Dealer Success Guide V36 by GreenIndustryPros.com

Volume 36

Dealer Success Guide

HELLO 2017

The year dealers got their mojo back

New laws strengthen dealer protections A SUPPLEMENT TO

Association bringing real-time realism to flat rate pricing Consumer market getting larger, smarter and more quality-conscious

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Volume 36 - March 2017

Cc o n t e n t s

MESSAGE FROM THE EDITOR The Year of the Dealer – For Real If you attended the GIE+EXPO in Louisville this past October, you may have noticed banners and other signage highlighting the fact that it was “the year of the dealer”. An expanded educational curriculum, including classes Gregg Wartgow on utility vehicles, editor@greenindustrypros.com indeed made the 920-542-1248 2016 GIE+EXPO one for the record books. As I walked the show myself, gawking at all of the “year of the dealer” signage, I had flashbacks to 2003 when I was just taking over as editor of Yard & Garden magazine (which has since been rolled up into Green Industry Pros). That was the first year the show switched from hot and steamy July to mild and crisp October. The expectation was that since the mowing season typically winds down for most in October, more dealers would find the time to come to the show. They did. We also launched our Dealers in Excellence Award at that show. We called 2003 the “year of the dealer” too, because of the increased commitment by manufacturers to make the show a valuable one for dealers to attend. Enough strolling down memory lane, though. I am here to boldly proclaim that this year, 2017, is going to be the year of the dealer to end all years of the dealer. Here are five reasons why: 1. Several economic indicators point to increased demand for landscaping services and products 2. Many dealers and financial service providers point to a growing consumer market for high-quality products sold by service-oriented specialty retailers 3. Big advancements are being made with flat rates 4. More state governments are implementing more robust dealer protection laws 5. If you’re a good, honest dealer who provides reliable service, you can still thrive in today’s market – it just takes the right approach and the right partners. We have articles touching on all five of those points in this issue. I hope you enjoy them. And if you’re doing something special this year, this historic Year of the Dealer, please let me know so we can help share your story with the industry.

4 IN THIS ISSUE

4 Laying Down the Law

Two new state laws in the Northeast are designed to level the playing field between manufacturers and dealers. But are they providing one with an unfair advantage? That largely depends on whom you ask.

10 Realistic, Real-Time Flat Rate Pricing

United Equipment Dealers Association readies its new online, interactive flat rate pricing guide for commercialization after months of development.

12 A Dealer and

His Daughter

Dave Groen and daughter Kristy Vander Ziel are all it takes to keep the small engines hummin’ at their popular repair shop in rural southwestern Minnesota.

16 How To Capture a 360° View of Customers

Three ways OEMs and dealers can work together to gain a better understanding of their target market.

18 Growing Opportunity, Narrowing Window

Many consumers are gravitating toward higher-quality products and better service, but they’re shopping differently and making decisions much faster.

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Regulations

by Gregg Wartgow

Laying Down the Law

t was a grueling, contentious, better than three-year process. After all of the dust had settled and legal arguments had been heard, New Hampshire’s “Auto Dealer Bill of Rights” hurdled its final roadblock back in October when the U.S. Supreme Court declined to hear a legal challenge to the law. As a result, New Hampshire automobile dealers are better protected from suppliers—and so are equipment dealers. New Hampshire Senate Bill 126 amended an older version of the law, RSA 357-C. The new law changes the definition of “motor vehicle” to include farm and utility tractors, forestry equipment, industrial equipment, construction equipment, farm implements, farm machinery, yard and garden equipment, attachments, accessories and repair parts. Offhighway recreational vehicles and snowmobiles were already included. “It’s very important to have laws that level the playing field between dealers and manufacturers,” says one New England dealer. “That is exactly what this law in the state of New Hampshire does for equipment dealers. Dealers worked hard as a team to make this law happen. It’s something to be proud of.” The Northeast Equipment Dealers Association (NEDA) worked closely with the New Hampshire Automobile Dealers Association to lobby for the law’s passage. “It was a long, arduous process,” says Tim Wentz, field director for 4

Dealers often sell competing lines of product, which is now a protected practice in New Hampshire and Vermont.

NEDA. “The hearings started in the first part of January (2013) and went clear through to May. Virtually every week we were in Concord, NH, on that second floor. To the dealers’ credit, they packed those committee rooms. That is what really made the difference. The legislators could see that people really cared.” In New Hampshire, there already was separate legislation that governed equipment dealers. Wentz says lawmakers took that definition of “equipment dealers” and had it woven into the separate auto dealer law. “When I’d first started with NEDA back in 1999, everybody was telling me that what had happened with the auto industry was going to happen to the power equipment industry,” says Wentz. He’s referring

to mass consolidation and a reduction in the total number of servicing dealers. “When you look at the dealer agreements in auto and compare them to our industry, they include much of the same text,” Wentz continues. “Additionally, the manufacturer behaviors are the same. The dealer behaviors are the same. The end-consumers are also often the same. A landscaper is buying a truck and a mower or skid steer, etc. A consumer is buying a car and a mower for his or her lawn.” In other words, the automobile and equipment industries are very similar when it comes to the manufacturerdealer dynamic. Thus, collaboration between auto dealers and equipment dealers was natural—and each

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Regulations

deserve the same protections, the courts have concluded. Many on the manufacturer side do not agree. They see big differences between the auto industry and the outdoor power equipment industry. For one, power equipment makers often sell through more than just dealers. Many sell through box stores, for instance, while some sell online. Many use a combination of two or all three. “Generally speaking, we don’t support putting outdoor power equipment dealer protections in an auto dealer statute,” says Kris Kiser, president and CEO of the Outdoor Power Equipment Institute (OPEI), a manufacturer association. Nonetheless, the State of New Hampshire thinks auto dealers and equipment dealers should be viewed similarly. There is one exception, though. Stihl won its appeal to be excluded from the law. Stihl’s “handheld” equipment, the courts found, doesn’t have wheels or a transmission. Thus, that equipment shouldn’t be considered a “motor vehicle”. A handful of other manufacturers— AGCO, CNH (i.e. Case, New Holland), Husqvarna, John Deere and Kubota—also appealed, but to no avail.

Why dealers like the New Hampshire law

The New Hampshire law does several important things from the dealer’s perspective. Cutting through the labyrinth of legal mumbo jumbo, here is a summary of the law’s most important elements. Succession. The law makes it easier for dealers to facilitate familial business succession by including adopted, step and lineal descendents, in addition to spouses, children, grandchildren, siblings and parents. Competition. The law generally prohibits a “manufacturer or distributor” (*supplier) from

competing with a dealer in that dealer’s contracted market area. Some exceptions naturally occur. Suppliers also cannot change the market area set forth in the dealer agreement without good cause. Good cause could include changes in the dealer’s registration pattern, demographics, customer convenience and geographic barriers. If a change is about to take place, though, the supplier must give the dealer at least 60 days’ notice—along with the information, data and methodology used to conclude that a change is necessary. Measuring dealer performance. Equipment sold outside of the dealer’s territory cannot be considered when measuring that dealer’s sales performance. All that should be measured is how a dealer performs within his or her specified market area. That performance can then be used to evaluate whether or not a dealer is performing up to expectation, and to administer any incentive programs. Additionally, performance standards must be applied uniformly across similarly situated dealers. Vigorous communication with the dealer is also mandated. Once a year, dealers can request reports that include: ✔✔All written correspondence with the dealer over past 12 months ✔✔Reports created by the supplier memorializing any contact with the dealership or its employees ✔✔The supplier has 30 days to satisfy the dealer’s request ✔✔The supplier can charge a reasonable per-page fee ✔✔Documents discussing any possible insolvency, or criminal or fraudulent activity by the dealer can be excluded. Other items dealers need to buy. The law gives dealers some control over the various goods or services they must purchase in order to operate the business, such as signage,

tools and materials. In other words, the supplier cannot require a dealer to purchase from a specific vendor— unless the supplier substantially reimburses the dealer for those purchases. “Substantial” means at least 65% of the cost, which can’t be greater than the total cost of the goods from another vendor the dealer would rather buy from. With respect to signage and branding materials specifically, the supplier does have the right to approve the work of an alternate vendor in order to preserve its intellectual property rights. In other words, hypothetically speaking, a dealer doesn’t have the right to hire an alternate vendor to create a sign that looks terrible and damages the supplier’s brand image. Finally, dealers are granted some local decision-making ability to choose their floorplan sources. Facility. Suppliers cannot require a dealer to enter into a site-control agreement or exclusive-use agreement. This gives dealers control over what they use their facilities for and which products they sell. “When you’re carrying multiple lines of equipment, being forced to operate separate facilities and staffing for each line is just not economically viable—especially in New England,” one dealer says. Additionally, suppliers generally can’t force dealers to change location, substantially update their facilities or add/replace signage. If a supplier feels that a change is reasonable and necessary due to economic conditions or financial expectations, the supplier has the burden of proving it. Furthermore, suppliers cannot require dealers to upgrade their facilities more frequently than every 15 years. After a 15-year period has elapsed, the supplier has the burden of proving that a facility upgrade is

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Regulations

necessary. Exceptions could be when health, safety and technology requirements are called into question. Another caveat is if the supplier offers “substantial” (at least 65%) reimbursement for the improvements, which can’t be greater than the total cost from a vendor the dealer would prefer to buy from. Service and parts. Warranty repair is the big area of contention. Suppliers must now reimburse dealers at full retail for parts used in warranty repairs (this requirement is already present in several other states). Also, suppliers must pay a given dealer’s posted shop labor rate. Also as part of the new law, a supplier cannot require a dealer to sell an extended service contract or maintenance plan. And service-only dealers are given full protection under this law.

Inferior dealers get a lifeline?

It is important to note that “singleline dealers” are not protected under this law. A single-line dealer is defined as one that has purchased at least 75% of its inventory from a single supplier, and has total average annual sales volume in excess of $100 million in its defined market area. Suffice to say, there aren’t too many equipment dealers that fall into this category. What does that mean? Well, a massive dealer largely tied to a single brand is likely to be in a pretty good position with that brand. The dealers who need more protection are those selling numerous brands of equipment, and those selling given brands of equipment where additional dealers are in close proximity. Manufacturers are concerned that the New Hampshire law, through its heightened dealer protections, will entrench poor-performing dealers in the marketplace. Legal filings by 6

Since Stihl’s products do not have wheels, Stihl was granted an exemption from the New Hampshire “motor vehicle” law.

a lawyer representing the OPEI last May stated: “The law makes it virtually impossible for a yard and garden equipment manufacturer to terminate a poor-performing dealer or add a new dealer in the state of New Hampshire, unless that manufacturer first obtains state approval through a cumbersome, protracted, and unduly expensive process stacked against the manufacturers.” Kiser added, “Ultimately, the New Hampshire law needlessly meddles in the manufacturer-dealer relationship, hinders the free marketplace, and hurts consumers (by limiting strong competition among dealers).” Some think a little bit of meddling was sorely needed. One dealer says, “If you are a good dealer who wants to succeed, you understand it’s a two-way street. A good dealer will want to make the proper investments and commitments on behalf of the manufacturer so he is providing excellent service and taking care of the customer. For the dealers who are performing poorly and not putting the appropriate effort in, it might be a little bit tougher for a manufacturer to get rid of them, but they still can. But you know what, it was the manufacturer who set that dealer up in the first place. There are still plenty of ways for the manufacturer to ensure that the dealers who represent them are good dealers.”

“Dealers saw what was happening when they wanted to put up a new store, or perhaps sell the business to a family member or one of their employees,” Wentz adds. “Some manufacturers would say, ‘You can’t do that unless you get rid of one of these competing lines. “Similarly, we also started to see more instances where some manufacturers would see competing lines of equipment at one of their dealers,” Wentz continues. “All of a sudden that dealer is having discounts taken away. NEDA’s position is about preserving the free marketplace and taking care of the consumer. If the dealer isn’t able to provide the customer with the best equipment for that particular application, the dealer loses credibility pretty quickly. Competition ensures that the end-users get the most costeffective product for their money.” In the interest of competition and fair market principles, wouldn’t it also make sense to allow more than one dealer of the same brand in the same market area? On that note, it is interesting that this first domino to fall has fallen in New Hampshire, a state known for its libertarian tendencies. After all, the state motto is, “Live Free or Die.” Government interference in free market activity is generally frowned upon. That said, the

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See the future.

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Regulations

protection of personal liberty is of critical importance. Perhaps that is why a law protecting “the little guys’” ability to operate his or her business captured the state government’s attention.

Proliferation of dealer protection laws

Dealers around the country are probably wondering if something like this could happen in their state. Those in Vermont already have an answer. The State of Vermont passed a new law back in July, Senate Bill 224 (Act 142). Legislators say the new law is necessary to protect the state’s economy. There is a strong need for a reliable servicing dealer network to help support the vitally important farm and forestry industries of the state, not to mention the snowmobile and ATV industries. Lawmakers also say the law is necessary to help protect consumers. A more even playing field between suppliers and dealers will help dealers prosper, creating a stronger competitive environment that benefits the consumer through improved service and retail prices. Unlike in neighboring New Hampshire, the Vermont law is not tied to the automotive industry. The law defines “equipment dealer” as anyone primarily dealing in the retail sales of farm, utility, forestry, yard and garden, or industrial equipment. The “motor vehicle” loophole doesn’t appear to exist. The law also dictates some requirements for when a supplier wants to terminate a dealer agreement: ✔✔Supplier must have just cause to terminate and also provide specific reference to at least one violation of the dealer agreement ✔✔Notice must be delivered in writing at least 120 days prior to date of termination 8

DEVELOPING: Connecticut Mulls Warranty Reimbursement Law Second-generation dealer Tony Gargano, manager of Gano’s Power Equipment in Colchester, CT, testified on January 31 to the Connecticut General Assembly as to why outdoor power equipment servicing dealers should be better reimbursed for the warranty work they do on behalf of the manufacturers they represent. Gargano, who was joined by Tim Wentz of the Northeast Equipment Dealers Association (NEDA), was asked to testify as the Assembly took up proposed House Bill 5633, “An act concerning post-sale warranty work reimbursements for power equipment dealers.” HB 5633 requests that the general statues be amended to require suppliers of power equipment containing wheels and transmissions, including, but not limited to, lawnmowers, to reimburse retail dealers of such equipment the full retail cost for parts and such dealer’s posted shop labor rate for post-sale warranty. Text of the proposed bill also states that these stipulations are already granted to automobile dealers.

✔✔Dealer has 60 days to meet the requirements cited in the notice ✔✔If it’s a sales performance issue, the supplier must work in good faith with the dealer for two years Check greenindustrypros.com/12300587 for updates. in an effort to improve performance. ✔✔Can’t prohibit dealers from selling The Vermont law also stipulates a competing line of product some buy-back terms for when ✔✔Can’t require a dealer to operate a a dealer agreement is severed. separate facility and/or staff for For instance, the supplier must other brands repurchase inventory, along with ✔✔Can’t change a dealer’s territory any supporting materials such as without good cause. manuals or signage, within 90 days. It’s a two-way street Dealers are to be paid “net cost” for wholegoods inventory—dealer Manufacturers tend to think that cost minus incentives plus freight what has happened in New Hampand assembly—on everything shire and Vermont will spread to purchased over the past 30 months, other states throughout 2017. “I less a reasonable allowance for think we’ll see a lot of action this weather-caused deterioration. With year,” Kiser says. “We look forward respect to parts, dealers are to be to working with our dealers on these paid 100% of net cost for all new issues going forward. We have good and undamaged parts, and 95% for relationships with our dealers in the superseded and/or noncurrent parts. outdoor power industry. We meet With respect to warranty repair, with dealers regularly. It’s a symbidealers are to be paid their posted otic relationship. We look forward to shop labor rates. Warranty-related continued dialogue—and a consenparts are to be reimbursed at dealer sus strategy going forward.” cost plus 20%, plus any shipping At the end of the day, the supplierfees. Suppliers must pay all apdealer relationship should be—and proved warranty claims within 30 often is—a real partnership. When days. If a claim is denied but not in a strong equipment brand works in writing within 30 days, it is to be close, honest collaboration with a assumed that the claim has been apstrong dealer brand, both the manuproved, and thus, should be paid. facturer and dealer benefit. And The Vermont law also identifies you know what? So does the end some prohibited acts on the part of customer. ■ a supplier, including: *For the sake of brevity, we’ve ✔✔Can’t force dealers to accept referred to “manufacturers or inventory they haven’t ordered distributors” simply as suppliers.

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Service Department

by Gregg Wartgow

Realistic, Real-Time Flat Rate Pricing

United Equipment Dealers Association readies its new online, interactive flat rate pricing guide for commercialization after months of development.

he United Equipment Dealers Association (UEDA) announced the development of its new interactive OPE Flat Rate Guide at GIE+EXPO back in October. Since then UEDA has been working with dealers to test the software and ready it for an official launch sometime this spring if all goes according to plan. The online OPE Flat Rate Guide is designed to provide dealers with a secure web portal to find and report OPE flat rate repair times with more current and accurate information than what is typically provided by OEMs. With this information, dealers can increase their productivity and profits while improving customer relations. “This is the only industry resource that factors actual dealer times into a flat rate calculation used to determine job pricing,” says Kim Rominger, executive vice president and CEO of UEDA. “This project is not just important to members of UEDA, but to all dealers selling and servicing the machines found in the OPE Flat Rate Guide.” Dealer Dale Magie agrees. He’s the president of Moe’s Outdoor Equipment & Supplies with two stores in Liberty Township and Springboro, OH. Magie has also been serving as president of UEDA’s board of directors. He played an instrumental role in helping to advance this concept 10

of an interactive flat rate guide. “Flat rates in general are increasingly important to a servicing dealer,” Magie says. “OEMs like to reimburse dealers per hour at their shop labor rate, but consumers want to know that ‘a new belt put on this mower will cost me this much.’” Magie says his service department has been utilizing UEDA’s original flat rate guide—originally available in printed form or CD-ROM—for many years. Staff used that guide as a framework to develop its own dealership-specific flat rates. The concept of the guide now being online and interactive is intriguing to Magie. “Our dealership can continue to provide its own input on what the flat rate times should be, but other dealers can too,” Magie points out. “This is great because we can compare ourselves to other dealers. Plus, since other dealers are helping to provide the data, we don’t have to do all of the work ourselves to keep our flat rate pricing current. Finally, when more dealers are providing the times, it is much more credible information to present to the customer or manufacturer.” Another dealer who played an instrumental role is Scott Muehlhauser of Scott’s Power Equipment with three Missouri locations and a fourth in Illinois. Muehlhauser is an example of a dealer who is not within

UEDA’s four-state territory of Ohio, Michigan, Indiana and Kentucky— but still wants to utilize the flat rate guide in his business. “We’ve also been using that old printed flat rate guide for many years,” Muehlhauser says. “I really like this idea of it going digital. Rates can be updated more quickly and easily. Plus, 80-90% of what dealers are doing today is happening online, so it just makes a lot of sense.” Another benefit is that the service departments across Muehlhauser’s four stores each have easy access to the exact same information. The information is up to date, which allows for consistency and increased efficiency across stores.

Dealers giving it a test drive

Dealer interest during the initial unveiling at GIE+EXPO was tremendous, Rominger points out. UEDA quickly began signing up dealers to participate in the pilot testing. “By the end of 2016, we had all of our existing flat rate data uploaded into the new system,” Rominger says. “Then we started getting dealers going with testing it in early February. Training is very important with something as new as this. UEDA laid out a plan to remotely train 10 dealers at a time on how to use the system. Once the first group was trained,

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Service Department

Screen shot of the OPE Flat Rate Guide

it was turned loose. UEDA then took the dealers’ feedback and reports of any technical bugs to improve the software. Then a second group of 10 dealers was trained and deployed. The goal was that, by the third wave of dealers, things would be running smoothly and more dealers could be deployed at a given time. It’s expected that a total of nearly 100 dealers will help test the system. “We want to make sure we have this thing right before we put it out in the marketplace,” Rominger says. “We don’t want anything to surprise us. That’s why we wanted to take our time with the testing and rollout. The goal is to have everything fine-tuned and ready for launch by the spring selling season.”

Dealers set the times The interactive OPE Flat Rate Guide is the latest iteration of the original flat rate guide developed in the late 1990s. A guy named Bill Bohmer had actually helped UEDA (OMEDA at the time) to develop its first Ag & OPE Flat Rate Guide in printed form in 1998, later being made available on CD-ROM. The Ag & OPE Flat Rate Guide was in the process of undergoing its third update a few years ago when Rominger and his staff determined it

was time to take it online and make it more interactive. “The discussion with our partner on this, Charter Software, actually happened over a dinner meeting,” Rominger shares. “That’s all it took and we were moving forward.” Dealers Dale Magie and Scott Muehlhauser were also part of that dinner meeting. The basis for the flat rate times comes from that original Ag & OPE Flat Rate Guide, which is entirely based on actual data provided by dealers, as opposed to OEM recommendations. Realistic flat rate times factor in conditions resulting from wear and tear like mud, grass, rusty bolts and other issues faced by dealers every day. The difference now is that, because the OPE Flat Rate Guide is online and interactive, dealers can upload their own time information into the system, and also add new product models as manufacturers introduce them. “There are always new product models coming out,” Rominger says. “We can get those model names and specs from the manufacturers, but we can’t get the repair times. That’s the nice thing about the interactive nature of this system. Dealers can help us compile new data in a very timely fashion.” When a dealer uploads a new product model and its

repair times, UEDA staff will review that upload, verify product details with the manufacturer, and add it to the system. Charter Software has been the technological driving force behind the development of this OPE Flat Rate Guide. So naturally, the Guide works seamlessly with Charter’s Aspen business management system. It’s important to note, though, that Charter Software has put the OPE Flat Rate Guide on a universal platform so it can also work seamlessly with other business management systems. “This project is very exciting because it is a technology tool that is managed by a dealer association for dealers,” says Anne Salemo, president and CEO of Charter Software. “Our goal is to get as many dealers as possible to subscribe to the OPE Flat Rate Guide. As a result, our API, available through UEDA, allows any business system to integrate with the OPE Flat Rate Guide without any charge from UEDA or Charter Software.” “We have had a couple of additional BMS providers express strong interest,” Rominger adds. “There are obviously others and we’ll be working on that too. We’re giving this information to a BMS provider free of charge because we want it out in the marketplace for dealers to use.” On that note, Rominger says it is very likely that dealers outside of UEDA’s territory of Indiana, Kentucky, Michigan and Ohio will be utilizing the OPE Flat Rate Guide. “We have had agreements with most of the regional dealer associations with our old flat rate guide from the late 90s, and that is going to continue,” Rominger points out. “The national Equipment Dealers Association (EDA) would also like to be a part of it because EDA has an outdoor power equipment council within its broader membership.” ■

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Spotlight Dealer

by Gregg Wartgow

A Dealer and His Daughter Dave Groen and daughter Kristy Vander Ziel are all it takes to keep the small engines hummin’ at their popular repair shop in rural southwestern Minnesota.

Dave Groen and daughter Kristy Vander Ziel

“E

verybody thinks that owning your own business is ‘living the dream,’” says Minnesota dealer Dave Groen. “Well I’ll tell you what, it’s a lot of work. But if you don’t do it, you don’t get anywhere.” Groen has been doing it full-time on his own for 12 years now. “I’ve been working on lawn and garden equipment for what seems like forever,” Groen says with a hint of both pride and pain in his voice. He took his first job as a small engine technician at a dealership in 1985. In 2001 he was working full-time for another dealership when he bought a building and started a repair shop of his own on a parttime basis. He did that for the next several years. “Finally I realized I needed one job, because I couldn’t keep doing 24/7 for much longer,” Groen says. In 2005 he quit the dealership and made Groen Small Engine Repair his 12

full-time endeavor. He solely focused on repairs that first year. Then he connected with a big distributor in Minnesota, Central Power Distributors (CPD). That relationship led to Groen earning his Kohler certification (he’d been Briggs-certified for many years), and also getting into the wholegoods business with the Troy-Bilt line. Today Groen Small Engine Repair also sells Columbia mowers (another MTD brand), Briggs & Stratton pressure washers and generators, and Ohio Steel and Agri-Fab accessories and attachments. In addition to Briggs & Stratton and Kohler engines, Groen is also certified in LCT engines and Hydro-Gear drive systems. Even though he is down to one job, Groen’s typical daily schedule is still quite grueling. “I am in the shop between 5 and 6 a.m.,” Groen says. “I make some deliveries if scheduled, usually by 7 or so. I then work at the

shop until 5 p.m. Then I head home and have supper and work on bigger repairs, like repowers, in my home shop. I also make deliveries at night if need be. Sometimes I’m still on the road at 10 p.m.” Thankfully Groen has a very understanding and supportive wife, along with an understanding and tremendously reliable daughter. “When my dad started here fulltime in 2005, he’d asked me if I wanted to help here and there,” says daughter Kristy Vander Ziel. “So it started out as a part-time thing, but by the next year I was full-time.” Kristy has backed off her hours over the past year, but still plays a very important role in helping her dad keep his head above water. “I do all of the bookwork, run errands, pick up parts and stock parts, and help with customers,” Kristy points out. She used to help out with repairs, too, working alongside her dad.

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Spotlight Dealer

Lawnmower Fun Ride

That’s not the case anymore since she’s not working as many hours.

Nitwits, nitpickers and customer loyalty

Given the dealership’s sales level, sales mix and overhead structure, Groen definitely could afford to hire another employee. “I just don’t know,” he says. “It’s so hard to find good people that will do things the way I want them to be done, especially in the shop. Kristy says I’m too picky, but that’s just the way I am.” What some may interpret as being a bit picky could also be interpreted as being precise. To small-town dealers like Groen, you have to be precise—darn near perfect—because your reputation can become stained in a blink. Most of Groen’s customers live on farms or simply have acreage. He also gets quite a bit of business from municipalities in the way of parts and repairs. “I don’t sell too much equipment to them, though, because I don’t carry any big commercial-grade machinery,” Groen points out. Revenue is split pretty evenly between equipment and parts/service. “For a town of 60 people, that’s pretty good,” Groen jokes. Truth be told, he’s pulling customers from all over the area—sometimes as far as 100 miles away. That said, a good chunk of his customer base is in the 30- to 35-mile range. So that explains it: Groen Small

Engine Repair is the only place to go for miles and miles. No wonder they’ve been able to do things “their way” and still be successful after all these years. Nope. Groen has plenty of competition. In fact, three dealerships are in a single town about 15 miles away. The fact is, the fatherdaughter tandem has been successful because they indeed do things “their way”, and “their way” is based on total customer satisfaction. “We have good service; that’s why they come to us,” Groen says. “I’ve always looked at it this way: When I fix a piece of equipment, it’s like I’m fixing it for my mother so she can get it started and use it with no problems. You can’t disappoint a single person in a town this small; word travels too fast. We are fair to everybody, and we don’t believe in the concept of selling used equipment as-is. If you bought it from us, you have the right to expect it to work.” When it comes to new equipment sales, Groen offers to do that first five-hour oil change for free. “We tell them to bring the machine back to us or I’ll even go pick it up,” he tells. “I also spend a lot of time talking about bad gasoline, i.e. ethanol-blended gas, especially when it has been sitting around for a long time. My new favorite saying is, ‘Bad gas, spend some cash.’ And that’s the truth. More than half of our repairs are gasoline-related. The customer is going to spend money at some point. They might as well

spend it up front on a good fuel stabilizer because it can help prevent some headaches and more costly repairs later on.” Groen sends a packet of Briggs & Stratton fuel stabilizer with each new equipment sale, enough for 2.5 gallons of gas. “We tell the customer how important it is to use it and then come back to get more down the road,” Groen adds. Some of Groen’s customers are farmers with 3,000-gallon fuel tanks on site. He advises them to run to town and get 5 gallons of fresh gas for their mower, but they don’t always listen. After all, they already paid for all of this fuel that is just sitting there. As a dealer, Groen says you can try to advise the customer on what they should do, but must also be prepared to help them when they do otherwise. A good fuel stabilizer like Briggs & Stratton offers can help. So can having a robust parts inventory.

A noggin full of part numbers

“My biggest pet peeve is having to wait for parts after I get something torn apart,” Groen relates. Plus, since it’s just him and his daughter, he doesn’t want to spend a minute longer than absolutely necessary placing parts orders. He’d rather keep an ample supply of what he’s confident he’ll eventually need in stock at all times. “I think I have every belt that MTD

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Spotlight Dealer

makes,” Groen exclaims. “I keep 25 spindles in inventory at one time, along with lots and lots of blades.” Generally speaking, Groen orders parts from his main distributor, CPD, once a week. They offer a program where dealers get free freight one day a week if they get their orders in by noon. Groen has picked Tuesday as his free freight day. He does a visual check of his inventory first thing in the morning to determine what he needs to replenish. His shop isn’t computerized. “It’s all in my head, and that’s OK because there’s nobody else here who needs to know,” Groen reminds. Kenneth, MN, is a big farming community. Hence, there is plenty of John Deere equipment in the market. Groen repairs a lot of it. He’ll typically get parts from the big dealer in the area. The same goes for Stihl. Finally, he relies on two aftermarket brands—Stens and Oregon—to help supplement his parts inventory and ensure he has what he needs, when he needs it. He has less of a need for twocycle engine parts than in the past. “When I was still taking in two-cycle repairs, I used to have 20 pieces lined up at one time,” Groen says. “It just wasn’t worth the hassle of running around for parts for all of the different brands people were bringing me. So I’ve stopped doing it.” Now Groen only services what he sells, which is a limited amount of Troy-Bilt trimmers and blowers. Groen also sells Troy-Bilt mowers— but not in a limited amount. Mowers are a big part of his sales operation. “We’re selling more and more zeroturns,” he says. “We used to sell a lot more lawn tractors and rear-engine riders. But now we’re selling about 10 zero-turns to every tractor or rider. And the zero-turns are getting bigger. So we’ve had to get bigger trailers in order to keep up with how the market 14

Groen Small Engine Repair shopfront

is changing.” Groen says he also sells 10-15 push mowers a year. But speaking of zero-turns, a growing market is females who have taken on the chore of mowing their lawn. Groen says most are initially intimidated by the zero-turn. He directs them to the tennis court. Huh? That’s right, the tennis court. Groen has one on his expansive property surrounding his dealership. “I let them drive the mower around on the tennis court where it is nice and level,” he explains. “I tell them we won’t run the engine wide open or engage the blades; they can just get a feel for the controls. Most end up feeling comfortable after a short time and want to buy one—and a year later you couldn’t take that mower away from them.”

It has been a fun ride As is the case with most small-town repair shops, Groen Small Engine Repair relies on word of mouth. Still, Groen has regularly run ads in a local farming publication which reaches a lot of people. “I’ve heard that dealers should spend about 2% of their inventory on advertising,” Groen says. “Well, we spend more than that.” It’s necessary in a market as desolate as this because expansive reach is so important. At the end of the day, though, it’s Groen’s reputation that pulls customers in—and keeps them coming back. Great, reliable service is key. So is community involvement. Groen and his daughter have been

helping to spearhead a unique fundraising event for the past six years called the Lawnmower Fun Ride. It is held in conjunction with the City of Kenneth’s annual celebration each August. Groen encourages customers to bring their riding mowers and four-wheelers to join in the 5-mile ride and make a modest donation. Roughly 90% of the money raised goes to the City of Kenneth for snow removal. The rest helps pay for food and entertainment. “We typically have 60 to 80 people riding in the event—and they come from all over the area,” Groen says. They must come from all over the area, because the turnout for the Lawnmower Fun Ride nearly exceeds the entire population of Kenneth. That’s part of living and operating a business in a rural area. Your neighbor, and oftentimes customer, might be 20 or 30 miles away. Perhaps that is why Groen and daughter Kristy go to such lengths to stand behind what they do and always do right by the customer— even when it requires 16-hour days. “It took a while, but now we seem to have a good system and rhythm to how we do things,” Kristy says. Still, it’s easy to get frazzled when things get really backed up. “But all you can do is focus on one machine at a time. We’re pretty proud of the fact that, unless it’s a major rebuild or something, we usually get machines back to customers within a week. They are happy with that so we don’t often run into any issues.” ■

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Marketing Tips

How To Capture a 360° View of Customers 3 ways OEMs and dealers can work together to gain a better understanding of their target market.

riginal Equipment Manufacturers (OEMs) that rely on independent dealers as their sole point of trade are often challenged to have a true understanding of the ultimate end-user universe. This is mostly caused by a lack of data collection at the point of sale at the dealer, who then would provide access for the manufacturer. Absent of this, manufacturers are flying blind on having a deeper understanding of who and where their top customer and prospect segments are. This data gap can have wide and varied implications to improving efficiency and effectiveness across sales, marketing, product and finance teams. Contemporary OEMs strive to have a much broader view of their entire ecosystem, which is to say from manufacturing plant, to distributor, to territory managers, to dealers, to the local marketplace. The business benefits of getting this full spectrum include: ✔✔Reducing market waste and redirecting media dollars wisely across national, regional and local buys ✔✔Improve customer loyalty and profit by understanding purchase trends ✔✔Decrease inventory lag time and increase product replenishment with smarter inventory management by dealer and customer need ✔✔Predict greater growth opportunities by customer segments (i.e. high-value customers vs. lowvalue customers) 16

✔✔Accelerate product sales with the right product portfolio for each local dealer ✔✔Make poor-performing dealers act like high-performing dealers. Here are few suggestions to help you on your journey.

Idea 1 – Properly analyze registration data OEMs can incent their distributors and dealers to collect product registration and warranty data. Additionally, while most OEMs do have product registration data, few take advantage of turning it into actionable insight. To properly know exactly what your

customer base is compared to the marketplace opportunity, a manufacturer must hygiene and normalize product-centric counts into customer counts. For example, if one person registers four different products, this single customer is often counted as four unique customers. When that happens, you are overstating your market penetration but understating the lifetime value of your current customer base. When these counts are analyzed correctly, dealers can be convinced that a given OEM’s brand drives foot traffic to their stores, resulting in repeat business. Additionally, equipment manufacturers that also build engines— such as Briggs & Stratton, Honda,

Bundled customer segments should go beyond the obvious “buyer by profession or type” (e.g. farmers, landscapers, homeowners). Customers within each type could represent very different segments with unique brand loyalties and purchasing habits.

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Marketing Tips

Kawasaki and Kubota—can leverage their OEM partners’ data to help understand what products are best to build based on customer types in a particular region.

Idea 2 – Create customer segments

After hygiening the data, a manufacturer’s next natural step is to bundle like-minded end-users into segments. These segments should go beyond the typical “buyer by profession or type” (e.g. farmers, landscapers, homeowners). By adding more context to the analysis, the OEM can know and understand a customer’s value to itself and its dealers. While those commonly used buyer types often make customers look the same on the surface, customers within each type could represent very different segments. For example, while it may seem like all landscapers are landscapers, small or large, what you may discover is that one group may have the proclivity to buy certain types of product from certain dealers at different times of year. You may also find that emerging landscapers may be brand loyal to your competition for certain product lines and accessories, or that companies or even homeowners with certain key attributes such as equity levels are ideal targets.

Idea 3 – Action to realize the growth opportunity With precision comes increased profits. Having the customer purchase data, or even the ship-to-dealer data, will make it easier for an OEM to predict the next end-user purchase. Some organizations call this propensity modeling. It is a complex process for an OEM to get answers to these fundamental outdoor power equipment sales and

marketing questions, such as: ✔✔What should be my best product portfolio mix by territory, dealer and customer target? ✔✔Can I upsell more products or aftermarket parts/service at the right time? ✔✔When should I be communicating my next marketing message in order to become more relevant in the buyer’s journey? ✔✔Can I increase my product replenishment? ✔✔Do I have nuances in seasonal booking seasons? At Black Ink Technologies, we help manufacturers gain more visibility into the entire supply chain—from manufacturing plant, to distributor, to territory managers, to dealers, to the local marketplace. Even if you have decent tools internally such as business intelligence, CRM systems or statistical modeling, we at Black Ink take it to the next level because our models and data are specific to the manufacturing and power equipment marketplace. This helps improve customer acquisition and customer relationship management— and that helps both the OEM, their distributors and the dealer. ■

ABOUT THE AUTHOR Jeff Winsper offers more than 20 years of leadership experience in sales and marketing. He is the president and founder of Black Ink Technologies. Black Ink is an advanced, analytics SaaS platform made especially for the power equipment industry, independent dealers and their OEM/distributor supply chain. Stihl USA is a customer of Black Ink and an example of a 10-year relationship in which Black Ink helps them sell more product through the existing dealer network, identify new dealers to cultivate and develop, improve co-op marketing, and enrich dealers’ local ability to service their customer base. Email Jeff at jwinsper@blackinkroi.com and connect with him on LinkedIn.

To inquire, visit greenindustrypros.com/10155781

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Market Insights

Growing Opportunity, Narrowing Window

Many consumers are gravitating toward higher-quality products and better service, but they are shopping differently and making decisions much faster.

esearch from Synchrony Financial illuminates the importance of outdoor power equipment dealers having a strong online presence. Consumers are spending less time shopping, largely because of the vast amount of research they’re conducting online—especially when it comes to lawn and garden products. Last summer Synchrony Financial conducted its fifth annual third-party Major Purchase Consumer Study. More than 2,700 consumers were surveyed about their shopping preferences for items costing at least $500 from 13 different product categories—including lawn and garden. The survey results show that consumers spent an average of 80 days shopping/researching in 2014. That dropped to 68 days in 2015 and even further to 63 days in 2016. Lawn and garden shoppers, specifically, spend even less time researching purchases with an average of 36 days. “As major purchase shoppers become more decisive, influenced by the amount of information they find online, it is important for retailers to have a strong online presence,” says Ronda Slaven, vice president 18

of research and insights, Synchrony Financial. “Making it easy for shoppers to find the information they are looking for during their search can help ensure that a retailer is part of the major purchase shopper’s consideration set and stays top-of-mind throughout their journey.” Survey results show that 68% of lawn and garden shoppers report visiting a retailer’s website when conducting research. At the same time, only a little more than half (54%) visited a manufacturer’s website or used a search engine, and just 38% visited a review site.

Mobile matters, as does financing

Having a website today is not enough. The website must also be mobile-friendly. Roughly 82% of lawn and garden shoppers started their research online. Furthermore, nearly two-thirds conducted in-store research and more than one-third used a mobile device at some point during their journey. Synchrony Financial offers some tips for dealers hoping to leverage the consumer’s mobile experience: ✔✔Make payment and financing info easy to find ✔✔Make it easy to apply for credit

✔✔Consider creating a retail app where shoppers can pre-load credit card info like a digital wallet ✔✔Enable your POS or terminal to accept mobile wallets. Promotional financing plays an important role in the shopping experience. While 77% of lawn and garden respondents made their major purchase in-store, 23% made it online. Then, 63% said they “always” seek promotional financing while 78% said they feel that special promotional financing makes larger purchases more affordable. Additional Synchrony research done in 2016 shows that retailers who integrate credit messaging on their home page, product pages, shopping cart and checkout pages see a higher rate of customer engagement. Retailers can also designate a credit landing page where the card benefits such as promotional financing can be clearly explained with links to apply online. Promotional financing can help retailers drive website traffic when mentioned in search results, build incremental ticket size (cardholders spent about 30% more than non-cardholders), and close the sale (47% of Synchrony Bank cardholders said they would not have made the purchase or would have gone to another retailer if financing wasn’t available). ■

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