ARE you leaving money on the table?
Maybe so, according to a recent NTEA survey of two major groups that truck equipment distributors commonly serve — truck dealers and commercial fleet managers.
One of the key conclusions in the survey was that getting the lowest price from a truck equipment distributor is not most important for either group. It ranks near the bottom for truck dealers and is a neutral item for fleet managers.
Instead, customers are looking for value for their money. Are they receiving a fair price?
They also are looking for knowledgeable sales people, along with a company that is responsive to their needs.
The survey was an attempt to evaluate what the distributor's customers consider important and to measure how highly these customer groups believe the truck equipment industry meets those needs.
By comparing customer values with distributor performance, companies can identify areas where they may be delivering more than is necessary and where they are not performing well enough.
A summary of the survey was presented at a Work Truck Show session by Steve Carey and Donna Coleman. Carey is NTEA's meetings and member services director. Coleman is vice-president of Markinetics, the company that conducted the research.
“The research project was an offshoot of several initiatives NTEA has undertaken, including the manufacturer-distributor relations project,” Carey said. “It started about two years ago in an effort to identify how the truck equipment market is changing.”
The ultimate goal, according to Carey, is to provide a tool that distributors can use to evaluate how well they are serving their customers, both large and small.
What do distributor customers want? The survey measured a variety of factors associated with the process of buying and taking delivery on commercial trucks. The factors are divided into five general areas:
- Access
Among assess attributes: Is it important to the customer that a distributor have a location nearby? Is the distributor easy to contact?
- Products
Do the products meet the customer's expectations? Does the completed truck do its job? Is it reliable?
- Experience
This attribute is subjective, but it relates to how the customer feels about himself as he does business with a particular company. Such attributes, which cannot be easily measured, include courtesy, trust, and respect.
- Service
Whereas “experience” attributes involve how customers feel about themselves, service attributes relate to how the customer feels about the business. Included here are customer perceptions about the company's employees, timing, and follow-up after the sale.
- Price
Beyond lowest cost, this includes value for the dollar, fairness for the product specification, and financing.
These five areas are based on the book The Myths of Excellence, Coleman said.
Conducting the survey
The survey was mailed to 700 fleet managers who attended the 2004 Work Truck Show. Results of the survey are based on 83 responses.
The survey included truck dealers and fleet customers. Of the responses from truck dealers, 67% were involved in selling medium-duty trucks. The sample included an assortment of dealerships, 45% of which sell multiple brands.
Fleets — those with 100 trucks or more represented 60% of the sample.
According to the survey, small fleets tend to use truck dealers as their primary contact in buying commercial trucks. Larger fleets tend to work more closely with NTEA members.
Fleets value knowledgeable sales people, delivering the truck as ordered. Fleets are saying, “Pay attention to me.”
How should distributors apply the findings of the survey? One of the clearest areas involves pricing and selling equipment. Coleman said that distributors should not simply emphasize low price when making sales presentations to fleets. They should stress the value fleets are getting for the dollar.
She also advised that distributors look at each area of the survey and use it as a way of evaluating their company's performance.
“If you are doing poorly in all five of these areas, you obviously are doing damage to your brand,” Coleman said. “But you can't be all things to all people. You can't tackle all of these areas simultaneously and expect to make any progress at all.
“Strategically, you should elect to compete on one or two of these attribute areas. Differentiate your company from all the others and own that area for your brand. Commit to a long-term effort. There were almost 40 attributes that were measured. It will take some time to digest this data on an industry basis and to apply it to the strategy of an individual company. But this is a very big first step by NTEA to take a global view of customers and their relationship with member companies.”
“This will allow you to see where you are over- or under-performing,” Carey said. “You may be wasting resources over-performing in some areas, and you may need to allocate resources in other areas.”
Truck dealers and fleet managers expressed what they want from their local truck equipment distributors in a survey commissioned by NTEA. Areas marked “high” in the table were considered important to at least 80% of the respondents. For the purposes of the survey, opportunities to improve exist when customers consider an area important, but distributor performance in this area does not match customer expectation. The table shows results for local distributors, but results also exist for distributors with bailment pools and for truck body and equipment manufacturers that sell direct.