MIC expands dealer credit card program
August 16, 2004
Filed under Features
By Joe Delmont
The credit card processing program developed by the Motorcycle Industry Council (MIC) and Boaz Payment Systems in 1997 seems to be hitting its stride as new services and bigger dealers are added.
The program reduces costs to dealers and provides revenue back to the MIC. There is no additional charge to dealers for the basic services and dealers can save approximately $4,000 annually on processing fees.
More than 1,000 dealers are now participating, and approximately $400,000 has been generated for the MIC, says Matt Tanzy, managing director of Boaz. The program is expected to generate approximately $60,000 for the MIC this year, and as much as $85,000 next year. The number of participating dealers has jumped by about 40% over the last 12 months, he said.
Giant steps taken
In the last year, the program has taken several giant steps ahead, including integrating the program with Lightspeed, the industry-leading dealer management system. The Lightspeed system is used by nearly 3,000 dealers in the powersports industry. Lightspeed recently was acquired by Automated Data Processing, Inc. (ADP), which serves more than 17,000 dealers and manufacturers in the U.S., Canada and Europe.
“Lightspeed gave us an audience,” says Tanzy. “With Lightspeed, they’re starting to understand what the MIC BankCard program is about.” And, now, ADP can extend the program’s reach even further.
Under the MIC program, any powersports industry supplier that works in another industry can use those additional “outside” transactions to generate fees for the MIC to use in the powersports industry. That means that ADP’s non-powersports accounts now are eligible to participate in the program.
“Our umbrella agreement allows us to include additional industries that are served by participating companies from our industry,” says Tanzy. “Those funds come back to our industry.” The funds go into a separate account at the MIC that is used for “industry growth initiatives.” These range from promoting off-road access to legislative projects.
“We’re anxious to open a dialog with the ADP folks,” says Tanzy. “Talk about two quality organizations that are leaders in the field of dealer management technology. The next 24 months will hold some fantastic opportunities for advancing this program.”
Big Dealers Join program
The Lightspeed/ADP move is huge, of course, but there have been other important additions on the participant side as well in the last year.
Both Tucker Rocky Distributing and Global Motorsport Group, which owns Custom Chrome and Motorcycle Stuff, have joined the program. Boaz handles credit card processing for the two distributors, who, in effect, act as huge mega-dealers.
Each time a dealer-customer places a credit card order with Tucker or Global, the order generates a fee for the MIC in much the same way that one is generated when a local dealer swipes a credit card for a customer.
“A lot of dealers like to use their personal credit cards to make purchases,” says Tanzy, “because they earn points for themselves from the card companies.”
Large dealers such as Bert’s Mega Mall in Covina, Calif., and Black Hills Harley in Rapid City, S.D., also are enthusiastic participants.
Dealers and distributors aren’t the only ones participating. DynoJet, an aftermarket company, also has joined the program.
NEW GIFT CARD PROGRAM
New in June this year is a customized gift card program for dealers. Under the program, dealers can purchase customized gift cards, complete with their own artwork, that are good for purchases only at their dealership. Cards cost 63 cents each in orders of 5,000, and it takes about four weeks for delivery. Dealers can order as few as 500 cards at one time. There’s a one-time setup fee of $175, but no monthly fees or other charges.
The program was launched in June and about 50 dealers signed up in the first 60 days, says Tanzy. The average order is about 5,000 cards. Boaz Payments handles all the production and administrative work for dealers.
“One if the biggest challenges facing dealers,” says Tanzy, “is how they can get customers to come back frequently because it’s so expensive to find new customers. They want to get more out of the customers they have.”
Historically, dealers have been able to use their F&I operation to pull more dollars from customers, but many have fully tapped this revenue source. “That’s transactional revenue,” says Tanzy, “and many dealers have maxed out on this. Now, they’re trying to focus on re-occurring revenues. They’ve seen what’s happening at Starbucks and Home Depot and Wal-Mart — they all have gift cards.”
The gift cards have several advantages for dealers, notes Tanzy:
n They can only be used at the issuing dealership; they’re not good at other stores operated by the dealer’s OEM.
n They can be used to stimulate machine purchases. Many dealers give away a card with each machine purchase.
n They can be used to pay for returned merchandise instead of giving the customer cash. This forces the customer to return to the dealership for additional purchases.
n They are ideal as gifts. Many dealers sell gift cards at the cash register for $1, netting 37 cents on each card, plus the amount of the card.
n A participating dealer can log onto a dedicated Web site to see who holds his cards. He can determine the balance on each card and how it’s been used. Customer information is available to the dealer so he can tailor an e-mail or direct mail piece targeting the card holder.
“He can send a message, encouraging the customer to come in and use the balance on his card,” points out Tanzy.
“My guess,” he adds, “is that in the next three or four months this will be really busy for us. It’s just a great holiday gift.”
Financial services is a problem
One processing problem does have to be addressed, says Tanzy, and that’s that there is no coordination between financial services companies serving the powersports industry.
“Each financing company has a different code and it requires a different card processor. We have the technology to integrate them if they wanted to do it,” he says. PSB