There was a time when many a general agent, flush with business in a booming economy, tried expanding into the powersports market. It would seem to be a natural transition. Both businesses sell vehicles, both sell financing, and both have the potential to sell "product." With such similarities, why have so many automotive general agents failed at making the transition to powersports?
Perhaps a second look at what it takes to be a successful powersports agent can be even more important when the economy is at the bottom. If we can break the code now and develop a solid foundation in powersports when times are tough, what will it mean for our agency when things start rocking again?
First, let's define powersports. Powersports consists of motorcycles, all-terrain vehicles, personal watercraft, snow machines, and portable generators. There are sub categories within each, like scooters under motorcycles. An ATV could be a 4-wheeler or the newer category of side-by-side buggies popular on farms and for hunting. Personal watercraft run the gamut from jet skis, which must be balanced like a motorcycle, to personal watercraft like Wave Runners that don't tip over when you sit on them, to small twin-engine jet boats that can pull a water skier.
It is difficult to pigeonhole the demographics of a powersports buyer. As can be seen from the description above, just for the motorcycle category, age can run from a 7-year-old youth buying their first mini dirt bike for a little over one thousand dollars, all the way up to a retired person wanting to buy a fully equipped touring motorcycle costing tens of thousands of dollars.
One very unique aspect of the powersports buyer is that in almost every case, the vehicle is a "want" and not a "need." Nobody needs a 150 horsepower personal watercraft than can do 75 mph, but I know a bunch of people who want one, myself included! This is drastically different than the primary purpose of buying a car: personal transportation to get to work and run errands.
Understanding the type of person that is the typical powersports dealer and the type of people that manage motorcycle dealerships is the first step in breaking the code. They are usually not buttoned-up suit and tie kind of people like many agents. They are enthusiasts first and foremost. There is a good chance when you visit a store and things are slow that the crew will be out back racing 4-wheelers rather than waiting around for the lay down bus like you are apt to find at a car dealership.
Showing up at a powersports dealership on your way from one auto dealership to another because it is on the way is how most agents think of expanding into powersports. The aforementioned suit and tie and the Rolex might not appeal to the powersports GM who has the job because he loves motorcycles. How many GM's do you know in car dealerships who have the job because they love cars? Think about that.
A better option may be to first identify the powersports dealerships in your area of operation. Then, pick one day per week and dedicate it to powersports. Starting with your wardrobe, skip the tie and try to be more casual. It's OK to roll up your sleeves and show those tattoos - in fact, it may even help! If you own a motorcycle, it wouldn't hurt to ride it to the store occasionally so they know you ride and you're not just a poser. You will be seen as a fellow enthusiast.
Being considered a part of the motorcycle community, rather than a "car guy" trying to fit the automotive square peg into the powersports round hole, will go a long way towards acceptance by the powersports operators. If you give the impression that the powersports business is just like the auto business except 10 years behind (even if it is from an F&I perspective), you will probably fail.
Another recipe for failure would be to not recognize the fundamental differences of the powersports dealership and how it operates. Applying the proven automotive solutions that we are familiar with may not be the best approach. Here are a few examples of the differences and suggestions that may help the prospective powersports agent crack the code:
- A lot of powersports customers pay cash for their toys. In the absence of a financial arrangement, traditional paper F&I products like GAP are not eligible. Your agency must find non-traditional products you can offer the dealer, products that may not have gained traction in auto dealerships for any number of reasons. One example is a GPS theft recovery device coupled with a paper product guaranteeing a payout if the vehicle is stolen and not recovered. A theft recovery product to the cash or finance buyer is elegant for a number of reasons: it is a "hard add" and powersports dealerships are accustomed to offering and installing hard adds at the point of sale (exhaust systems, saddle and tank bags, helmets, etc...); the guarantee is much like an etch product and is familiar to general agents - teaching an F&I manager how to succeed with this type of product is right in our wheelhouse; by bundling the two, you would be providing a neat solution for the powersports buyer that typically does not carry full coverage insurance. Instead of a total loss and no insurance to apply for a claim, we're getting the customer's property back because the vehicle can be located and recovered by the authorities. If the vehicle is not recovered, the customer has a nice down payment for a replacement.
- Factory finance programs are often revolving accounts with teaser rates, not installment loans. For this reason, full coverage insurance is not required to take delivery and loans are approved for a dollar amount based on customer qualifications, not an advance based on invoice. The approvals range from the expected short calls for first-time buyers to significantly more than what is needed to buy the vehicle for a buyer with established credit. For the first-time buyer, opportunity exists for the development agent to train dealership personnel on how to switch to a lower priced new vehicle or a used vehicle and still make a sale. For the well qualified buyer, your goal should be to teach the sales staff to blend both hard and soft adds and offer them to every buyer.
- Many powersports dealerships do not have a dedicated F&I department or personnel, and some dealers fear that offering finance products can somehow jeopardize a sale. We know that F&I development can easily add at least $300 per vehicle (especially if we are starting from $0), so it is our job to convince the powersports dealer that an F&I department, properly trained, will not only solidify his deals but contribute significantly to his bottom line. If for some reason the idea of an F&I department or dedicated F&I personnel is still met with resistance, why not train the sales personnel or sales managers to offer products in conjunction with financing? In other words, be aware that working within the powersports sales process rather than insisting on installing a clone of what works in the auto business might be just the ticket to gain the dealer's confidence. Once the dealer sees that your processes do not cost sales and actually enhance his business, he will be more likely to consider wholesale changes.
Right now, powersports dealerships are struggling in a down economy and buyers are carefully weighing the "want" or "need" proposition. Visit some powersports dealerships and you will find that right now is a great time to talk to the operators about increasing profitability and sales. You will find them receptive to your ideas, as long as you keep in mind the subtle differences that exist and try not to fit a square automotive peg into a round powersports hole.