Importance of product selection brings up retailing quandary
January 23, 2009
Filed under Features
New unit product selection remains the No. 1 reason why new motorcycle buyers choose a specific dealership, a fact that has not changed in the past five years.
That is according to the 2008 J.D. Power and Associates’ Motorcycle Competitive Information Study, a survey of more than 7,000 new bike buyers.
However, the study does point to some different preferences among buyers of different brand categories.
Metric buyers, for example, named new unit product selection as the top reason for selecting to buy at a particular dealership nearly 25 percent of the time. The “best deal or lowest price” was the second most popular choice, at 23 percent, while “convenient location” was third, at 17 percent.
Buyers of domestic brands, like Harley-Davidson, had different thoughts. They too selected product selection as most important, at 24.5 percent, but picked “past experience with a dealer” as the second most popular option, at 17 percent, while “convenient location” was the third most picked selection.
European buyers thought product selection was even more crucial — it was the No. 1 reason 28.5 percent of the time — but also cited “convenient location” and “past experience with a dealer” as key reasons.
The buyers’ reasoning for selecting a particular dealership did not conflict with data that dealers chart on their own.
“Those are definitely the top three,” Greg Kirn, finance manager of Action Power Sports in Waukesha, Wis., said of the “product selection,” “best deal” and “convenient location” categories. “It seems like in different months, they’re in different order. As far as selection and price, those two interchange pretty frequently.”
Chris Cuomo, president of Velocity Cycles in Mechanicsburg, Pa., can attest to the fact that product selection remains king.
“With BMW this year, it was a lot about having the right product here because BMW had so many different configurations on the bikes,” Cuomo said. “So it became difficult to have every possible setup that was available. So we got some sales because we had some units and we lost some sales because we didn’t have some units.”
“That survey is right on the money,” said Robert Hintz, general manager of The Engelhart Center in Madison, Wis. “I’ve been surveying customers for 10 years and selection is the No. 1 reason they purchase.”
In fact, Hintz believes product selection is so important that he jams his showroom floor with new bikes, going against some retail merchandising expert opinions that advise for plenty of walking space around each new unit.
“I truly believe that my customers when they come in still don’t know what they’re looking for a lot of times, especially when you’re dealing with first-time buyers,” Hintz said. “I have to have that color out there because so many of them go, ‘Oh, that’s a neat-looking bike.’”
Merely having a photo of the bike in a different color or having that different-colored motorcycle in a crate in storage just doesn’t suffice, Hintz says. “It’s such an impulse that you have to have that model” on the showroom floor, he said.
Cuomo of Velocity Cycles has taken a different route this year, providing more space so consumers can walk entirely around a new bike.
“When bikes are so sardined together consumers can’t sit on them, it doesn’t make for a good sales process,” he said, noting the dealership carries all models on the showroom floor and then has other colors available in the storage area ready to be wheeled out as necessary.
New bike buyers’ overall satisfaction with dealers remains high, something that has not changed notably during the past five years. Just slightly more than 61 percent of buyers give dealers a 9 or 10 score on a 1-10 rating, with 10 being outstanding and 1 being unacceptable.
Those scores do not surprise Jay Eugair, general manager of Central Vermont Motorcycles, Rutland, Vt.
Central Vermont uses a follow-up system that contacts consumers after their new unit purchase. Eugair estimates of the 1,200 new units the dealerships sells annually, they receive about 10 complaints in the follow-ups.
By Brand Category
There are, however, some customer satisfaction differences between brand categories.
Domestic dealers score a 10 or 9 from 66.5 percent of the new bike buyers, slightly higher than European dealers (64.9 percent) and moderately higher than metric dealers (54.5 percent).
Metric dealers are twice as likely to get an average score — a 5 — from new bike buyers than their counterparts.
Similar results were found when new motorcycle buyers were asked to rate a dealership’s sales process.
Domestic dealers again rated highest, with nearly 60 percent getting a 9 or 10 mark from buyers. European dealers trailed slightly behind (nearly 58 percent) while metric dealers were farther behind (47 percent). And again, metric dealers were almost twice as likely to get an average score compared to their counterparts.
Kirn of Action Power Sports, a metric dealership, wasn’t surprised to hear those differences.
“The turnover is higher (at metric dealerships) so the salespeople don’t have the opportunity to be trained and remain trained,” Kirn said. “The Harley guys and the Ducati guys and BMW, that’s a pretty loyal group, both for employees and customers. But for us, it’s hard to find good salespeople.”
Hintz of The Engelhart Center agreed.
“Metric stores are going to have a hard time with CSI because of the turnover,” he said. “You usually have much younger staff and don’t have the money to support the payroll to have professionals that are going to be with you 10-15 years.
“The average metric store that does $4-5 million in sales, I think they really struggle with staff.”
Overall Satisfaction With Dealership
Harley-Davidson and European dealers scored “10s” more often than their metric counterparts in the 2008 survey.
Overall Scores For All Brands
10 Outstanding: 39.4%
5 Average: 6.8%
1 Unacceptable: 1.5%
By Brand Category
How often they score 9 or 10:
Domestic Dealers: 66.5%
No. 1 Reason For Using Dealerships
For European new bike buyers, the “best deal/lowest price” was named as the No.1 reason less than 10 percent of the time. The below rankings represent all brands.
Dealer had the motorcycle I wanted: 24.8%
Best deal/lowest price: 18.3%
Conveniently located: 17.2%
Past experience with dealer: 15.9%
Hassle-free negotiation: 9.9%
Dealer reputation: 8.2%
No particular reason: 3%
Dealer was able to get me financed: 2.4%
Dealer convinced me of the benefits: 0.3%
Rating Dealerships’ Sales Process
The number of new bike buyers that selected a “10” decreased nearly 5 percentage points compared to a year ago.
Overall scores for all Brands
10 Outstanding: 34.6%
5 Average: 9.7%
1 Unacceptable: 1.6%
By Brand Category
How often they score 9 or 10:
— Neil Pascale
For further information on the survey, contact Tim Fox, research manager at J.D. Power and Associates, at 248/312-4373 or at email@example.com.