Consulting. Tractor Monitor Sales excellence in farm machinery sales using the example of tractors. A study by MBtech Consulting GmbH.

Transcription

1 Consulting Tractor Monitor Sales excellence in farm machinery sales using the example of tractors. A study by MBtech Consulting GmbH.

2 Preface Management Summary 3 Dear readers, dear customers, Objective and design of the Tractor Monitor 2011 study Overall conditions: Developments in agriculture Overall conditions: The tractor market In spite of the continuous decline in employment and the number of companies in the agricultural sector, the total cultivated area in Germany remains nearly constant. As a result, there is a ongoing trend towards increasing company sizes, leading to a rising degree of professionalization of the end customer. In addition, technological trends force the manufacturers and their dealer-networks to face changed needs of their customer base and therefore to adapt their sales processes. In doing so, it is important to identify key areas for action from the customers perspective and to take the right measures for the future. Beside the product itself, the quality and efficiency of the distribution system is of essential significance for the purchase decision. Sales success 8 Customer relationship management 9 Customer relationship management: Dealer performance 10 Pre-purchase-phase 11 Sales advisory and purchase decision 12 Order and delivery 13 The study Tractor Monitor 2011 Sales excellence in farm machinery sales using the example of tractors faces this challenge and illustrates specific levers for optimization. Similar to the previous study of 2009, we have analyzed the tractor market in Germany, as a representative core segment and one of the world s major markets. The aim of the study in 2011 was the detailed analysis of the sales processes of the six largest tractor manufacturers in Germany, as well as the identification of success factors and areas for action from the dealer and customer perspective. So-called Best in Class examples show already existing industry-approaches. The study focuses on customer relationship management, as well as on the sales phases pre-purchase, sales advisory and purchase decision and order and delivery. This summary gives an impression of the methods used for the approach and the levers on the way to excellence in agricultural equipment sales. The findings and measures are also applicable to other segments. In case of any questions and detailed discussions about the study you are most welcome to contact us directly and we look forward to an active exchange of ideas. Summary and recommended actions 14 With best wishes from Sindelfingen Contact, Disclaimer 15 Dr. Michael Müller, CEO MBtech Consulting GmbH

3 Management Summary 1. Introduction After the crisis in 2009 the agricultural machinery sector returned to positive growth in The change of the customer structure and the increasing cut-throat competition continued. This and more industry trends have a significant influence on sales and after sales of tractors. A further development of sales processes is requested due to complex products and a changing demand. In image barometers and dealer satisfaction studies, the performance of manufacturers in sales and after sales is judged differently and questions regarding concrete optimization approaches remain open. 2. Object of investigation and design To judge the sales performance of the agricultural machinery manufacturers, surveys have been carried out with end customers, to identify and prioritize the critical success factors in the sales process. Based on this, expert interviews with dealers of the six largest tractor manufacturers have been accomplished to capture their level of satisfaction. Major elements were selected and analyzed. 3. Study results In context of the survey results, considering customer relationship management, dealers have identified a need for action across all brands in the areas of customer data management and customer contact management. Furthermore, there is great potential in the use of marketing tools to influence customer behavior. In the pre-purchase-phase, there are significant differences between the quality of the producer websites and in the regulations of demonstration tractors. The topic sales advisory and purchase decision shows the high relevance of the salesman qualification from the customer perspective, as well as potentials in the control of the salesmen from the dealers perspective. In the phase order and delivery it becomes apparent that delivery times show variations and that the delivery reliability is of major importance for the customers. Summarized, there are different fields of action, from dealer and customer perspective, with direct influence on the sales success. The potential fields are either relevant for all manufacturers, or manufacturer-specific. This potential should be addressed and measures should be taken sustainable. 2 3

4 Objective and design of the Tractor Monitor 2011 study Objectives of the study Before the detailed results of this study are being discussed, the latest industry developments, which have an impact on the area of tension between the manufacturers, dealers and customers, are considered. The study is mainly focused on the German market and its current conditions. If there are significant trends, developments outside this core market are considered aswell. On this basis, success-relevant characteristics in the sales process are defined for the following topics: 1. Identification of success factors and areas of action from the customer and dealer perspective 2. Assessing the performance of the leading tractor manufacturers and mapping of Best in Class examples 3. Derivation of recommended actions for achieving sales excellence Systematic approach of the Tractor Monitor 2011 study MBtech Tractor Monitor 2011 Fendt John Deere Claas Customer Perspective Dealer Perspective Excitement Performance Basic + - Importance Manufacturer A Manufacturer B Manufacturer C Manufacturer D Manufacturer E Manufacturer F Recommended Actions Customer relationship management Sales network 7,0 7,5 Manufact Online presence 5,0 MBtech Consulting Tractor Monitor 2011

5 Study design To identify the customer and dealer perspective, more than 100 qualitative interviews with contractors and farmers as well as qualitative interviews with 25 dealers of the leading tractor manufacturers were conducted. The study was carried out in the period between June to September Pre-purchase-phase Customter data management Contact management Marketing operations Customer relationship management Sales advisory and purchase decision Order and delivery Focus of the study Based on previous conversations with dealers, selective criteria in four core areas were analyzed (illustrated right). Sales network Online presence Availability of demonstration tractors Salesmen qualification Sales training Product configuration Delivery times Delivery reliability The focus was specifically chosen for tractors as core business of agricultural machinery dealers. The survey is focused on the six leading tractor-brands in Germany. In addition to the qualitative answers consumers and dealers had the opportunity to evaluate their satisfaction on a scale from 1 (low satisfaction) to 10 (high satisfaction). New Holland Case-IH Deutz-Fahr OEM Performance Assessment Dealer Frequency (year) Telemarketing Direct mail customer visit Brand A Brand B Brand C Brand D Brand E urer A Best in Class 4 5

6 Overall conditions: Developments in agriculture Development of the farm sizes The number of farms in Germany decreased sharply since Within the last 10 years, there was a decline of about 30%. Looking at the farm size structure of agricultural companies, it is established that in particular small businesses with up to 60 ha are becoming less important. On the other hand, farms with a size of ha are increasing. This means that there is a clearly identified trend towards larger farms, which indicates that farms with smaller land are difficult to operate with profit. The average farm size is still at about 56 ha, with two tractors in use. As a result, the customers decide in favor of agricultural concepts that offer an optimized cost/benefit ratio. Employment in the industry Due to the concentration process which is actually taking place in the agricultural sector, the number of employees and the structure of the workforce have also changed. While the number of family workers is declining, the amount of temporary contract workers increases. However, the overall number of employees in this sector is decreasing. In 2010 approximately 1.1 million workers were employed. Thus, the number of employees decreased by about 180,000 since Profit situation and origin The large increase of profit in agricultural companies during the years 2008 and 2009 could not be maintained. The companies had to accept a decrease of the average profit to about 35,000 Euro per farm. Currently they are increasing again. Nearly 60% of the revenue has still its origin in products of animal husbandry. Development of the number of farms forecast Source: Federal Bureau of Statistics and MBtech Consulting GmbH Agricultural subsidies from the EU Subsidies play a key role in customer decisions whether or not to purchase new agricultural machinery. There are several distinctions between various public aid programs operated by the EU, all of which are aimed at a common agricultural policy. The goal of this policy is to establish and maintain stable, sustainable and competitive agriculture within the EU. Environmentally friendly measures are particularly supported by these programs. In 2013 there will be changes of agricultural support conditions, which could include a reduction of the EU budget. Summary: The size of farms is growing and there is a smaller amount of farms, which creates demand for larger and more machinery. Another development is the increasing demand of environmentally friendly tractors, partially due to the Tier-4 emission standard. MBtech Consulting Tractor Monitor 2011

7 Overall conditions: The tractor market AGCO CNH SAME DEUTZ-FAHR CLAAS JOHN DEERE ARGO Fendt Massey Ferguson Challenger Valtra Lamborghini Deutz-Fahr Hürlimann Same McCormick Landini Process of concentration in the farm machinery segment Case IH Steyr New Holland Agriculture The tractor market in Europe The agricultural machinery industry is characterized by a strong concentration process. The tractor market is dominated by six major companies, each with different brands. Regarding market share, John Deere is market leader, followed by the companies CNH and AGCO. In Europe, the German market is placed second for tractors in quantity with 28,600 new registrations in 2010, after France (about 31,300) and ahead of Italy (approx. 23,300). Regarding the offered product portfolio or the manufacturers strategies, there are definitely differences between the brands. New Holland for example is characterized by a wide product range, in contrast to Claas, which offers the smallest portfolio. The tractor market in Germany Since the outstanding results of 2008, the tractor market in Germany has faced a decline. For 2011, however, the market is again expected to grow by 14%. Looking at the engine-power of new tractors, a rising level of customer requirements can be noticed. For example, one third of the new models have more than 110 kw engine-power. This development descends from the need of more productivity, in order to manage the increasing field size more efficiently. It can also be observed, that vehicle-stocks are getting older, although they have almost decreased by 50% since Technological requirements Increasing requirements also exist regarding technology of the vehicles. Keywords are precision farming and tightening of emissions standards, which require further development of the vehicles. In this context, alternative propulsion technologies (e.g. biogas, fuel cells, etc.) and the electrification and networking of vehicles are gaining in importance. Selected purchase criteria: Reliability low Importance high Purchase criteria The adjacent figure shows an extract which purchase criteria have the highest or lowest importance for the end user. In this illustration you can see that not only product features affect the purchase decision, but also the focus is on the distribution systems. Salesman qualification Durability Fuel consumption 33 parameter Cost of repair Vehicle delivery Delivery reliability Driving systems (GPS) Offerings for leasing Online presence Summary: In addition to product features, aspects of the distribution system increasingly have significant impact on the purchasing decision. As only a few companies, mostly multi-brand companies, dominate the tractor market, differentiation through the distribution system is becoming more and more important. Product Distribution system 6 7

8 Sales success Measuring success in the sales process Before starting with the detailed analysis of the sales process, it is necessary to understand, in which sales phases the customer s interest stops. The following figure shows a cross-brand survey of the sales funnel based on dealer information to the respective success rates for each phase. Overview of the sales funnel 100 % 78 % 68 % 27 % Over all brands, an average of 78% of all the interested are willing to do a test drive After that, 68% of the potential customers request an offer and 27% sign the purchase contract. 50 Best 25 Average Worst Interest Test drive Offer Contract Within a cross-brand analysis, most of the deals are lost in the timeline between the offer and the contract. More detailed analysis of the manufacturer level shows that there is a significant difference in success rate between the individual process steps. The illustration shows the potential between the best and the worst performance. Duo to the present results, the reasons for these deviations are mainly in the organization and implementation of sales processes. Based on this background the Tractor Monitor 2011 focuses on the performance of the leading tractor manufacturers. MBtech Consulting Tractor Monitor 2011

9 Customer relationship management The analysis of the sales funnel shows that the performance of the sales processes and systems of tractor manufacturers differs widely. Customer data management Contact management Marketing operations A key area is the comprehensive customer relationship management of the manufacturer or dealer. Across manufacturers only a moderate satisfaction was expressed by the dealers. The largest areas of activity are seen in the contact and customer data management. Manufacturers are particular challenged to provide IT systems for effective and efficient support of customer communication. Pre-purchasephase Customer relationship management Sales advisory and purchase decision Order and delivery From a customer point of view, the issue of dealer or manufacturer support is a one-dimensional requirement, where competitors can clearly be differentiated. In addition to the sale of new tractors, there is also the sale of services which is of concern in this criterion. Excitement Performance Basic Customer perspective + - Importance Customer relationship management of the dealers Dealer satisfaction Ø 6,2 Manufacturer A 6,5 Manufacturer B 7,0 Manufacturer C 5,3 Manufacturer D 5,8 Manufacturer E 6,5 Manufacturer F 6,0 Classification of importance for the customer dissatisfaction indifference satisfaction The customer statements consist of two dimensions: Importance of the purchasing decision criteria and Requirement of the purchase decision criterion: it is divided in basic requirements (these attributes are taken for granted when fulfilled but the result is dissatisfaction when not fulfilled), performance requirements (these attributes result in satisfaction when fulfilled, but dissatisfaction when not fulfilled) and excitement requirements (these attributes provide satisfaction when achieved completely, but do not cause dissatisfaction when not fulfilled) 8 9

10 Customer relationship management: dealer performance Dealer performance comparison: Contact management Many dealers do not contact their customers and potential customers regularly. This is often due to a lack of sales personnel and insufficient support of IT-systems. A connected customer management system between producers and dealers would help to handle customers systematically and more efficiently. In addition, this ITsystem can be used indirectly to control the seller and to verify and document customer contacting. Across all brands, dealers of different size differ greatly in their frequency and type of media used to contact their customers. In this area, it is often due to a lack of standards that dealers don t work on the market at an optimum cost-benefit ratio. In initiating and implementing customer loyalty programs, the dealers are usually left alone. That is the reason for transfering ideas and solutions from the automotive industry to the agricultural machinery trade. Schematic illustration of the implantation of the contact management Percentage of customers who are regularly contacted by their dealer (average over all asked dealers) % % Dealer Potential customers Brand A Brand B Brand C Current customers Frequency (year) Telemarketing Direct mail Customer visit The manufacturer doesn t provide us with an IT-system to sale tractors. In this area there is a considerable demand. Brand D Brand E Quotation by a general manager of a distribution company MBtech Consulting Tractor Monitor 2011

11 Pre-purchase-phase In the pre-purchase-phase of the purchase-decisionprocess customers make important preliminary decisions for the following process steps. A selected aspect of the pre-purchase-phase is the online presence: Customer relationship management This issue shows a very heterogeneous picture among the manufacturers. Particularly noticeable is the negative assessment of two brands. From the customer point of view, the online presence is taken as self-evident, which can result in large dissatisfaction for poor implementation. Pre-purchasephase Sales network Online presence Availability of demonstration tractors Sales advisory and purchase decision Order and delivery There is potential for improvement for the manufacturers to support their dealers with online presence. In this section there are only a few satisfactory solutions. Excitement Performance Basic customer perspective + - Importance Online presence of the manufacturers Dealer satisfaction Ø 8,0 Manufacturer A Manufacturer B Manufacturer C 6,8 Manufacturer D 5,8 Manufacturer E 8,5 9,0 9,8 Manufacturer F 8, dissatisfaction indifference satisfaction We would welcome more support regarding our website. But the solutions must be flexible, because in addition to the tractors, we also sell other machines in that case we don t want to be too restricted from our tractor manufacturers. Quotation by a general manager of a distribution company 10 11

12 Sales advisory and purchase decision The pre-purchase-phase is followed by the sales advice and purchase decision. During this phase the main focus is on the sales people, who have an essential influence on the purchase decision of the customer. Excitement Performance Basic Customer perspective + - Importance Pre-purchasephase Customer relationship management Sales advisory and purchase decision Salesmen qualification Sales training Product configuration Order and delivery Salesmen qualification product knowledge Dealer satisfaction dissatisfaction indifference Ø 8,4 Manufacturer A 8,5 Manufacturer B Manufacturer C 9,0 8,8 Manufacturer D Manufacturer E 8,3 8,3 Manufacturer F 7,3 satisfaction Highly qualified salesmen regarding product knowledge are a critical success factor in the business field of new tractors. This issue has a strong influence on the buying behavior of the customers, hence highly qualified salesmen are a basic requirement for them. In general, the dealers show a high satisfaction with the qualification of their salesmen. Nevertheless, the dealers see further potential for improvements regarding training programs. If the seller can t convince me personally and professionally, then I will not buy the machine. Quotation by a farmer MBtech Consulting Tractor Monitor 2011

13 Order and delivery The phase of order and delivery is situated at the end of the sales process. The performance in this phase shows a high importance for the preliminary purchase decision as well as for subsequent transactions in the future. The delivery times and especially the delivery reliability are fundamental aspects in the ordering and delivery process. Overview: Adherence of the agreed delivery dates The good economic situation provides a maximum order amount for the manufacturers, what causes not only longer delivery times but also larger variations in delivery reliability. Across all manufacturers, only 76% of the promised delivery dates can be fulfilled. Failings in the delivery process are often compensated by the dealers by maintaining a high inventory of machines. Pre-purchasephase Customer relationship management Sales advisory and purchase decision Order and delivery Herein, only two manufacturers got satisfying results and thus are able to differentiate from their competitors. The adherence of delivery dates is a very important basic criterion that influences the purchase decisions of customers in a significant way. In this context the supply of information and reliable production planning by the manufacturers are key fields of action. Excitement Performance Basic Customer perspective + - Importance Delivery reliability Dealer satisfaction Hersteller A Hersteller B Hersteller C Hersteller D Hersteller E Hersteller F 6,0 Delivery times Delivery reliability Ø 7,4 9,0 9,3 6,5 6,8 6, dissatisfaction indifference satisfaction Fundamental process improvements can avoid costs and dissatisfaction for dealers and customers. Adherence of the agreed delivery dates Ø 76 % Manufacturer A 88 % Manufacturer B Manufacturer C Manufacturer D Manufacturer E Manufacturer F 60 % 70 % 72 % 75 % 93 % 12 13

14 Summary and recommended actions As results of this study, suggestions for improvement can be deduced for distribution systems and for the sales success. These can be relevant for the whole industry or for specific manufacturers. To identify the most important fields of action, in-depth analyses were made on brand-levels. In the following figure, the performance of one manufacturer is shown as an example: Example: GAP-analysis manufacturer A in comparison with the branch Customer relationship management Sales network Online presence Rule of demonstration tractors Salesman qualification Training offerings Product configuration Delivery times Delivery reliability low dealer satisfaction high ,0 7,5 5,0 7,8 9,5 9,5 8,5 7,5 9,3 Manufacturer A Importance (customer perspective): Requirements: Basic Performance Excitement Best in Class This figure indicates all areas, in which comparisons between the customer and the dealer perspective were made. On the left hand side the customer expectations for each area are shown and on the right hand side the satisfaction of the dealer with the manufacturer is presented. The illustration shows areas in which the manufacturer has potential for improvement. Within this example it is apparent, that there is, among others, an urgent need of action for training offers. As mentioned in the chapter sales advisory and purchase decision, a well-qualified vendor is a prerequisite for the customer. Furthermore customers rank this area as one of the most important purchase criteria. In contrast, dealers evaluate the offer of trainings only with an average satisfaction. An in-depth analysis shows concretely which options for improvement the respective manufacturer has. Fields of action In addition to brand-specific fields of action there are potentials for improvement, which could be identified over all manufacturers for the following topics: Professionalization of customer data- and costumer contact management by the use of lead manage ment and CRM Support of the dealers with online presence by the manufacturer Alignment of the training program to the needs of the dealers Mandatory supply of the dealers with information and adherence of the delivery dates in the orderingand delivery process Regarding these topics, MBtech can offer implementation-oriented solutions, due to its extensive experiences in the automotive industry. MBtech Consulting Tractor Monitor 2011

15 Contact Disclaimer: MBtech Consulting GmbH has compiled the contents of this trend analysis with the greatest possible diligence, to the best of its knowledge and with the assistance of established scientific methods. All of the information which is not based on historical facts or quoted sources consists of statements or prognoses which, with regard to their correctness, are subject to influences which lie outside the control of MBtech Consulting GmbH. MBtech Consulting GmbH does not assume any responsibility for any damages which occur as a result of decisions which are made on the basis of the contents of this paper. Frank Schlipf Principal Engineered Products MBtech Consulting GmbH Telephone: frank.schlipf@mbtech-group.com Martin Schwarz Project Manager Customer System MBtech Consulting GmbH Telephone: martin.j.schwarz@mbtech-group.com This study was developed in cooperation with: Markus Wiest Lukas Fontani Maximilian Schupeck Julian Statt MBtech Consulting Profile: Who we are MBtech Consulting is a member of the MBtech Group. We are a consulting firm that operates internationally, in Germany, Austria, the United States, China and at other project sites worldwide. We combine lean consulting know-how and global practical experience into valuable specialized knowledge. What we stand for MBtech Consulting stands first and foremost for business strategies that deliver measurable results, are implementation-oriented, and achieve lasting impact strategies made possible by close dovetailing in terms of strategy and operations. All of our business strategies are based on the lean enterprise approach, which is used along the entire value chain, enabling longterm global competitiveness. Our clients benefit from leveraging the synergies created in the engineering environment of the MBtech Group. Our consulting teams are specifically composed to guarantee the ideal combination of consulting expertise and extensive mobility know-how. When it comes to processrelated research topics, we also work closely with leading academic and scientific partner institutions. What we offer There s no substitute for experience and professional expertise. That s why our consultants come from well-known corporate consulting firms or have already held management positions in the automotive industry. They know exactly what counts: feasible, effective concepts and concrete results. MBtech Consulting: The best consulting address on the way to lean enterprise 14 15

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