Competing in the Parts Business

Oct. 1, 2000
HE CAN of WD-40 is on display next to the cashier at the parts counter.Its price: in excess of four dollars.Was the owner of the enterprise concerned

HE CAN of WD-40 is on display next to the cashier at the parts counter.

Its price: in excess of four dollars.

Was the owner of the enterprise concerned that his price was twice that charged by the Home Depot down the street? Not at all.

"Hey, we aren't trying to compete with Home Depot," he explained. "There's no way we can. Instead, I'm competing against other companies like mine.

"My company doesn't exist to sell WD-40. But if our customers need a can, we have it available for them. The fact that they are able to drive down the street and save a couple of bucks is not that important to them. Our customers are here in our parts department, and we have what they want. If I weren't price competitive with my main product lines, that's when I would worry."

The above illustration is an example of an old retailing technique for remaining both profitable and competitive in the parts business - knowing the price elasticity of the products that are stocked - and pricing them accordingly. A few products that can be sold with a higher gross margin can go a long way toward offsetting the slim margins that may be necessary to meet the competition head-on.

But while price may be an issue in the parts and accessories business, it is simply one battleground among many on which truck equipment distributors and trailer dealers must compete. As we talked to the owners of the companies that we profiled in this year's Aftermarket Parts Issue, the most crucial battle that our industry faces is getting, training, and retaining employees. Not surprisingly, having good margins and good personnel go hand in hand.

"We have to have decent margins to remain in business," says Stan Zeamer, president of Utility/Keystone Trailer Sales, and one of four finalists for the National Trailer Dealer of the Year Award. "We hold our margins by providing a high level of customer service. You can do that only through teamwork."

Teamwork is a key at the dealership. For a detailed description of how Utility/Keystone has built its team, see the story on Page 90.

The ability to develop personnel successfully is a common trait for all four National Trailer Dealer of the Year Award finalists. With good soldiers fighting the battles, other concerns become less worrisome. For example:

- Customer service. This is a broad topic that starts with knowing the customer and identifying his needs - things that only can be accomplished by a knowledgeable, motivated team of employees.

- Customer loyalty. Strong customer service produces loyal customers. This is a key topic for Atlantic Great Dane, another Trailer Dealer of the Year finalist. Scott Lamb, president, believes customer loyalty will be the major issue facing his company in five years.

"The trailer market is becoming more and more competitive, and our customers have many options available to them," he says. "Atlantic Great Dane will have to focus on the things we do well in order to maintain and expand our customer base."

Atlantic Great Dane has been successful in keeping good employees. The 31 employees have an average tenure in the industry of 12.7 years. For a full report on this Trailer Dealer of the Year finalist, see Page 66.

Craftsmen Industries, also a finalist for the Trailer Dealer of the Year Award, is another company placing high value on developing and retaining its employees. The company has implemented a bonus system that has been paying $70,000 per month.

"Employees are your customers," says Craftsmen's Penny Helmsing. "They're your partners. You have no business without them." She points out that satisfied employees make satisfied customers. Details on the Craftsmen bonus system are part of Rick Weber's story that begins on Page 78.

Whether it's the sale of parts, new trailers, or truck equipment, almost everyone wants to move away from making price the sole reason for the sale.

As one of the National Trailer Dealer of the Year Award finalists points out, "We're all selling the same thing, so you have to differentiate yourself in some way... you have to add value to the customer."

Business owners know that they can't differentiate their companies or add value by themselves. But a team of knowledgeable, motivated employees can make serving the customer go smoothly. Just like a spray of WD-40.

About the Author

Bruce Sauer | Editor

Bruce Sauer has been writing about the truck trailer, truck body and truck equipment industries since joining Trailer/Body Builders as an associate editor in 1974. During his career at Trailer/Body Builders, he has served as the magazine's managing editor and executive editor before being named editor of the magazine in 1999. He holds a Bachelor of Journalism degree from the University of Texas at Austin.