NTEA: Today's changing world requires better and more rapid communication between upfitter and dealer

NTEA: Today's changing world requires better and more rapid communication between upfitter and dealer

Scoring Market Relevancy Chart

CUSTOMERS don't care whose fault it is. They just want the problem solved. That's why it's so important that everybody in the chain learns to communicate more directly, more clearly, and more accurately.

“There has to be much more rapid communication between the upfitter and dealer,” said Ryan Mathews, CEO of Black Monk Consulting. “It's not a dealer and upfitter problem. It's a customer-service problem, and it requires people to work together.

“It's important that the customer knows as soon as possible. And an explanation is possible only when the upfitter and dealer are on the same side and are agreeing. The grass isn't always greener on the other side. Increasingly, customers are more stressed, under-resourced, and overworked. They're also smarter, better informed. They're not going to take your word for it. They're much more critical.

In “What Your Customers Really Want,” Mathews presented breaking research from fleet customers and truck dealers showing exactly what is needed to stay competitive today and in the future.

The study was conducted by the NTEA, was a product of both quantitative (online and intercept) and qualitative research, and featured an in-depth questionnaire on key factors impacting transactions and the relationship between buyers and sellers. Mathews tied it in with research conducted in 2004 and with the points made in his book, The Myth of Excellence: Why Great Companies Never Try to Be the Best at Everything, which debuted on The Wall Street Journal's list of best selling business books.

Following Mathews' methodology, the NTEA reduced all commercial transactions into five core attributes:

  • Access

    The ability of a customer to find and easily use a good and/or service. Keys: solution, convenience, ease.

  • Experience

    How you feel as a customer as a result of doing business with a company. Keys: intimacy, care, respect.

  • Price

    The cost and cost impression of a good or service. Keys: agent, consistency, honesty.

  • Product.

    What you're offering for sale, including services. Keys: inspiration, reliability, credibility.

  • Service

    The quality and level you deliver. Keys: customization, education, accommodation.

He said it's a myth that a company ought to be great on all five attributes.

“The best companies, we found, dominated on one attribute, were differentiated on a second and met their competition on the other three,” he said. “What would happen if you tried to be good at everything? If you try to do that, you tend not to be good at anything, because you're spending a lot of money in areas you're not good at.

“In this industry, being as good as everyone else — just sort of meeting the market, being average — is a very high level of performance. This is typically what we see in established industries. You have to be pretty good just to be average.”

Comparison of Fleets Over and Under 50 Trucks Chart

2006 survey results

In 2006, smaller fleets were asked to name their primary point-of-contact for truck and truck-mounted equipment purchases, and 71% said truck dealer, 10% truck manufacturer, 7% distributor/equipment upfitter, 6% body/equipment manufacturer, and 6% leasing company. For larger fleets: 53% truck dealer, 25% truck manufacturer, 9% leasing company, 7% body/equipment manufacturer, and 6% distributor/equipment upfitter.

“In terms of product, your customers gave you almost universally high marks,” Mathews said. “In pricing, most rated you very highly. Access could have been better. Service and experience were OK. You had a picture of an industry that worked really hard at building products, worked really hard at competitive pricing, worked pretty hard at communicating, but when it came to really getting inside the heads of customers wasn't really doing a bang-up job.

Summarizing the 2011 survey results, he said: “We found business had been bad the last couple of years. We found that there is an upswing coming in terms of sales, and the question becomes, ‘Who benefits from that upswing?’ We know there were tough times. There was a recession, and a few major industries crashed. But the key is not to look at the decline so much, but to look at the uptick and see what's going to happen.”

Here are the key 2011 survey results for fleet managers:

  • Who is your primary point-of-contact for truck/truck-mounted equipment purchases? The answer: 40% said distributor/upfitter, 24% truck dealer, 21% body/equipment manufacturer, 8% other, 7% leasing company.

  • “The role of distributor and upfitter has increased significantly,” Mathews said. “That does not mean dealers are not important. It means that for upfitters, more and more truck buyers tend to go there first. Fleets have fewer personnel now, so they need to transfer the work someplace. When work gets transferred, information and communication gets transferred.”

  • Over the past three years, here is what fleet managers are saying: workload has increased for 76% of respondents. It has stayed the same for 16%, and for 8% the workload has gotten lighter. Overall, truck customers are overtaxed, underfunded, and understaffed, Mathews said.

  • Over the same time period, the personnel and resources available to manager have decreased in 52% of the cases. For 37%, personnel and resources have stayed the same, and 11% reported having more. On average, though, “You retire, you're not replaced.”

  • Over the past three years, the job stress has intensified for 80% of respondents. Nineteen percent reported no change, while 1% say they have less stress. Mathews' conclusion: “Your customers are feeling a squeeze. When people feel squeezed, it makes them feel worse. ‘I've got more work, more responsibility, less budget, fewer people. I need help. I need somebody to take care of me.’”

  • Over the past three years, about half of the respondents report no change in how much they rely on upfitters for support. However, 37% say they are looking to upfitters more, while 11% say they need them less.

  • Customer optimism seems to be increasing. When thinking about the future of their company or the industry, 35% reported being more optimistic than they were a year ago, and 49% said their outlook is unchanged. Only 16% were more pessimistic than one year ago. “People are fairly optimistic, or at least not totally pessimistic. Customer expectations are that everything's going to be fine because they have suppliers who will take care of them, Mathews said.

Truck dealers reported similar experiences. Here are the key 2011 survey results for truck dealers:

  • Over the last three years, their workload (or that of their commercial sales department) increased for 39% of the respondents and stayed the same for 23%. It decreased for 38% of the truck dealers.

  • Over the same time period, the personnel and resources that truck dealers have to manage the workload have decreased for 49% of the participating truck dealers. Twenty percent reported increases, which personnel and resources stayed the same for 31%.

  • Over the past three years, job stress increased for 76% of the truck dealers. Three percent are feeling less stress, while it is business as usual for the remaining 21%. “People are doing more with less and feeling bad about it. The difference between 2006 and now is how strained that problem is.”

  • When thinking about the future of commercial truck sales opportunities, 61% of truck dealers are more optimistic than a year ago, 26% said they were about as optimistic as they were a year ago, and 13% said they were more pessimistic.

  • Over the past three years, reliance on support from your upfitters remained unchanged for 57% of respondents. It increased for 22%, but that increase was offset by the remaining 21% of truck dealers who reportedly are relying less on upfitters.

Mathews said this is the bottom line from the customers' side of the table:

  • Your current customers are survivors, and they think like survivors. When they think like a survivor, they're making decisions on a highly emotional and sentimental basis.

  • Everyone will be forced to do more with less. “And feel stressed about it. There is no credible observer of modern American business today who says, ‘Now we're going to go back and hire all those people, and business is normal.’ Nobody believes that will happen.”

  • You are your customers' outsourced labor pool. “The work doesn't go away. There is a shift in who does the work. Work gets more complex.”

  • Many customers will need a more consultative approach, while others will remain transactional. “There will still be some customers that want what they want: a transaction. It will be price-based and delivery-time-based. Those customers are not going away. We're not saying from this research that transactions are falling off.”

  • High stress is the “new normal.”

  • Since product standards are already high, some customers will be looking for innovation, collaboration, and relationships while others will be looking for speed, price, and no strings. “This is an industry with a high production standard and high quality performance. So making something better is probably very difficult because you're already pretty darned good. It's a way for you as a supplier to bring customers the insights and creative solutions that they don't have. In this new world, you almost have to be smarter about your customers' business than the customers are about their own.”

  • NTEA members are increasingly the customers' preferred point of contact. “This is the difference in research between this year and 2006. Does that mean you're the customers' exclusive point of contact? Don't read it that way. It's preferred point of contact. As work gets transferred, the customer wants to be in contact with the person doing the work. This does not mean dealers don't have any function anymore. This is saying that your value to customers in terms of information flow has increased significantly.”

  • The ante to sit at the table will continue to increase for all vendors.

  • Many customers need both smarter and cheaper. “They are not mutually exclusive. Cheaper may be the wrong word here. It's more effective solutions: lower cost, higher standards. More for less, in a timely manner.”

Mathews said common responses from truck dealers were: need improved response times; need improvement in meeting promised delivery times; and need to provide more product information/specs and images on the website.

They said that supplier support and reliance has increased due to: improved response and delivery times and offering better web-based information and becoming actively engaged in collaborative specification development, joint sales calls, and training of each other's sales teams.

How can upfitters improve their performance? Mathews said common responses from fleet managers were: improved response times; meet promised delivery times; increase parts inventory; improve warranty and repair service turnaround; and provide more product information/specs and images on website.

They said that supplier support and reliance has increased due to: improved response and delivery times; faster warranty, repair, and service turnarounds; offering expanded parts inventory and improved web-based product information, specs and graphics. They want improved and constant communication, and collaboration on specifications and vehicle design.

Types of transactions

He said there are three different types of transactions:

  • Pure transaction

    This is most common when dealing with an individual buyer. The key facets: everyone can play; price driven; low customer loyalty; demands efficiency; no room for error; continual sales effort; low service cost; product is critical; limited consultation; high advertising cost; and speed is critical.

  • Facilitated transaction

    The key facets: many can play; service-driven; moderate loyalty; requires efficiency; some flexibility; good follow-up skills; higher service cost; customized product; consultation critical; high marketing cost; speed is important; and work until it's right.

  • Solution provider

    The key facets: only a few can play; experience-driven; high customer loyalty; total transparency; learn together; continual interaction; very high service cost; co-development; partnership; can't lose a client; full understanding; and develop solution.

“As you look to the future, the force of history is moving toward those who are solutions providers. That's because business gets more complicated all the time and information becomes more critical all the time. But there's still a whole bunch of money to be made by making a truck.

Mathews said that upfitters must know where they fit in this spectrum.

“It is critical to know who you are and who you are not,” he said. “You have to be good at providing pure transactions before your customers will give you permission to be their solutions provider. If you don't do the basics right, you don't get to move on. You don't get to make a worse truck because you have a more consultative role.

Mathews said that no matter where you are on the chart, it's more critical than ever that you be a better business partner.

“You have to be smarter,” he said. “Companies that offer pure transactions need to offer operation efficiency, low overhead, and have great supply-chain relationships. Solutions providers must be experts in marketing and co-development skills. But no matter where you are, you can't get sloppy.

“Remember, the business has changed — and most of those changes are here to stay. It's easy to say happy days are here again. The danger is that you begin to think that you're going back to those happy times prior to the crisis. Those times are gone. It's a new day. Those changes are permanent. The demands of the customer are permanent. The challenges of living in an information system as opposed to a pure production system … those changes are permanent.

“The world of your customer has changed as well. Demands on them have changed. The need to be on 24/7 is a reality with them. They probably sleep with a Blackberry to their ear in case of emergency. You need to listen to and understand your customer. It's important that when a customer says something, you understand what they think they're saying — not what you think you heard. Because same words have really different meanings.”

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