July 2, 2007 – Why we’re experiencing the best of times and the worst of times
July 2, 2007
Filed under Uncategorized
To paraphrase the opening line from Charles Dickens’ “A Tale of Two Cities,” we are truly experiencing the best of times and the worst of times in the retail motorcycle business.
Success in any endeavor is largely built on experience. When market forces change to the point that it contradicts much of your past experience, you can find yourself facing the worst of times. Those making the needed adjustments will find themselves experiencing the best of times.
I’ve previously written about the changing market and have received numerous requests to be more specific. I will attempt that, in the space available to do so. I do need to stress that my opinions are more than the abstract view of a journalist or others with a specific agenda who might offer commentary on what amounts to, what I often feel, is a “view of the circus through a hole in the tent.” My 38 years in the industry means only that I have had one year’s experience 38 times. In the current year, I am a partner in four retail dealerships, and have, via the call center we operate currently for 40 dealerships, conducted interviews with more than 60,000 dealership showroom visitors. As a moderator of 20 clubs for more than 25 years, I always tried to separate concepts from absolutes. Hopefully, I can do that here as well.
Public acceptance of, and demand for, our product has never been higher. Registrations are at an all-time high, more people than ever are riding motorcycles and ATVs and there is pent up desire to own one that far exceeds the number we are selling. One of the primary objectives when calling back showroom visitors is to determine if there is an interest in acquiring a motorcycle. Two hundred thousand interviews in the past four years have turned up only a handful of people who have said, “No, I have no intention of buying.”
Identifying the opportunity requires understanding why 85 percent of the people visiting a dealership do not buy. Clearly price is an issue. What we offer is expensive, and the cost of ownership has to be justified. With few exceptions, we are not catering to need; we are selling high-price toys. Price resistance is real, and the customer has many resources to obtain competitive quotes. As price resistance has become more of an issue, we have allowed price to become our primary focus on the showroom. If you sell the bike at cost, it is still more than a customer can justify if he/she is not sold on what the bike can do for them. Price is definitely an obstacle we have to overcome, but it’s not the primary issue.
Two things have to happen in the current market, for all brands. Number one, you have to be better at accommodating the price shopper who has made a buying decision and is armed with all the nouns and numbers. Two, you have to be structured to deal with the folks who are just looking. Success in both areas require you absolutely do not talk about price until after you have sold the fun, the dealership, the brand, the ease of buying and provided a reason to buy today. Once price is discussed, you cannot loop back to what really makes the customer want to buy. The only way we have found to accomplish this is to take the price card out of the hand of the salesperson.
Anyone who has ever spent a day on a showroom knows that price will come up in the first few minutes. If we know that is true, and we do this for a living, we should be better at it than the customer. As part of the initial greeting, get price out of the way before the customer can make it an issue. The salesperson introduces himself and the manager. If the manager is not readily available, he/she is pointed out, and it is made clear that the manager will get them the right price and financing and the salesperson’s job is to find them the right bike. I now refer to step 2 as “assure and tour.” Assure that you will have a very good price and begin a tour of the dealership.
Motorcycles are exciting and emotion is more of a factor than in virtually any other purchase. Give the motorcycle a chance to sell itself. Having the customer touch, feel, sit on it and start it before sitting down to talk about price is essential. This can be done without creating the impression that you are evading the price.
This might not seem like a startling revelation, but it is profoundly different than what happens in the vast majority of dealerships. Much is talked and written about market conditions that are truly reflective of ineffective retail segment. We continually prove that dealers in any area do not have to follow the market. I am often critical of some OEM practices that make it harder than it has to be, but ultimately you are not limited by them. The price you get for a motorcycle does not have to be influenced by the discounter down the street. You can control your showroom and generate more volume at a higher margin.
The new “frontier” is all about capturing the business we have missed. It does require that you have the following:
The hard-core price shopper will wait if you do not have enough help and will appear regardless of your opening hours. Old timers will recall when I wrote of and extolled the benefits of opening for five days a week and having the “A” team there all the time. Many will recall the sales training I provided teaching sales people how to get write-ups. That was then, this is now.
We used to be able to make it on the customer-driven business. Today, all of the competition is for the bad business.
If you operate like we did in the past, you are experiencing the worst of times. Because so many are unable or unwilling to make the changes required, it is truly the best of times for those who do. Cheers, Ed. psb
Ed Lemco has been involved with the powersports industry for more than 30 years. Lemco, the former owner of Lemco Management Group, is the founder and executive director of the National Council of Motorcycle Dealer Associations. Lemco currently operates a call center for dealers in St Croix.