Posts Tagged ‘Shenk’

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
joe@powersportsupdate.com or 952/893-6876

Converting Buyers To Repeat Customers

September 27, 2010

Customers For Life: How To Turn that One-Time Buyer
Into a Lifetime Customer

How much would you pay to acquire a lifetime customer? One who would come  back to your dealership time after time to buy things, year after year? How about $15 and a few hours of your time? I thought so.

All you have to do is read a small paperback book, or, better yet, pick up a bunch of copies for your key employees. The book is the bestselling classic, “Customers For Life“, by Carl Sewell and Paul B.Brown. It also includes  a brief but informative section by management consultant Tom Peters. The book is published by Doubleday, initially in 1990 and reprinted in 2002. But it’s still valuable today, two decades later. It might be the best investment of a hundred bucks or so in staff training that you ever made. I don’t work for Amazon, but here’s where you can read other reviews and order the book on-line, if you wish.

The easy-to-read paperback contains 41 chapters in 210 pages. But you don’t have to read the entire book, front to back. Pick out chapters that are important to you, and start there. “Customers” is written by Carl Sewell, a Dallas car dealer, who is one of the most successful sellers of luxury cars in the country. His associate, Paul Brown, is a former writer and editor at Business Week, Forbes, Financial World, and Inc., and a specialist in customer service. These guys know what they are talking about and they know how to say it in plain, simple language that’s easy to grasp.

(more…)

Do You Want To Sell Your Dealership?

February 9, 2009

Groups Plan To Purchase Up To 40 Dealerships in 2009

If you’re considering the sale of your dealership, your chances of success might be improving. It looks like there is new money coming into the market with an eye to rolling up dealerships into operating groups

Long-time industry pro, Bill Shenk, is the point man for three groups, and his PowerHouse Dealer Services company has been retained to find and evaluate acquisition opportunities for these buyers.

The three buyers plan to purchase collectively up to 30 metric motorcycle

Bill Shenk

Bill Shenk

dealers and 10 Harley-Davidson dealerships in 2009 with more acquisitions planned for 2010, Shenk told me. The three groups did over $100 million in retail powersports business in 2008, he said.

Shenk wouldn’t tell me the names of the three groups or the money behind the groups. He did tell me that all three groups “are very liquid,” already have “successful OEM/powersports relations and operations,” so they can purchase and close on deals quickly.

The buyers, Shenk said, are prepared to acquire the dealership businesses and their real estate, providing a nice opportunity for owners to cash out of the business completely.

It’s easy for interested dealers to participate, Shenk says. “There are no listing frees, marketing fees, selling fees or other requirements or constraints placed on potential sellers,” he told me, “other than the standard confidentiality and non-disclosure agreements at the time of discussions.”

While the buyers will look at individual dealerships and groups, Shenk said they are limiting their purchases to businesses that have at least one of these franchises: Harley-Davidson, Honda, Yamaha, Kawasaki, and Suzuki. Dealerships can carry other franchises, but they most have one of these five major lines to be considered, Shenk emphasized. (more…)