As you continue to learn about the benefits of rental for customers, we need to also be keenly aware of what their expectations are. And so, this continues to be a very competitive business. And so, customers have real live expectations of having newer equipment potentially than maybe they could afford to buy themselves. And so, there is a real race between leading rental companies to have newer and newer equipment. I would say that on average, we are probably looking at an average age between 36 and maybe 39 or 40 months might be the average. As the recession was going on, the age of the equipment extended somewhere as probably 45 to 48 months for some of those. But conditions are better today. And so, customers expect newer equipment. I have worked with some dealers that thought that maybe it was a good idea to take some trade-in equipment and let's just put it in a rental fleet until we figure out what to do with it. I would suggest to you that that's probably not a very good idea. It's not a very good representation of your company or the services to take a used piece of equipment and put it in rental. It doesn't stack up well against what the competition is doing out there. So, I would suggest that you do not let your rental fleet become a dumping ground for everything that you can't sell or things that get traded in and we'll try to make a few dollars on that equipment while we wait to sell it. Customers are too smart for that. You're being evaluated every day. Meanwhile, they do want reliable equipment. And so, reliability has a lot to do with how well your processes are in your service department. Are the machines being properly inspected or are you in a real hurry up, turn it around in your shop and let's get this thing right back out the door and we're missing opportunities to properly inspect and check the machines to make sure that they are in safe working order as well as properly functioning. So, those things are tied together. The reliability of your fleet and how your processes work in supporting the equipment. So, I would recommend if you don't already have it, some type of tagging system. That is in place so that when someone in your service shop says this piece of equipment is ready to be rented, that it is formalized with some type of tag. So, then when the customer gets the piece of equipment, he recognizes that you do have some type of inspection process going on. There's a time and a date and someone's initials there that said this was good enough for rental. Customers also have high expectations for delivery schedules being met. Whether you choose to do this in-house or whether you hire a third-party transportation company, it is really important that you do what you say. And so, therefore, when you commit to a delivery time, stick to that delivery time. If you have to make a change, notify the customer and it is what it is. Same thing with picking up. Customers want to get rid of the liability from their job site. So, when they tell you to pick it up, they don't want it sitting there three days later. That's an aggravation to them. And they also, back to the delivery, they do not want their people standing around with nothing to do. If they are expecting the machine to show up and they've got an operator ready to go in the seat, they don't want him standing around for two or three hours waiting for the machine. They also expect the equipment to come out full of fuel. There are some dealers that are new to rental and they are not quite sure what to do in this particular situation. Let me tell you that the industry, for a long time, the norm is send the machine out full of fuel and the customer is charged for every gallon that it takes to fill it back up as he returns it, but they do not expect to have the machine delivered and then have to turn around immediately and source some diesel fuel. They expect to go to work. They do expect you to be able to get out there and support the equipment. Most of the time, rental equipment works within about an hour, an hour and a half of a product support capability. So dealers oftentimes have much larger geographic territories, but that starts to become a problem if I send the machine three hours away, which geographically may be in my sales territory. But when a customer is renting a piece of equipment, generally they are expecting a more immediate response. So I would suggest that if you are new to rental or you're struggling with supporting your machines in the field, that you come up with some type of limitation according to your service capabilities and the distance that you have to go. So one of the things that is new these days with Tier 4 engines and modifications that are happening in that way is this diesel exhaust fluid. And so it's not reasonable to expect a customer to have access to this type of thing or that they're going to refill it. And so this is going to be something that you can add value to the customer. You're going to have to somehow monitor these fluid levels and maintain them. And whether you can get away with charging them for that stuff, I don't know. The customer's perspective is that two years ago, that wasn't a requirement on this piece of equipment, and why do I have to pay for it now? So it is just part of the service that you render to maintain that equipment. And then lastly, periodic service. Most of the rental industry does not charge a customer for showing up to maintain the equipment. Now, if the customer has done something to damage the equipment, that's a different story. But to go out and inspect the machine, potentially top off some fluids, grease, lube the machine, that's kind of all inclusive in the rate. And so customer's expectations have been shaped by many of the other people in the rental industry for a long time, and so you're going to have to, for the most part, play by those rules. So let's take a look at some more customer expectations. Trade credit is a huge part of being successful in rental. Contractors are trying to use leverage to be able to do their work. So they're going to get some trade credit for the materials and supplies that they buy, and they're going to do work, and they're going to get paid, and then they're going to turn around and play that supplier. And we as equipment distributors and rental companies, they do the same thing and expect the same thing for us. They are probably not going to... I don't think it's a reasonable expectation for you to think that a commercial contractor is going to pay you with a credit card at the time that he picks up the machine or write you a check. I think it tends to be more... They're expecting 30 day terms, and that is... They can get it other places. So for you to be competitive in the marketplace, you have to meet these expectations. Competitive pricing, no one's expecting you to be the lowest price, but I will say that a 20 ton excavator, there is a market price. Wherever it is you live, if we went out and talked to contractors about what's a 20 ton excavator rent for, somebody's going to know the number and it's going to be consistent. And so it doesn't really matter what brand you have or how much you paid for yours or how much your light bill or how much your building costs. For you to be in the game, you're going to have to have some competitive pricing. So you have to be in there and I'll tell you that the prices have already been established for the most part, and you're going to probably have to work within that framework. Customers also expect that if you happen to have aerial equipment or things that might require safety training, they're going to expect you to be able to help support them in that way. That is just part of an expectation that someone at your place potentially can provide the certification training that would keep them in compliance and also keep them safe. In the rental business, it is not reasonable to have one of anything. In most cases, you've got to have two or three or four units because even if it never broke down, if you've got it out on rent, then you don't have any for anybody else. So customers expect you to have a fleet that they can count on. I have worked with some dealers in some foreign countries that were thinking about getting into rental, and the question was, how many machines do you think I need? And so obviously, we have to look at market opportunity, but when you're talking about trying to convince a contractor who typically owns a lot of equipment, he's going to evaluate you and your ability to support him by how many machines that he sees or knows that you have. So available fleet and having backups is very important, and customers have a legitimate expectation for that. When it comes to your location, so we talked about this in the earlier module about dealerships and where they tend to be geographically versus rental companies. Rental companies oftentimes have a more convenient location relative to where growth and development is, and so whether the customer comes there and picks up the equipment or they just have to have it delivered from that spot, it's potentially cheaper because of the location that the equipment's being sourced from. So that's a reasonable expectation from a customer, is to not think that they have to pay because your location may be 50 miles farther away. In so many words, that's not their problem. They wanna rent equipment from you, but your transportation is a function of how close you are to the job, and they expect you to be somewhat convenient. They expect your store hours to be convenient. So if you have a habit of opening at, let's say, 7.30 or 8 o'clock, you may be missing opportunity in the marketplace because you're really not in step with what your customers are doing. Many of them want to be on the job by 7 or 7.30 in the morning. And lastly, your customer has real expectations that you've got some problem solvers at your place, people that can listen to a particular problem being explained over the telephone, and they can have some sense of what type of equipment might be necessary to solve that problem, or how big a piece of equipment you'd recommend, how fast could I expect to get this done, what's the difference between a particular model from a competitor's machine versus your machine. So customers expect a rental supplier to know competitive machines, and they expect you to know capabilities of your machines. So let's take a look at the top 10 rental companies in North America as of spring of 2015. These are the companies that are helping establish the expectations of your customers. These folks are working very hard each and every day to create great customer experiences with renting equipment. As you can see the number of locations, just by the top three gives the customer great flexibility when they move around as a contractor from potentially one state to another, or being able to go in different regions of the country. It makes it much easier for a customer to know that when I go from Alabama to Georgia, that rental source is gonna know who I am. I'm already gonna have an account established, and they've got all my rental history on their computer. That's not true in the network of equipment dealers. That's a handicap for equipment dealers in being able to entice some customers that may come in from other areas, because the customer basically has to start from scratch in terms of explaining who they are, getting credit set up, and that type of stuff. So an equipment dealer, a local equipment dealer, is at a disadvantage right off the bat. These same companies, the top tier, these folks, besides having lots of locations and a broad offering of equipment, they have very robust computer systems. Some of these will allow contractors to come online through a portal and manage their own account, be able to make requests for different types of things, do quotes. Also, if you go and look at the websites for many of these guys, they are in the business of selling used equipment. And so these guys, not only are they direct competitors against you, an equipment dealer for renting equipment, but as well, when they get ready to roll out their rental fleet, these guys, and many of them, can provide financing for a customer. So they are direct competitors with you. They are chasing your customers, and they are trying to allow your customers to have a better experience doing business with them. So it is a tall mountain to climb relative to competitive forces in the market out there. Lots of locations, broad offerings of equipment, and using IT and leverage. And so dealers have to be real smart to compete on a local level. So let's take one last look at this roadmap for value add to an end user. As you recall, in the first module, we talked about an OEM working through a dealer distributor and providing added value to an end user. And then these rental stores showed up, and they had a different value add for the customer. And now you've got national rental companies out there, and you've got manufacturers that have their own rental division. So the customer has all kinds of options available to them, and they are being told each and every day, here's what we can do for you. So the value add proposition is very strong. So as an equipment dealer that may have been very good and continues today to be very good at your value proposition for being a dealer, the thing you have to look at yourself in the mirror and say, do we stack up with the value proposition for rental? Because the customers have high expectations as we have looked at them. So it is not sufficient enough just to be able to offer a piece of equipment for rent. We looked at the variety of things that have to be in place to be competitive in the market. And so the challenge is for you to be able to evaluate your dealership and the operations and say, do we have an attractive offering for rental? In closing out this module, I again remind you to please take advantage of the participant workbook that's been provided. There are some great exercises in there for you to learn about the competitive forces in the marketplace today, as well as some very thought provoking questions that will help you become more of a rental professional.

customer expectations

rental industry

efficient service processes

competitive pricing

customer experiences