Mar. 9, 2009 – Victory at 10: Seeking ‘the next level of velocity’
March 10, 2009
Filed under Features
By Neil Pascale
CINCINNATI — Victory Motorcycles has announced the first of its year-long efforts at trying to improve its business performance.
The company announced a five-year limited warranty — believed to be the longest such program in the industry — on all new Victory bikes.
The Polaris Industries brand has hit its 10th anniversary with some mixed results: Customer satisfaction scores remain at industry-leading levels but the brand has not been able to dodge the effects of the challenging U.S. economy. Victory’s wholesale revenue fell 17 percent in 2008 compared to the prior year and the company is forecasting further declines in 2009 as it seeks to improve its inventory mix.
Citing those mixed results in a recent conference call, Polaris Industries President and Chief Operating Officer Bennett Morgan said “we must do things differently to find the next level of velocity and performance that we expect.”
What changes the cruiser and touring brand will make in the coming year is something Victory Motorcycles Vice President Mark Blackwell addressed with Powersports Business at the
V-Twin Expo in Cincinnati.
“What we’ve been doing is trying to figure out how we can leverage our greatest strengths and separate ourselves from the other guys,” Blackwell said.
“We tried to differentiate ourselves by being new and forward-looking as opposed to retro and classic (in styling). We tried to set ourselves apart to a certain extent with the way we do business, like the custom order program and being more innovative. But the thing that is really clear now is for the fifth year in a row we have the highest ownership satisfaction ratings in the industry.”
Victory has stated it stands at the top of customer satisfaction scoring with a 95 percent owners’ rating score. Such ratings are not made public so how close other manufacturers are to that score is unknown.
The brand’s ratings prompted the company to deliver the new warranty package, the first of an aggressive marketing plan for 2009.
“We’re doing that because it sends a very strong message about our confidence in the quality of our motorcycles and our confidence in how satisfied our customers are at a time where there is a lot of pressure to discount the product,” Blackwell said. “What we’re trying to do is add a value and strengthen our brand rather than weaken it.”
Another future marketing message figures to entail the company’s growing accessories line.
“One weak point of our business model is our bikes are so reliable and we’re still a relatively new brand, so we don’t have tons of service business compared to the real established brands,” Blackwell said, noting this makes the selling of Victory accessories and apparel all the more important to the dealer network.
Recognizing this, Victory has increased its offerings so that the eight-page accessory and apparel catalog it initially offered 10 years ago is now closing in on 150 pages.
“We still have a perception by owners that there are not a lot (accessories and apparel) available for Victory,” Blackwell said. “The reality is there is, there’s just a lag effect on the perceptions so we’re working hard to communicate that.”
Victory also is working on its inventory mix, striving to reach a better rate of noncurrents to current-year models, the latter of which offer increased profitability. Blackwell says the current inventory mix is a result of the brand’s tremendous growth during several years and then the sudden, recent halt in that growth.
“We were growing at a very high rate of speed, plus 30 percent, plus 40 percent and then the market turned suddenly,” he said, noting the company has taken “really aggressive action” on limiting production multiple times during the past couple of years.
Blackwell says Polaris is committed to improving that inventory mix throughout 2009, meaning its Victory wholesale revenue will continue to decline. Still, Blackwell believes the steps the company has made — including the new warranty package — means the wholesale decline won’t necessarily translate into reduced retail sales, which were basically flat in 2008.
“We think the market will be down this year,” Blackwell said, “and we’re trying to buck that trend and actually grow in the face of a declining market.”
It’s a position that Victory, along with the rest of the industry, hasn’t had to wrestle with too much during its first decade.
“There are a lot of different ways of looking at it,” Blackwell said of Victory’s 10th anniversary. “One is, wow, that’s a long time. We’ve come a long way. It’s not a start-up anymore. But the other way of looking at it is we’re still a relatively young brand compared to the people we’re competing against.”