The Mheda Journal

As material handling distributors look toward a new beginning in 2011, one of the areas many of them plan to focus on to generate more revenue will be fleet management. As most of you are aware, fleet management is the complete oversight of a customer’s fleet, including service calls, invoicing, leasing agreements and anything else you can think of. “The more services we can provide for the customer, the more they will need us, and the harder it will be to get rid of us,” the thinking goes. Sound logic, and when executed well, it does indeed pay off for the distributor.

However, in the words of one MHEDA member, success with fleet management is just a pipe dream for many distributors. The problem, according to Steve Ross, operations manager at Komatsu Forklift Retail Operations in Long Beach, CA, is that these distributors give good lip service to fleet management but don’t actually perform it very well for customers. “There are a lot of people who do fleet management,” Ross says, “but what happens is they don’t communicate it with the customer. They’re afraid the customer will find out how much it costs for the distributor to fix the forklift and they don’t want to stand up for their profits. However, the most profitable dealerships are the ones who make it a point to communicate this with their customers.”

It’s an interesting observation. The age-old industry question of “How much is the customer willing to pay?” rears its ugly head again. As has been pointed out on more than one occasion, there’s nothing wrong with profit. The end-users of your product are businesspeople who surely understand that. But it takes a true partnership, one in which both parties are willing to be frank with other and broach those not-so-fun to talk about subjects. According to Ross, fleet management doesn’t need to be one of those issues. “The truly successful dealerships have a partnership mentality, not an ‘I’m-going-to-make-money-off-this-customer’ mentality. You have to get over that and communicate with your customer. If you do enough of the right things for the customer, you’re going to make money. And if you don’t do it, there are plenty of people out there who will.”

What do you think? Have you seen this mentality at play in the marketplace? How can it be overcome?

During the course of working on this issue (April) of The MHEDA Journal, a common element that kept coming up was the importance of customer service. To be sure, customer service has always been a hot topic of conversation among MHEDA members. They know the value of the service they provide and its importance in separating themselves from the competition.

As MHEDA focuses on how “The Rules Have Changed” during their 2010 Convention, it’s interesting that quality customer service is one thing that isn’t changing. Time and again, MHEDA members are telling me that “we’ll still provide the same service” or “servicing the customer is more important than ever” or “they’re not buying, so it’s important to focus on servicing what they’ve already got.” Comments like these have been common during our 2010 Industry Forecast and since.

As one distributor says in repsonse to the question of whether the explosion of Internet selling is bad for distributor relationships, “We are not burying our heads in the sand and are using the internet more and more frequently to market our goods and services. contracts will be tested, but customer service disappears with low margins and value can still be sold.”

Today I received a newsletter from a consultant who bemoaned the state of customer service from his newspaper delivery person: “I haven’t seen my paper on my porch in years.” Fixing that is a small step in fixing the newspaper industry’s struggles in general, he argues.

It’s a lesser example, but I keep seeing it all around. The more things change, the more they stay the same.

Yesterday I spoke with Peele Dunn at Virginia Forklift in Richmond, VA, for a Sales Success Story. In addition to providing me the information for what’s going to turn out to be a great story about turning quality service into a sale, he also said some interesting things about the temptations associated with saving money in a bad economy.

In a nutshell, what he said was, it doesn’t always pay off to save a few bucks in the short term. The customer he referred to had bought used forklifts from a dealer out of state “because he saved a few bucks.” When the units soon broke down, that dealer was nowhere to be found, and the customer was out of luck. (Don’t worry, there’s a happy ending, which will be in the October issue of The MHEDA Journal.) “He tried to save a few bucks, but guess what? He really didn’t save a few bucks.” Which means, the customer made a decision to save now but it ended up costing money later. Isn’t that often the way?

It just goes to show that, especially now, when everyone is trying to cut back, it’s not always a good idea to do so. Sometimes decisions made for short-term gain aren’t the best decisions for the long haul.