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Jan. 17, 2011 – Filling the customer expectation

January 17, 2011
Filed under Features

With the economy in a slump, customers are looking for more value out of each purchase, and dealers are considering all the subtle ways to differentiate from their competitors. What has emerged is a trend of dealers giving away anything from T-shirts to extended warranties to sweeten a new motorcycle sales.

Steve Seltzer, president and general manager of Steve Seltzer Honda in Altoona, Pa., was introduced to items given away at no cost when he acquired the dealership more than five years ago.

“I can tell you when we first bought the business, people would say, ‘Where’s my shirt?’” he recalled. “I had never experienced that before.”

Seltzer, a motorcycle enthusiast since he was young, had never heard of items given away during a sale. However, the person who owned the dealership before he purchased it participated in the practice, so he felt compelled to do the same.

It’s a trend that appears to be growing.

For the first time, the 2010 J.D. Power and Associates Motorcycle Competitive Info Study asked new bike buyers what had been given to them free of charge as part of the new motorcycle purchase. More than 40 percent said they had received something of value.

“When you make a large purchase anywhere of higher-end products, whether it’s a BMW or a Harley, I think the obvious customer expects something, a token of appreciation, and that’s the idea behind that, and rightfully so,” said John Lyon, general manager and part owner of Wilkins Harley-Davidson in South Barre, Vt.

“If you can’t show some goodies to throw in with every purchase, you’re not meeting what the expectation is.”

Dealers of domestic brands give away more on average, according to the survey. They throw in more accessories and apparel, oil changes, future incentives and “other” items than their import competitors. However, dealers of import brands gave away more extended service plans and maintenance programs.

Lyon’s sales staff often throws in T-shirts and tire gauges with purchases, but little more.

“We give away some small goodies,” he said, “but other than that, we sell at a fair price, so we’re not inclined to give stuff away.”

Seltzer gives away a few items to each buying customer, and he packages it to make it seem like a lot of items, while enticing customers to visit each department.

As what he calls the “Passport to Great Service,” customers are asked to visit the parts, F&I and service departments to pick up each item. By the time customers leave the store, along with their new units, they will each receive a Steve Seltzer branded can or bottle holder or keychain, a Honda care kit and a high-quality Steve Seltzer T-shirt.

Apparel and accessories topped the list of giveaways in the J.D. Power and Associates survey, with a majority of those polled saying they received those items. Store branded T-shirts are most popular, dealers say.

“Our shirts are custom. We do a really nice shirt. I’ve seen $5 shirts from some stores; our shirts are a little nicer than that,” Seltzer said.

He and others use the T-shirts to serve double-duty. They are not only giveaways for loyal customers, but they also promote the dealership each time they’re worn.

“We think if we put a little more quality into the product, it will get used long term, and that of course is the name of the game,” he said.

To encourage the promotion of his dealership’s brand, Seltzer carries $5 coupons with him, and when he sees his dealership’s branded T-shirt worn around town, he gives the wearer the coupon toward a future purchase at the dealership.

Second-most popular on the list of giveaways was extended service contracts. Though nearly a quarter of survey respondents said they received the contracts for free, many dealers said they wouldn’t throw them in to the deal.

“We do not ever give away extended service contracts,” Lyon said. “There’s a lot of value there that needs to be sold. There’s a lot of cost associated with extended service contracts as well, so giving them away wouldn’t make sense to us.”

The only dealers he thinks would consider that option would be those selling for well over MSRP.

Seltzer said the idea that customers may be getting service contracts for free might be in their perception.

Honda, for example, has extended its Gold Wing warranty up to four years, he said. His dealership has added another three years to make the warranty last a total of seven years to differentiate from the competition.

“We’re including it in the purchase price, but that was in lieu of a further cash discount,” he said.

Many customers may think they’re receiving a service for free, when in fact, it’s just worked into the financing. Seltzer says he doesn’t normally give away back-end products, but adds, “Never say never.”

He and others are assessing what they have to do to put themselves ahead of the competition, even if that means giving a few things away at no cost to the customer. PSB

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