All Purpose Vehicles

Tom Smith (l) of Smith Custom Service demonstrates the features of a Kubota RTV900 utility vehicle to a prospective customer. Ron Hendershot (l), Hendershot Equipment, has given APV sales responsibility to his parts counter to manage.

Welcome to the wonderful world of consumer retailing. Even before the skyrocketing growth of compact tractors during the past few years and steady sales of lawn and garden equipment kicked in, it was the introduction of utility vehicles (UV) and all-terrain vehicles (ATV) that began transforming many traditional farm machinery outlets and opened the doors of the ag equipment world to consumer retailing as along as two decades ago.

UVs fall somewhere between golf carts and small pickup trucks. They offer far more functionality than a typical golf cart and are more economical and efficient for many tasks than a pickup. UVs are generally rated by payload capacity with some of the larger ones capable of handling as much as 1,750 lb.

ATVs, while offering utility for farm operations, are often considered more of a sport vehicle and are commonly referred to as four wheelers or quad runners.

Today, many dealers say that sales of UVs and ATVs, including parts and service, account for 10-20% of their total annual sales. These have been a godsend to dealers who watched the growth of metro areas gobble up farmland that was the basis of their traditional business plan.

The buying habits and demands of the new customer base have caused many ag dealers to re-evaluate how they conduct their day-to-day business affairs. New opportunities always present new challenges.

Opportunities Abound

A number of factors led ag equipment dealers toward expanding their businesses by selling and servicing UVs and ATVs. Some responded to the changing demographics in their areas. Others expanded as a means of growing existing sales from farmers. For some, it was strictly personal. Another benefit is that sales can help smooth the seasonal slumps typical in the the ag equipment business.

Joe Konneker, Konneker-Brown, Carlinville, Ill., says his firm started handling ATVs in 1997, largely because the family was growing tired of driving 60 miles to get to the nearest Honda ATV dealer. "And my dad was frustrated after a price would be agreed upon and then there would be documentation fees, setup fees and handling fees."

The firm started by carrying the Arctic Cat brand and later added Polaris. "We were also looking to fill in the typical slow cycles with ag equipment," he says. "ATVs and lawn and garden do a great job of this."

Jacobi Sales of Palmyra, Ind., started selling UVs and ATVs even earlier. "We were purely ag until about 15 years ago and we could see how the metro areas around us were growing and eating up the farmland," says Phillip Jacobi. "That's when we began to handle lawn and garden equipment as well as the UVs.

"It didn't take long after we introduced these vehicles to area farmers that we started selling the four-wheelers, too," says Jacobi. Not only did the new product lines establish a new customer base, but Jacobi quickly saw how it helped smooth out the seasonal fluctuations typical with ag equipment - particularly in the parts and service areas.

"It surprised us that these vehicles kept selling even in the fall months and generated a lot traffic in the off-season," he says. "It also keeps our service department busier during our normal off-season."

Today, Jacobi Sales offers Kubota, Kawasaki and Cub Cadet brands of UVs, ATVs and lawn equipment in its 7 locations throughout southern Indiana and the greater Louisville area.

The story for Smith Custom Service, Inc., in Goshen, Ohio, on the east side of Cincinnati, is a similar one. As the dealership marks its 40th year, Tom Smith explains "the city has come to us."

Recognizing the demographic changes taking place around the dealership, Smith explains, "We started with Kawasaki's Mule in 1990 when there wasn't much competition. Last year between Kawasaki, Kubota and John Deere we sold over 55 utility vehicles.

"Needless to say, they became a very important part of our business. In general, UVs are durable, but with the number of units out there they generate a lot of parts and service business." He estimates that sales, service and parts for these units comprise as much as 15% of his total gross sales annually.

Hendershot Equipment, Stephenville, Texas, got into ATVs in the early 1990s as well to fill a need for its customers working in dairies and farms who wanted another way to move about their land, says Ron Hendershot.

In addition to using them to check fencelines, count cows, etc., he also sees large numbers of absentee farmers or the sundowners who need something to get around with on the weekends. "Nearly all also have recreation on their minds," he says.

Defining the Market

Even those dealers who have been selling and servicing all-purpose vehicles (APV) for a decade or more find it difficult to characterize a "typical" user of the equipment because of the almost infinite applications and customers that are buying them.

"More than half of our customers for these vehicles are white-collar consumers," says Konneker of the typical ATV buyer. "They work Monday through Friday, and enjoy riding at night and on the weekends. They often have another recreational vehicle like a boat or a motorcycle. They tend to know the powersports language."

Hendershot characterizes his ATV customer as male, 49 years old or younger, who does a lot of solo work on his land and likes to hunt.

Meanwhile, he says, the UV buyer tends to be older and more family-oriented, and wants something that one or more family members can use.

"These customers might still have that 'want' of an ATV inside of them, but they want to enjoy it with someone else," adds Konneker. "That side-by-side seating opens a new universe of things you can do with it."

He says the UV buyer has evolved from his or her ATV. "They come to the UV because they want something more versatile, with more towing capacity and speed of travel, or to transport them from the shed to the house after chores," he says.

Hendershot says a lot of his customers own both. "We know a lot of original ATV buyers whose wives took it over. Going from an ATV to a UV is a logical part of the sales process."

Smith's experience has been a bit different, though. He makes the point that his ATV and UV customers tend to be distinct from each other. "They don't cross over," he says.

"Our farm customers that want an ATV are usually the younger people because it's their toy to play with, but it isn't a practical farm piece anymore. You can put a blade on the front of it and push a little snow or put a hitch on it and pull a cart, but short of that, there's not a whole lot you can do with it," says Smith.

"UVs are much more practical. Some of these things, when we get them loaded up, can cost almost as much as a pickup, but a pickup truck isn't practical to drive around the yard. Hunters like UVs, too.

"The same people who are prospects for compact tractors are candidates for UVs. They don't want to use a wheelbarrow anymore to move wood or dirt or rocks and sometimes it's a pain to have a tractor because you can't take any help with you," says Smith.

"These vehicles have so many uses, almost anyone can find an application for them," adds Jacobi.

Today, Jacobi's "typical" APV customers include professional farmers, hobby farmers, hunters, commercial landscapers, local manufacturing plants, construction companies, municipalities and the military.

"Kawasaki makes a dual-seat model that can sit up to 6 passengers. We've sold several of these to Fort Knox," says Jacobi. "Who would have dreamed that we would ever sell anything to the military?"

Wanted Features

In many respects, what's important to commercial or industrial users of UVs can differ dramatically from what the retail consumer is looking for. These can range from options that improve the utility of the vehicle and its ease of operation or even its appearance.

Konneker says that many customers know exactly what they want when they arrive because they've done their research. "I've never seen so many asking for automatic transmissions," he says, admitting that he had been reluctant to carry this style of vehicle. "Now they can pick a gear and push the throttle - it's all seamless."

Other things he cited as the most requested features/benefits in recreational vehicles are the "creature features" around the operator station for the ease of operation and the carefully placed location of switches and levers. He also points to the fully independent rear suspension. "A rider who gets on one and feels that world-class ride will never go back."

Service, however, is not a big concern of buyers. "We sell a lot of service to consumers, but serviceability isn't on top of their list when they first come in."

"Some people like to dress their vehicles up and are proud of them," says Jacobi. "We've outfitted some units with aluminum or chrome wheels and special tires that can add $800 to the cost. We also offer several colors, including camouflage, for the hunters."

Smith also finds that hydraulically powered beds are in demand. "With the size of the beds, it's difficult to overload them, but when you get 300 or 400 lb. on them, it's hard to raise it by hand."

Most dealers agree that cab enclosures, options that can add $2,000 to $2,500 to the price, are also big with hobby farmer and other retail consumers. "They want hard glass and metal all the way around or vinyl doors," says Smith. "We put on a lot of dozer blades and almost everybody gets at least a top shade and often bed liners. Available accessories are almost unlimited."

All Purpose Vehicles

Pictured is Joe (l) and Bill Konneker, Konneker-Brown, prior to shaving their heads after their successful ATV sales event. Phil Jacobi (r), with customer Ron Gasaway, says that he sees the potential of the APV market to continue growing every time he sees a new house being built.

A Different Approach

Some traditional ag equipment dealers have found the transition of selling and servicing retail customers a major challenge. Whereas the professional farmer tends to be far more familiar with the product and knows what he needs, the sales approach stresses detailed technical knowledge, warranties issues and the bottom line.

The buying public, on the other hand, is often not familiar with many of the operating specifications of the vehicle. In many cases, they may have a few specific tasks in mind when they're shopping. Initial buys may include a few accessories or an implement, with the thought that other implements and accessories can be added later. Convenience is usually the underlying desire for hobby farm customers.

Jacobi maintains that often times, UV products are "impulse buys" for these customers.

"When they walk in, you can almost see it in their eyes that they're thinking about a hundred different uses for a UV. Compared with most ag equipment, these are very economical and handy. They're fairly easy to justify for people with acreages or horses or other smaller property and farming tasks."

But this group of dealers agree that the basics of selling still apply: ask a lot of questions about the intended use of the vehicle and listen very closely.

More often than not, Smith says, "Buying an APV is a family decision. When we recognize this, we always try to get the ladies involved. We've found, for example, that women often don't care for the sound and vibration of diesel engines. Gas engines give a smoother and quieter ride, so they are preferred by our female customers.

"But given the choice, the guys would almost always go with diesels."

The biggest factor though, says Smith, is giving the family the chance to actually use the vehicle. "We keep demo units available and we will take them out to the house. Once they find out how easy they are to operate with automatic torque converter drives and simple controls, their decision become a lot easier."

Hendershot agrees that having an excited buyer actually use the vehicle can give a dealer the inside track to making the sale.

He maintains a test-drive track in the field directly next to his dealership. "They need to figure out if it's the right thing for them. The worst thing is when a customer buys the wrong thing. This way, he gets to know everything, because he's tried it out there."

Konneker had an ATV course out in front until a few years ago, when they gave it up to make more room for lawn and garden equipment. "We had a nice inline track in front of the yard. We alternated with 8-in. timbers to demonstrate how competitors' units couldn't keep all 4 wheels on the ground at once.

"We sold a lot of ATVs that year," he says, noting that he'd like to find a way to get the riding course back for training and demonstrations.

Last year, the dealership got to work reconstructing a more advanced track in the back of the store, which features far rougher terrain, (complete with boulders) for the avid rider.

After-Purchase Follow Up

Another tenet of effective sales is that it takes several times more effort to get a new customer than to retain a current one. This lesson hasn't been lost on this group of experienced ag dealers.

They have already experienced the additional bottom-line benefits that the sale of accessories, parts and service to existing customers can bring.

"One of the pleasant surprises with UVs was the amount of accessories purchased by our customers," says Smith. "The vehicles are so versatile we can equip them to serve almost any need. Naturally we enjoy the extra profits generated from accessory purchases."

Jacobi adds, "This has really helped us. As a farm dealership, our business used to be very seasonal and these vehicles have really benefited us in parts and service. On top of this, especially with the ATVs, many families own 2, 3 or 4 of them."

With the margins so small on APVs, Konneker says that he is diligent about ensuring that his store will make it up in other ways. Service is an obvious one.

"We follow up with them after the sale. We offer an incentive to get their parts and service business. After a specified number of days following the sale, they'll get a reminder in mail. After another 30 days, they'll get a $5 off coupon to buy oil and filters. If we get them back in, we'll sell more than the oil and filters."

Konneker says that more than 50% of his ATV buyers purchase accessories. So if he can get them to buy parts and service, he knows there's more revenue awaiting.

"A set of bumpers will sell for $400, with $200 in profit. In the past, we couldn't make $200 on the ATV side itself. When that buyer comes back in, he sees the Exmark zero-turn mower and the Stihl chainsaw and blowers.

"These are all residuals from carrying the line, and are areas that we wouldn't have sold to that buyer in the past. If we've earned his trust and business, he comes back to buy something he would not have bought here previously."

Hendershot sees the same thing, particularly with that new landowner who buys a tractor, then sees the outdoor products, the chainsaws, weedeaters, etc. And he has sold a lot of ATVs to buyers who've later come back for a compact tractor.

Jacobi says that his UV buyers often return to purchase implements like tillers, seeders and blades. Once they start using them, they almost always find other uses to make their lives a little easier.

Getting Them in the Store

Many dealers that handle APVs do not push advertising for their products. "The manufacturers take on this role more so than we do as dealers," says Smith. "But you still have to let them know that you have the product available."

Displaying the vehicles is key for Jacobi. "Once they see them, their imaginations go to work. We like to have them right out front so customers who might be coming in for something else notice them right away."

Like Smith, Jacobi lets the OEMs do the advertising. "With the Kawasaki Mule, Kubota RTV and Deere Gator, they can ride them side by side in one place, he says.

"A lot of people have a hard time justifying this equipment at first because they look at it as a toy. But once they get it, they see how they can use it in so many ways. So this is the biggest promotion we use," says Jacobi. "They find that it goes beyond convenience."

Getting customers in the door remains a significant challenge, says Konneker. "Anyone in this business who says that they're doing a good job in marketing but doing the same thing as 5 years ago is fooling himself."

He admits that he isn't happy with their marketing schemes particularly for ATV customers. His company has tried a number of things (he vows never to use radio again), but is frustrated by the expense when looking at the measurable deals closed per promotional investment.

"Word of mouth among customers is the most important thing," he says. One method that he is banking on for the future is event sponsorship.

Meanwhile, Hendershot's firm advertises its outdoor products line in the local paper every Sunday. He has seen value in being on the radio with Polaris line, but says he believes in letting his inventory speak for itself.

While ATVs and UVs can get the door swinging open, it's by no means a high-margin line. "It's definitely a buyer's market," says Konneker. "It's all about price, and the competition is inevitable. Until January 1, before we put in some new changes, our average profit was less than $190 per unit.

"We realized that the next dealer sets the price. What we control is service, parts, garments, service contracts and repeat business."

Hendershot enjoys less competition because of his location. "I'm sitting in a town of 15,000 - there's no other dealer here and there won't be."

Nevertheless, his success stems from the attention he gives the Polaris line. "We focus on that line like it's a mainline," he says, noting that Vermeer, Rhino, Hustler, Dixon and Stihl also complement his Case IH offering.

Where the farm equipment dealer can shine is with service. "It's not just that single APV," says Hendershot. "We get to know these customers much better than the powersports dealers do, and they're in more often because of other lines.

"We service him quicker because we're closer to him. If he doesn't have a tie to the area, we don't have a lot to offer him that's any different than the powersports competition. But we're not chasing those guys, either."

Big Aftermarket Biz

According to Hendershot, the most important variable in handling APV products is having a large inventory for the customer to choose from. He currently has 50-plus units on-hand, but never falls below 20.

"It'd be harmful if I had fewer than that," he says. "You must have the inventory if you're going to play. There's no money in individual units, it's all in the numbers."

While wholegoods margins leave something to be desired (abysmally low by many accounts), the parts, service and accessories can bring big dollars.

Konneker says that the APV lines keep his parts and service departments "super busy," and brings a 70% margin in service labor sales ($26,000 total) and 47% margin on parts ($27,000 total). "The parts business alone could convince me to keep the ATV lines," he says.

Hendershot says that the parts and service business continues to grow at a substantial rate, year after year. He adds that customers' service demands are great, and they expect fast turnaround with their units.

"We've gone out of our way to make sure we don't lose our service customers to the powersports stores," he says, adding one of his techs does nothing but work on APVs. "It's another thing that keeps that guy busy back there. The service rush is right before deer season and then again in the spring, but we still have customers bringing them in every month."

He adds that the APVs have become very significant to his overall business. "It complements everything we do, and everything else complements it," says Hendershot.

"Without these lines, we wouldn't have had anywhere close to the traffic we have and we would've lost some opportunities. I wouldn't have wanted to do without them.

"Sometimes, they own a competitive brand, come in and see how we take care of him service-wise. Then, they'll ask us to take care of their tractor, too."

Some of the dealers say they're seeing a slowdown in ATV sales lately, but none expect it to last too long.

Jacobi says the he doesn't see a significant downturn in the market for these products anytime soon.

"The problem is there are so many people getting into it. All the major manufacturers offer UVs these days. I wonder if we're hitting a saturation point. But then I see a new house going up and see even more potential."




When asked for his advice to other dealers, Konneker-Brown's Joe Konneker offers the following pointers:

- You can't sell what's not set up. "Get them out of the box and on the floor. This year, with our goal of selling 100 units, ATVs will need to get some priority, even during harvest and planting season. And if we stay on top of things, it'll calculate to a better bottom line in parts and service."

- Get the aged inventory out on the floor and walk everyone past it. "Our new Arctic Cat rep, Chad Colby, told us to get a 2005 out there on the floor and, sure enough, we sold it. We walked everyone by it who'd give us 5 minutes of their time."

- Sponsor rides. "We're taking a group to a state park and building excitement over the event. The bikes will sell themselves. We let them ride ours and we get on theirs. They'll ask us about trades. I took a half-dozen demo units on a ride in Wisconsin and my dad was shocked when one came back with 140 miles on it. But, it was sold by the time I got it back home."

- Follow up. "We borrowed some ideas from an auto dealer I've been job-shadowing. He showed me his 'Playbook,' which is a daily game plan, which contains sales tips as well as a book to keep track of prospects and follow-ups. To sell 100 ATVs this year, we need to sell 9 per month. With the callbook procedure in place, and our diligence on making things happen, we think our closing rate could be 50%."

- Everyone is a potential customer. "Even if we can't sell them the four-wheeler, we can sell a chainsaw, a mower blade, a pair of gloves."

- Keep credit applications on hand. "No one can compete with the local lender. We keep credit applications from local banks and credit unions. And when someone has a hiccup on credit, we know where to send them. It's a mutual relationship, as lenders can steer buyers our way, too."




Joe Konneker has found that pushing price up front is an ineffective approach when selling APVs. He says a different approach is working for them and credits it to newly appointed Arctic Cat reprepresentative, Chad Colby.

Previously, he says, a customer would come in, ask about an ATV and the salesman would take him right to the unit and give him a price. "That draws a line in the sand and says 'here's price and there you go'," he says.

"Now, we have a process of relationship building. We walk customers past the other units. Once they see everything on the floor, we bring them to the office, get their name and number, and recap all the things we talked about and the customer's specific needs.

"From our standpoint, we start at list price and work down, instead of working up from the invoice price." This is quite a departure from their traditional ag sales process, he says.

Konneker explains that they've succeeded in getting away from the price sheet approach, which often results in a customer getting the price, leaving and then never hearing from him again.

"Now, it's a process, and all about follow-through. Another thing is that our 3 owners personally see each and every customer, even if I interrupt for a moment, introduce myself and walk away. It gives the customer a warm and fuzzy feeling, that the owner cares about them.

"It's not a used-car mentality. We can identify whether they're a buyer or not. We can tell when we need to do business and close the deal. If they need to go home and talk it over, there's no reason to take things too far the first day, nor to talk pricing. In those cases, we invite them to come back with their spouse and give them a commitment that we won't lose the deal over price," says Konneker.

"This was a new way of thinking - that we didn't need to give the price out over the phone. When we started doing this, I thought we'd lose those customers that we hadn't given a price to. But they came back again.

"Our goal for this year is to sell 100 units. If we can get buyers in the door, I'm confident that we'll close them."

Hendershot notices that one thing that's different about the ATV and UV sales approach is that the customer expects to take it home that day.

"They come in with an idea in their mind and want to leave with it," he says. "If they like what they see, like what we have, you need to stay with them and close the deal there."

The aggressiveness needed to succeed in ATVs has been a good shift for his staff, says Hendershot. "As a company, we must stay focused on closing the deals. It forces us to be prepared at all times and stay on our toes.

"We must keep the units prepped and clean at all time, which takes some work the way the wind blows down here. It's not the same as buying a car, but it's close. They want everything to be ready and looking good."

Konneker agrees that the new aggressiveness has been good for his entire sales team, even on the ag equipment side. "The jury is still out," he says of how well it's transferred over to the ag equipment. "But I've seen a new attitude, with comments from our people on trying some new things on the ag side that have worked on with the Arctic Cat line."




"We had an enormous amount of aged inventory last December," says Joe Konneker, noting that the fall rush had taken priority away from the ATV line "Our new Artic Cat rep, Chad Colby, came in and said, 'we need an event.' He said, 'We're going to move all of your 2005 inventory in 6 months.' I said it was impossible, and he said, 'watch me.'"

On a Friday night and Saturday in early February, Konneker-Brown hosted a two-day Arctic Cat event. The Friday night VIP event was a by-invitation-only gathering that targeted ATV buyers from the past 2 years.

The VIP flyer contained a $20 Arctic Cat coupon and presented a bargain-basement offer ($600 factory discount plus $830 discount) on a limited number (8) of the 2005 ATV models, which list for $6,029. Up to $750 in accessories were offered free on a select models, too.

"Some of these units were 300 days old, so it was time to get them out the door." Konneker and his team served a pork chop dinner from 4:30 until 8:45 on Friday night.

The next day, Saturday, was open to the public and promoted as an "ATV day" at the dealership. "By Saturday, all the specially-priced units were gone. We still sold a lot of ATVs, and were busy all day until 4 p.m. The result of this two-day event was 23 sales.

"Of those 23 units, 14 were brand new customers who had never bought anything from us before, and 9 were first-time ATV buyers," he says.

When a couple of buyers had financing issues, he asked the finance company to step up. "We had never asked lenders for this kind of help before, but they did it," he says. He says that asking the right questions of the loan processor can get things done, in some cases requiring only a few more of the customer's cash dollars to obtain the financing.

The success with the Arctic Cat event has Konneker thinking about other targeted events. "We saw how well this direct marketing approach can work. The old customer appreciation days or open houses are expensive, with questionable return.

"We used to think we needed them just because every other dealer does the same thing. But what happens with those broad events is that you don't spend much meaningful time with customers and then they go home. We can recapture some of those marketing dollars leaking out of here and put them to better use.

"We're going to take the money spent on customer appreciation days and spend it in specific segments. We're going to be doing a compact tractor 'rodeo.' Maybe a zero-turn mower event or an outdoor products event next."

And, as was said in the flyer ("You save, we shave") Konneker, his father, Bill, and his uncle, Rick, all had their heads shaved the following Monday, as the event was a rousing success.




At Konneker-Brown, all the salespeople have their hands in vehicle sales, but all deals go through either Joe or Bill Konneker. "With everyone's hands in it, no one knows what other hand is doing. For the saleperson who isn't comfortable closing the deal the way we need to, he should be passing the customer off to me so I can close it."

Joe is the main ATV salesperson and the whole building knows that he will be giving his full attention to any ATV prospect, even if that means handing off an ag customer when needed.

While Hendershot says they can't afford a designated salesperson, he has given the responsibility for ATV and UTV wholegood sales to his parts staff. "I've always been big on parts people coming out from behind the counter to sell," he says, noting that his parts staff also has responsibility for lawnmowers and Stihl weedeaters. "It's made them better parts consultants behind the counter."

When asked if it's a hard transition for a parts person, Hendershot says, "That person has to be aggressive. But the right person, that guy who doesn't want to just sit there and react to things, loves it. We really aren't looking for a person who is happy just to sit behind the counter anyway. This turns them loose, makes him feel part of the whole dealership."

Hendershot says that there's a learning curve to understanding the equipment, the customer, the inventory situation, promotion, etc. But, he says, it's no more to learn than taking on any new line, such as Stihl.

Konneker says that it doesn't matter who is doing the selling, it simply requires motivation and drive. He says training, and the confidence that ensues, go along way in succeeding. "With that confidence," he says, "you learn that you don't have to start the sales process with a price."