As we have talked about KPIs and some of the reports that you might choose to look at on a weekly, monthly basis, I'd like to talk to you about why machines are underperforming, or basically, why aren't they renting? I'd like to quickly go through a list of things that I have found over the years really are issues, and you need to figure out how to address those. Believe it or not, even in the rental business, there are customers that have real brand sensitivity or brand loyalty. It could be that you're up against maybe a leading brand or a particular model that is considered to be the leader in the industry because of its speed or capability somehow, and that's a difficult one to overcome. Features on the machines, kind of the same thing. Maybe you haven't bought the right models for the market that you're working in, and you just don't have the right features, and so your machine is considered a last resort. It could be associated with attachments. I can tell you that more and more people are trying to get utility out of their excavators, especially mid-sized mini excavators, and if you don't have a thumb on it... I was recently talking to a manufacturer that said they're shipping their minis, approximately 80% of them, with thumbs. So your machine configuration, is it track, is it rubber tire, what type of tread is on the tires? A lot has to do with whether the market wants your machine if they consider it to be a very productive machine. So competitive forces can put pressure on you to potentially add features to a machine that maybe you wouldn't normally do. Years ago, loader backhoes, no one had four-wheel drive, and then somewhere in the mid to late 80s, four-wheel drive became popular, and whether customers needed it or not, they requested it. And so if you had a two-wheel drive backhoe in your fleet, it was likely to be there until all the four-wheel drive machines were out. Transportation is a big deal. Do you have enough trucks to be able to get it there, or do you have to say, no, you'd have to be third or fourth delivery in the morning because we only have two trucks? That can actually be a negative for you and keep your fleet from renting. It could be that your rates are too high for transportation. The logistics has a lot to do with the number of locations you have and how strategically they are located. Your fleet mix has a lot to do with someone thinking that they've got a project, and if they're going to have to go to two or three suppliers to basically get all the equipment, but they could go to another supplier and, for instance, get an excavator to dig the trench, and then they can get compaction equipment to put the dirt back, and potentially a patch asphalt roller to put back the road or the parking lot where they've had to do some work. Those have a lot to do with somebody selecting your excavator or your wheel loader because they can get some of those other things. So fleet mix has a lot to do with whether you are renting your core products. Additional considerations. Maybe you've just flat out got too many units, or maybe you don't have very good pricing strategies. The relationship between your weekly rate and your four-week rate, maybe you should take a look at that, or maybe you've got a hard policy on discounting and you're not competitive. It could be that your outside salesmen are more PR guys rather than solution providers, and maybe they're staring at opportunities every day and just not recognizing them, or they don't know how to ask for the order. And it could be that you're missing opportunities because maybe your rental coordinators don't know all the applications. So when they're talking to a customer on the phone and he describes what the challenges are, your inside guy just is clueless. They don't know what machines to recommend and that type of stuff. The next couple of items, field service support and poor quality control, it could be that the community has started to figure out that you guys don't do a very good job in that area. And so therefore when they rent from you, unfortunately they're going to meet a mechanic in a day or two. Not a good idea. So quality control can be one of the reasons why your fleet's not performing very well. And the loaners is a really, I believe, a big deal with most dealerships because the sales department oftentimes is reaching over in the rental department and grabbing a machine and putting it out to satisfy some requirement that they have. The service department may be behind in repairing something for a customer and they reach over in the rental department and they get a loaner and you as the rental manager are then standing there and half a dozen of your units are out more or less for free. I believe that these things, every one of them needs to have a rental agreement and the charges should go back against that department so that there's a recognition of this rental department more or less bailing out those other departments. And as long as there's no negative financial impact to them, then they will continue to kind of bleed off units from your rental fleet, which is going to show poor performance on your part. So I believe that loaners, you need to have a real policy in place of how you're going to handle that so that we can record the activity even though a customer ultimately may not be paying for it. Seasonality is pretty straightforward. You could just be in winter months and that's why we're down and you need to look at it from a broader view rather than say, for instance, the month of December or January. Your service processes, I want to be able to show you what this really means. It really has to do with your machines coming back from rent and getting through your system. And so pay attention to the boxes that are red. So the machines come back into the yard. And how long does it sit somewhere before somebody actually does something to it? It's got to be refueled. Somebody's got to do an initial inspection to it. The machine's got to be washed. Generally speaking, it's going to be moved into another area where somebody's going to inspect the machine. I personally don't think you need to open a work order for each and every time a machine comes in and out unless there's actually something broken. But the time period that the equipment is in your yard in the service department, more or less on the backside of the building and not available for rent, that's something that you control. And so it needs to be an ongoing measurement for you to try to figure out how much of my fleet is sitting back there not being attended to. And are you getting preferential treatment when it goes through the service department? Or do they try to repair everybody else's machine before they do the rental? So this is a key area for most dealers. Additional reasons why machines don't rent is it could be that you don't have a very good marketing strategy. I mean, you really are not really focused on any particular group, and that needs to be addressed. It could be that the sales effort is not very focused. Oftentimes, machine salesmen are out there trying to sell machines, and if they can't sell, then their default on the way out the door is, oh, by the way, you don't need to rent anything today, do you? Well, that's not exactly how we create relationships with customers to be able to create a pipeline of ongoing rental. It should not be an afterthought. It should be a primary focus because there are some clients that that's exactly how they plan on sourcing equipment or a majority of the machines is through rental. So we need to be looking for conversations and creating conversations that talk about strategic use of rental. And if we don't tie a salesman's compensation to rental activity, then you can pretty much assure yourself you won't get any. You could have facilities that are cramping your style and you're just kind of on top of yourself. So there's not enough staging area. We don't have enough place for the ready line. It's kind of spread all over the yard. Your computer system can be a handicap, and one of the reasons that is is because if you can't see availability and you can't create reservations for things, then it's difficult for you to say whether we've got it available or not. Hey, I'm going to have to call you back. I've got to check. Or you don't trust the accuracy of your system. So your system needs to basically support all of your processes. You need to be able to see how many of your machines are in the being serviced, how many of them have been called off rent and aren't back in the yard yet. Your credit policy can be a detriment to your renting equipment. Let's face it. Contractors use rental as a form of leverage to go out and do their work, just like they use trade credit when they buy materials. And so if your credit policy is too tight, it could be handicapping you from being able to do more rental. And obviously competition in the marketplace can push back against things that you're trying to do, and it can have negative impact. And then some of your items, they can turn into just a commodity. As I mentioned before, loader backhoe in many markets is getting hammered as far as rental rates. It could be that the 6,000-pound, 36-foot forklift is also something that is just considered a commodity. And so it stays busy. You just don't make much money with that. And then lastly, market segments. You really need to look and see does the fleet that you have, does it line up well with any particular market segment or not? I think it's a key ingredient in understanding your marketplace, is look at your customers. What is it that they do all day? What type of equipment do they typically use? And you need to align yourself with good matchups. In other words, the type of products that you represent, you need to find markets that need that exact type of equipment.

rental business

machine performance

rented machines

pricing strategies

market segments