Dan Scheuers: I’m co-owner of our 2 store ag equipment dealership, one in Watertown and one in Waupun, Wis. I supervise the parts and service departments in both stores, plus I’m active as a service manager in Waupun. I hold a little bit of a unique position in ownership. In my position, you’re usually in accounting or you’re in sales, but I’ve been in service all my life. 

Marty Iten: I grew up in the automotive world. My family owned a car dealership in Minneapolis. So, I was brought up through the service. Yeah, most owners kids are brought up through the sales side of it — in financing and sales — and I was brought up on the service side of it. We were also a big player in commercial vehicles.

Then I got out of the business in 2006. I worked down in Florida as a commercial manager, and then I ended up here, 3 years ago, as a director of commercial sales.

I have 5 stores that I’m responsible for and the sales team. Our commercial side is more similar to your business, because of our commercial customers, just like farmers for you.

Scheuers: So your customer uses your product to make money vs. the car guy that drives out of here, and it’s…

Iten: A personal purchase, yes. For our commercial customers, it’s an ROI, that vehicle, to their business. That’s what I like about our industry in the commercial side of it, because we’re dealing business-to-business. The business owner is a logical buyer, where your typical person walking through, just buying a car, it’s more of an emotional purchase.

I like talking to business owners about their business and how we can help them with their fleet, the cycle of their fleet and to keep it fresh. So this leads into a lot of different financial options that we provide. 

Scheuers: Farmers are the same. They’re there because they need that piece of equipment to make money. We also deal a fair amount with what we call consumer product people. They buy the small, compact tractor, and they have to have that vehicle because they’re home on the weekend, and they have to have it to move their dirt.

In our industry, in my opinion, there’s still too many of us because of our quantities that we sell. If you need a 120-horsepower tractor, or a 150-horse tractor, you can go on the internet, and you can find that same tractor five different places, within 150 miles. So what the consumer says is, “Marty, you’ve got that one for sale. Kim, you have that one for sale, now can I ...”

Iten: We deal with it every day.

Scheuers: “Let’s see how much we can get that for.”

Iten: Yeah.

Scheuers: I buy trucks and one of the things I find unique is I can never find two trucks that are the same. I wish they would do that in our industry, so maybe I’d compare.

Iten: Right.

Scheuers: You got A, B, C and D, and we’ve just got one tractor.

Iten: So you don’t have a lot of disparity among your product line?

Scheuers: Well, let’s say it’s a New Holland. The model that I’m talking about, there might be one sitting at 4 lots. There might be three different option bases. We try to make money on every product. I know you do, too. We find people listing them on the internet for 10% below cost. So what do you do? 

Iten: Yeah, it’s the same, and we deal with it every day. The internet is great, and it’s great for the consumer. They can get a lot of information, and pricing to what they think it should be. Reality of what the real incentive is, at the time that they purchase, may be better a lot of times.

Scheuers: We try to drive home service, because our equipment is more service-relevant. If you need an oil change for your car, you can go 50 places in Waupun to get an oil change. Our product, they either do it themselves, or we’re the only ones. 

Iten: Yeah, service is really where we maintain our relationship with our customer. So we always need to be on our toes, and on top of our game, with commercial. We do things like “next available bay,” just to turn that customer within a 24-hour period. Within all of the 5 stores, that’s what we strive to do, with all of our commercial customers.

Scheuers: So if he comes in, within 24 hours you’ll have his oil changed? That type of thing?

Iten: Yeah. Depending on what it is. A diesel and 10 quarts, and all the maintenance items, and so-forth, could take an hour or hour-and-a-half to get done, but we’ve got to get them in and get them back on the road. You may use the same term, it is “up time.”

Scheuers: Absolutely.

Iten: In our businesses, when there’s down time, it negatively affects the profitability of that company. We understand that, and so it’s very important.

Scheuers: So what do you do in your industry, if I didn’t buy my truck from you, I bought from somebody else, but I want my oil changed in an hour?

Iten: If they bought it from a competitor, and they’re servicing with us, we’re going to treat that customer the same as if they purchased it from us, and it’s our opportunity with that customer to win their business. So there’s some similarities.

Scheuers: That’s what we try to do, too, because that’s where you grab these guys. That’s where you get their attention. When you can say, “Yeah, we’ll fix that for you.” The customer will think, “Yeah, well I don’t have to go 150 miles.” Hopefully next time, that becomes relevant to them.

Iten: I’ve seen enough statistical data from Chevrolet, FCA, Ford, that shows us that if we take care of the customer, not only are they repeat service customers, but their opportunity to purchase from your dealership is extremely high. So there’s an emphasis on our service operations, to make sure that we service our customers right, the first time, and on time. And, following up with the customer.

Scheuers: So you said most of your technicians are on flat rate. Where, by us, there are dealerships that are on flat rate, but it’s a mix, because we work on product that’s 30-40 years old sometimes. It’s almost impossible to do flat rates. Busted bolts, broken pieces.

Iten: We see that on the medium-duty side dealerships. But, as that business grows, they’re going to need to get to an hourly rate, and get off of flat rate. In that business, our competitors are hourly. So it’s hard when you’re trying to compete, and you’re a flat rate, and they’re hourly, and they’re making $1.25 more, right?

So, it’s an internal, structural change, and it will come in time. That’s just accumulating more service business, and eventually that will …

Scheuers: Do you think that’ll shift back to hourly?

Iten: It will. It needs to.

Scheuers: Because the technicians can’t stand around.

Iten: Right, and for us to attract technicians, we need to go to hourly.

Scheuers: Interesting ... because in our industry, we’re being pushed more and more to flat rate,

Iten: So our light duty and car that’s different; that’s all flat rate. I don’t see that ending, but on the medium duty, the bigger trucks, it’s hourly. So what’s your labor rate?

Scheuers: $110.

Iten: Here, it’s $126.

Scheuers: I’d love to be at $140.

Iten: Do you have to go through the manufacturer then, on warranty? You have warranty, and then you have retail.

Scheuers: Right. Let’s say I would go to $140, in order to get labor rate from the manufacturer at that rate, I must prove to the manufacturer that I bill everybody else at that. So, I have to provide five work orders per week, for a month. Then, they’ll up your labor rate to match.

Iten: Right, so it works very similarly for us.

Scheuers: I can change it once a year with the manufacturers, I think. You can ask for an increase once a year, but you must prove it. So then, another thing with warranty is ... return rate. Warranties of course are all of course flat rate, so you get $125 of labor to do this job, or you get an hour. You’re at $125. Now, does that labor rate reimbursement change, according to dealer standards?

Iten: No.

Scheuers: Ours does. If you’re not a performing dealer, you might get $80 bucks. If you’re a performing dealer, you might get your full, $110, plus another 10%.

Conversations in Ag: Introduction

Commercial Vehicle Business vs. Ag Equipment

Shortliners Ask: Is Ag’s Future Autonomous?

Women Add a Different Perspective to the Sales Process

2 Industries, 1 Problem: Recruiting Technician

33 Years Later: Lessons Learned Make Today’s Dealers Stronger

Hemp’s Future: What Will Happen When the Dust Settles?

Early Experience & Advantage in European Brands

Two Sides Examine 2-Step Distribution

Overcoming Adversity Through Technology & Diversity

Getting Real: Farmers Growing Too Much Corn...

Research: Can It Be a Dealership’s Business?

Dealer Structures: Europe, North America a World Apart

Trading Places: Farmer vs. Dealer Expectations

Dealer & Economist Compare Notes on Challenges Global Economy has on U.S. Agriculture

Avoiding Hefty Fines When Doing Business Out of State

Thinking Ahead: How Should Dealers Prepare A Succession Plan?