Commercial Playbook - Chapters 1-6

MOBILITY BY THE NUMBERS: IDENTIFYING DEALER OPPORTUNITY

COMMERCIAL

MOBILITY BY THE NUMBERS: IDENTIFYING

DEALER OPPORTUNITY

OPPORTUNITIES

A review of sales data from 2022 reveals many dealers continue to make significant profits despite persistent inventory challenges. However, with so many factors in play, such as rising interest rates, high gas prices, EV stimulus credits, costs mandated by OEMs to “play” in their EV lineups, and the potential recession looming, it’s also critical to a dealership’s future success to formulate plans and recognize that the winds of change are blowing.

That means that savvy dealers are looking ahead and seeking out new revenue opportunities. Some of these opportunities may include additional inventory types or customer types to whom they can sell, or ways to bolster the markets they already serve. Local and regional business customers are one avenue to aid with continued growth because they offer so many different revenue streams.

Commercial vehicles are used by industries large and small, supporting approximately 80% of the GDP.

Commercial/fleet sales are a profit multiplier for your bottom line. However, commercial business differs from the retail business in many positive ways. Consider these impact points:

Upfit vehicles [those customized with specific configurations needed for different businesses, such as a plumber’s truck or a refrigerated van] traditionally sell at much higher prices than retail vehicles

Business shoppers differ from retail shoppers in an important way - they aren’t looking for a vehicle simply because they want one. Rather, they are looking to purchase a vehicle for their business because they need it; their livelihood depends on it . As a result, when you prove your ability to help them, the likelihood of gaining a loyal customer is significant (commercial customers are up to 5X more loyal than a non-business buyer).

Those same business customers also have personal vehicles, along with employees, family, and friends with vehicle needs. As you can see, the odds for ancillary sales are in your favor.

There are many additional revenue streams - and that list is growing - for your dealership when you’re part of the commercial vehicle space. For example, small businesses typically don’t have their own fleet servicing team, which means your service department can fill this role, which contributes mightily to your profits. Additionally, commercial departments can provide a pathway to expansion into the EV market and autonomous vehicles, along with mobility and telematic solutions.

And when considering these additional revenue streams, it’s important to note that OEMs are also developing ways to help dealers grow their revenue opportunities in the commercial vehicle market. Current areas with new product and service offerings include:

Service: specialty maintenance, fleet warranty and mobile service.

Software: telematics/vehicle insights, safety and security.

Finance: commercial lines of credit, lease programs and repair/fuel cost controls.

Charging: depots and home-based.

The key takeaway? If you aren’t in the commercial space today, you should dive deeper and look at the possibilities. And if you are already selling to businesses, when was the last time you reviewed your strategic plan to ensure you were capturing all the market share and business available?

As the saying goes, “Hope is not a strategy.” Instead, researching data points and incorporating those into your plan is the way to

go. [And, as you read on in this and subsequent chapters, you’ll see we offer numerous data points, as well as recommendations for where to find information to assist you.] Not only does data show historical performance, it helps you establish a baseline, from which you can launch your plan for growth. And don’t forget to factor in industry specific experience (both your own and that of trusted advisors), as well as specifics related to your particular market.

We’re seeing numerous dealership customers with commercial department performance outpacing retail sales results.

Commercial Sales Retail Sales

UNIQUE INSIGHTS

As the only company that collects the data that offers national visibility into commercial vehicles, especially those customized after the chassis or van is manufactured by an OEM, Work Truck Solutions® has a unique insight into industry growth, business trends and evolving opportunities, all of which affect a dealer’s profitable sales of these vehicles. With more than 10 years specifically dedicated to providing solutions for the commercial vehicle industry, our history and data enable us to track industry growth, trends and evolving opportunities. These metrics and knowledge enable Work Truck Solutions to offer insights that impact a dealership’s commercial vehicle department success.

Even though commercial vehicle inventory numbers through the first three quarters of 2022 mirrored much of the overall automotive vehicle industry, we’ve tracked some revealing trends.

Average prices for new commercial vehicles have remained relatively steady through Q3 of 2022, showing only a 0.2% increase from Q2 and a 1.5% increase YoY. But, they are still much higher than pre-pandemic levels; over 20% higher with an average price of $51,573. A proliferation of final-mile delivery service businesses have however caused prices for certain new commercial vehicle segments to spike dramatically. For example, the average price for upfitted cargo vans showed a 5.6% increase compared to this same time in 2021. This means that those dealerships who are poised to capitalize on these metrics and prepared to help customers navigate today’s pre-sales environment, can grow their commercial base, and their bottom line.

Despite economic fears, commercial demand is expected to continue. For example, even when new housing starts slow down, people still need home repairs completed, which means the businesses/trades that deliver these services need work trucks and vans to complete the job.

VEHICLE SEARCHES

When looking at search trends, the numbers confirm that the final-mile business is impacting the entire commercial vehicle industry, and the overall statistics support rapid growth. Empty cargo vans and upfitted cargo vans held two of the top four spots when comparing search metrics from Q3 2021 to Q3 2022. And when looking at the top 10 changes in body type searches, we see other commercial vehicles that can also be used in last mile deliveries showing increased activity.

As customers became more and more accustomed to ordering online during the pandemic - from household goods to groceries - the need for final-mile delivery vehicles grew. And, coming out of the pandemic, this trend is expected to continue. This means those dealers who can source new and used final-mile delivery vehicles for their B2B shoppers are the ones who will win the business.

On demand is the norm. For example, I was ordering some stuff on Amazon and the message at checkout said ‘If you click this button in the next 53 minutes, this shipment will be at your door between 7 and 10am’. This is incredible for me, but a nightmare for a company.

Gregory Skinner, VP of Strategic Insights, Escalent

INVENTORY CHALLENGES

Although persistent manufacturing obstacles have continued to restrain new commercial vehicle inventory per dealer, there was an uptick in inventory of almost four more vehicles per dealer in Q3 2022 compared to the previous quarter. The good news here is that this builds on the increase of two vehicles per dealer in Q2, which indicates inventory levels are improving.

As for used work trucks and vans, Work Truck Solutions’ dealers saw inventory improvements in many truck and van segments. For example, Used Cutaway Vans have been on an upward trend over the last three quarters, rising by 36% during the timeframe; Empty Cargo Vans are above where they were at the end of last year, up more than 37%; and used pickups have stayed well above their Q1 2022 levels, increasing by almost 15%.

Used Commercial Market $160B

It’s important to ensure commercial customers can find the vehicles they need during supply chain difficulties. This means employing a two pronged approach that covers both new and used vehicles.

You know customers look online for the work trucks and vans they need. But what happens when they’re searching for new commercial vehicles and you don’t have them in stock? If you’re like most dealers, these shoppers see a page that says something like, “Sorry, we don’t have what you’re looking for today.” A much better approach is to show inventory possibilities of what these same internet searchers could purchase via an order process , so you don’t lose them to a competitor. By doing so, you get them into your pre-order sales funnel and secure their business.

And what about those who can’t wait for a work truck or van - the ones who need it ASAP? The needs of these customers can be met with used inventory, which means you need sources for these remarketed vehicles. The challenge here is cultivating relationships with these sources - auctions, fleets, rental companies, etc. - or finding other avenues to acquire this type of inventory. But, no matter how you go about it, your business customers will thank you for it by awarding you their business.

Have a strategy that supports offering “bridge vehicles” to your B2B buyers. A “bridge vehicle” is one that, although it may not check every box for a commercial buyer, it does meet/ exceed their minimum requirements and it enables them to continue to stay in business. With this strategy, you may be able to help your customers meet their needs with a used vehicle today , while also moving them into the pre-order process for needs down the road .

MARKET SPECIFICS

Each dealer’s market offers unique opportunities; like the gold rush, the first to find and stake a claim will profit the most. For example, the snow removal business, which is applicable only in specific markets, has significant dollar figures associated with it. Per IBISWorld market data, the snowplowing services industry has a 2022 U.S. market size of $20.8B as measured by revenue. Additionally, it has shown a 4.3% annual growth rate between 2017 and 2022.

Or, another specific but also growing market, is the cannabis industry. With more than 35 states legalizing cannabis, the demand for ‘secure transport’ vehicles is strong, and also expected to grow. According to Grand View Research, the cannabis market size was valued at $10.8B in 2021, and is expected to expand at a staggering compound annual growth rate of 14.9% from 2022 to 2030. With very specific requirements for these secure transport vehicles based on the laws in place, finding vehicles that meet their needs is essential for businesses in this industry.

No matter the specific commercial enterprise, the bottom line is this: dealers who can assist businesses in meeting vehicle demand in industries specific to their market are the ones who will capitalize on these opportunities. As such, it’s important to do your research and get to know your commercial vehicle market. There are many avenues for this type of research, including (obviously) the internet, but don’t discount additional sources, such as local/regional trade associations, expos, data research firms and state associations. All of these can help you understand the nuances of your commercial opportunity.

Photo: Driverge, 2022

THE NEW [ COMMERCIAL ] WORLD SALES ENVIRONMENT

COMMERCIAL PLAYBOOK

THE NEW [COMMERCIAL] WORLD SALES ENVIRONMENT

If you’ve spent any amount of time in the automotive dealership environment selling vehicles (commercial or retail), you may remember the “old days”—also known as one or two years ago. You could list vehicles on your website, wait for visitors to find them online, and subsequently come to your physical location, walk the lot to find the commercial truck or van they were looking to purchase and complete the deal. In today’s world, this is no longer the case. Rather, it’s a New World Sales Environment .

Like many businesses, automotive sales have peaks and valleys. You can enjoy the good times, but you must also plan for the dips that are sure to come. Said another way, the danger of success is complacency.

Dealers who aren’t complacent are looking for new revenue opportunities as a hedge against that next dip. And, they realize there’s also been an overarching change in the automotive space, much of which is being led by the OEMs, and it’s impacting the approach to inventory, as well as how dealerships operate. With continued supply chain issues, an uncertain economy, and rising interest rates, dealerships that are planning ahead, modifying processes, and seeking out and uncovering those new profit centers are the ones who will be well-positioned for the future.

As we saw in Chapter I, selling to businesses (i.e. commercial vehicles) is a great profit multiplier. If you’re already in the commercial vehicle business, you know this to be true.

commercial space today, you should dive deeper

As the saying goes, “Hope is not a strategy.” Instead, researching data points and incorporating those into your plan is the way to

For the first time ever, we are seeing our commercial division outsell our retail division.

Dan Bryan , General Manager, Ricart to Business (a Top 25 Ford Commercial Dealer)

So, if you find yourself saying, “Ok, I’m interested in assessing the B2B side of the business”, actually figuring out where to go next might seem daunting. Or maybe your situation is different and you’re already in the commercial vehicle arena, and you find yourself asking “What can I do to expand my existing commercial department and capitalize on current opportunities?” No matter which scenario best describes you and your dealership, a sound execution strategy, built on education, ideation and research, is foundational to a successful plan.

When times are good, it’s easy to get complacent and forget time-proven habits and processes that result in profits; but maintaining those good habits even when times get tough is what keeps successful operators on top.

You’re the expert on your market; after all, you operate in it on a daily basis. There is a set way to look at market specifics, especially as it relates to commercial business. Let’s start with the basics and expand from there.

As a dealership engaged in, or planning to be engaged in, the commercial business, you should join the NTEA, the association of the Work Truck Industry. There are a number of perks to joining.

You gain access to data and various reports to keep you abreast of the industry, such as the following examples that show the continued stability of commercial vehicle demand, and trends in the industry. As a member, you’ll gain access to updated stats, data and metrics as NTEA releases new information.

If you’re a dealership just getting started in the commercial business, NTEA resources are a must. They’ll help you get a feel for the industry and the opportunities, while also introducing you to many nuances not found in the retail side of the dealership business.

Source: NTEA, OEM Quarterly Chassis Report

You should also plan on attending Work Truck Week , held in early March each year. This event not only offers attendees the largest commercial vehicle expo at which to see all the upfits and chassis offerings in one place, but it also has workshops and sessions that focus on trends and opportunities in the industry.

If you’re already selling to businesses, but you’ve stopped attending - or sending your team - to Work Truck Week, you need to revisit your approach. What better way to stay current on what’s happening in the commercial vehicle industry, hear about ideas from other top operators and talk through potential strategies? If you’re looking to grow your commercial business, you and/or your leadership team need to attend this once per year event. You may even attend an educational session that answers questions you have about how to grow to that next level.

There are also other events where you can spend time with commercial dealers and learn from those Dealer Principals/GMs/Commercial Managers successfully operating in the work truck and van sector. Some of these are local truck club meetings and regional OEM or upfitter events. After all, who better to learn from than those who are in it today?

In total units sold, our retail and commercial sales are about even, but commercial sales always lead in profit margin. Factor in that our commercial sales team is half the size of our retail team, and the profitability of commercial vehicles is through the roof.

AJ Hewitson, Fleet & Commercial Director, Paradise Chevrolet

Photo: Driverge, 2022

Additionally, here’s a few other resources you should consider to gain knowledge about the commercial space:

Local trade associations - Research online and determine which ones have a strong presence in your market and then seek out opportunities to get involved, such as sponsorships, luncheons, and so forth. They also often post their members’ contact information, which can be downloaded to expand your prospect list.

Commercial Vehicle Business Summit - this virtual event is held twice per year and is fully dedicated to the commercial vehicle industry. Recent event themes included Mobility and Transformation in the work truck and van market, and had expert speakers/panelists from dealerships, OEMs, upfitters, data research firms, finance and fleet management companies. This is a no-brainer!

Escalent market assessment - New opportunities always involve a certain amount of risk. Escalent can help expansion-focused dealerships assess markets to make datacentric market evaluations.

Upfitter websites - There are many upfitters (these are the businesses that put vocationspecific bodies onto vehicle chassis) in the commercial vehicle market, and several have websites offering great information. For example, you can read blogs to see what others are talking about, check out upfit guides to better understand unique vocational needs, and review product literature about the upfits provided.

Here are a couple different upfitter sites for consideration:

Knapheide | Scelzi | Reading

STEP TWO 2

DEFINE YOUR PRIMARY MARKET AND CUSTOMER

Start with what’s obvious (what do your eyes tell you). Then back that up with data. The following list is not meant to be a comprehensive checklist, but enough to demonstrate the kinds of questions that will help you to zero in on your target.

Is your market urban, suburban or rural? Geography. Are you located in the north where snow removal vehicles are essential in the winter? Or maybe you’re in the south where pool-cleaning outfits prevail year-round.

Final mile delivery

With a 43.5% increase in online holiday shopping from 2019 to 2021 , cargo vans used for final mile delivery have been in high demand. In fact, Work Truck Solutions’ Q3 2022 Data Report shows empty cargo vans, upfitted cargo vans, and step vans in the top eight searched commercial vehicles from Q3 2021 to Q3 2022.

What does this opportunity look like in your market, including electric work van use cases?

Adoption of electric commercial vehicles

Last Mile delivery is a super tough market. For companies in this space, it is a cutthroat, brutal, and highly competitive environment. To be competitive in this space, business owners are choosing vehicles optimized to meet that need. Vehicle selection is about maximum optimization and efficiency because that efficiency is what creates dollars and cents.

Gregory Skinner, Vice President, Strategic Insights, Escalent

Are EVs making inroads into the commercial sector in your market? What types of topics do business owners need to consider when looking at EV adoption and how can you factor those into your approach? EV delivery vehicles are especially suited to businesses that perform last-mile deliveries within a fixed and limited radius, such as retail delivery, and e-commerce home service businesses. Even medium and heavy-duty EVs are gradually gaining popularity, so it’s a worthy investment to begin exploring what the top EV concerns are of those fleet/business owners.

TYPES OF COMMERCIAL CUSTOMERS

There are several types of commercial vehicle customers, each with specific needs and requirements. Consider the different types of customers and what factors are important for their ongoing success. By taking the time to understand the unique needs of every kind of customer, you can provide them with the customized care they need to continue doing their job with the least stress possible, while also continuing to look to you as their trusted partner.

Sole proprietors

A sole proprietor usually operates under extremely tight time and budget constraints. They juggle many hats and don’t have the luxury of exploring new strategies or technologies. By adopting a partner mentality, dealers can find ways to bridge the gap between what a customer needs and what they can manage to implement.

These sole proprietors are local businesses relying on their work trucks and vans; if their truck or van isn’t running, they’re losing money. These customers need reliable vehicles that can handle their specific business needs. By offering expert service and repair, you can help keep these businesses running smoothly.

Small fleets

Any business maintaining a small fleet of commercial vehicles deals with many moving parts, and managing a fleet can be time-consuming and expensive. Limited budgets can bully owners and managers into thinking only in terms of cost rather than investment, and their predicament is an opportunity for your dealership to ease their burden. Consider offering a suite of solutions like:

• Basic telematics to track maintenance/hours/routes

• Extended service hours

• Mobile services, such as oil changes, no-starts, etc.

• Keeping realistic constraints in mind, you may be able to offer some OEM-style fleet management services

Medium/Large fleets

Customers with substantial fleet numbers are likely to already have some telematics in place, so integration with OEM telematics and fleet management programs might be a more relevant opportunity.

Upon conducting your research, you’ll probably discover you have more than one target customer. Make sure to create buyer personas for each one. And you may have more than one persona for each customer type. Just remember that documenting your buyer personas will help guide your inventory, marketing, and sales strategies. Those who write down goals are much more likely to achieve them than those who don’t—so write them down.

Three years ago, Ricart to Business invested in building a 115,000 square foot building with approximately 64,000 square feet of that dedicated to service. Today, that space is fully utilized and because we take care of our commercial customers, we continue to grow.

Dan Bryan , General Manager, Ricart to Business (a Top 25 Ford Commercial Dealer)

Large commercial operations selling multiple brands, who may also have several locations, need to continuously delve into market and customer definition. If this is you, it’s likely you already know how much the market can and does change - which means frequent re-evaluations of these conditions are essential to staying on top. And not only do you need to frequently review your market, you’ll also want to do the same with your sales operation because as the market changes, your team will need to do so too.

Anything you can do to help businesses with small fleets operate more efficiently will set you apart in your market.

STEP THREE 3

UPDATE YOUR WEBSITE

A foundational place to start is with positioning your dealership as a commercial partner to businesses in your market by having a robust section of your website dedicated to commercial vehicles - both inventory and

Yes/No

Yes/No

Yes/No

education. After all, if you don’t tell business buyers you’re the experts at providing them with commercial vehicles, how will they know that you’re a good resource/partner to fulfill their work truck and van needs?

With that in mind, use this checklist of things to consider at a minimum:

Does your retail website prominently display that you sell commercial vehicles? This is critically important when business buyers come to your site.

Yes/No

Can your prospects and customers quickly search for (filter) exactly what they need, such as bodies, upfits, engine types, etc.? Remember, these buyers have specific needs for vehicles that fit their particular use case(s). If they can’t quickly and easily search, they’ll move on to another dealership/source.

Yes/No

Are your business prospects able to see the details of the unique vehicle configurations, or do they have to guess what’s on the work truck or van? If they have to guess, you’re making it much harder - as well as unlikely - for them to do business with you. When it comes to business buyers, while price is certainly important, time savings and ease of doing business are also high on their list when choosing a dealership partner.

How about photos? As with a retail site, a picture is worth a thousand words, so show shoppers lots of vehicle and body images.

Does your site offer educational information to business owners and fleet managers? For example:

Do you have content discussing EVs (or other alternative fuel vehicle options) to help make decisions on how and when to consider transitioning from ICE vehicles?

Is there content about vehicle servicing specific to businesses? Consider links or original content related to telematics.

By listing additional, non-promotional commercial content on your site, you further establish your dealership as a business partner for these commercial customers.

What if you don’t have much on-lot inventory to display on your website? This is a problem challenging many dealerships today. Use these three strategies to deal with a low inventory climate.

NATIONWIDE VEHICLE LOCATION TOOL

Find a single-platform solution that searches multiple inventory sources, including wholesale, auctions, rental companies, and other suppliers of work trucks, vans, and pickups to source remarketed vehicles for your customers. You’ll want one that provides detailed upfit information that is crucial to your prospects.

VIRTUAL SHOWROOM

Is there a way you can show vehicles even if you don’t have them? Think about it - don’t most big retailers do this today? Does Amazon avoid showing customers a product just because it’s not in stock? Of course not - so you should do the same thing; after all, customers, including B2B buyers, are conditioned to shop this way, so you should make sure you have a way to show—and order—the most popular vehicles, even when you don’t have them in stock.

OUTBOUND MARKETING MESSAGES TO YOUR CUSTOMERS

Be the one they think of, and make sure these messages are built for mobile/tablets since these customers are always on the go. A regular cadence ensures it gets done. A haphazard strategy won’t cut it. As buying cycles are stretched by thin inventory and pre-sales lag time, it’s more important than ever for you to reach out to your customers, build the relationship, and be top of mind. While it might seem counterintuitive to market to customers if you don’t have vehicles in stock, if you implement steps 1 and 2 above, you’ll certainly want to keep those prospects thinking of you - and, with the order process being elongated, getting those business buyers into the pipeline sooner rather than later is a winning approach.

Previous: Commercial Playbook - Chapter 1, Mobility By the Numbers: Identifying Dealer Opportunity

Coming Soon: Chapter 3 - Commercial-Customer Care: Partner vs. Vendor

COMMERCIAL PLAYBOOK CHAPTER 3

COMMERCIAL CUSTOMER CARE: PARTNER VS. VENDOR

In the Commercial Playbook Chapter 1, we learned that adding a commercial vehicle component to your dealership business is a savvy way to aid in continued growth. In Chapter 2, we explored strategies to implement or fine-tune your commercial vehicle department. Now, let’s look at how an expanded view of commercial-customer care can build on that.

THE PLAN

STEP ONE: TRANSITION YOUR MINDSET FROM VENDOR TO BUSINESS PARTNER

We can see that commercial vehicle sales represent high-profit margin transactions, so it should come as no surprise that after-sales services represent a sustainable recurring revenue stream. To leverage this new opportunity, it is crucial to transition your dealership’s mindset from being an auto vendor to being a business partner or consultant.

This transition begins with an expanded view of commercial-customer care. It means going beyond simply selling a work truck or van; dealers must develop a proper understanding of their customers and anticipate the eventualities of their business needs. These might include: repair, preventative maintenance, upfitting, fleet management, telematics, charging, and aftermarket services. Building a consultative business relationship with your customers is the key.

The bonus is that anticipating customer needs creates value for your customer—and translates to additional revenue opportunities for your dealership.

THE PLAN

STEP TWO: PROVIDE VALUE

Start with how you can be a resource for valuable industry information. If you can write original content, that’s terrific. If not, content creation can be outsourced. But even if you don’t publish content, you can provide links on your website for tools and articles that your commercial vehicle customers will find helpful in business operations.

A few examples might include

• Local EV charging station maps for those who have jumped into the EV market. Providing maps helps your customer while also helping establish your commercial department as a leader in the commercial EV space.

• Equipment storage options. Vehicle storage could run the gamut from toolboxes to shelving to other storage compartments. The reality is work truck and van customers are experts in their business, but they likely aren’t experts in upfitting their work vehicles for efficiency. Providing links to storage options is an excellent service to your customers.

• New or used purchasing guidance. In today’s market, this topic could hit home with your B2B buyers, particularly if you (like many dealers) have very little new inventory.

Remember, the idea is to tune in to whatever after-sale issues interrupt your customer’s business, and step in with a possible solution.

THE PLAN

STEP 3: SET UP SERVICE AND REPAIR PROGRAMS

Unlike retail customers, downtime for business owners equals lost profits. They cannot afford to be without a vehicle or have one sitting idle waiting to be repaired. Your customers trusted you enough to buy a vehicle from you; the odds are excellent you can leverage that trust to fulfill their service and repair needs as well. Or, perhaps a business owner bought their work truck or van elsewhere, maybe even several states away - possibly due to inventory challenges. Nonetheless, they still need service work completed; and you can be sure they aren’t going several states away for that. Too many dealerships are missing out on the opportunity to expand into the repair aspect of their dealer/ customer relationships.

But don’t stop at just repair; consider expanding your role to include a consultative relationship, working with your customers to forecast maintenance, repair, and replacement needs.

Preventative maintenance (PM) is a valuable service area that can position your dealership as a partner in business. Review the specifications of the truck or van you sold to them and analyze how your customer will use it. Then explore an appropriate service schedule to avoid downtime. Shepherding your commercial customers into a consistent maintenance program constitutes a massive benefit for them.

Commercial service revenue can be as much as twice the value of retail.

Furthermore, as a vehicle’s age and mileage increase, there comes the point where it may be more cost-effective to replace the truck or van rather than continue having it repaired. Be a partner, rather than just a vendor, by bringing them information that could help them in their planning. You can add value to the relationship by evaluating the cost comparison between continued repair vs. replacement and then presenting the information in a Total Cost of Ownership context.

THE PLAN

STEP 4: VIP TREATMENT

While providing expert service and repair is the foundation for your commercial dealership’s success, you can exceed all expectations by offering your commercial customers VIP treatment.

OPTIONS MIGHT INCLUDE:

Optional vehicle warranties and insurance

Integrating vehicle warranties and insurance into your dealership’s commercial-customer care plan is a great way to increase revenue while providing peace of mind for your customers. By partnering with a reputable insurance provider, you can offer competitive rates and comprehensive coverage to protect your customers’ vehicle investments. Not only will this help build customer loyalty, but it can also lead to referrals and repeat business.

Telematics services

Telematics combines GPS tracking with vehicle diagnostics to provide data about a vehicle’s performance. For commercial customers, telematics can be a valuable tool for managing their fleet of vehicles. By offering telematics services, you can provide your customers with valuable data to run their businesses more efficiently.

Additional OEM Solutions

For example, OnStar services - If you’re a GM dealership, you have the unique opportunity to offer OnStar services, a subscriptionbased service that provides safety, security, and convenience features for drivers. These features can be invaluable for commercial customers who use their vehicles for business purposes. By offering additional OEM services, you can provide another layer of care for your commercial customers.

THE PLAN

The OEM connection

Ford, GM, and Stellantis (Ram) have created unique business arms catering specifically to commercial fleet customers. As a franchised dealership, you can leverage these programs to serve your customers better and position yourself as a business partner.

Ford Pro TM

Launched in 2022, Ford Pro leverages technology from the ground to the cloud to help improve uptime, total cost of ownership, and performance of fleets with electrified or combustion vehicles. Ford Pro solutions combine software, charging, service, and financing for commercial vehicles, providing customers with one comprehensive platform to operate their fleets as they adopt connected and electrified vehicles across their business.

GM Business Elite

One of the ways General Motors is catering to commercial customers is with GM Business Elite. This OEM program partners with commercially focused dealership teams to support small businesses and small fleets with services and expertise designed to keep their vehicles and businesses running smoothly.

Stellantis Fleet & Business Solutions

Stellantis works through participating BusinessLink Dealers that can provide everything from dedicated account managers and extended service hours to complimentary loaner vehicles, telematics, and more. Stellantis Fleet & Business Solutions perks may also include a dedicated support system of in-field technicians, a business relations team, and exclusive incentives and discounts.

Mercedes-Benz Fleet Services

Mercedes-Benz offers commercial vehicle fleet services analysis of your fleet needs, fleet management, and telematics. They also provide custom upfits, mobile service, and roadside assistance.

THE PLAN

THE VALUE OF MONTHLY SALES GOALS VS. LIFETIME CUSTOMERS

It comes down to this: Long-term relationships represent much more in total revenue than one-time sales. And don’t forget the disproportionate cost of acquiring new customers vs. exceeding the needs of existing customers. Remember, customers have relationships with business partners and consultants, but not so much with vendors.

Creating “sticky” customers

Customer retention is about building a relationship of trust and respect that will result in customer loyalty and continued business. Nurturing that long-term relationship lets customers know you are vested in their success.

Your customers are looking for:

• Regular communication

• Proactive problem solving

• Follow up

• A personal relationship

Cultivating “consultative” salespeople

To be successful at these long-term relationships, you have to foster an environment for consultative sales professionals; you must find team members with this capacity and then support the different skill set needed than what is typically found in a dealership. Making the commitment to being a consultative resource is what will build those long-term relationships and validate your customers’ loyalty.

CONCLUSION

Customers will remember who took care of them vs. who was looking for a quick sale. This philosophy of expanded care for your customers fosters long-term relationships and develops sustainable recurring revenue.

Don’t fall for the short-game trap because what you do today creates your tomorrow.

COMMERCIAL FINANCING: HOW UNDERSTANDING LENDERS CAN HELP YOU AND YOUR CUSTOMER

COMMERCIAL PLAYBOOK

CHAPTER 4

COMMERCIAL FINANCING:

HOW UNDERSTANDING LENDERS CAN HELP YOU AND YOUR CUSTOMER

TOPICS COVERED:

Types of Lenders

Heavy, Medium, and Light-Duty Differentiations and Considerations

Know Your Customer

What to Look for in a Lender

TYPES OF LENDERS: CLARIFYING THE CONFUSION

Understanding basic differences between independent, captive, and bank lenders can help dealers select the right one(s) for their needs.

Independent

A non-bank lender that can make decisions “in house” on borrowers and types of programs it wants to offer. They can finance vehicles and equipment from any manufacturer and develop individualized, flexible programs for customers.

Captive

A captive lender is the financing arm of a manufacturer. Captive lenders can typically finance only that manufacturer’s equipment. Manufacturer subsidies enable them to provide low interest rates or other incentives but can have strings attached. Examples may include financing restrictions that do not allow room for flexibility in meeting customers’ needs.

Traditional Bank Financing

Banks are not restricted to any one manufacturer and may offer relatively low rates. It also can be more difficult to get a loan approved with a bank lender because they may ask for additional documents such as business financial statements and tax returns before making their decision.

Advantages:

Flexible

Simple, streamlined approval process

Custom financing solution

High level of dealer and end-user customer service

Advantages:

OEM subsidies

Ability to adapt lending guidelines quickly for franchise OEMs

Advantages:

Low rates

Ability to finance vehicles and equipment from any manufacturer

KNOW YOUR CUSTOMER.

Ask your customer these questions to help you better understand their financial needs to determine the best financing partner:

How long have you been in business?

How many trucks do you own?

What type of trucks are you looking to finance?

Are you a first-time buyer?

Have you financed a truck in the past? If so, with whom?

What is your personal credit like?

Are you looking to put money down?

Typical buyer personas that emerge from using the above questions:

Have cash on hand for a large down payment.

Sensitive to payment amount.

TRAC lease.

Rate focused.

Poor credit, need sub-prime lending.

Consider these points as well:

Not all lenders will finance all vehicles.

Ask prospective lenders about experience and expertise with what you sell.

FINANCING BY SEGMENT

Strong, dependable vehicles are key to your customers’ business, as are experienced and reliable financing partners. Before choosing which lender to suggest to your customers, take the time to learn about their financial needs and wants. Creating a loyal customer goes beyond matching them with the best equipment, but also guiding them towards the best financial solution for their business.

Heavy-duty/ Over the Road (OTR)

Types of Vehicles Financed. Many vendors that work with OTR vehicles exclusively focus in that area. If you sell vehicles in several segments, verify which lenders specialize in specific segments.

Source of Funds. Heavy-duty truck dealers can expect to be contacted by many lenders seeking their business. While this may signal a robust lender market, realize that many of these companies may simply be brokers. Be sure to find out if a lender has access to its own funds, or if it’s a broker.

Fleet Size. Lenders have varying appetites for fleet business, whether it’s small, medium, or large. Know your customers’ fleet sizes up front and ask if a prospective finance partner can meet those needs.

Medium Duty

Knowledge of the sector. In the medium-duty space, upfitting is common. A lender that understands the sector, the specific equipment, and the values of each type of vehicle will be able to work more quickly and accurately in providing financing.

Captive lenders typically offer subsidy programs for dealers of medium-duty (as well as light-duty) trucks. Take time to really understand the programs and their trade-offs. Captive-lending programs may sound good on the surface but determine if they meet your customers’ needs in the way of price, service, flexibility, and speed.

Tradeoff example 1:

A manufacturer offers retail assistance money and/or a subsidized interest rate, which may or may not be better than what you could receive from an independent lender.

Tradeoff example 2:

Your customer is at the high end of the LTV range your captive lender is comfortable lending against. The result could require your customer to make a down payment that another lender would not request or need. A captive lender might also require a shorter amortization period, resulting in a higher payment that may not meet your customer’s financial needs.

FINANCING BY SEGMENT

Light-Duty

Merit of “corp-only” financing. Many dealers prefer not to ask their commercial customers to guaranty the loan with a personal guaranty or co-signer. In the light-duty space, where there are many companies with good credit and payment history but are relatively young, this can be a critical consideration. Not all finance providers will do corponly financing; make sure the one you are evaluating does.

Credit assessment. Search for a lender that works with PayNet®, which provides private company credit assessments. PayNet benefits your customer by separating business finance from personal finance in terms of credit reporting. Business lending activity and debt can show up on a customer’s personal credit history versus their business credit history, thereby restricting the customer’s ability to borrow due to lack of time in business or inflated personal debt. While important across the board, some lenders in the light-duty space do not work with the service.

Loan to Value Limits. Lenders have different loan to value (LTV) limits. Your customer may have to provide more down payment to meet the lender’s LTV limit and be approved.

Customer service. For you and your customer - consider the type and amount of service you will need.

Will the lender be able to provide service to you over a weekend? In the evening?

Will they return calls promptly?

Are they willing to work with your customer if hardships occur?

Pre-payment penalties. Does the lender have prepayment penalties for light-duty vehicles?

Ease of application process. You may prefer to work with a lender that uses RouteOne or DealerTrack, which is a main application integration and exchange system. While these services do provide a simple way to submit applications to multiple lenders, the dealer’s finance manager should still take time to pinpoint appropriate lenders through the system that meet their customers’, and their, needs.

Risk. The size and age of the customer’s business can impact down payments and interest rates. New businesses tend to present a higher risk profile due to lack of credit history. To mitigate this risk, lenders ask for higher down payments and rates.

WHAT TO LOOK FOR IN A FINANCE PROVIDER

While interest rates are certainly part of any financing equation, they are just one part. In fact, for a dealer looking at operating and growing its business, other factors can easily surpass rates in importance. It all starts with finding the right lender. So, when evaluating lenders, keep the following overarching points in mind.

Value of a partner rather than a vendor. Partners seek a shared vision and shared success. Because they are looking for a long-term relationship, they will take time to learn about your business, your processes, and your goals. Using a consultative approach, a partner will work with you and recommend programs that work for your customers and you today, as well as in the future.

Respect for your customers. A good partner will get to know your customers and understand that they are your most important resource. They will provide exceptional service, be available when needed, and focus on the priorities you and your customers set.

Flexible programs. Tailored programs will drive more units to you, faster. Maybe it’s a special program for new or used equipment or a special on terms or rates. Development of tailored programs for your customers will ensure they get financing that works for them in the time they need it.

Speed in execution. Some finance providers, working amidst regulations and policies, can be slow to respond. A responsive partner with flexibility will have greater ability to develop customized programs quickly and efficiently, resulting in a better overall experience for everyone. For dealers, getting quick-turn credit decisions and expedited funding can be challenging. An experienced, customer-centric finance partner can make things happen fast, often even providing same-day funding.

One-stop shop. To make life easier, look for a partner that can handle as many of your needs as possible. You’ll save time, eliminate stress, and develop valuable long-term business relationships.

Technology needs. Dealers will find it pays to make a realistic assessment of their technology needs. How and in what ways will automation benefit your customers and you? What kind of customer service will you need? Will you be looking for a live person to pick up a call? Make sure to evaluate the human factor in a decision on a financing partner.

The Winning Combination

Financing can be complicated, but it doesn’t have to be. Dealers – whether working with heavy-duty, medium-duty or light-duty vehicles – will benefit by taking time up front to select a lender that can meet their customers’, and their, needs, both in the short-term and long-term. Getting a finance partner in place can not only save time and frustration, but they can also help secure and grow business over the long haul. The bottom-line is that you will need relationships with all three types of lenders to best support the dealership and your customers.

COMMERCIAL PLAYBOOK

CHAPTER 5

EXPANDING YOUR REVENUE HORIZONS: THE ROLE OF THE COMMERCIAL VEHICLE SERVICE CENTER

TABLE OF CONTENTS

Introduction

The Growing Demand for Commercial Vehicle Services

Benefits of Adding [or Growing] a Commercial Vehicle Service Center

Steps for Implementing [or Enhancing] a Commercial Vehicle Service Center

Conclusion

INTRODUCTION 1

Auto dealerships face many challenges that impact their ability to thrive and grow. Although encountering adversity is not new, the particulars evolve with the times. One of the most prevalent current struggles in vehicle sales is lingering supply chain disruption, leading to lost sales and an imbalance between supply and demand. Some even project that supply and demand won’t fully return to balance until 2024.

However, despite shutdowns and other challenges, consumer retail sales declined by only 9% year-over-year in 2020, leading many dealers to enter 2021 on a high note with strong sales. Paradoxically, this also resulted in increased competition in the market. Furthermore, the rise of electric vehicles and vehicle subscription services is changing the way consumers approach car ownership, which may impact traditional dealership models.

As the industry continues to evolve, auto dealerships are constantly seeking new ways to expand their services and increase revenue. One area that has shown significant growth and potential is the commercial vehicle market. Chapter 1 of our Playbook series highlights the value of adding a commercial vehicle component to your dealership.

This particular chapter discusses why you should consider adding, or enhancing, a commercial vehicle service center, and delves into the key considerations that dealers and general managers must take into account when assessing the value of adding commercial business to their enterprise.

THE GROWING DEMAND FOR COMMERCIAL VEHICLE SERVICES 2

The commercial vehicle market has experienced significant growth in recent years. For instance, according to Fortune Business Insights , the global commercial vehicle market size was $821.28 billion in 2021 and is projected to grow to $1,712.44 billion in 2029. Furthermore, Grand View Research Inc. reports the global commercial vehicles market size is projected to register a compound annual growth rate (CAGR) of 3.7% from 2023 to 2030.

GROWTH HAS BEEN DRIVEN BY FACTORS SUCH AS:

The rise of e-commerce and the need for efficient delivery services.

The increasing demand for specialized vehicles to support various industries.

The growing emphasis on eco-friendly transportation solutions.

The caveat to this growth, as mentioned in our introduction, is an unsteady supply chain.

The combination of disrupted supply chains and reduced production capacity has resulted in a significant decrease in the availability of new commercial vehicles [although inventory levels have been showing signs of recovery]. This has led to longer wait times for businesses looking to purchase new vehicles for their fleets. In some cases, businesses have been forced to delay the replacement of older vehicles, resulting in an increased need for repair and maintenance services to keep their existing fleets operational.

THE GROWING DEMAND FOR COMMERCIAL VEHICLE SERVICES 2

Over 69% of respondents in an NTEA survey reported their average commercial vehicle ages are exceeding normal replacement cycles. Source: NTEA

According to the NTEA’s 11th annual Fleet Purchasing Outlook , 69% of survey participants report the average age of their trucks is exceeding their normal replacement cycle.

When I first started in the business 20 years ago, the average age of a fleet was five and a half years old, now the average age is 14 years old. Age and high mileage of commercial vehicles are big factors in maintenance and repair needs.

AJ Hewitson , Fleet Sales Director at Paradise Chevrolet Cadillac

THE GROWING DEMAND FOR COMMERCIAL VEHICLE SERVICES 2

Companies are now more reliant on their existing vehicles, making it crucial to ensure that they remain in good working condition. This increased demand for repair and maintenance services has led to growth in the commercial vehicle repair and maintenance market.

There is a growing need for specialized service centers that can cater to the unique requirements of commercial vehicles, and dealerships can capitalize on this demand by offering comprehensive service solutions for commercial vehicle owners.

“The growth in demand for work trucks and vans across the U.S. is tremendous,” says Aaron Johnson, CEO of Work Truck Solutions. “And the need for commercial vehicle maintenance and repair is not subject to the same fickle elements as with passenger cars. If a business owner’s vehicle isn’t on the road, it isn’t making money.”

That urgency for maintenance and repair felt by business owners is echoed by some of the best commercial dealerships in the country.

I’ve heard from multiple business owners that it costs them in the neighborhood of two to three thousand dollars a day when their commercial vehicle is not up and running.

Dan Bryan General Manager for Commercial Sales and Service of Ricart to Business

If a business owner’s vehicle isn’t on the road, it isn’t making money.

Aaron

Johnson

CEO of Work Truck

Solutions

“I’ve heard from multiple business owners that it costs them in the neighborhood of two to three thousand dollars a day when their commercial vehicle is not up and running,” says Dan Bryan, General Manager for Commercial Sales and Service of Ricart to Business. “And business owners are willing to pay for more maintenance at one time than the average retail customer. The commercial customer would rather get it done while the vehicle is already in the shop so he doesn’t have to have that vehicle out of service again. This trend manifests in the fact that our retail ops gross revenue has remained essentially flat over the last four years while commercial has increased by 124%.”

It’s the nature of businesses’ dependency on their vehicles that qualifies a commercial service center as such a solid investment.

BENEFITS OF ADDING [OR GROWING] A COMMERCIAL VEHICLE SERVICE CENTER 3

A commercial vehicle service center offers dealerships several benefits, including:

Increased Revenue Streams:

As the commercial vehicle market size increases, dealerships expanding into that side of the business tap into a new and growing customer base, and generate additional revenue from servicing and maintaining these vehicles.

A Mordor Intelligence report indicates the United States automotive service market size, which includes both commercial and passenger vehicles, was valued at $177.51 billion in 2023 and is expected to reach $237.33 billion by 2028, registering a CAGR of around 5.98% during the forecast period. And according to a different report by Global Market Insights, North America is set to account for $180 billion in the automotive repair and maintenance services market by 2028. Although the figures vary— possibly due to variables in building data sets—there is an obvious growth trend for this field. And, while these figures encompass both commercial and passenger vehicles, they still provide an indication of the market size for vehicle service and repair.

It is worth noting that commercial vehicles often require more frequent maintenance and repairs due to their heavy usage and higher mileage, which could lead to higher revenue generation for commercial vehicle servicing compared to passenger vehicle service and repair.

“Certainly, high mileage contributes to more frequent maintenance,” explains Bryan. “But also some commercial vehicles will run at idle for hours on the job while providing power for equipment, so service intervals for work trucks can definitely be more often than for passenger cars.”

It’s also worth highlighting that, although new vehicle inventory is on the rise, used commercial vehicles are still prevalent in business fleets and single-vehicle operations as illustrated by the current average age of well over 14 years.

Naturally, used vehicles typically require more maintenance and repair to keep them on the road. A fact punctuated by Erin Kerrigan, founder and managing director of Kerrigan

Advisors, Irvine, CA when she spoke at a webinar sponsored by the American International Automobile Dealers Association, Alexandria, VA.

“In 2023, there are many reasons to be optimistic about profit potential,” said Kerrigan. For example, dealership Fixed Ops profits are up as customers drive more and service and repair older cars and trucks.

While Kerrigan’s comments ring true for consumer/retail vehicles, this is even more acute for commercial vehicles since small and medium-sized fleets are having to hold onto work trucks and vans longer than they used to, which equates to even larger Fixed Ops profit opportunities for dealerships in this arena.

There’s no doubt that commercial maintenance and repair represents a major increase in profit opportunities in multiple ways.

“Not only are shop rates for commercial repair higher than for retail, but hours per repair can average 50% more than retail,” reveals Bryan. “Looking at dollars per repair order (RO), passenger ROs average about $390, while commercial ROs pull in about $650. That’s nearly 50% higher than for passenger vehicles. In terms of gross revenue per technician, again, commercial averages are nearly double.”

Not only are shop rates for commercial repair higher than for retail, but hours per repair can average 50% more than retail.

Dan Bryan General Manager for Commercial Sales and Service of Ricart to Business

BENEFITS OF ADDING [OR GROWING] A COMMERCIAL VEHICLE SERVICE CENTER 3

COMPETITIVE ADVANTAGE:

Let’s face it, there are a number of dealerships out there selling work trucks, and as new inventory increases, so does their competition. Dealers must see the larger picture of the positive effects a commercial service center can have on several aspects of their business. Providing a one-stop shop for commercial vehicle owners can lead to technician acquisition, increased customer loyalty, repeat business, and overall revenue.

“Dealerships know the challenge of hiring and retaining skilled technicians. And you know what makes a technician happy? Having work.” quips Bryan. “So, we make sure we own our backyard, meaning that we do everything within our power to get the service work for all the vehicles we sell, which makes for happy technicians; therefore, we retain technicians.”

Offering specialized commercial vehicle services can differentiate you from your competitors and help attract and retain more customers and repair technicians.

Any

touch points you have with the customer, including maintenance and repair, are going to have an impact and give you more opportunities.

AJ Hewitson Fleet Sales Director Paradise Chevrolet Cadillac

STEPS FOR IMPLEMENTING [OR ENHANCING] A COMMERCIAL VEHICLE SERVICE CENTER

With many variables and possible requirements associated with a commercial service center, it’s important to consider these points, regardless of where you are today, as it relates to servicing work trucks and vans.

For dealerships that have no commercial component to their business, or for those that sell, but do not yet service them, this assessment can lead to informed decisions about the potential costs and benefits, and whether or not adding a service center is the right fit for your operation.

For dealerships that are currently selling and servicing commercial vehicles, all of the following points are valuable benchmarking tools to assess their commitment to the business owners to whom they currently serve.

Here are five steps to begin your journey.

1. CONDUCT MARKET RESEARCH:

Again, dealerships that have no commercial component to their business must conduct thorough market research to ensure the venture’s success and profitability.

The first step in targeting a range of fleet sizes for service is to identify the target market, which includes understanding the demographics, preferences, and needs of potential customers in the local area. You can assess the level of commercial activity in your local area by analyzing various indicators. These may include the number of local businesses and industries, the types of businesses present, and the growth trends of these businesses. Utilize online business directories like Yelp, Yellow Pages, and Google My Business to find companies within your target market and geographic area. Pay attention to local news outlets for current and projected infrastructure development projects in your area, as these require commercial vehicles for construction and transportation purposes.

Furthermore, engaging with local business owners to learn more about their current maintenance and service needs by attending trade shows or local business networking events can provide valuable insights into the demand for commercial vehicles. Local trade and vocational

associations may be useful in finding the businesses most likely to be future customers, and often publish their membership lists online. By evaluating these factors, you’ll better understand the commercial activity in the local area and make informed decisions regarding a commercial service operation.

Networking with the local Chamber of Commerce can also be extremely helpful in assessing the types of commercial activity in a market. The Chamber of Commerce consists of local businesses and professionals who work together to promote economic growth and development in the community. By connecting with your Chamber, you’ll gain valuable insights into the needs and preferences of local businesses, as well as stay informed about upcoming infrastructure projects and business expansions. Additionally, the Chamber often hosts networking events, seminars, and workshops, which provide opportunities to build relationships with potential customers and partners, further enhancing the understanding of the local commercial vehicle market.

Analyzing competitors in the region is also crucial, as it provides insights into their strengths, weaknesses, and potential gaps in the market that your service center can fill (think SWOT analysis). Gathering data on the size and growth of the automotive repair and maintenance services industry, both locally and nationally, can help you gauge the potential demand and market opportunities. Additionally, understanding the specific services that are in high demand, such as preventative maintenance, tire services, or specialized repairs for commercial vehicles, can help tailor your service offerings to meet customer needs effectively.

STEPS FOR IMPLEMENTING [OR ENHANCING]

A COMMERCIAL VEHICLE SERVICE CENTER

2. ASSESS FACILITY REQUIREMENTS:

Evaluate existing dealership facilities to determine if you can accommodate adding commercial vehicle services / growing your existing commercial service footprint, or if additional space and equipment will be needed. When a dealership decides to add commercial vehicle maintenance and repair to its business, there will typically be a need to invest in additional equipment and tools to accommodate the unique requirements of these larger vehicles. Essential equipment may include:

Heavy-duty vehicle lifts: An average shop lift may be rated for up to 10-12 thousand pounds, and that’s fine, considering a fully-loaded 2023 F-350 weighs in around the 7-8 thousand pound mark. But commercial vehicles are often in the 20–30 thousand pound range, so investing in heavy-duty lifts that can handle the increased weight is crucial.

Tire service equipment: Commercial vehicles often have larger tires and may require specialized tire changers and wheel balancers designed for these vehicles. Although many service centers continue to use sledgehammers and bars for heavy-duty tire changes, it’s a method that poses a considerable safety risk to the technician, not to mention damage to the customer’s wheel. Using an appropriate tire machine reduces operator effort and technicians have more control.

Diagnostic tools: Commercial vehicles may have different electronic systems and components, so investing in diagnostic tools compatible with these systems is necessary.

For instance, scan tools tailored for commercial vehicles such as semi-trucks, light-duty trucks, buses, construction vehicles, and agricultural vehicles are preloaded with a completely different set of make and model configurations than a scanner made for passenger vehicles.

Some commercial vehicles are equipped with hydraulic systems that may require specific pressure gauges. Work trucks and vans may also use a 48v electrical system necessitating specialized diagnostic solutions.

Specialized hand tools: There are wrenches, sockets, and other hand tools designed for larger fasteners and components commonly found on commercial vehicles. For instance, 3/8” drive sockets may be used for cab and trim on a commercial vehicle, but a commercial service center will definitely need to also be outfitted with a full complement of ½” and even 1” drive sockets and air wrenches to accommodate the vehicles coming in.

Brake service equipment: Commercial vehicles may have air brake systems, requiring specialized equipment for servicing and maintaining these systems.

One of the most important things, whether you’re just starting out or you’re well established, is to create separation between your retail service and your commercial service operations.

Dan Bryan General Manager for Commercial Sales and Service of Ricart to Business

STEPS FOR IMPLEMENTING [OR ENHANCING]

A COMMERCIAL VEHICLE SERVICE CENTER 4

These are just a few examples of the equipment that may be needed when adding commercial vehicle servicing to your business. Another consideration is whether to create a separate operations group strictly for commercial vehicles.

“One of the most important things, whether you’re just starting out or you’re well established, is to create separation between your retail service and your commercial service operations,” recommends Bryan. “Commercial and retail customers have different sets of needs and expectations. But the fact is that commercial work is more profitable, so we don’t want to dilute our focus on taking care of the commercial vehicles in a way that gets them back on the road making money for their businesses. It’s a whole different mindset because with retail if circumstances prevent work from being finished, you can usually make up those lost profitable hours and still keep your customer happy. But with commercial, the CUSTOMER cannot recoup the time the vehicle was out of service, costing money rather than making money; that time can never be put back on their calendar. So, trying to juggle the two ops under one roof just doesn’t allow you to properly care for either one.”

It is essential to research the specific requirements for the commercial vehicles you plan to service and ensure your facility and business plan are equipped to handle these needs. However, it’s also important to remember that while there will be investment on the front end if you’re new to commercial vehicle servicing, repair and maintenance work, the ROI can be well worth it and provide significant returns in the form of bottom-line dollars.

3. ASSESS STAFFING AND TRAINING

Opening a new commercial vehicle service center requires careful planning and execution, especially when it comes to staffing and training employees. The success of the service center depends on the quality of the technicians and support staff, as well as their ability to perform specialized tasks and provide excellent customer service.

Commercial service center personnel need to be aware of and adapt to the unique needs of business owners with commercial vehicles to provide efficient and satisfactory services. Some of these unique needs include:

Fleet management: Business owners with multiple commercial vehicles may require comprehensive fleet management services, including tracking, maintenance scheduling, and fuel management. Personnel in larger service center operations should be knowledgeable about these services and able to assist customers in implementing and managing them effectively.

Customization and upfitting : Since commercial vehicles often need to be customized, or upfitted, to meet specific business requirements, such as installing specialized equipment or modifying the vehicle’s body, it’s important that personnel are conversant in customization options that will help them answer questions from customers.

Quick turnaround times: Business owners rely on their commercial vehicles for daily operations, making quick turnaround times for repairs and maintenance crucial. Being able to efficiently diagnose and resolve issues to minimize vehicle downtime are critical skills.

Specialized knowledge: Commercial vehicles often have unique features and systems that differ from those in passenger vehicles, meaning that your team will need to be knowledgeable about these systems.

Financing and incentives: Business owners may require information on financing options, tax incentives, and special programs available for commercial vehicle purchases . Providing your service team with resources for customers with these types of questions, such as knowing who to point them to on your sales team, will help you stand out, and can easily result in additional sales revenue, along with repair order dollars.

By adapting to these unique needs, commercial service department personnel can better meet the demands of business owners with commercial vehicles, ultimately leading to increased customer satisfaction and loyalty, as well as the profits associated with commercial service business.

4

STEPS FOR IMPLEMENTING [OR ENHANCING]

A COMMERCIAL VEHICLE SERVICE CENTER

4. PLAN MARKETING AND MESSAGING:

Marketing for a commercial vehicle service department differs from marketing for a passenger vehicle service center in several key aspects, as the target audience, messaging, and promotional strategies need to cater to the unique needs and expectations of these specific customers. Here are some ways in which marketing for these two types of service centers may differ:

Target audience: While passenger vehicle service centers focus on individual consumers, marketing efforts for commercial vehicle servicing should be tailored to reach decision-makers within businesses, such as fleet managers, procurement officers, or business owners.

Messaging: The marketing message for a commercial vehicle service center should emphasize factors that are important to business customers, such as quick turnaround times, specialized services, fleet management solutions, extended hours of operation, and mobile services. In contrast, marketing for passenger vehicle service departments may highlight convenience, comfort, and personalized customer service. It’s also worth noting that commercial vehicle customers aren’t focused on coupons like many passenger vehicle customers - rather, their main concern is getting their vehicles back on the road and earning money, so be sure to keep this in mind.

Channels: For commercial service departments, consider using industry-specific publications, trade shows, online forums, and professional networks to reach potential customers. Traditional channels like local radio and social media can also be effective in reaching businesses, like it is for individual consumers.

Content marketing: Leveraging content marketing to showcase your expertise and provide valuable information to potential customers can be very effective with business owners. This can include creating blog posts, case studies, and whitepapers on topics relevant to commercial vehicle maintenance and fleet management.

Lead generation and nurturing: Implementing a targeted lead generation strategy to identify and engage potential business customers should be a focus for commercial service operations. This can involve using tools like LinkedIn Sales Navigator, trade show attendee lists, or industry-specific databases. Once leads are identified, nurturing strategies, such as

CONCLUSION 5

Adding a commercial vehicle service center to your dealership, or expanding the footprint of your existing commercial service operation, can provide significant benefits, including increased revenue streams, a competitive advantage, and improved customer retention. By carefully considering market demand, facility requirements, staffing needs, and marketing strategies, dealerships can successfully expand their operations and capitalize on the growing demand for commercial vehicle repair and maintenance services.

NAVIGATING THE DIGITAL SHIFT IN COMMERCIAL VEHICLE BUYING: MEETING THE COMMERCIAL VEHICLE BUYER WHERE THEY SPEND THEIR TIME

COMMERCIAL PLAYBOOK CHAPTER 6

NAVIGATING THE DIGITAL SHIFT IN COMMERCIAL VEHICLE BUYING:

MEETING THE COMMERCIAL VEHICLE BUYER WHERE THEY SPEND THEIR TIME

In today’s rapidly evolving business landscape, the journey undertaken by B2B buyers has been profoundly transformed by the digital realm. The traditional path of purchase decisions has given way to a dynamic process that unfolds across various digital touchpoints, and numerous channels.

According to Gartner Inc, 75% of B2B buyers prefer a rep-free experience. However, the commercial vehicle vertical has typically been slow to reflect the buying habits as have other areas of B2B. And business purchasing is nowhere near completely dependent on digital interactions, as evidenced by B2B buyers being 43% more likely to regret purchases made through digital channels alone. But the commercial vehicle buyer’s journey is beginning to reflect the demographic preferences of next-gen business owners.

The commercial vehicle buyer’s journey, once characterized by linear steps taken primarily in-person at dealerships’ lots, has now embraced a multidimensional approach, facilitated by the proliferation of technology and interconnectedness. Understanding the buyer journey is a commercial dealer’s foundation for leveraging their pain points and helping them on their journey.

This chapter of the Commercial Playbook series delves into the intricacies of the B2B vehicle buyer’s journey within this digital-specific ecosystem paradigm. We will dissect each of the four stages, or steps—Awareness, Consideration, Decision, Delight—and shed light on the pain points that businesses encounter as they navigate their way to making informed, and valuable, purchase decisions.

You are not selling trucks and vans. You are partnering with business owners and fleet managers to solve their specific problems and challenges. Market your dealership as much as your vehicles. Waiting for OEM inventory to return to glut-level numbers is just plain lazy. Finding the vehicles your customer needs is a smart recipe to develop those lucrative long-term relationships.

Work Truck Solutions

THE AWARENESS STAGE 1

The awareness stage marks the beginning of the B2B vehicle buyer’s journey. At this stage, potential buyers have a burgeoning need, or problem, requiring resolution. However, they may not yet have a definitive grasp of what their particular need or problem entails.

PAIN POINTS

Some specific issues or pain points that might prompt business owners and fleet managers to embark on the Buyer’s Journey include:

Their business is growing and it’s getting harder to complete jobs with the current number of vehicles in their fleet or the types of vehicles they have.

The increasing cost and scarcity of commercial vehicles have made it harder for them to purchase work trucks quickly.

The escalating costs of vehicle purchases and repair operations are becoming unmanageable.

Increasing government regulations have narrowed the vehicle choices available for their companies.

At this point, the prospective buyer just knows that they are experiencing issues and something probably has to change, but they’re not sure what or how.

ADDRESSING THE AWARENESS STAGE

During the awareness stage, the commercial dealership’s overarching goal revolves around providing education about the prospect’s problems. Their job is to help the prospect understand why they are experiencing problems and identify potential solutions.

Asking questions like “How has this impacted your business?” can help you understand where the prospect is at and what knowledge gaps exist. The goal is to identify their pain points and ensure that they have all the information they need to make an informed decision.

The key here is to not try and sell them anything yet, but rather focus on educating business personnel about the issues they are facing and how to create numerous touch points between them and your dealership.

UTILIZING TOP-OF-THE-FUNNEL CONTENT

Positioning your dealership as a trusted industry source through reliable, relevant content is key to engaging the prospective buyer. Consider circulating eNewsletters/ emails linking to articles tackling key industry topics.

Help buyers quantify their pain points with content that asks questions like:

“What are your biggest concerns with your current vehicles?”

“How many vehicles do you service annually?”

“How long does it take to perform a routine maintenance check, and do you handle this in-house or do you bring these vehicles into a dealership?”

Leverage content that offers insight into trends in the commercial vehicle industry to further build your credibility and establish your dealership as a trusted source of information on all things automotive.

Developing robust, branded content is so key in the awareness stage that even if you must invest in professional writing services for topical content, it is worthwhile.

ENHANCING ONLINE PRESENCE AND VISIBILITY

Creating a compelling online footprint that caters to your prospect’s specific needs is essential to capitalizing on an efficient content marketing plan. In the awareness stage, branding is the word of the day. You want to make sure that your business is recognizable as a leader in the industry.

This starts with having a strong website, but it doesn’t end there. You should also be active on social media platforms like Facebook and X (formerly Twitter), where you can share links to your blog posts and other content. If possible, consider investing in paid advertising campaigns through Google Vehicle Ads or Facebook Ads to drive traffic back to your dealership’s website.

Your dealership site must feature highly visible commercial branding. A prominent link to your dedicated “Work Truck”

site/pages is one of the best ways to generate a strong commercial identity for your business and create continuity between your messaging.

BUILDING BRAND RECOGNITION IN YOUR COMMUNITY

Sustained brand recognition requires not only an online presence, but also continuous networking and community engagement.

Being active in your local and regional trade and business groups can show your commitment to the area’s economy.

Supporting community initiatives and events regularly can demonstrate your commitment to the well-being of local residents.

KEY TAKEAWAYS

Addressing the awareness stage is a two-pronged effort:

Help the customer identify and quantify their pain points.

Build your dealership’s brand as a trusted resource in the world of commercial vehicles.

The awareness stage is the critical first step in the customer lifecycle, and it’s where your dealership can make or break its reputation. It’s important to remember that buyers are looking for a trusted resource that can answer their questions, provide information on available options, and help them make an informed decision. As such, you should take advantage of every opportunity to connect with potential customers and show them why your dealership is their go-to choice for their work truck and van issues/questions/needs.

THE CONSIDERATION STAGE 2

During the consideration stage, commercial vehicle buyers begin evaluating possible solutions to the issues identified during the awareness stage. They’ve determined what exactly their problem is, now they are trying to determine what options are available and how much investment will be required for different solutions.

PAIN POINTS

Key concerns for buyers include:

Available options: The buyer wants to know what options are available and how they work. This is a great opportunity for your dealership to help educate potential customers about types of vehicles and the latest technology and features that can help them solve their business’ vehicle needs.

Cost: The price of the solution poses elemental decisions for buyers. The prospective buyer needs to be certain that the cost will yield a solid return on investment.

Remember, buyers in the consideration phase may not have determined that purchasing a vehicle is the best solution for their problems. Also, bear in mind that your dealership can offer more than just vehicle sales. You are the expert in your industry and can provide solution ideas that may not be immediately apparent. For example, you can help a customer determine whether purchasing a vehicle is the best solution for their particular circumstance, or if an alternative would help them get the most value from their investment. Alternatives to a new vehicle might be an interchangeable truck body system or delivery routing software depending on the issues a business is dealing with.

ADDRESSING THE CONSIDERATION STAGE

Dealerships need to provide as much information as possible to the buyer at this stage, with a focus on helping the customer find an appropriate solution for their needs.

Publish content that highlights multiple solution options: Content that responds to the specific concerns of your target market has a crucial role during this stage. Now is the time your communications should articulate how various options can mitigate their identified issues, whether in the form of a vehicle purchase, vehicle upfits, or fleet management offered through your dealership.

Distribute content focusing on vehicle types: Commercial dealerships need to distribute information about specific vehicle types and models, as well as provide information on the comparative benefits of each vehicle option. Don’t forget the possibility for one vehicle to fulfill multiple roles. This is an important consideration for organizations looking to make the most out of their investment. Your job right now is to provide your target market with everything they need to make an informed decision about how a vehicle type might alleviate their dilemma. In addition, this content should be distributed across multiple channels to reach as many people as possible; think blog, email, Facebook, Linkedin, Google Ads, etc.

Social channels are extremely under leveraged platforms for B2B brands,” said Rick LaFond, Director Analyst in the Gartner Marketing practice. “Marketers can go beyond using social channels for flashy short-form videos promoting brand values to truly demonstrate how the brand supports different customer needs and pain points across various stages of the buying process.”

Optimize your website for search engines: Essential content must be easily discoverable by search engines. Ensure that your webpages, especially those focused on vehicle specifics, are SEO optimized to appear at the top of search results when prospects seek solutions. SEO best practices should include indexing efforts, whether using a sitemap or requesting indexing directly via Google Search Console.

Optimize your site for user experience (UX): Beyond just finding your site, users must be able to navigate it easily. Use clear, intuitive site design and implement UX best practices to guarantee seamless navigation to and around the commercial portion of your website.

KEY TAKEAWAYS

Like the Awareness stage, the Consideration stage is also a two-pronged approach:

Publish content that helps buyers decide what type of solution is appropriate for their needs.

Ensure your website UX is optimized to influence prospects to consider the options your dealership provides.

Your efforts here form stepping stones to the decision stage that follows. At this point, you have your prospect’s attention and you’ve established yourself as a trusted authority and influencer in the buyer’s world. The buyer has used provided material to choose the type of solution that will address their needs and they are ready to make a decision. They just need some help deciding where exactly to spend their hard-earned money.

THE DECISION STAGE 3

The decision stage is critical in the B2B buyer’s journey. It’s the point at which potential buyers have determined which solution is most beneficial and they are ready to buy. However, even at this stage, perhaps especially at this stage, potential buyers still face several impediments.

PAIN POINTS

Pain points in the decision stage may include:

Financing: Arranging for the funds to make the purchase can be a considerable hurdle. Businesses need to identify a financing method that suits their financial plan.

Availability: Limited vehicle options can force companies to compromise and choose solutions that may not exactly match their requirements.

Delivery: The timeline of vehicle delivery can significantly impact business operations, making this a pivotal criterion for decision-making.

ADDRESSING THE DECISION STAGE

The decision stage is when you want to ease any pain points that are holding your prospect back from pulling the trigger on a purchase.

At this point in the buyer’s journey, your focus should be on facilitating the final decision and ensuring the completion of the purchase. Here are some ways dealerships can reduce friction during this stage:

Optimize your website for search engines: Keeping your website SEO optimized continues to be critical. Prospective buyers will likely return to your site multiple times before making the final decision. For your website to appear in your potential customers’ searches, it should host a diverse range of pages featuring keywords linked to vehicle makes, models, and characteristics.

Optimize your site for user experience (UX): A seamless, intuitive user experience can significantly simplify the decision-making process for your prospects. Providing quick access to financing information, availability details, and delivery logistics can be crucial.

Engage prospects with direct response emails: Personalized, targeted emails can help address any remaining concerns. You can outline financing options, discuss availability, and supply information regarding delivery timelines, along with offering a way to connect with your commercial department team to take the next step(s).

Engage prospects with Google and social media retargeting: Retargeting can effectively nurture prospects at this stage, keeping your solutions top of mind as they navigate their decision-making process.

TO ADDRESS SPECIFIC PAIN POINTS:

Total Cost of Ownership (TCO): Now is the time to highlight your offerings that help reduce TCO. Whether your dealership offers favorable financing options, maintenance packages, fuel-efficient models, or warranties, ensure that this information is easily accessible to your prospects.

Availability: Communicate clearly about vehicle availability. If you don’t have something in stock, custom vehicle search platforms can help you quickly locate what your buyer wants. You can also embed easy-to-use order forms right on your vehicle detail pages (VDPs) to ease prospects right into your pre-sales process.

Financing: Offer comprehensive information about various financing options available to prospective customers. Consider partnering with a financial organization with a deep knowledge of commercial vehicles. Again, you can feature that financing option prominently on your VDPs.

Transportation: Everything we’ve covered on financing applies to transportation as well. It’s critical to display options on VDPs which are natural landing spots for buyers in the decision stage. You want prospects looking at those vehicle description pages to think of your dealership as the place that has solutions to their pain points, no matter if you are “in their backyard” or a thousand miles away.

KEY TAKEAWAYS

Overall, ensuring clarity and detailing customer-supportive options at the decision stage can significantly influence the business buyer’s journey, tipping it in your dealership’s favor.

NON-LINEAR APPROACH TO THE BUYER’S JOURNEY

People rarely take a linear path from prospect to lead to buyer. Your marketing must leverage content and pathways to engage buyers wherever they may be at any given moment.

Once a buyer moves on from the awareness stage, they will bounce between the consideration and decision stages many times before actually buying.

When developing your marketing strategy, keep in mind that buyers will often revisit content related to all three stages during their journey to purchase. It’s important to remember this when developing your strategy, as it will help you create content that speaks directly to each stage of the buyer’s journey.

As buyers gain knowledge of options and weigh the ROI for each option, they will, at some point, settle into the decision stage and your dealership must be prepared to deliver and delight.

THE DELIGHT STAGE 4

The delight stage is often viewed as the conclusion of the buyer’s journey, yet in reality, it’s the beginning of the next cycle. This stage emphasizes the critical role that postpurchase experiences play in fostering customer loyalty and perpetuating repeat business.

The objective of the delight stage shifts away from direct selling and focuses on transforming customers into advocates and promoters who can contribute to growing your business further. Growth can manifest as repeat purchases of commercial vehicles, a steady stream of revenue from maintenance and repair services, expanded operations into fleet management programs, and potential opportunities in passenger vehicle sales to the business customer and their employee base.

PAIN POINTS

After purchasing a commercial vehicle, customers may encounter several challenges, such as:

Customer service quality: Effective customer service can greatly influence how customers perceive your business, which can consequently impact their future purchasing decisions.

Maintenance and repair challenges: As vehicles age, important maintenance and timely repairs become paramount.

Resource management: Managing and tracking a fleet of vehicles can be a daunting task for your customers.

Expanding needs: As businesses grow and diversify, their commercial vehicle requirements will likely expand.

Staying current: Customers may struggle to keep abreast of new vehicle options, government regulations, and emerging technology pertinent to their business.

If these pain points look a lot like the issues that lead to the first step in the buyer’s journey, that’s because they are. This is why the delight stage can lead to a virtuous cycle.

ADDRESSING THE DELIGHT STAGE

(Strategies to Delight Customers)

To change these challenges into opportunities to delight your customers, you can:

Enhance the customer service experience: Adopt a proactive approach to customer service, addressing potential issues before they become problems. Always aim to provide efficient, helpful, and empathetic customer service - and seek out ways you can make your dealership stand out.

Assist with maintenance and repair: Either provide vehicle maintenance and repair services yourself or establish partnerships with trusted service providers. Introduce beneficial service packages and comprehensive warranty programs to add value for your customers.

Support fleet management:

Establish in-house fleet management solutions or connect your customers with dependable third-party providers. Show your commercial vehicle customers how utilizing fleet management solutions can help them effectively track and manage their vehicles, thus saving them money.

Identify and respond to growing needs: Stay connected with your clients, understand their evolving needs, and present solutions proactively to resolve their anticipated challenges.

THE CYCLE REPEATS

Understanding the cyclical nature of the customer journey helps you recognize the importance of sustaining customer relationships. By delighting customers each time they interact with your dealership, you set yourself up for repeat business and customer referrals.

KEY TAKEAWAYS

To summarize, the delight stage is not merely a closing stage of the buyer’s journey, but an initiation point for future transactions. Prioritizing proactive customer service, offering comprehensive care for the vehicles you sell, empowering your customers with fleet management tools, and staying in tune with changing needs will all help to ensure customer satisfaction.

Satisfied and happy customers transform from being strictly customers into industry advocates, promoting your business and contributing to its sustained growth. Use the same customer-centric approach when addressing the needs of each stage, and your dealership will be on its way to building customer loyalty.