OK, that’s cars. Before we move on to heavy equipment, let’s consider medium duty trucks. Medium duty truck owners are more like car owners than heavy truck. These owner operators don’t have large fleets of trucks. They primarily focus on their bakery, local brewery, or plumbing supply business. They are more sophisticated than car owners, but, unlike heavy truck fleet owners, they do not have fleet managers that focus on uptime and cost.
What about heavy trucks, farm equipment, and construction? Twenty-two year old sales reps typically don’t play in these sandboxes. My caution here is to watch the technology and how it is used; don’t overly fixate on the customer. The patterns of customer loyalty erosion outside auto and medium duty truck will reflect how technology will be used, not the genetics of a brand or a customer.
Ag, heavy truck (HT), and construction dealers have much stronger aftersales customer relationships than their automotive cousins – this is truer of Ag and construction than HT. That is important because these sorts of products typically don’t have tail fins, 20 color choices, tuned exhausts, and fancy fat low-profile wheels and tires. Ultimately, they are commodities that are primarily differentiated by acquisition cost, performance, uptime, and total cost of ownership. Up-time is critical and this is all about fast response to maintenance and repair needs. Now, let’s watch the technology.
Time out: The largest, most sophisticated fleets are using technology to maximize value, not just to find cheaper parts and service. In particular, they want easier parts and service, and will pay more for it; for example, telematics and infrastructure that are integrated with dealers’ DMS and fleets’ purchasing systems that automatically open repair orders, send estimates to fleets, and then send POs from fleets back to dealers. Dealers that can support this will get the aftersales business.Two things are bound to happen. First, dealer/distributor labor rates and parts costs will become more benchmark-able for the faster moving wear parts that are available through the aftermarket. Second lines will help here, but they might not be able to plumb the depths of competitive pricing. Labor rates will be more transparent from dealer to dealer … and from dealer to non-dealer. Fix-my-own commercial operators will buy more from the internet. They will buy what’s available … and more will become available. That’s the good news.
The bad news is that they will document their experience and write customer reviews – they will do this because they will find these reviews helpful in choosing dealers, and choosing manufacturers. This will serve to further commoditize these segments. Winners will be (1) low cost total providers, (2) with great digital marketing presence, (3) with extraordinary supply chain performance, and (4) who closely watch the technology, how it is used, and get in front of their customer needs … rather than chase after them.