Asked & Answered

 

Each issue of The MHEDA Journal features a question and answer column. The Board of Directors share their knowledge and expertise by responding to questions posed by distributor members. Asked and Answered has collected these questions and their responses into a convenient index allowing you to revisit questions based on their topic. To view a particular question and its response, simply scoll down the index to the topic of interest and click on the question you wish to view. To return to this index, click the back button at the bottom of the article chosen. To submit a question to be answered by MHEDA’s Board of Directors, click here.

NEW QUESTION:
What resources do you use to analyze the marketplace and market trends for strategic planning purposes? [Winter 2012]
Categories

Advertising Personnel Software
Fleet Management Regulations Short & Long Term Rentals
Manufacturer Support Revenue Enhancement Supplier-Distributor Relationships
MHEDA Membership Service Training
Operating Costs Shipping Warranty Claims
ADVERTISING
Budget
What types of marketing/advertising are the best value for a material handling dealership? We all tend to think like an end consumer; however, the market is very different. With so many options these days—Yellow Pages, cable television, radio, print ads, mailers, Internet, inserts, promotional items—and so many constraints on our budgets, how can we evaluate each medium for maximum value? [Spring 2006]
In light of today’s economy, with sales down and profitability threatened, what percent of gross sales and gross profit do you budget for advertising? [Summer 2002]
Methods
How would you define success on social media platforms like LinkedIn, Facebook and/or Twitter? [Spring 2011]
In today’s world of electronic, paperless communication, what part does direct mail play, if any, in the overall marketing program? What and who are the targets—existing customer base or search for new customers—and what is the frequency (monthly, quarterly, etc.)? What is considered a good response rate? [Spring 2006]
What kind of results have direct mail campaigns had in the material handling industry? Has one type of direct mail seen superior results? How can a company effectively maintain its mailing list? [Fall 2003]
Which of the following methods do you use and what percent of your advertising budget are they: coupon flyers, product announcements, corporate identity devices (lighters, hats, key chains, etc.), Yellow Pages advertising, meet the customer events such as an open house, trade shows and others? [Summer 2002]
We have experienced a reduction in co-op money available from our vendors. Consequently, we are paying more of the Yellow Pages advertising expense. Is there a reliable way to measure the effectiveness of Yellow Pages ads? Does anyone have an effective alternative to the Yellow Pages? [Spring 2002]
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FLEET MANAGEMENT
Forklift Rentals: Lease vs Purchase
We own a forklift rental fleet of 250 units. What are your thoughts on leasing your rental fleet versus owning your rental fleet? [Summer 2005]
Fuel Costs
How are dealers with fleets of service vans and delivery trucks addressing soaring fuel costs? [Winter 2006]
Service Van: Lease vs Purchase
As a fleet of road service vans approaches 40 vehicles, there are some who choose to lease these vehicles as fleet leases. Is there any real big advantage to leasing vehicles as opposed to outright purchase / bank loan? If so, what are the advantages? [Summer 2003]
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MANUFACTURER SUPPORT
How can a distributor obtain factory support and how much support should a distributor expect? How can the distributor insure that the product line he is representing does not go direct, replace the distributor or add more distributors. [Fall 2002]
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MHEDA Membership
Optimizing Your MHEDA Membership
A common refrain from members is, “I want to get more from my MHEDA membership but can’t find the time.” So, MHEDA’s Membership Committee is asking the Board for their recommendations maximizing the value of association membership. [Fall 2008]
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OPERATING COSTS
Cash Flow Management
The increase in customers requesting just-in-time delivery increases pressure on small distributors to stock inventory for same-day or next-day delivery in order to compete with larger houses with more buying power. What is the best way to manage cash flow in such an environment? [Fall 2006]
Leasing vs. Buying Computers
What are your thoughts on leasing versus purchasing computers and servers used in our business environment? It seems that technology changes so quickly that a new computer is outdated as soon as I take it out of the box. Would it be better if our company leases the computers and servers or purchases them outright? [Fall 2006]
Resources For Planning
What resources do you use to analyze the marketplace and market trends for strategic planning purposes? [Winter 2012]
Rising Fuel Costs
How are industrial truck distributors handling the increasing fuel price for their mobile mechanics, and how are they recovering the cost? [Summer 2008]
Technology Expenditures
We are a general lines distributorship selling mainly storage & handling equipment. It seems that the cost just to maintain our technology infrastructure (server, network maintenance, software updates, EDI, etc.) has been escalating every year. Is there a budgetary percentage of total sales that you would expect to spend on technology each year? [Spring 2005]
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PERSONNEL
Administrative Salaries
Is there a formula, ratio or percentage that is generally used to compare administrative salaries to revenue-producing salaries? We have established the administrative cost per dollar of revenue but would like to know if there is a formula that works to tell us if we are administratively top heavy or if we fall in the normal range. Also, how do most members allocate working owners’ salaries? [Fall 2005]
Compensating and Retaining Good Salespeople
How do you compensate and retain good salespeople in a climate of declining gross profits? Has anyone implemented an “out-of-the-norm” compensation plan in response to these trends? [Summer 2006]
Compensation
With 2009’s uncertain economy, how are dealerships handling pay increases? We certainly want to retain good employees, but at this point is it realistic for employees to expect raises? Several of our employees are asking for raises, but with the uncertainty of the economy and the fact that expenses are definitely up (and sales are questionable), how are others addressing the issue of pay raises (specifically for technicians) without adversely affecting the company? What other means are you using instead of raises to maintain good technicians? [Summer 2009]
Employee Recognition Programs
With substantial pressure generated by shrinking margins and increasing costs, what recognition programs are dealers using to complement wage increases and retain solid employees? [Winter 2002]
Finding Loyal Salespeople
Given the expense to which an employer must go to recruit, hire, train and develop a salesperson, where do you suggest we look to find the best candidates? What do you look for when trying to decide if a potential salesperson will be loyal? [Spring 2004]
The Future Of Technicians
What advice do you have for the future recruitment of technicians, as the millennial generation does not seem to have much aspiration for these types of jobs? [Fall 2010]
Incentives for Technicians and CSRs
What incentives have proven most effective in generating new equipment leads through technicians and customer service representatives? Would those corresponding incentives be based on submission of the lead, a subsequent formal quotation or an order? [Summer 2004]
Inside : Outside Salesperson Ratio
We are an allied lines material handling distributor. Over the years, we have considered adding an inside salesperson to try to keep our salespeople in the field as much as possible. Is there any rule of thumb on how many outside salespeople it takes to support an inside salesperson? Should the inside salesperson support the outside people with quoting, order entry, order follow-up, etc? Or are these activities better handled by the outside people? [Winter 2004]
Labor Shortages
The projections are for a skilled labor shortage of 10,000,000 workers by the year 2010. Some of this shortage will directly impact our ability to service customers in a professional manner. With competing industries also recruiting directly from our own companies, what is being done to market our industry as an attractive, stable, rewarding industry to work in? What is being done at the local level by anyone to market their own company as a rewarding career? What recruiting techniques have worked well, besides going after the competition’s technicians? [Summer 2007]
Maintaining Employee Morale
How much of the cost of insurance do you spread to employees? Also, how do you keep morale up after cutting out overtime, freezing wages, stopping the 401(k) match and then asking employees to pick up more of the insurance cost? [Fall 2009]
Recruiting Allied Salespeople
What have been your best sources for finding allied line salespeople? How long of a training period do you recommend? Is it better to have the salespeople salaried during the training period? [Summer 2005]
Recruiting and Compensating Salespeople
We specialize in storage systems integration with some unit equipment sales, but no lift truck sales. What is the best method to recruit young talent into our sales force? Also, what is the best method of compensation for them in their first years when they are building a client base? [Winter 2006]
Salary : Commision Ratio
We are a company that is primarily a project house / systems integrator, but also distributes general lines. We do not sell lift trucks. What have other companies found to be the best ration of salary to commission in order to motivate and retain salespeople? Have other companies tried different salary / commission ratios and programs within the same sales force with any success? [Spring 2003]
Sales Personnel Titles
In this day and age, when companies have so many salespeople out in the field, what is the best title for them? Sales Representative? Account Executive? [Summer 2003]
Technician Discipline
Good forklift service technicians are extremely hard to find. They are also hard to keep, as they are always being approached by our competition. We tend to put up with rogue behavior because they are so vital to our business, (i.e., not wearing full uniforms, not calling in, not taking care of company vehicles; in short, not maintaining the high standards we expect in the dealership). How can we build employee discipline, involvement and loyalty in an environment where the grass is always greener at the competition? [Spring 2005]
Technician Wages
As a service crew matures and many of us have 10 to 15 year loyal employees, how do most dealerships address the wage rates? Do any MHEDA dealers have a ceiling on technician wages? [Summer 2003]
The Role Of A Sales Manager
Should an equipment sales manager be focused on making calls with the salespeople, or should this position be proficient in all areas of the sales department (i.e., contact management system, quotation system, running reports, running bookings/delivery reports, etc.)? Should the manager perform simply as a coach or as an operationally rounded manager? [Winter 2005]
Workers’ Compensation Claims
What steps does your company take to protect itself from employees who claim they are injured on the job and involve you in a Worker’s Compensation claim that goes on for an extended amount of time? [Fall 2004]
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REGULATIONS
Building Codes
Depending on a job’s location, permitting requirements for racking and building attachments vary. It can be done one way in one city, and the next town over requires something different. No matter what you submit, the building department comes back with questions. What can be done about this? Is there any sort of state or national permitting requirement in the works? [Fall 2007]
Licenses
Do all MH distributors need to have a contractor’s license? Can a distributor contract with a licensed installer if the distributor does not have a contractor’s license? Or does the customer need to work directly with the installer and pay the invoice directly? In California, the code has an exemption that states that if the equipment is not part of the structure, then a contractor’s license is not needed. If that is so, then why do all the cities require that a contractor’s license number be written on the application? [Summer 2009]
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REVENUE ENHANCEMENT
Allied Product Sales
In our fifty-some-odd years of selling lift trucks, we have tried selling and servicing many different allied products (sweepers, racking, people movers, etc.) with limited success. Other than tires and batteries (which I consider more of an accessory than true allied line), what products do you see as the best fit for enhancing the revenue of a traditional lift truck dealer? [Spring 2003]
Business Practices for a Down Economy
What are you doing to prepare and respond to the forecasted economic conditions? [Spring 2008]
Capitalizing On The Economic Recovery
Besides diversification and elevated customer service orientation, what strategies—sales, processes, etc.—does your company have in place to re-align itself in this recovering economy? [Summer 2010]
Charging for Services
We are a storage & handling distributor. Considering the unbundling of services by our customer base, how can our industry set the precedent to start charging the customer for engineering, drawings and services that we now provide for free? I realize that systems integrators have been successful charging for services. Does anyone have a model for the storage & handling distributor? [Winter 2007]
Credit And Bad Debt
If a customer files for bankruptcy and you are left with a large bad debt amount, do you continue to do business with them? How can you determine the creditworthiness of a customer? [Winter 2010]
Have you changed your credit terms in this difficult economy? If so, what did you do? How are you protecting your company from future bad debts? [Spring 2009]
Developing Consistent Revenue Streams
Automation Concepts designs and installs integrated material handling and control systems. Our sales cycle is very long and sometimes unpredictable. Because of this cycle, we experience peaks and valleys. Do you have any creative suggestions on products and services that will allow us to have a more consistent revenue stream? [Spring 2002]
Growing Your Business with Small Margins
In today’s market with small margins on new equipment, how does a dealer grow his business and make it profitable? [Fall 2002]
Opening New Branches
Customers are frequently interested in the support and nearby resources available from their “local” branch. Indeed, we have won and lost orders due to our proximity to the customer, leading us to consider new branches in developing territories. Conversely, the ever-increasing pressure on margin would lead us to abandon that very expensive thought and make investments in better technology/coordination tools to support these territories. What factors should be considered in opening or closing branches? How significant is physical proximity of the branch to the purchasing decision of the customer? [Summer 2007]
Overcoming Margin Pressure
In today’s challenging marketplace, we continually find margins reduced on all profit centers to stay competitive. Additionally, customers with longstanding relationships are forced to change suppliers strictly on price in an effort to reduce their overhead. What suggestions could be made to help control the erosion of the bottom line? How do you protect longstanding relationships with customers when price—and price alone—becomes the issue? [Winter 2007]
Targeting New Customers
Our company is a systems integrator and allied products distributor. Potential customers often open distribution centers in our area but purchase equipment prior to announcing their move and without contact with local suppliers. Local Chambers of Commerce and real estate developers maintain the secrecy of any projects until a formal announcement is made, usually after any equipment has been purchased. What strategies can be used to successfully identify and approach these potential customers early enough to have the opportunity to bid on, and hopefully win, a project? What marketing avenues can target potential customers that might move into our area? [Winter 2005]
Web Site Sales and Profitability
Today, many companies are diverting to the Internet to purchase material handling equipment. As a growing distributorship, what is the best approach to developing a website that will secure our future customers? Are websites profitable in the material handling field? [Winter 2002]
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SERVICE
Creating Value while Controlling Costs
We are a small service department consisting of eight people. Our organization primarily repairs dock leveling equipment, trailer restraints and dock seals. How can we best create value for our customers, control company costs and impact business growth? [Fall 2002]
Drive-Time Charges to Rural Areas
We are a forklift dealership serving a very large but low populated area. We constantly evaluate how we charge for “drive time” for our techs. I have visited with other dealers, and it seems that everyone struggles with setting their rates. Our customers don’t like being charged for “drive time,” but there is a very real cost involved in getting to remote locations. How do you recommend charging for servicing rural areas? [Winter 2003]
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SHIPPING
LTL Trucking
We are a national distributor of material handling equipment and services. In recent years, our Internet marketing efforts have led to a significant increase in the number of less-than-truckload (LTL) orders that we must send across the country. We have found that some suppliers prefer LTL trucking arrangements that work well, while many others do not. This often leads to situations where we must work with LTL trucking firms that are not reliable in ensuring on-time and damage-free delivery of products to our diverse customer profile. What are other distributors doing to meet the challenges posed by an LTL trucking industry that offers few guarantees without charging excessive premiums? [Fall 2005]
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SOFTWARE
Customer Relationship Management Systems
Is your company recognizing the need for and/or implementing intranet or CRM (customer relationship management) at your dealerships? Have you been able to establish a successful infrastructure for effective CRM? [Spring 2010]
A CRM system is only as good as its data. What features help you best use your data, and how do you ensure integrity? [Fall 2011]
Dispatching Systems
Our dealership constantly strives to capture new aftermarket customers for our parts and service departments. As a result, our force of service technicians is expanding rapidly and we are approaching the limitations of our current dispatching system. While our software system provides rudimentary dispatching features that help to track open calls, we still use manual dispatching boards to assign technicians to specific jobs. Are there other tested and proven dispatching systems that are available to dealers with 40 or more technicians? What types of automation are available that might help the process? [Summer 2004]
Supplier or Off-the-Shelf
In today’s age of complex information technology, major manufacturers exert considerable pressures on their independent dealers to adopt costly accounting software systems to manage information in a more uniform format and to ensure that their software for managing sales, rentals, parts and service sales is sufficient. Many of the specialized niche software suppliers tend to be relatively small businesses with high turnover in personnel and poor or expensive local support. On the other hand, they offer a product designed with our business in mind. Many larger suppliers offer superior local service; however, it is really up to the dealer to ensure the system is fine-tuned to process information the way the dealer wants it done. Do you believe that an independent dealer is better off choosing the software supplier being promoted by its major supplier, or going it alone with an off-the-shelf software solution from a major software developer? What are the critical factors in making this decision? [Winter 2004]
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SHORT & LONG TERM RENTALS
Marketing Short-Term Rentals
Short-term rental business has been off in our area. Have you heard of any new or innovative ways to stimulate short-term rental business? We have been kicking around ideas such as using an hourly usage charge instead of a fixed rate and renting operators with forklifts. [Winter 2008]
What strategies have you found effective in marketing and growing the short-term rental business when your product offering is limited to straight-mast lift trucks and you’re competing against the major rental yards? [Winter 2006]
Replacement Policy
What is the evaluation policy you use for the replacement of short-term rental assets? Does your company have a policy where the customer participates in the guarantee of Long-Term Rentals (LTRs), in order to lessen your debt exposure? What percentages of your LTRs are supported this way? [Fall 2003]
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SUPPLIER-DISTRIBUTOR RELATIONSHIPS
Is Win-Win Dead?
The newly released book by Mike Marks, Tim Horan and Mike Emerson of Indian River Consulting Group, Working at Cross-Purposes: How Distributors and Manufacturers Can Manage Conflict Successfully, has the premise that “win-win” is dead or never existed between suppliers and distributors. What is your opinion? How do you see the supplier-distributor relationship evolving over the next five years compared to how it has evolved the last five years? [Spring 2007]
Manufacturer-Distributor Partnerships
What is the most important characteristic distributors look for in their manufacturing partners? [Winter 2011]
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TRAINING
The material handling business is one of the most diverse and “product-knowledge-intense” industries on the planet. Add to it the ever-increasing need for a lightning-fast, accurate, informative response to our customers, and you have a new employee training dilemma. What resources are available, other than vendor supplied training, that can address the generic product concepts, i.e., conveyor, shelving, rack, etc., and shorten the time between new hire and effective salesperson? [Summer 2006]
Internships And Co-ops
This quarter’s question was proposed by MHEDA’s Industry Advocacy Committee, which would like to know: “How are internships and cooperative education opportunities structured in your organization, and what value have you found?” [Winter 2009]
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Skills For Material Handling Newcomers
I am new to the material handling industry. What specific skills should I allocate time toward perfecting and why? [Summer 2011]
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WARRANTY CLAIMS
We are seeing a dramatic increase in manufacturers refusing warranty claims and customers using warranty as a reason not to pay invoices long after the warranty period is over. What can be done to reduce both of these problems? [Winter 2003]
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