From dumb iron to Big Data: Caterpillar's dealer sales push
By James B. Kelleher
(Reuters) - Caterpillar Inc has a long tradition of proudly - and publicly - proclaiming how much it loves its dealers.
In recent years, the Peoria, Illinois-based company has called the 178 independently owned businesses that distribute its earth-moving products worldwide everything from "a critical competitive differentiator" to "the foundation" of its success.
Now the world's largest maker of construction and mining equipment is adopting a cooler tone with those dealers, asking them: "What have you done for us lately?"
Caterpillar believes its distributors are missing out on somewhere between $9 billion and $18 billion in easy-to-capture revenue each year because they are falling down in at least three ways. They are not tapping into the wealth of real-time customer data now at their fingertips; they are not communicating with each other; and they are not providing customers across the globe with a consistent experience when it comes to everything from e-commerce to parts and services pricing.
So Caterpillar, which is in a hunt for new revenue because of weakness in key markets, is giving dealers until the end of the year to come up with a three-year plan to capture those lost sales. Distributors who fail to meet their targets could have their dealership agreements terminated, though top executives insist a cull of dealers probably won't be needed.
"That would be the last resort, the last outcome and certainly not desirable," says Chief Executive Officer Doug Oberhelman.
Like its rivals, Caterpillar has integrated all kinds of diagnostic technology into its machines that throws off a torrent of real-time information about the health of the products. The data helps owners track their equipment, optimize its utilization and manage fuel and maintenance costs.
Better exploited by the dealers, the information could immediately increase part and service sales to existing customers, Caterpillar says. Dealers could anticipate problems, schedule preventive and predictive maintenance and help customers manage their equipment fleets more efficiently. Continued...