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3 Bold Ideas of 2006 – December 25, 2006

December 25, 2006
Filed under Features

They were bold. They were cutting edge. And best of all, they have given a select few powersports dealers across the nation a legitimate shot at higher profits.
Through dozens of conversations with dealers last year,
Powersports Business identified a host of interesting ideas. Many of these we shared with you through our Power Profiles. A select few of these ideas we’ve watched closely to determine if they were more than just good ideas, but actual difference
makers or even money makers. Here are three such bold ideas that meet that criteria.

A change in management philosophy
Britt Motorsports, Wilmington, N.C.

The goal
Improve staff leadership by going outside the dealership to recruit highly experienced managers. It sounds simple, but it’s hardly an industry norm for smaller dealers who face a huge obstacle in considering such a move: higher salaries.

About the initiative
Scott Britt was changing from a “mom and pop” sized store of 9,500 square feet in Wilmington, N.C., to a “big box” store that was nearly three times that large. “I knew in order to pay for the big box, I had to install some new horsepower within management,” Britt said. Previously, the North Carolina dealer principal would sometimes use the “last man standing” management philosophy, meaning he would turn to a veteran employee and say, “Somebody left and you’re the guy who’s been here the longest. Would you consider the position?” This spring, Britt went outside his dealership to find management candidates with proven experience. Mainly he used online job sites, including motorcycleindustryjobs.com, to find candidates. He ended up hiring five parts department managers and one service manager from as far away as New Jersey and Alaska. That meant Britt not only had to pay relocation costs, but also his salary expense grew by up to $10,000 per manager. In return, Britt started his new store with a group of highly experienced managers that he could expect infinitely more from.

The result
The bulk of Britt’s new management hires were for his parts and accessory department, which he radically changed from having one manager to having several managers, each of whom specializes in a certain segment. “A guy who comes in looking for a dirt bike really does not care about a street bike,” Britt said. “And the guy who is looking at a Jet Ski could not care about a four-wheeler. Well, I feel that employees run the same game,” noting that “everybody is an enthusiast for one segment of the industry.”
To accomplish that specialty manager concept with experienced leaders, Britt had to dramatically boost his payroll. His parts department payroll went from 30 percent of profit to 65 percent with the new hires. That number, however, has swiftly fallen to 38 percent in the first 60 days of the new Wilmington dealership as P&A sales have risen substantially.
“I know things are going in the right direction,” Britt said. “It’s just taking effort from myself to help monitor and help bring these people in as one, and help spot the problems” and figure out how to correct them.

What have been the difficulties?
“Certainly communication has been the biggest challenge so far with having five people with five sets of ideas,” Britt said of his parts and accessory department. “I don’t have the ability to pull a manager up here and say, ‘Here’s what we need to work on; here’s what I need you to go do.’” Now, it’s pulling together five managers, one or two of whom may be busy with a consumer at any given time. Learning how to fully take advantage of communication tools, including e-mail blasts, has helped set up team meetings, Britt said.

If you were to start this initiative today,
what would you change?

Britt, who owns three other stores in addition to Wilmington and a custom bike shop, couldn’t think of any. “Right now, I’m very pleased with the whole program,” he said.
The Good, Better, Best Tire Program
Beaverton Honda-Yamaha, Beaverton, Ore.

The goal
Increase tire sales by putting together a program that is easy for the service department to sell and easy for the consumer to use and understand.

About the program
Consumers are given three choices: the good (a low-end tire), the better (a mid-level product), and the best (a high-end tire). They’re also provided a list that shows the installed price of each of the three options for each tire size. At Beaverton, the program resulted in a significant change in the parts and service departments. Previously, a consumer would hear from the service department that their tire was wearing and that they should consider buying a new one. They would then be directed to the parts counter to look at new tires. But sometimes the consumer would get sidetracked and not purchase a tire or after looking at a barrage of tire choices, would end up going home and studying tires over the Internet and then buying a set online. The good, better, best program was designed to keep the entire process — inspecting the old tire and selling a new one — in the service department to stop the loss in sales. To do that, General Manager Jerry Lenz worked with two distributors to provide three tire brands (Shinko is good, Dunlop is better and Michelin is best), heavily stocking those brands and then reducing or getting rid of other brands.

The result
Since starting the program last spring, Lenz said he is selling 50 more tires per month. That number reflects just street bike tire sales as the dealership is planning on expanding the program to include dirt bike and ATV tire sales in the future. Besides implementing the new program, the dealership did nothing else to potentially spur tire sales, including any type of new advertising or marketing.

What have been the
difficulties?

“The hardest point in laying it out is pricing,” Lenz said, noting there are slight price differences between cruiser, sport and standard bike tires. But the dealership standardized pricing as much as possible to keep it simple for consumers and staff. That, at times, means getting less margin on some tires. But when setting the pricing structure, Lenz said he kept in mind “that more people will buy good than they will buy top of the line or the bottom of the line.”

If you were to start this
program today, what would you change?

Lenz said he would require service writers to write on the work order the specifics of the tire’s condition, such as its tread depth and how it’s worn. That information would then be used to spur a follow-up call to the consumer if they do not immediately purchase a tire. It’s a process that Beaverton has recently started. “If the guy doesn’t take (the new tire) today, there should be a follow up in 30 days mandatory because I think you need to keep (the tire’s condition) top of the mind awareness to the guy that you’re running out of time if you’re running on a bald tire,” Lenz said.
Internet sales growth
Barney’s, St. Petersburg, Fla.

The goal
Increase online sales by hiring an experienced, full-time Internet salesman.

About the initiative
K.C. Wood, owner and president of Barney’s, went beyond what many dealerships have done in regard to Internet sales. Rather than assigning a salesman to occasionally check
e-mail, Wood recruited a full-time online salesman from the auto industry. “We’ve got to make ourselves communicate with people in this matter whether we like it or not,” Wood said, noting he prefers “the old school one-on-one, ‘Come on in and we’ll do the best for you that we possibly can.’ But we’ve got to open ourselves up to another avenue.” Wood’s full-time Internet salesman not only handles the customer online, but also greets them personally when they come to the dealership. By that time, the consumer already knows Wood’s salesman, having seen his photo and getting some background information on him via the exchanged e-mails. It’s all an effort to connect with the type of consumer that Wood sees more and more of: the customer who prefers to do their shopping at work through e-mails, text messaging and cell phone calls.

The result
Wood’s online new unit sales have mirrored his overall sales, which have been slow. “I would like to see it a little bit better,” he said of his sales that come from Internet leads. “We’re still turning 13 to 15 percent of those leads into sales, pretty consistently. Right now, the focus is we have to get more leads. So it’s my job now to put our (online) information in the right place, spruce up the Web site and have a reason to go there.”

What have been the difficulties?
Wood said he did not have to spend a great deal on capital improvements in order to facilitate the full-time online sales position. However, his original thought of perhaps having one online salesman serve two different dealerships didn’t work out. The logistics of trying to keep the salesperson with the consumer throughout the sales process would have been too difficult at two different sites, Wood said.
“I still think it’s a necessity in the business,” he said of online sales. “I’m not saying that it’s the success that I would like to see either, but I think it is another form of communication that we have to do in our business right now.”

If you were to start this program today,
what would you change?

“The only thing I would do different is put more effort into it,” Wood said, noting he and his staff have to get the dealership’s Web site “into the forefront at all the right places when somebody is looking (online) for a motorcycle” and make better use of Google and other online searches. “We’ve not done that to the best of our ability,” he said. “We’re just going local word of mouth, normal advertising to get our Web site out there.”

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