The Four Dimensions Every OEM Network Review Should Cover
Most OEM dealer reviews follow the same script.
Market Share. Retail versus target. Stock levels. A glance at the P&L.
Then everyone shakes hands and books the next quarterly.
· The OEM knows how many machines the dealer sold.
· The OEM has very little idea how healthy the business behind those machines actually is.
The P&L and balance sheet are scoreboards. They tell you what happened. They don't tell you why, and they don't tell you what's coming.
The strongest networks I've worked with look at dealer development across four dimensions: Markets, Customers, Operations and Management.
Here's how each one looks from the OEM side of the table.
1. Markets: You're measuring the wrong share
OEMs are very good at measuring whole goods penetration.
Almost none measure aftermarket penetration.
Yet most machines your network has sold over the last five years are still in the territory. Every one of them consumes parts and labour every year it runs. That parc is the aftermarket opportunity, and you already have the data to size it.
The logic is simple:
· Machines in the field, by product category
· Multiplied by typical annual parts and service spend per machine
· Equals the aftermarket potential in each dealer's area of responsibility
Compare that to what the dealer actually invoices, and you have an aftermarket capture rate.
In my experience, most dealers are capturing far less than they think. The rest is leaking to independents, to online parts stores, or to customers simply skipping maintenance.
Take it one level further. Rank the dealer's customers by the gap between their potential spend and their actual spend. The accounts at the top of that list are where the next year's growth sits.
The OEM question: Do you know the aftermarket capture rate of every dealer in your network? If not, you're managing the smaller half of the business.
2. Customers: Revenue isn't the same as value
Most dealers can tell you their biggest customers by turnover.
Far fewer can tell you their most profitable customers.
Three tools are consistently underused:
· Formal key account management. A written plan for each major account. Who decides, who influences, where the competitor is, how the relationship gets stronger.
· Customer profitability analysis. Rank customers by gross profit, then by gross margin percentage, for each revenue stream: machines, parts, service, rental.
· Margin discipline. Find the median margin. Then ask why some large accounts sit well below it while near-identical customers pay full rate.
The OEM question: Does your network know which customers make them money, or just which ones keep them busy?
3. Operations: Stop reviewing history
Monthly accounts arrive weeks after the month has closed. By then, the damage is done.
High-performing dealers run on leading indicators. Numbers that can be acted on this week, not explained next quarter.
The core set I'd want to see in any dealer review:
· Absorption rate
· Service recovery rate and technician productivity
· Gross margin and profit after direct expense, by department
· Parts fill rate to the workshop
· Parts stock turns and obsolescence
· Used equipment turns
· Debtor days
None of these are exotic. All of them are available in a modern DMS.
What's missing is the habit of looking at them. On both sides of the relationship.
The OEM question: Are your field teams equipped to discuss absorption and recovery rate with a dealer principal? Or does the conversation stop at retail units?
4. Management: The right people in the right seats
Every department needs a leader who can set the pace and hold it.
Sales, parts, service, and used. Each one needs a manager who understands their numbers and owns their plan.
In my experience, the most powerful single intervention is getting the whole leadership team in one room, working on the business together:
· Benchmarking each department against high-performing peers
· Reviewing what good practice looks like
· Each manager building and presenting their own action plan
Three things happen almost every time.
Silos break down. The relative strengths and gaps in the management team become obvious to the owner. And everyone leaves speaking the same language, focused on the same priorities.
The OEM question: When did your network last invest in the dealer's management team, rather than just its sales targets?
What this means for OEMs
Dealer development isn't a sales target with a support programme bolted on.
It's four dimensions. Most OEM review processes cover one of them well and the other three barely at all.
The networks that win over the next decade won't be the ones with the most dealers. They'll be the ones whose dealers are strongest across all four.
That starts with what the OEM chooses to measure, and what its regional managers are equipped to talk about.
Which of the four dimensions does your current dealer review process cover least?
If you're a channel director or regional manager looking at how your network reviews are structured, drop me a message
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