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Selling Rental Consumables
Add On Sales Create Add On Profits
Whether your customer calls in an order, a customer walks in your front door, or your sales representative brings in an order, you are appreciative of the sale. After all, not counting the hardware and lumber yards that have a rental department, there are already enough competitors in your market.
However, are you leaving money in your customer's pocket? If we could listen in on the conversation between the customer and your salesperson, what would we hear? The concern for the money left in the customer's pocket occurs when the customer asks your salesperson if they have any recommendations as to where to buy related or accessory items.
Of course your rental center is going to carry blades for a cut off saw. And while selling designer sheets may be a bit too much for those rental beds, there are plenty of items that are in the "middle ground" that you should give consideration to. The reason for selling these retail products is the fulfillment of an old adage; "The dog with a full food bowl, does not go looking at other dog food bowls".
The translation of this for your business is fulfilling the need will keep your customers out of the competitor's business. If the customer goes into the competition to pick up the items you do not sell, then they will undoubtedly be exposed to many of the same items that you are renting to them.
Anticipating that you have a limited budget for this venture, we have created a list of questions you should ask yourself, along with some ideas to share with you as you answer the questions.
Question #1. What should I sell? The most requested items will likely be those that most directly relate to the item you are renting. If your customer is renting a chain saw, they may be needing a pair of gloves, ear plugs or goggles. For a customer renting a floor sander, you could even sell the floor finishing sealants, rollers, and handles.
The key to how many products you can sell will be in the knowledge you have about the entire process needed to complete the task. For example, if your sales staff only knows how to operate the floor sander, you probably will not get much accessory sales. Yet if the salesperson knows how to refinish a floor from start to finish, you are more likely to be able to sell all of the products to complete the task. With many rental centers, answering this question will help you decide which products you rent will warrant your adding accessory items.
Question #2. How do I sell these items? This is where technique and salesmanship enter the picture. Most of the pieces of equipment you have for rent have a list of suggested safety equipment. And, each of your employees are probably already knowledgeable on how to use each of the items as well as knowing many of the accessories that could go with the rental.
The salesmanship begins by asking the customer if they have the various accessories. For example, "Are the goggles you have in good shape, or are they all scratched up?" This is inviting the customer to think about what they already have. With a log splitter, you would perhaps ask about the gloves the customer owns. And when they decide to purchase new gloves, you will see a double digit sales increase when your salesperson asks, "Is one pair enough, or would two be better?" Now you are selling a pair to the person who will be helping your customer.
Another proven sales technique to increase your accessory sales is to have your salesperson take the suggested item off of the shelf or peg hook and offer it to the customer to look at. You can again expect a double digit sales increase when the customer takes the item in their hand to examine.
Question #3. How should I display the items? The best location for the accessory and related items is next to the product you are renting. As your salesperson is explaining the equipment and rental rates, they can utilize the techniques we outlined in the previous question.
Question #4. How should I "tie in" these items to my rentals? If you and a competitor are both renting a welder for the same rate, you may want to have your rental include a pair of goggles. This eliminates the customer making an "apple to apple" comparison of the rental price. If you advertise in a local newspaper, you would want to mention these add on products that are a part of renting from your center.
Question #5. How should I price the items? There are two key factors that will determine this. The first is to determine who is your competition, and the second is deciding what brand you have chosen to stock. Answering the second question first, in stocking accessories you will need to shop the other rental centers, hardware and lumber stores, and the big box stores, to see what brands they are carrying.
Choosing to sell then identical product as them will mean that there is an established price in your market. However, if you stock brands which are different, and you have educated your sales staff, you can explain how the quality of the gloves you stock are superior to the brand of gloves stocked by the competitor.
As for guidance on the margins you can get, note that the national average for the type of merchandise sold in the hardware and lumber industry is in the range of 38%. This means that for an item selling for $10, there is a cost of approximately $6.20. Again, brand and market conditions will cause this to vary.
Question #6. How much of each should I stock? With this question, there are two concerns we want to make sure you consider. The first is to ask how long it will take you to get replacement merchandise back on the shelf. The second question is to ask how much any one customer could purchase. Returning to the example of the floor sander and a rental center stocking the 5 gallon cans of floor sealer, it would be helpful to know how many of those 5 gallon cans the average customer could use.
You are more likely to lose the sale when there is only one can on the floor and the customer needs three. Telling the customer, "We can get more" can often send the customer out the door and to the competition.
Question #7. Can I be stocking too many items? Absolutely! After all, you are a rental center first. However, unlike rentals where you have to consider the utilization rate, an item you are selling is going to sit on the shelf until it is sold. Few items have expiration dates to them.
The other concern is to again point out a comparison to the hardware and lumber industry. Those retailers are looking to "turn their merchandise" three to four times per year. That means on average, the pair of gloves they are selling today will be reordered three or four times in the next 12 months. You can become inventory heavy, and greatly reduce your cashflow, thus hurting your primary rental business.
As you display merchandise remember it will take up some of the same square footage of your sales floor that could be filled with the items you rent. Rental items should be your bread and butter while sales should just be the icing on the cake.
Question #8. Should I give special prices to customers who are renting items? Most businesses we have spoken with have always looked for ways to get out of a situation like this that they already have created, or one they have inherited from the previous owner of a business. The potential problem you run into is the customer who wants to buy the gloves at the special price today as they will remind you they rented the saw six months ago but did not need the gloves at that time. If you can use a special price to close the sale, it may be good for you. However, it can often lead to a messy situation.
All of these questions when answered to your satisfaction will probably lead you to stocking more accessory items in your rental center. And if you are still thinking about whether or not you want to follow through with the idea, remember that your competitor - be it another rental center or the hardware store with a rental department - goes to great lengths to invite customers into their business. You do not want to be helping your competitor by sending the customer to them to pick up the accessory items.
This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
Profits Plus Solutions, Inc.