Mar 26, 2018

Don't Forget the 80%

A plea to manufacturers to acknowledge small dealers

A plea to manufacturers to acknowledge small dealers

Manufacturers, and pretty much anyone in business, understand that their revenue follows the 80/20 rule: 20% of their dealers produce 80% of their revenue. This common truth has been confirmed for as long as business has existed. It makes sense that the vast majority of resources and support a manufacturer offers will go to the largest and most productive dealers. In many cases, a 1% increase in sales for a 20% dealer will far exceed a 30% increase in sales for an 80% dealer. I understand that manufacturers only have so many resources and that there are only so many days in a year and only so many hours in a day.

Even the largest manufacturers have a limited number of dealer representatives. The income of these dealer representatives often is based, at least partly, on sales from the dealers for whom they are responsible. One of the largest and most well-known manufacturers in the country has nearly 600 dealers and only seven dealer representatives. That means that each dealer representative is responsible for 75 to 80 dealers. It simply is not possible or fiscally reasonable to give the same attention to the smaller dealers as they give to a larger dealer.

Breakdown

I want to break down the numbers because I want to be clear on what I’m asking of manufacturers. If a manufacturer has 500 dealers, that means 100 of them are doing 80% of the business. Of the remaining 400 dealers, roughly 90% are either content to stay the same size or actively looking to sell their dealerships to one of those 20% dealers. That still leaves 40 dealers across the country who wish they could grow to be a 20% dealer. They are the ones who attend the dealer meetings and are the most dedicated to the brand and industry. They simply do not have the resources or knowledge on how to expand.

These are the dealers for whom I am advocating. It is on their behalf that I am asking our industry manufacturers to evaluate the importance of the small dealers and to step back and look at the world through their eyes.

Eliminating the Disconnect

I first noticed a disconnect between dealers and manufacturers when, as regional sales manager for a 20% dealer, I was sent to represent the company at regional dealer and manufacturer meetings. The company I represented had nearly 20 stores in three states. We had human resources and payroll departments that exclusively focused on their own roles. We had the resources to provide company vehicles to all of our sales and management personnel. We had an excellent benefits program. In a bad month, we did a higher sales volume than most of the other dealers represented in that room did in a good year. Our owner did not attend these meetings; he sent me.

Many of the people sitting around me were owners of the 80% dealerships. Many were second- or third-generation owners who had grown up in the dealership and had taken over the business when their grandfathers or fathers retired or passed away. Many did not have a college education, but did have a work ethic and an almost-obsessive dedication to their businesses. They were the ones for whom it cost the most to take a day off, but they felt it was their responsibility to participate in the dealer meeting. They were the 10% of the 80% dealers, but the message they heard was being delivered to the 20% dealer crowd not present. Many of those owners and managers left those meetings feeling frustrated. They wanted to implement some of the suggestions they heard, but often did not know how to start or did not have the resources to do so.

The meetings I attended and the conversations I often had with dealers afterward is one of the biggest reasons I started Moti-Vitality. The majority of what we do is work with the 80% dealers who want to be 20% dealers. We hire, train, and manage sales and management professionals for companies that want to grow but do not know how to start. We give them a path to become a 20% dealer. For the past 10 years, we have worked almost exclusively with these dealers of almost every manufacturer.

We hear what they say. They recognize that the manufacturers they represent do not have the resources to give them the same attention that they give the 20% dealers, but when they take a couple of days off to go to a dealer meeting, they want the manufacturers to acknowledge the sacrifice it took to get there. They want to walk away with tools they can realistically implement with the resources they have available. They are willing to take the advice. They are hungry for the knowledge. They are not looking for handouts, but they are asking for help.

Call to Action

At the 2017 Water Quality Assn. Convention & Exposition in Orlando, Fla., I attended an excellent session on hiring sales professionals. As I looked around the room at the attendees, I saw the same frustrations. The 20% dealers were not in attendance because they already had a system that worked for them. The 20% dealers had human resources departments staffed by college-educated managers. The people in that room agreed that the ideas presented were good, but they wanted to hear how to make them work for their tiny dealerships.

So on behalf of the 80%, here is what I am asking manufacturers to do: Look at who is listening to you. Look at who is most dedicated to you. Take a moment thank them for their dedication and then take them into consideration when you are putting together your dealer meeting agendas.

Take a look internally at the professionals you have representing your dealers. Did they all come from 20% dealer or corporate situations? Who do you have on your team that truly recognizes what the 80% dealer needs? Who is incentivized to help the 80% dealer who wants the help? If that person is absent from your team, consider fixing that. Take or leave this advice, but the majority of my clients are telling me that they want your help and are willing to do what it takes, within their abilities, to become your next 20% dealer. 

About the author

Kelly R. Thompson MWS, CI, is president of Moti-Vitality LLC. Thompson can be reached at [email protected].

expand_less