Mar. 10, 2008 – How to end the price game

By Lisa Young
Editorial Assistant
Adding aftermarket accessories to new motorcycles on the showroom floor isn’t a new phenomenon, but it’s one that is garnering attention as a way to boost new unit profit margins and reel in price shoppers.
The tactic’s big draw for customers is the individualization factor: Many people want a product that is unlike any other. Being able to buy a bike that has been pre-loaded with accessories can get them riding away feeling like they stand out in the crowd.
That individuality factor pays off for dealers, too. Adding an aftermarket piece or two changes a new motorcycle, meaning it can’t be compared to the same model down the street. Thus, dealers should be able to extract a better profit margin off that model.
St. Petersburg, Fla.-based Barney’s Motorcycle & Marine recently started accessorizing new bikes. Right now, the bikes make up less than 10 percent of the units on display.
“For a dealer of our size, the general consensus is we should be doing it more,” said J.J. Person, sales manager for Barney’s.
That’s something the company plans to do, although not to excess.
John Yurejefcic, owner of York, Penn.,-based Action Motorsports, has had accessorized bikes on his showroom floor from day one, which was 12 years ago. He opts for a high concentration of units with accessories; always better than half of those on display and usually in the 60-70 percent range.
Many dealers aim to have 20-25 percent of units pre-loaded with accessories: Enough to have multiple units dressed up without oversaturating. In return, customers get to see a handful of popular accessories in action and have an idea of what is possible for a unit, which could not only be a new bike but an ATV or UTV.
Accessorized units can offer a multi-pronged boost to a dealer’s revenue stream.
Tom Haueter, owner of Middlefield, Ohio, dealership Just For Fun Honda, started including bikes with select accessories on his showroom floor the day the dealership opened four years ago. Haueter says given that one-of-a-kind look consumers can’t find at the shop down the street or in the next town over, buyers are less likely to haggle over an accessorized bike’s price because it’s something they can’t find elsewhere.
Another tributary to dealer revenue with accessorized bikes is the higher profit margin. At Rocky Mountain Cycle Plaza in Colorado Springs, Colo., typical markup for accessories is 40 percent, compared with a 10 percent markup for a bike only. So, accessorized bikes “add about 30 percent [margin] but not for the whole bike,” said Vernon Clark, Rocky Mountain owner. He estimates a bike with accessories brings in $300-$400 more in profit than a bike without. Accessory profit margin should augment the profit margin for outfitted units, helping dealers realize improved percentages.
Finally, accessorized bikes lead to increased accessory sales. If a customer sees a bike with two accessories on it and wants one, but not the other, he or she can go for a stock model of the same motorcycle and have the accessory they were interested in added on.
“It’s the best way to display the accessories,” Lance Cherry, owner of Rocky Mount, N.C.’s Twin County Motorsports. “We normally dress out a model pretty heavy and use that model to sell off of. Occasionally some will like it just the way it’s set up.”
So, what works and what doesn’t work in terms of accessorizing a new motorcycle? It’s all about finding the right recipe for each unit, Cherry says.
Appeal is part of the recipe. At Action Motorsports, they like to stick to the “bread and butter” accessories, as Yurejefcic puts it. Each segment has its own items dealers tend toward.
For sport bikes: windscreens and exhausts.
For cruisers: backrests, saddlebags, chrome and exhausts.
For off-road bikes: graphics kits.
For UTVs: fenders and roofs.
Another part of the equation is seasonality.
“People can walk in in the middle of a snowstorm, and we have 10 and 12 (new ATV) units set up with plows they can take away with them,” Haueter said.
Another key ingredient is thinking in terms of the whole. What goes together? What will attract customer attention? What little piece can be added to give it the right amount of flash? Add saddlebags and a backrest instead of one or the other.
“It’s the whole package, not just one item,” Twin County’s Cherry says. “It’s like colors. Some things go together and some things don’t. On a sport bike, if your customers like chrome, go with chrome but don’t if it won’t work.”
Beyond matching appropriate accessories to appropriate units, there doesn’t seem to be an aftermarket add-on that is an immediate turn off for customers, dealers say.
There are, however, some downfalls for accessorizing a new unit, and it can be overdone
at times.
“Price is a factor,” Rocky Mountain’s Clark said. “Sometimes you can put something on, and the customer doesn’t want it.”
The key to resolving this problem is keeping accessories simple and easy to remove if necessary, especially for dealers aiming to do same day delivery.
The customer’s loss of being able to customize their own ride was the most commonly cited negative aspect of selling outfitted units.
“A lot of customers want individuality,” Barneys’ Person said. “It’s better for the customer to do that sometimes; those that want to not just blend in with everyone, but want to put their own style to [their ride].”
It’s a balancing act. Dealers need to know how much accessorized units benefit business and to what degree the customer should be the one adding the accessories.