Oct. 13, 2008 – A shift in business focus

By Neil Pascale
Editor
INDIANAPOLIS — Ducati’s bid to continue its streak of dramatic retail sales growth in North America faces a number of hurdles, not the least of which was the following headline splashed across the cover of USA Today, “Markets in turmoil.”
Wall Street’s historic plunge was documented on the same day Ducati opened its national dealer meeting and hence was not a surprise point of discussion for Michael Lock, Ducati North America’s CEO. In his opening speech to dealers, Lock said the turnout of more than 90,000 fans at the MotoGP held days before in Indianapolis showed consumers “want an alternative to reading the USA Today cover” or similar depressing stories about the U.S. economy.
Lock said the designated Ducati area at the MotoGP certainly was testimony to that, as the crowd dwarfed what Ducati officials have experienced at past MotoGP events held in California.
“We’ve proven we can generate (consumer) demand. Now we’re shifting,” Lock said of Ducati’s emphasis for the coming year. “Now it’s about quality of experience.”
To address that, Ducati North America (DNA) is instituting new programs aimed at improving two key dealer departments: sales and service, with the latter including a program geared off what BMW has done.
Besides seeking to improve customer experience, Ducati is taking steps to keep its retail sales growth curve heading up, by targeting both conquest sales and new riders.
For its part, Ducati Motor Holding, the parent company, is investing $200 million in the next three years in the company, with 75 percent of that going to new product, said Gilbert Del Torchio, the parent company’s CEO. Del Torchio told Powersports Business that number represents at least 50 percent more than the company spent in the past five years on product development.
“It’s very important for us because we’re a product-oriented company,” he said, noting that not only will more funds go to product development, but also the company’s top staff. “Product is our life.”
Some of that new product, shown to North American dealers in Indianapolis, will be unveiled at international shows this fall.

Retail sales focus
The retail sales growth DNA experienced during the past few years has continued in 2008. The manufacturer has seen its retail sales increase by about 7 percent this year after a record-breaking 2007. DNA could approach 11,000 new unit sales in North America by the end of this year, a far cry from its total of 5,600 in 2004.
Where is the company expecting its retail sales growth to occur in the future, from conquest sales — consumers who have bought other brands before — or from new riders?
“I actually don’t know,” Lock said. “I don’t know where it’s going to come from so I’m covering all bases.”
That includes going after conquest sales in the all-important 600cc-and-above sport bike class. Ducati will offer dealers a “conquest bonus” for any non-Ducati trade-in they receive when selling an 848 superbike.
“We were inspired by Yamaha’s decision to break $10,000 with the R6 next year,” Lock said, noting the new five-figure price tag on some R6 models “make our 848 look dynamite. So we’re anticipating and will be gearing up for a lot of acquisition on that bike.”
DNA also is targeting the new rider perhaps more than ever, both in its outreach to mass media and through a beefed up demo program. Plus, the company has put a priority on working more closely with Hollywood, ensuring its bikes will be on the big screen with increasing regularity.

New dealer programs
Starting in 2009, DNA is starting two programs that it believes could make big impacts on customer experience. First, Ducati is mandating all Level 2 service techs to be retrained within the next two years “so we at least know that everybody has been trained to a modern and equal standard,” Lock said.
“What we’ve done first is identified the level of service available to customers is below their expectations. That’s not because our dealers have gotten worse. It’s because the rest of the world has improved. But we didn’t come from a strong place in service. It was never our forte.”
Ducati also is establishing training for Level 3 or master technicians, a level that previously did not exist. Lock said the idea for a master technician program comes from BMW, which has done it for years.
“BMW has learned that you have to give these people status and respect because they can determine the long-term success of a dealership,” he said. “I think that’s a very valuable program. I’m a big fan of it and we’re going to develop the Ducati version of that.”
Lock said DNA will examine in the future whether to give a retail bonus to any dealership that has a master technician.
DNA also is developing Ducati Academy, the sales department equivalent to the service department training. DNA is hoping each dealership can have at least one sales staff member take part in the Academy, which will start with online training and seek to provide broad product and company education.
“The fully qualified sales brand experience is something we must have in every single dealership,” Lock said.