Archive for the ‘retail sales’ Category

Profiting From Failed Competitors

October 13, 2010

“Dealers struggle with this because they feel the pain of their
competitor going out of business.
What do you say to this guy?
It’s not a fun conversation, but it’s something you’ve got to do.”

—Bill Shenk

Nobody likes to see a local business fail. The question is, How do you deal with it? How do you treat a competitor that has failed or is failing? Ignore his problem? Sympathize? Take advantage of his situation? What are you prepared to do?

What if you helped yourself and helped her at the same time… by quickly purchasing some of his most valuable customer assets?

It’s a sensitive situation, of course, especially if you’ve had a cordial relationship with the competitor. But the reality is that when that store closes, several things are likely to happen, and most of them are not going to benefit you unless you take quick action. For example, assuming that he has many of the same lines that you carry:

  • He’s going to have a closeout sale that’s going to suck many of the hot prospects out of the market. That means you lose sales today and in the near future as consumers move up their purchases.
  • When he closes, his OEMs may very well set up a new dealer, or dealers, and if this happens, the new competition very likely is going to be more aggressive and better financed than his predecessor. Now, you have a tougher competitor than you did before; that doesn’t sound like fun, does it?
  • Your OEMs may give you a chance to take over his point, or at least the OEM may sell you his inventory at a discount— if they don’t sell it to another of your competitors.

So, if you wait, your options aren’t very good and they actually could be bad enough TO PUT YOU OUT OF BUSINESS. What are you going to do? I asked Bill Shenk, head of PowerHouse Dealer consulting services and the key man in Dealernews’ Dealer Lab project, if this subject had come up in his 20 Group meetings. It has, he said, and he told me some of the steps that his dealers have taken in this situation.

“Going after ORPHAN CUSTOMERS is one of the best ways to boost your business in a tough economy,” says Shenk. “Orphan customers— those without a dealer relationship— are already in the lifestyle and they are looking for a dealership to take care of them.

“But you have to be PROACTIVE. Only one person is going to get that customer list,” emphasizes Shenk. “OEMs tend to split up the list among surrounding dealers. And the (failed) dealer may have brands you don’t carry; you want to get those names, too.”

First, put sensitivities aside, for the moment, and move into action. Make a list of the things that you can do to take advantage of the big change in your marketplace. Here is a sample Action Plan:

CALL your competitor and tell him that you sympathize with his situation and you want to do some things that will help both of you. Offer to pay him for pieces of his business that he won’t be able to sell elsewhere.

BUY his phone number and have calls to his store forwarded to your dealership. Set up a separate number coming into your store so that your employees know where the calls are coming from. Then they can answer with a special greeting. “You have to tell the customers that you bought the number from the previous dealer and that you are trying to take care of them,” says Shenk. This straightforward approach creates a comfort level with the new customers and creates confidence that you will service their needs, he says.

OFFER to purchase his customer list. There are more customers than the ones who have purchased new units; those generally are available from the OEM. “Say there’s a store 30 miles away that carries one of your lines. A nice store might be worth 100 new units a month,” says Shenk. “So, if you get a list of those who purchased in the last two years, you might get 2,500 names from the OEM. But there really might be 10,000 active customers on the total list, people who have purchased parts and accessories and service.”

REVIEW the dealer’s DMS. You’ll get more information here than you would from your OEM. The DMS probably will provide you with the customer’s entire purchase transaction record.

RUN ADVERTISING aimed at your competitor’s customers, offering inexpensive products and services. “It’s easier for these prospects to try you and this new experience for $100, rather than buying a unit for several thousand dollars,” points out Shenk. “It’s a lot easier to drive to your store and try it for a small, first time purchase.” But don’t spend a lot of money on splashy ads. “The cost for advertising to attract these customers can go way through the roof,” says Shenk. “There’s no ROI here.”

PAY THE DEALER to write a letter to his customers recommending your dealership as the place to go for service and support.

SCOOP UP an existing franchise that could fit your operation as quickly as possible. “My preference is to be a motorcycle dealer or an ATV dealer,” says Shenk, “rather than a single-line store. People would rather go to a store that has it all, rather than a one-brand store. That’s been proven.”

Working with your failed competitor isn’t something most of us want to do, but it’s something that you should definitely consider and then move on quickly. “This is a real time sensitive deal,” says Shenk. “Dealers struggle with this because they feel the pain of their competitor going out of business. What do you say to this guy? It’s not a fun conversation, but it’s something you’ve got to do.”  JD

Contact me with news tips and story ideas at or 952/893-6876

Retailing Questions Continue for Powersports

October 4, 2010

Wells Fargo Consumer Conference

There wasn’t much to excite investors at the recent two-day consumer conference held by Wells Fargo Securities, according to a report issued by the company last week. The conference was held Sept. 29-30 in New York, but there were not many powersports companies among the 64 firm that gave presentations to the analysts. Perhaps the best known powersports participants were Arctic Cat and Brunswick. Other related companies included International Speedway Corp., Penske Automotive, Tractor Supply, Marine Products, and U.S. Auto Parts Network.

Several trends ran through the presentations, according to reports compiled by attending analysts. These include: A continuing major shift to online marketing in a number of forms; personalized marketing is growing, using the Internet and social media to drive sales at online and bricks and mortar sites; increased sourcing costs which could put pressure on margins even though many companies are operating in a more efficient manner, and holiday inventories seem to be in good shape.

“Powersports retail sales visibility likely will be clouded until the beginning of seasonal sales in March,”  Senior analyst Tim Conder wrote in his conference summary report. Near-term price movements of powersports stocks most likely will be tied to general economic activities, he wrote. In his conclusion about the leisure segment, Conder says he likes certain toy companies, followed by cruise lines and powersports companies. Not a real strong recommendation.


One-To-One Training Offer Is Great Idea

April 30, 2010

Program Offers Lessons for Motorcycle Dealers

I picked up my new MacBook Pro laptop the other day, and I couldn’t be happier with the experience.

I’ve written before about Apple’s outstanding customer service but one of the best parts is its One-To-One program that offers personal help in setting up your new computer, personal training and assistance in working through your personal projects.


Customer Service Isn’t Dead

April 10, 2010

It’s Alive and Blossoming at Your Apple Store

It’s easy today to wring your hands and really despair over the state of customer service by America’s retailers. Plenty of examples of disinterested, couldn’t-care-less service practices pop up every day. But things aren’t as bad as they might seem. Actually, customer service is offered at a very high level in some places. Just visit your friendly Apple computer store and you’ll see what I mean.

It’s refreshing if you’re a consumer and educational if you’re a retailer.

First, a disclaimer: I’ve been an Apple guy since I bought my first computer 25 years ago. It was a MacIntosh SE, the third machine in the revolutionary MacIntosh line. I never regretted that purchase, nor have I regretted any of the many Apple purchases I’ve made since then. Today, I’m a dedicated iPhone user; in fact, I do almost as much work for Dealernews and its website on my phone as I do on my laptop.

Back to my point: Apple has two things going for it: It knows how to meet market needs and it knows how to take care of its customers. Let’s talk about customers.


Online Retailers Getting Better at Service — How About You?

April 1, 2010

Does your dealership sell online? How’s your follow up? How are you helping your customers with the buying experience or are they just free to roam and stumble?

Thought we’d pass along this bit of info from Internet Retailer magazine.

According to E-tailing Group Inc., more online retailers have made their websites easier to shop and are responding promptly to consumer inquiries. The group’s 12th annual Mystery Shopping Study found that such top retailers/e-tailers as REI Co-op and Blue Nile responded to customer e-mails in less than 30 minutes.

The study also found that the organizations E-tailing Group 100 study group allows shoppers  to sort site search results by price, category and brand. Also, most of these businesses link to social networking sites.

Other interesting findings? About 60 percent of the businesses in the study group over guides, how-to content with audio and/or video on their websites. And a bit more than half offer video product demos on product pages.

Keep in mind that these are the websites/retailers training your customers on what to expect from their internet shopping experience. Just as Nordstroms, Banana Republic, the Apple store, and Best Buy are training them what to expect of brick & mortar retailers.

In other words, as time goes on and as new generations of people get into powersports — or when older enthusiasts return to riding — they are going to have an entirely different set of wants and needs from their retailing experience. What does this mean for your dealership? The best way to find out is to go out and shop the major retail stores in your area and take careful note of how you’re treated or mistreated. Steal, beg or borrow new ideas from those businesses who are competing with you for your customers’ expendable cash.

Are Consumers Getting Ready To Buy Bikes?

March 3, 2010

Pent Up Demand May Be Stronger Than We Thought.
Is a Bike Rebate Program Necessary?

Is there enough pent up demand to push consumers into buying a bike this spring? Maybe so, based on what happened with the government’s appliance stimulus program this month in Minnesota and Iowa.

But it may take an exciting promotion from OEMs to prime the pump.

In the last 18 months, consumers have been busy paying down credit cards and building up savings accounts. The savings rate has been the fastest in a decade. And January was a record 16th consecutive month of declining credit card debt; it dropped $1.7 billion to $864.4 billion, according to the Federal Reserve.

Now consumers may be ready to take a break from that fiscal conservatism and spend a bit of money.

Look at what happened in Minnesota and Iowa this month:  The two states ran through almost $8 million in government appliance rebate programs in less than a day.

Minnesota consumers were so excited about the retail program launched March 2, that they flooded the state’s dedicated phone lines and swamped its website. More than 25,000 persons signed up for the $5 million program in less than two hours, and by 10 am on the first day, there was a waiting list of 10,000 persons, when the program was shut down. That’s 35,000 persons jumping on the program that offered a $200 rebate on the purchase of an energy efficient major appliance such as a refrigerator.

I really can’t believe that 35,000 Minnesotans suddenly decided they wanted a new refrigerator or washer. I wonder if it’s more a case of WANTING a new appliance, rather than NEEDING one, and using the rebate as an excuse to dig into that fat savings account. And it’s not a freebee,  give-away program.

In Minnesota, a qualifying refrigerator is going to run you more than $1,000, so a consumer is still on the hook for close to $1,000 after sales tax, even with the rebate. Minnesota’s top rebate of $200 was much higher than many other states.

An energy-efficient refrigerator qualified for only a $50 rebate in Georgia, $75 in California and $100 in New York. Nearly $300 million in rebates will be available to consumers across the country through April.

The Minnesota story was much the same in Iowa where its $2.8 million program was exhausted in the first day.

Not all consumers liked the program, though, perhaps an indication of tight cash in some regions. New York had to extend its $18.7 million program and Michigan used up only about half of its $9.5 million in the first month of its program. Because of the state’s weak economy, it’ll take an estimated four months for Michigan consumers to sign up for all of the rebate money.

More Good News

Here are another couple of bright notes for retailers: Most retail sales reports improved in February over February 2009, despite heavy snowstorms for much of the month throughout the country. (Okay, February 2008 wasn’t such a hot month and it didn’t take great numbers to beat it.)

Another positive sign: the pace of home foreclosures slowed in February; it grew only 6% for the year, the smallest annual jump in four years, and was down 2% from January.

If the recent appliance rebate program was any indication, perhaps we’ll see consumers parting with some of those savings dollars and popping for a new bike or ATV soon. Now, wouldn’t that be nice?

I wonder, though, if the OEMs will have to prime the pump a bit to get consumers excited about spending money for a bike they way they were spending for appliances.  JD

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