Whether in the automobile or mobile phone consumer market, companies will divide customers into high-end, mid-end and low-end customers. Different customers have different needs, and different brands have their own target customers. However, in the construction machinery market, many companies seem to be reluctant to distinguish between customer groups. They think that the larger the target customer group, the higher the probability of a transaction, so they are unwilling to choose customers, thinking that the higher the market participation rate, the greater the chance of sales. The bigger.
Many companies lack a clear marketing strategy and try to provide products and services to all customers. The result is lack of differentiation, and competition has evolved into price and payment terms competition. It seems that as long as the price is low, it can increase sales and market share. .
Is the customer's expectation really just a lower price?
Customer perspective of outstanding service
For the services provided by the company, the customer's expectation is to help them reduce maintenance costs and reduce the effort and time spent. Specifically, how to reduce maintenance costs, save labor and quickly solve equipment problems. When a company achieves the ultimate in the three dimensions of cost, effort and time, that is the best service in the eyes of customers!
Many companies are clamoring to meet customer expectations, but is the company's expectations for the after-service market consistent with customers? Not necessarily, the business owner's requirements for service are very simple: reduce service costs, increase after-market profits, and improve service response speed. Many companies have limited service budgets, so if you can save them, you can save them. Because the profit created by the market after the service is not much, cost control becomes very critical. Therefore, most companies are not well paid for service personnel, and the number of personnel is insufficient.
After careful comparison, we can easily find that the service requirements of the enterprise are not consistent with the customer's expectations, and the two sides are just solving the problem quickly. However, to achieve rapid service response, it is inevitable that service costs will increase, which runs counter to the expectations of business owners.
If companies and customers have different perspectives on service, it is a luxury to meet customer expectations and increase customer satisfaction and return rate. In recent years, companies have tried every means to increase aftermarket profits and reduce service costs, but it has resulted in the loss of more old customers. This also proves that the benefits are different from another aspect, and it is very difficult to achieve a win-win situation.
The main factors affecting customer profitability
Construction machinery equipment is a means of production, and customers buy equipment for construction and making money, and making money is the most fundamental demand of customers. Although the initial purchase price of the equipment will affect the customer's return on investment, the selling price of the equipment is not a decisive factor.
Caterpillar once sponsored a survey project on customer costs and profits for the entire life cycle of equipment. The survey involved all costs and benefits in the full life cycle (approximately 10 years) of more than 25,000 equipment. Figure 2 lists the impact of equipment benefits. The research results show that every 1% increase or decrease can increase the profit of the equipment by x%, and the first 5 items are directly related to the quality of the service, which fully demonstrates the importance of the service.
The impact of equipment purchase prices on customer profitability ranks 7th only after equipment attendance rate, operating cost, and equipment integrity rate. Unfortunately, sales staff do not understand the results of such surveys, and of course they will not instill such concepts in customers. What they can do is keep lowering prices and rushing into the vortex of price wars desperately. Therefore, we see that many customers simply compare the price and payment terms of the equipment when choosing equipment. Many sales staff are also switching jobs between different brands, looking for the most competitive brands to sell.
Caterpillar agent Finning International's service and parts revenue in 2020 is as high as US$3.47 billion, contributing 60% of the company’s turnover. One of the important reasons is that they provide customers with many customer support agreements CSA, the implementation of service agreements It helps users improve the productivity, attendance rate and intact rate of the equipment, reduces the operating cost of the equipment, and at the same time increases the value of second-hand equipment. Finning International has promoted the differentiation of competition to the field of service, so that customers can taste the benefits of high-quality service.
However, few Chinese agents provide customers with long-term and comprehensive customer service agreements, and the loss of the market after a large number of services is also an expected result.
Are users really the beneficiaries of the price war?
Many companies regard price wars as an immediate marketing tool, but have never thought about the consequences of price wars. Just like many years ago, some companies chanted the slogan of "free service for life", thinking that this would attract more people. Users come to buy their own equipment. The result? Competitors are afraid that you will have a competitive advantage and will shout the same slogan. You did not win one more user because of the free service, but gave up half of the market after the service. Is it stupid?
Companies rely on continuous price cuts to attract more users, which will be effective in the short term, but at the same time, companies are also "punishing" old customers who bought products before, because they trust your brand to buy your products, but for nothing. The land paid a higher price, investment income and the price of second-hand equipment are declining, what would they think? In addition, the price war entices more users to buy the product, but the amount of work did not increase, resulting in the start of equipment Rates have fallen, and users’ return on investment has fallen, making it harder and harder to make money.
A customer in Sichuan told me that in the past, the equipment price was high, but the project income was also high; due to the price war, companies oversold a lot of equipment in the market, the competition became more intense, the shift fee was declining, and the money became more profitable. The more difficult it is, the risks are rising. He would rather not reduce the price of the equipment, and his profit would be higher. Obviously, users may not be the beneficiaries of the price war.
When equipment fails, what users need most is to quickly troubleshoot and restore equipment operation, rather than saving service costs, because once the equipment is shut down, the user will suffer greater losses. It is undeniable that free services have affected the overall quality of service personnel and reduced service response speed. Users are not beneficiaries of free services.
Price wars and free services have reduced manufacturers’ profits and made it difficult for agents to make money. Old customers feel that it is a loss, and it’s harder for new customers to make money. Who is the winner? When users don’t make money, what does it mean for the industry? When users don’t make money When it comes to money, it is the beginning of the industry's decline. Therefore, people in the industry cannot rush for quick success. We have to take responsibility for the healthy and sustainable development of the industry. Price wars and free services are not beneficial to the development of the industry. Although the profits of many manufacturers will increase in 2020, it is the result of the huge market growth rate. Is such growth sustainable? Once sales decline, will the company repeat the same mistakes as the previous round of market decline? ?
Price war is a sharp double-edged sword, which can kill competitors as well as yourself. As Professor Porter of Harvard Business School said: "Competitors fight price wars, and you also fight price wars. It is impossible to gain a competitive advantage in this way."
I often wonder: Why do Chinese people always like to fight price wars? In many areas, as long as the Chinese enter, they will be "nothing". This is not a compliment to the Chinese, because it is difficult for us to say "No!" at the time of temptation. The result is very fast. Keep the price to the lowest level, making sustainable development more difficult. Why don't we dare to mention the value? Because many times we don't understand the value.
After a few years of interruption, sales and market share have regained the top position of the performance indicators of the OEMs. The price war has been smashed, and the credit risk is also quietly rising. Everything is so similar to 2010, but Please don’t forget: the number of equipment in the Chinese market ranks first in the world. We have entered the stock market. It is idiotic to imagine that the market continues to grow at the rate of last year. When the market declines again, are you ready ?
