There’s a Chinese proverb that roughly translates to “You can only keep wealth in the family for 3 generations.” The proverb suggests that family businesses often don’t last past the third generation.

Cousins Chris and Jon Eis, third generation owners of single-store John Deere dealer Eis Implement, aim to prove the Chinese wrong. While the pair run the business differently than their fathers and grandfather did before them, they’ve helped usher in 40% year-over-year revenue growth from 2022 to 2023 and improved the dealership’s absorption rate by 25% in that same period.

Chris Eis, president, and Jon Eis, vice president and COO, purchased the business in 2014 as the ag industry was in a downturn.

“That made a hurdle for us, scuba diving underwater in debt, and then dealing with the downturn,” Jon says.

To help guide them as new owners, Chris and Jon worked with Dignify, a local leadership and business consulting firm. Jon says culture had to be No. 1 before they could focus on improving the dealership’s finances. They established 5 core values — Servant Leadership, Competent, Faithful, Idealistic and Enthusiastic — and the slogan, “Eis Implement, Down to Earth.”

“The mantra of down to earth just hit it for everybody,” Jon says. “That’s who we are; that’s how we want to be treated when we go somewhere. And that’s how a lot of the Northeast Wisconsin community is. That’s been the focus for everybody — how do you want to be treated and let’s treat every individual who comes in with that same level of respect.”

With a diverse customer base, Eis Implement is selling to everyone from large ag operations and custom harvesters to municipalities and homeowners. The dealership’s 2023 new wholegoods sales mix broke down to:

• Ag – 39%
• Turf – 21%
• Compact Construction – 30%
• Precision Farming – 10%

After 10 years at the helm, the cousins faced their challenges head on and continue to grow and improve the business.

Focus on Absorption

While Eis Implement notched a 111% absorption rate in 2023, the dealership’s rate has bounced above and below 100% over the decades. When Farm Equipment visited the dealership in 2020, the single-store was operating at 85% absorption. Before the previous downturn in the ag economy hit, it had an absorption rate of over 100%, which then fell into the low 70s as the economy dropped.

Chris and Jon shifted the focus to the aftermarket, in a departure from past generations.

“With absorption, it’s different from what our parents had,” Chris says. “Back then, sales floated the boat for everything, which is odd. Eventually that made a shift where you can sell a $500,000 piece of equipment. It’s a high-dollar item, but not at all high-margin. We knew we had to hit market share numbers because that’s what John Deere wants. We’ve got to hit those numbers, but we know we’re not going to make a lot on that stuff.’”

Whether it’s inline competition or from other colors, every dealer knows there’s pressure to get tractor and combine populations out in the AOR. But as Chris points out, machine population isn’t necessarily a big margin maker.

“You have to make it up on the service and the parts end,” he says. “We’ve done a good job with that. Jon’s done a good job of getting the matrix out there for those guys to do that and hit that.”

For the last 8 years, absorption has been the No. 1 focus, Jon says.

“It’s been years of work,” Jon says. “When you have a number you know you need to improve, there’s the fast way, and then there’s more of the slow and steady way.”

All of the Eis team leads are also frontline staff, which means there’s not much time for sitting back to evaluate numbers and strategize.

“Usually, I’ll come up with a plan, and then I spend some time with everybody going through it to figure out what levers they can pull at their level to help them push it forward,” Jon says.

The addition of a dedicated commercial aftermarket division and naming Tyler Hochkammer as the commercial service manager has also contributed to moving the absorption needle. Since adding the commercial division, compact construction labor sales grew 247%. Hochkammer also recently became a Certified Deere Instructor. (Read more about Hochkammer’s contributions on Farm-Equipment.com/0724.)

Solving the Parts Department Equation

Spader Business Management consultant Bill Bohmer helped inspire changes in the parts department that moved the ball forward to help improve the absorption rate. Bohmer writes a semi-annual report on how the dealership is doing.

“I remember the first one I got, many years ago. It said, ‘You have too many people in your parts department,’” Jon recalls.

He struggled at first figuring out how to solve the problem — considering how busy the department was.

“What can we do differently to transform this? A big piece of it was just me stepping away from parts. Teaching them what needs to be done and letting them run with it and me just overseeing helped,” he says.

To help improve the parts department’s efficiency, Eis Implement hired 2 part-timers to pick orders so the full-time parts employees stay at the counter working with customers and improving sales and responsiveness. Photo by: Jeff Lazewski

While it seems counterintuitive to Bohmer’s comments, the solution was hiring additional parts staff. At the time, the parts counter staff was picking orders, putting them out for delivery or on the pickup shelf and billing everything out. Jon says what they needed to figure out was how to keep the high-performing parts team at the counter. Today, Eis has 2 part-time parts employees who come in early mornings to pick orders, check in next-day orders, put away stock orders and handle some of the more tedious inventory tasks. That keeps the full-time parts employees at the counter where they are most efficient, he says.

Eis also hired another part-timer for its free parts delivery service who makes deliveries every day of the week. Another individual splits his time between parts deliveries and customer service representative (CSR) responsibilities.

“What can we do to help generate something more besides parts delivery?” Jon asks. “We’ve had a couple different individuals in that CSR role over the years, and we finally found our sweet spot. It’s all about the relationship, meeting clients. We got a gentleman who’s a retired police officer, so he’s good with communication and meeting individuals. He’s hit it out of the park with getting onsite with all different types of businesses — farmers and commercial businesses.”

Jon says it’s been a great dual role because while he’s delivering parts, he’s also drumming up recurring revenue.

Improving the efficiency in the parts department was a big part of improving Eis’ absorption rate. Focusing on inventory management has been another factor. For the last 3 years, Eis has been focused on improving its fill rate.

“The dynamic of having to stock parts for a 4020 tractor all the way up to combines and choppers, the whole gamut, and lawn mowers, it’s tough to spread your money across all these different product lines,” Jon says.

Eis Implement’s No. 1 focus for the last few years has been improving its absorption rate, which in 2023 hit 111%. Those improvements have come through a focus on efficiency and raising the shop labor rate as needed. Photo by: Jeff Lazewski

The dealership has been working with Deere through its RPM program. Deere has an analyst that Eis can contact who helps with running reports and sharing metrics for the dealership. In the last 2 years, Eis made a push on its fill rate. The focus is paying off, and customers appreciate the parts on hand, says Jon.

Available Income

Available income is one of Eis Implement’s primary metrics. When Chris and Jon first joined their 20 Group, they landed toward the bottom of the rankings on available income. They’ve since worked their way to the top.

Chris adds that outside of market share and a few other things, it can be hard to give the sales team something to focus on.

“When you put available income out there and say this is where you need to shoot for and you’re watching that number,” Chris says, “you see how much it takes to get to that number. It really opens some people’s eyes.”

Available income is a metric that can be measured across all departments. For sales, there are years when Eis exceeds the metrics and some years where they don’t hit it, but Chris says the dealership as a whole consistently attacks it.

“We’ve really tried to keep it simple,” Jon says. “Available income in Spader terms is our margin. So at the end of the day, what’s our margin? We like the word available income because it makes a little more sense to the average employee.”

Available income is calculated the same as margin — by subtracting the cost price from the selling price and dividing by the selling price.

Jon says it’s important that the employees understand how they can contribute to reaching the goal for their department and the dealership as a whole. To help at the department level, the conversation focuses on how the team can get through work orders faster.

“We challenge them. For example, if we can improve our efficiency here, we’ll stick our neck out and we’ll get a service truck for this,” he says. “We did that with our inspection building. If we can get enough inspections here, we’ll put up the building so that we can keep them here in the off-season. Keeping it simple has been a big part.”

This year, Eis set up dashboards using Salesforce (through Anvil) so the sales team can track its progress and where its available income numbers are. Chris says it made a difference for the salespeople to see their numbers for themselves on a daily basis.

“This is a business where there’s so many ups and downs. You have no control over certain things,” he says. “You don’t have control over the weather. You don’t have control over commodity pricing. There’s so many things you don’t have control over that affect you on a year-to-year basis. You try to keep the lows minimal so that you don’t have such huge troughs.

“I think we do a pretty good job of that. But you’re going to see some movement there obviously. Now we’re in one of those downturns where inventory levels are getting higher and prices on the new stuff have gotten really high.”

It’s always a balance, and Eis Implement’s diversification has helped keep that balance. The lawn and garden and commercial end of the business is going strong, Chris says.

“Our commercial guy is just humming. He is selling so many skid loaders and wheel loaders,” he says. “I’m surprised. I would’ve thought that market would’ve come down some, but it hasn’t. It’s been really good. When the farm market takes a dip, if you can get the consumer market and the commercial market to increase, you can offset that a little bit.”

Along with available income and margin, Chris is also monitoring inventory turns.

“One of the biggest things, as a single store, is you have to make sure you’re keeping your inventory levels in line so that you’re not paying out the nose for interest,” he says. “We try to have good turns, which we’ve done well with.”

Revenue Growth

While Eis Implement’s revenue growth from equipment sales benefited from high on-farm income over the past few years, the dealership was firing on all cylinders to grow aftermarket revenue, too. Eis added technicians and currently has 15 on staff.

“Just bringing in 1 technician, that’s $150,000 in available income,” Jon says. “Plus, they’re selling parts, so you can make double that. We’re bringing in an extra $300,000 in available income per tech.”

Eis also grew its margins and raised its labor rates. Jon says it’s a difficult conversation to have each year when they review their shop rates, but it’s a universal need across industries.

Jon says the dealership had to get comfortable with higher labor rates if Eis wanted to maintain its personnel expense ratio and hit its service metrics.

“If we want to be able to keep our techs, we’ve got to pay them,” Jon says. “That’s been an eye opener for all of us. But it’s what we had to do. Just reading articles about what some of the other dealers have done over the years, I see it working. We had to do that, too.”

Chris adds that the precision farming department’s profitability has been instrumental as well.

“I don’t know that there’s anybody in our dealer group that’ll tell you their PF department is profitable, but ours is,” he says. “That has a lot to do with the guys we’ve got. I challenge anybody to find somebody better than the guys we got. I don’t think you will.”

As Chris and Jon look ahead at the challenging times of ag set in, they’re readjusting their goals and focusing on their people and what aspects of the business they can control.