The Time Is Now: Dealer/Contractor Relationships

The economy is good. Unemployment is down. The stock market is up. People are making money. Everyone is happy. Right? Hardly.

Many landscape contractors are concerned with the state of service that equipment dealers supply them. Likewise, many dealers say contractors don’t understand their responsibilities. And the lack of understanding and communication between the groups has the potential to cause a serious rift in the industry. And that is one battle no one would win.

“Dealers used to be service oriented, but they have changed over the past few years,” lamented Harold Wiggins, president of Twin Rivers Lawncare & Landscaping, Lexington, S.C. “I see dealers being maxed out with all of their sales and success, and they don’t have time to service what they sell.”

“For instance, I called a dealer on a Wednesday to repair one of my mowers. He said he might be able to fix it by the following Monday,” Wiggins recalled. “That is almost a full week without my equipment, and I cannot afford that.”

Adding to Wiggins’ frustration was driving past that same dealer and seeing a lot full of homeowners’ mowers lined up for repair. “Seeing all of those mowers ahead of mine tells me that dealer does not care about the contractor business,” Wiggins said. “I need my equipment to make a living. Susie Homemaker does not. And he is placing her equipment ahead of mine.”

Wiggins added one more thing: “He will never get my business.”

“Sure we serve the general public, but contractors have to take precedence,” said Dennis Klei, president, Klei Mower, Cincinnati, Ohio. “We have one guy in the service department that is strictly a commercial mechanic. When commercial equipment comes in, he works on it.”

For Klei, that decision is simply a matter of economic sense. “For every commercial mower we sell, that is one less homeowner cutting his own lawn. So we know what direction the industry is heading and we are doing our part to make sure the contractors are successful as they pursue that business,” he said.

In Wiggins’ case, the unwillingness of the dealer hurt Twin Rivers’ business and it hurt the future potential of the dealer’s business. Many contractors echo Wiggins’ claim that service is the most important thing they can get from their dealers. And many more say they are reducing their dealer network – those providing service will continue to get business.

“Our company survives only because we give good service, and I expect nothing less from my dealers,” noted Ron Dodd, operations manager, Wallace Landscape Associates, Kennett Square, Pa. “We deal with about a half dozen dealers, and only those who provide us with good, consistent service.

“As to homeowners’ mowers taking precedence over mine, well that doesn’t happen with my dealers,” Dodd said. “But that was the case with some of the shops I dealt with in the past, which is why I haven’t dealt with them again.”

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Dodd has given many dealers the opportunity to win his business over the past few years, trying an estimated 30 to 35 dealers in that time. “The ones I have settled on are the best of that bunch. The rest either couldn’t meet our service requirements or didn’t have the right product line.”

And, lest his current dealers get comfortable with their status, one warning: “If I could deal with three, that is all I would want to deal with,” added Dodd. “It would be much easier for me.”

Working with three dealers and trying to reduce that number further is Ken Roth, president, Vivicon, Tampa, Fla. “We are trying to use fewer dealers simply because it is more convenient to use fewer dealers. The less people you have to deal with, the less hassles you will have,” he said.

Roth said his primary dealer provides loaner equipment to cover the loss on warranty work that takes longer than 24 hours. “We have used the loaner on occasion, but generally his turnaround has been very good,” Roth said. “We have had occasions with other dealers where work was not completed in the allotted time, and have been given a variety of excuses why it wasn’t done.

“We switched dealers, and went somewhere else for service shortly after that,” he added.

But Roth is not sour on most dealers. “The dealers who have been here awhile and have been through the economic cycles know the importance of service. The economy is strong now, but if it starts to worsen, it will be the dealers who have continuously provided quality service that will survive. Some of the newer dealers haven’t learned that yet,” he said.

“Sure they try and attract you on price, but they cannot back that up with service, so they will not last long in a service-oriented business,” he added. “They will not have that relationship.”

A Common Goal

While dealers and contractors have their differences, they really have very similar goals. Neither one wants equipment sitting around the dealer’s shop waiting for repair work, especially warranty work. “We make very little on warranty work, simply because of the restrictions many manufacturers have on it,” said Bill Fisher, president, Progressive Products, Pensacola, Fla. “Some manufacturers are so stringent with the work and their payment program, it actually costs us money. “It would be much better for us if the contractors maintained their equipment better,” he said. “If they kept belts and other minor products on hand where they wouldn’t have to make special trips here to get the equipment running again, everyone would be happier.” Scroll to continue with content But whose responsibility is it to provide those tips? Ken Roth, president, Vivicon, Tampa, Fla., expressed interest in a dealer-manufacturer repair seminar. “I am not sure if it is taking money out of the dealer’s pocket, but it would be nice to have our mechanics get some additional training from those involved in the sale.” Roth said such a program would benefit the dealer as well. “It would enable us to get the maximum performance levels out of our equipment, which would keep us happier,” he said. “Simple maintenance goes a long way,” said Fisher. “We constantly see equipment here that has 15 things about to go wrong, and one thing that already has. When a contractor does not follow recommendations, we all suffer.” – Dave Clancy

DESPERATELY SEEKING. Landscape contractor seeks relationship with dealer’s mechanics. Must be loyal, understanding, and have the ability to communicate. Must also understand I am still getting over the broken relationship with my last mechanic.

Contractors emphasize the need for relationships between themselves and their dealers, not only among managers, but between the contractor and the dealers’ mechanics. “Their mechanics learn your company’s equipment. They understand your unique problems and needs and are more willing to work with you if they know you,” said Blake Smith, president, Quality LawnCare, Lubbock, Texas.

“Unfortunately, when they are gone, you have to start a new relationship with the mechanic who takes his place,” he added. “And that is a big concern because there is substantial turnover among mechanics. And much of that is not the dealers’ faults, yet they are often blamed for it.”

Smith pointed out that just like landscape contracting, repair work is a seasonal business. And in the winters, when revenues are scarce, mechanics often find other means of earning a living. “You can’t blame the mechanics because they need to put food on the table, so they go where there is money to be made,” Smith added.

And the difficulty lies during the following season when the dealers must search for new mechanics. And small engine mechanics are not easy to find for several reasons. First of all, in days where school systems are struggling to pay their bills, cutting classes is not just for students anymore. School boards cut classes from the curriculum as they trim teachers. Among the first classes cut are small engine repair classes.

Second, many mechanics profess an interest in working on automobiles rather than lawn mowers. And third, since equipment repair is a seasonal business, it is not always lucrative to go into a career where you will not make money for one-third of the year.

“It is hard to find mechanics, so we try and keep the ones we have,” said Richard Leonardis, president of Jersey Power Equipment, Clifton, N.J. “We have a standard of not laying people off during the winter because it is so hard to find mechanics.

“The difficulty is that prices keep coming down and margins are being reduced, yet the service demands go up,” he added. “We seem to be caught in the middle.”

Money is one area where both dealers and contractors constantly battle – not usually over price, but on payments and what is included in the price. Dealers constantly lament that contractors do not understand their margins and believe the dealers should be indebted to the contractors for their business.

“I think the contractor thinks that if he is spending $3,000 with me, I am making $1,500. In actuality, I am making about $250. In my market, there is an oversaturation of dealers, so pricing becomes a factor. And when the contractors pit dealer against dealer in a battle of pricing, it becomes hard for us to make any profit,” Leonardis said.

IT MUST GO BOTH WAYS. Tired of frugal minded relationships. Tired of giving and giving with no return. Looking for mutual gains.

Bill Fisher, president of Progressive Products, Pensacola, Fla., said that contractors don’t fully understand the overhead involved in his business. “If I sell something for $2 that I bought for $1, I didn’t make $1 on the sale. You have to take into account insurance, rent, utilities, taxes, wages and interest. I might walk away with 15 cents on that sale.

“And then we have customers who will drive 20 miles to save $50 and force us to compete with other dealers on price,” he added. “They force our margins way down, then expect us to be able to finance the service they desire after the sale.

“Don’t get me wrong, I want to service my customers, but when I have to loan out a piece of equipment because a repair took longer than anticipated, it costs me money,” Fisher pointed out. “The manufacturers make no allowances for loaners.”

So dealers are in a quandry of their own. How much can they cut prices and still make a decent living? “How far must I go to make a little money? At what point will I begin losing money? And then, how long will I remain in business?” Fisher asked.

One solution, according to Don Hess, president of Wilson’t Outdoor Equipment, Raleigh, N.C., is to not cut prices at all. “I do not cut my prices one bit,” he said. “Contractors might be able to get a machine cheaper somewhere else, but if I cut prices, I will not be able to afford to provide the service they demand. And we have demonstrated that this philosophy works. We have about 300 commercial accounts here.”

Hess said he has even refused to deal with some larger contractors who had pricing structure demands that would have hurt his business. “They wanted us to string out the terms of the sale where we were acting as their finance company. I am not American Express, so I would not do that. The money we would have made on the sale we would have lost in the long run,” he said.

And therein lies a big problem in the industry – making money. Everyone believes everyone else is making all of the money. And everyone wants their share. “Everybody says they want me to make a profit, but no one wants me to make it off of them,” Hess said. “Contractors must trust me to make a fair profit without gouging them.”

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Dealers claim that payment is a major issue in their profitability. “Many times it is not bad pay, but slow pay,” said Klei. “We wait for 90 or 120 days while our creditors are pounding on our doors. That hurts us and our capabilities.”

Klei said several bounced checks to his business several years ago have forced his company to stop accepting checks as payment. “We have set up a credit company where customers can get credit. Our credit company handles the billing, which solved that problem for us,” he said. “But once again we have to pay for that service.”

“It seems I am in court every other month trying to collect on bad checks,” said Leonardis. “That takes time away from the business, money from our profits, and forces us to cover those costs somehow.”

“We get hit on financing,” added Fisher. “Financing costs us 2 to 4 percent. And credit cards take 1.5 percent off of the top. That is another cut into our margins.”

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Hess said he believes his role is to be a partner with his customers. “I want contractors to make a profit – no, I demand it,” he emphasized. “If I see his business practices will not yield profitability, I don’t want him as a customer. He might make money short term, but I am looking for long-term relationships with my customers.

“Once I develop that relationship, price ceases to be an issue. They call me up and say they want a product in one hour and I need to get it ready,” he said.

That philosophy has served contractor Thomas Dunn, owner Dunn Lawn & Land, St. Louis, Mo., well. “We have been using our dealers for about five years now, and they do what they can to meet our needs. They provide us with personal attention that tells me they are interested in our success,” Dunn said.

“I am a big believer in that relationship,” he added. “If they help us succeed, they will succeed as well.”

But, he cautioned, “I still expect service. If they are carrying a particular product line, they had better have any necessary parts in stock when I need them.”

Dunn’s dealer experience is more the norm than the exception. He has weeded out the dealers unwilling or unable to provide the service he requires. And, as long as his current dealer base continues to provide the service and support he desires, they can look forward to years of mutually beneficial business.

And, for all of the complaints about dealers and contractors misunderstanding each other’s businesses, there is a willingness to work things through. “We are fighting each other and we shouldn’t be,” said Fisher. “That is all there is to it.”

The author is a freelance writer based in Westerville, Ohio.

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