Growing sales in a down market – September 4, 2006

A quick look at recent stats makes the snowmobile business look like it’s going out of business: sales decreases, multiple low-snow seasons and shocking quarterly earnings results.
The good news: there’s still money in snowmobiling, and we’ve found three different businesses that are seeing growth in a slumping market.
Launching With The Internet
Arctic Cat dealer Country Cat, based in Sauk Centre, Minn., has the Internet to thank for its 8,600-square-foot addition — almost doubling the dealership’s space.
When the company launched its online business one year ago, it had no idea it would grow so rapidly, said Mark Wanderscheid, service manager at Country Cat. He estimates by year-end, online sales will make up about 20 percent of the dealership’s business. Of the addition, 30 percent of the space is now parts storage for online sales. He expects the entire business to be up 35 percent this year, mostly due to online sales.
The online division started almost by accident, when they were cleaning out a storage area and discovered a pile of ATV rims. “We figured we’d try to sell them on eBay or throw them in the Dumpster,” he said. “We got $70 or $80 for them. We had them on our showroom for $20 and no one would even take a look at them. Then we sold some miscellaneous seat covers and some items we’d ordered wrong and never returned.”
Online sales as a revenue stream was born.
The company still sells some through eBay, through a site called catbargains.com, and its most popular site, www.arcticcatonlineparts.com, which buys excess parts inventory for various Arctic Cat products and re-sells them. Costs are kept low for this site as customers look up their own part numbers, allowing Country Cat to use lower-skilled employees to fill the orders.
The Internet-spawned increased sales in an unexpected area: used snowmobiles. David Wanderscheid, sales manager, began purchasing closeout machines direct from Arctic Cat — either new non-currents or slightly used — at rock-bottom prices.
“It’s one of the strangest things we’ve run across: they were four-stroke turbos and they were so ridiculously cheap. David bought three or four of them and we made good money on them,” Wanderscheid said. “So he bought 50 more of them. Then, we bought 20 to 30 Firecats. We had a total of about 100 machines and turned them in a three-month time.” The machines sold to customers as far away as New Hampshire.
Of the dealership’s new space, 60 percent of it is for an indoor storage/display area for new and used machines. The goal is to have anything that’s built on display, Wanderscheid said. “Plus, used machines will sell better if they’re cleaned up and indoors, not out on the lot in a snow pile.”
The dealership hasn’t been immune to the sales pressure facing snowmobile dealers nationwide. In its height, it sold 220 new machines annually, at its low, 60. Last winter, it sold about 120 to 150 units, Wanderscheid said. ATV sales have increased, and now account for half of the machine sales. The company also added a lawn and garden line this spring, but have yet to see substantial contribution from this unit.
Wanderscheid said he feels that attitude has contributed to its snowmobile sales, and there are often sales pep talks on how to pep-talk to customers. “We tell them to relay any positive feedback to the customer but to let any negative feedback just die,” he said. “If you portray a positive image to a customer, they’ll be more positive about the purchase.
“We can tell a customer that there’s snow two hours north and put a trailer in with a sale. You don’t have to have snow in your own back yard to snowmobile.”
Basic Guerrilla Tactics
In its three-year life, Bikeman Performance Inc., New Richmond, Wis., has seen growth of about 25 percent annually — and is on track to post the same positive results for this year, said Robb Johnson, salesman.
In addition, the company will move from its cramped quarters to a 8,000-square-foot space that will house the development, service and dyno from the old space and a new retail shop, larger warehouse space and a shipping center. It just hired a new employee, and will likely add a couple more positions after the move, Johnson said of the five-member staff.
The company produces performance products for snowmobiles and other powersports equipment, and has found most of its customers interested in products to increase the speed of their current machines — not new snowmobile purchases.
Johnson attributes some of the company’s growth to some basic business techniques. Customer service has always been paramount for the company, he said. “We’re easy to get a hold of and easy to work with,” he said. “I’ve worked at other shops and with other vendors, and it’s hard to get people to answer and get good answers.” Bikeman employees make it a priority to answer the phones and e-mails, Johnson said, and customer comments indicate that it’s appreciated.
The company has exploited the Internet in many ways to advance its marketing capabilities. He calls it a “key, key factor for our growth.”
The company sells products at its site, www.bikemanperformance.com, lists its best sellers (currently the BMP Big Flow Intake For Firecats for $59), and offers easy ways for customers to ask questions.
Employees often cruise message boards and snowmobile-related forums to offer advice and answer questions. It also posts product information and new product releases on the boards. “If you want a big buzz in a big hurry, go to the Internet. We can put a release on the forums on Friday, answer some questions over the weekend, and get orders on Monday,” he said. The company’s Web site asks potential customers for the forums they frequent and their username.
Diversification has helped the company, too. It started out as Arctic Cat only, and has now added Ski-Doo. Soon, Johnson said, Yamaha and Polaris parts will be a part of the mix. It’s working its way into the motorcycle market with Harley-Davidson, pitbike mods, as well as building ATV products. Snowmobile still makes up the majority of sales, Johnson said, about 80 percent.
Know Thy Customers And Cater To Them
Choko Design International Inc., a suburban Montreal-based snowmobile clothing maker, knows what it’s like to burst at the seams — and how not to abandon its customer base.
The business moved into a large space in July. The new building, three blocks from the old, has room for eight additional offices and 20 percent more warehouse space, said David Hershon, CEO. The company is looking to add additional space to its U.S. warehouse, as well.
Hershon said the company’s snow business has grown nearly every year, some more than others. He’s expecting an even to slightly increased upcoming selling season.
He gave two reasons for his company’s success. First, he said, the company has stuck to its traditional snowmobile outerwear designs. In the past few years, the trend has been toward layerable, waterproof/breathable garment, which Choko does make. However, it’s kept the thick, insulated cold-weather gear while other clothing makers have abandoned the concept. “It’s a key garment,” Hershon said. “There are still a lot of cold days and people who go on long, multi-day trips.”
Hershon also said the company’s dealer-direct sales policy to select dealers has helped the company in a down market. The company keeps tight controls on who’s selling its products, as well as how much of it enters the market. “Our product is not footballing around,” he said, “So in a bad market, it doesn’t allow the dealers to lose money.”
Some of it is luck, too. He called sales in New England last year “a disaster,” but other areas of the US were surprisingly strong. Ditto for Canada: excellent sales in Quebec and Maritime Canada made up for the slump in Central Ontario and Manitoba. About 60 percent of overall company sales are in Canada, the rest in the U.S. The company has been active in cutting costs. Over the past six years, it’s been moving garment production to its own plant in China, which now accounts for about 70 percent of production. psb