Help Your Customers Increase Profits With Extended Warranties for Fleets
For customers of your construction equipment dealership, one consideration stands out: if they can’t control costs and keep equipment working, they cannot make a profit. As a dealership, you’re in a perfect position to help customers spec exactly the right machines for their business and keep that equipment on the job day in and day out. Creating a “cost-of-ownership” evaluation checklist and offering extended warranties for fleets are two significant ways you can help.
Total cost of ownership, sometimes called “real” cost of ownership, is the ultimate bottom line that defines any machine’s value for your customers. Contractors know relying solely on purchase price isn’t a business-savvy approach, but calculating TCO can be complex. They look to you as their knowledgeable dealer – and trustworthy working partner — for assistance.
Here’s how you can create a cost-of-ownership model to help your customers.
A truly useful model takes a holistic approach, because every decision your customer makes regarding equipment ultimately affects their financial position.
Financing is the first consideration.
Should they pay cash? Obtain a loan? Rent or lease to own? Each of these options has a different impact on capital and/or monthly outlay, but in every case that number is predictable for budgeting, even to the point of offering seasonal variability. A key factor here is how long your customer anticipates owning the machine.
Renting gives customers a chance to test-drive equipment before they invest in ownership. And leasing has been steadily gaining in popularity as a financing option. One reason may be that the lease can sometimes be packaged with a maintenance agreement or warranty that stays in effect for the length of the contract.
Operating expenses dramatically affect cost-of-ownership.
Acquiring the machine is just the first step. Computing expected costs of operation and maintenance enables you to help customers compare equipment models and options to determine the best long-term value for them. Fuel efficiency and reducing wear-and-tear are the two best ways to minimize operations costs.
To compute projected fuel costs, determine your per-hour cost (gallons per hour x dollars per gallon), then multiply that by the total hours you expect to operate the machine. Remember that working in more difficult conditions uses more fuel.
Customers should also compute the projected cost of replacement parts and consumables over their expected “ownership lifetime.” That includes bucket teeth and cutting edges, bushings, pins and wear plates, tracks or tires and so on as well as oil and filters. Include labor costs for regular service and preventive maintenance, too.
Extended warranties for fleets benefit both your customer and your dealership.
Whatever equipment your customers buy, you can help them protect it by ensuring your service technicians are well-trained and by advising customers on operational best practices. Nonetheless, no matter how kindly customers operate equipment, construction, landscape and similar job sites are a naturally harsh environment. Wear-and-tear happens.
Extended warranties protect customers from costly downtime as well as potentially catastrophic out-of-pocket expenses that come when machines break down. Warranties can be a real life-saver, especially during the busy season. Tailored options enable customers to choose how much coverage they want, depending on how much they expect to use that piece of equipment and just how tough the working conditions are likely to be. Extended warranties can protect the powertrain, powertrain plus hydraulics or the full machine.
When you offer these warranties as a direct service of your dealership, you’re reinforcing your position as a first-choice (and first-class) resource for customers. With the unique Protect My Iron® program, you also earn new revenue for your dealership. Protect My Iron® extended warranties are ideal for individual machines or entire fleets, and its proprietary software makes it easy for you and your customer to store and track warranty information, including claims.
Providing specialized tools such as cost-of-ownership assistance and extended warranties for fleets helps build a strong, lasting relationship with each customer. And that helps everyone increase profits.