Getting into the tractor-selling business wasn't quite an accident for James Little, but to hear him describe how he transitioned from owning his own successful contracting business to opening an equipment dealership in 2000, you might think so. But once he got started there were no accidents in how Little Tractor & Equipment Co. in Metropolis, Ill., grew its revenues to $6 million through dedicated customer service and solid marketing to be selected as the Rural Lifestyle Dealership of the Year for 2008 by Rural Lifestyle Dealer magazine.
Little says he's not quite sure why his dealership has succeeded the way it has. Maybe it's just because rural lifestylers and local businesses like to do business with someone they know and trust.
It was Little's affinity for tractors, developed at an early age on his grandfather's farm in southern Illinois, that led to his hobby of fixing up older tractors in 1994. He did it while operating his home-building and remodeling contracting business.
"I had an old International tractor and got in a bind and needed some money. So I put an ad in the paper to sell it and got about 25 calls. I started thinking to myself, 'There may be some opportunity here.' So I started buying other used tractors, fixing up and selling them."
Back then, Little says that he couldn't understand why equipment dealers would sell him their used equipment when all he had to do was take it home, clean and fix it up. He could sell it and make $1,500 or $2,000 on each one.
He learned fast once he got into the business full-time. After a few years, he says he began to understand why the dealers were happy to have him buy their old stuff. "I don't have time to do that sort of thing anymore," he says. "And now I have overhead."
Six years after taking up the tractor fix-up business as a serious sideline, he decided to make the leap and sell tractors as a full-time career.
A Competitive Challenge
Little was well aware that there were plenty of other equipment dealers in the area, most serving the farming community where soybeans and corn are king. Today, his competition runs the gamut of colors and brands, including John Deere, New Holland, Case IH, Mahindra, Kubota, Montana, Branson and TYM. But none are located in the town of Metropolis itself.
Nonetheless he found his business growing from the time he hung out his shingle. What he believes he had going for his new dealership was the fact that he'd grown up in the town and had operated his business there. He was well known and respected for his work and involvement in the community.
Little's customer base is typical of most rural lifestyle dealers around the country: large property owners, hobby farmers, landscapers, construction companies and "even some grave diggers."
Several of the hobby farmers in the area raise cattle and a few have horses. The small dairy farms that were once plentiful in the region are mostly gone. In their place, tree farmers and vineyards are springing up.
"Even Jay Corzine, my sales manager and right-hand man, started a small vineyard to make wine," says Little. "You can take 3 acres and have a really nice vineyard."
Otherwise, much of his sales territory in southern Missouri and northern Kentucky and Tennessee is characterized by hills and hollows. As far as full-time farms, 2,000 acres is considered a big operation. Most are much smaller.
Little Tractor & Equipment grew quickly and moved three times in its first 4 years in business. It finally found a permanent home on one of the main thoroughfares into and out of Metropolis.
The dealership's moves coincided with its sales growth that grew from $250,000 in 2000 to $650,00 in 2001. In 2002, Little Tractor's sales began picking up speed, reaching $2.2 million that year and $4.4 million in 2003. The dealership hit $6 million in 2007.
In 2004, Little built a 10,000 square-foot facility on 8.5 acres of ground on the west side of town. It was modeled after a dealership owned by a friend that operated a John Deere dealership in Columbia, Mo. Four years later, he's already planning its first major expansion — a 50-foot x 60-foot addition for the parts department.
"I'm not sure why people are drawn to our dealership. I grew up around this place and pretty much everyone knows me. I've always tried to be as honest as I can and take care of my customers. I did that when I was a contractor, too. When I tell someone something, it's done.
If I sell you something and it has a warranty, it's taken care of whether it hurts me or not. When I opened up, people who weren't even looking to buy a tractor would stop in and tell me they were glad to see me open," Little says.
Ask what sets him apart from the other area dealers and he has difficulty pinpointing exactly why Little Tractor has experienced such solid sales growth in a relatively short time. "The only thing I can think of is service and taking care of our customers. I always go the extra mile for them and, of course, we have a good location and a good product."
An Emerging Brand
The good product that Little refers to is the Kioti line of tractors that the dealership began handling in 2000. It was, in fact, another of Little's friends, Mike Parkins, who owned one of the tractors, who introduced him to the South Korea-made tractor and encouraged him to seek a dealership.
At the time, Kioti was a fairly new, but emerging brand of compact- and utility-type tractors. "They've been in the states for just over 20 years, but you couldn't ask for a better company to work with," says Little. "I have the president's cell phone and while I don't use it too often because he's busy, he always calls me back.
"And they listen," Little adds. "If they ask a question, they want to know what you think. They're not asking just to pacify you."
Despite carrying a "non-mainstream" tractor line, customers have flocked to Little Tractor & Equipment. In the last 5 years, the dealership has averaged 200 tractor sales a year, making it the top-selling Kioti dealership in the U.S. each of those years.
He admits that it's taken a while to get the brand established in the area. "People still come in and ask 'What's a Kioti?' We don't get the question nearly as often today as we did in the first couple of years, but it still happens."
Bucking National Trends
"Everyone was saying 2008 would be a tough year for tractors," Little says, but through August he hasn't seen it.
In fact, sales of low-horsepower tractors have been slumping in the U.S. since 2004, reflecting the dismal trend of housing starts and home sales, particularly in the last 2 years. According to the most recent figures from the Assn. of Equipment Manufacturers, U.S. sales of compact (less than 40 hp) and mid-size (40-100 hp) tractors from January to July 2008 were down 13.5% compared with the same period in 2007. Compared with the January to July period in 2006, sales of smaller tractors this year are down nearly 14%.
For Little Tractor & Equipment, unit sales in 2008 will be the dealership's best ever. Further, August '08 was the single biggest month in the dealership's 8-year history as it sold 57 tractors, pushing the fiscal-year (ending September 30) sales total to more than 300 units.
Little figures that the dealership's sales sweet spot falls in the 35- to 40-horsepower range, but adds that as Kioti's range of tractors has expanded, so has his customer base. Today, the manufacturer offers units ranging from 22-90 horsepower.
"This is the first year out for the 90-horse equipment," Little says. "We've already sold several of those and we're seeing more interest in the 65-horsepower units. With the bigger equipment, we've also been able to move into the production farming market, especially with those baling hay."
He also sees promise for increasing sales with the newer models of lower horsepower tractors that come with cabs. "We have a lot of businessmen here that have 3-5 acres lots and they use 45-55-horsepower tractors with cabs just to mow their grass. I think the smaller tractors with cabs will be really good sellers to folks like these."
A Natural Marketer
While Little says that his marketing program pushes both the dealership and the Kioti brand, it's evident that it's the dealership itself that's the big draw. As most successful dealers have learned, it's their reputation and service that sells machinery. The equipment brand only supports their efforts.
This is what stands out for one of the judges on the panel that selected Little Tractor as the 2008 Rural Lifestyle Dealership of the Year. In his rating of Little as the top dealership in this category, he wrote: "Selling $6 million worth of Kioti in Illinois speaks volumes of his ability to run a dealership. He has a very high market share while competing against the major lines. What impressed me is how he sells his dealership and his name."
In fact, Little Tractor's market share is a solid 33% within a 50-mile radius of the dealership, the typical sales territory for a Kioti dealer. But with its success, the tractor maker doubled Little's sales territory. Within a 100-mile radius, the dealership commands a 16% market share.
From the very start, Little took advantage of his reputation and community relationships to establish and grow the business. One of his first sales was to a "buddy," he says.
"This fellow's company is into all sorts of different businesses in the area, from a barbecue restaurant to nurseries to construction. You name it and he's into it. He talks to a lot of people. So I told him if he bought one of these new Kioti tractors from me, I'd stand behind it regardless of what happened. He did and he was happy with it. He told others and that was a big help in getting us up and running," Little says.
In addition to TV and radio advertising, Little says that billboard advertising has also worked really well in creating awareness of the dealership. "We have 6 mobile billboards that are moved to different locations every month, so the message doesn't get old. The company does it for a little more than the cost of one billboard sitting in the same spot for several months," he explains.
While Little Tractor's sales territory covers several counties in Illinois, Kentucky, Tennessee and Missouri, up until this year, the billboards only appeared in Illinois and Kentucky. This year, the dealership's billboards will also show up in Missouri.
One thing he doesn't do anymore is advertise price. "I used to do it all the time and found that other dealers would cut me by $100. I promote low-rate financing or cash-back offers, but I don't advertise pricing."
He's found that manufacturer incentives — like a free front-end loader with the purchase of a 35-horsepower or larger tractor — also work.
"In the past year, Kioti offered that deal for a month and it worked so well that they extended it for another month," Little explains. "We sold 3 semi truckloads of tractors (24 units) in less than 2 months with that program."
Paying for Referrals
Little says that while he'll continue to invest 1.5% of gross sales in advertising and other promotions, his most effective marketing tool remains his customers — both through word of mouth and direct referrals.
Little's referral program is simple. If someone refers a customer who buys a tractor, they're sent a check for $100 or, if they don't want cash, they're given a $100 credit when the purchase is completed.
"Customers love it," Little says. "I've got one customer who's received over $2,000 from us. Several others have $400 and $500 credits on the books that they can use for parts or service."
And he's seen the power of word-of-mouth advertising and a loyal customer base. Little likes to tell a story of how he was working with a potential customer but needed to respond to another situation. Rather than make the customer sit and wait until he could get back to him, Little asked other customers in the store if they could talk to him for a few minutes.
"In a couple of minutes, he was surrounded by other customers. By the time I got back, he said, 'I don't need you. They just sold me a tractor.'"
Tim Phillips, Kioti territory manager, started working with Little in 2005 and has seen the enthusiasm and loyalty that the dealer has created among his customers.
"What James has done," Phillips says, "is to create something I call 'compound interest.' Everyone knows what word-of-mouth is all about, but compound interest explains it the best.
When you start out in business and sell your first tractors and those people are taken care of 100%, they go out and tell 60 people and that just compounds year after year after year.
"It amazes me when he and I work farm shows together. His customers or future customers come in and every one of them knows somebody that did business with and bought a tractor from James," says Phillips.
"It was their cousin, dad, uncle, brother-in-law or someone who had sent them to see James or Jay Corzine. Each one has something positive to say about the other person's experience and repeat what the person told them. That's what drove them there. From my experience, the word of mouth from customers is what made Little Tractor successful."
With his philosophy that "loyalty is a two-way street," Little recognizes the benefits in helping out his community. He admits that having lived in Metropolis his entire life makes it easier to be involved with local groups and activities. From the time he opened his dealership's doors, Little was there to help out when a community group needed a piece of equipment.
"If they need equipment, they've got it," he says, "especially when kids are involved."
He loaned equipment to one group for 6 years in a row. When they finally got some money together, they bought a tractor from Little. "I've never said no when they asked."
Inventory is Vital
While he says he's still learning the finer points of operating an equipment dealership, one thing Little figured out quickly is that "If you don't have it, you can't sell it."
A full-time farmer might be willing to order equipment and wait weeks or months for it to be delivered, but the rural lifestyler wants it now.
Each year, Little Tractor starts out the selling season with at least with 150 assembled tractors, including 10-15 with backhoes and most of the rest with front-end loaders. "If we don't start out with that many, we can't keep up with sales," says Little. "We want them ready to go for delivery.
"I've been told that I'm nuts for keeping so much equipment around, but a lot of our customers are impulse buyers," says Little. "I don't think a dealer can make up a customer's mind, and too many things can happen in a few months. That's my philosophy. So we really push same-day delivery. When a customer comes in and buys a tractor, it's there that day or the next. And if he wants a rotary cutter, box blade or a tiller we always have those in stock."
Besides the fact that the rural lifestyle customer also prefers to touch and see what he's buying, Little believes that maintaining a large product inventory gives him other advantages, especially in this period of escalating inflation.
"Lately, the price of my trailers has gone up every time I order. The last load went up $2,300 each from the time I ordered until they were delivered," he says.
"So if I have it in stock, I can sell it right there. But if I have to order it, I don't know what the price is going to be.
"I know it's risky, but I knew we had a price increase coming on rotary cutters, so I ordered $500,000 worth. That way, I had a better price for my customers and it gave me a price advantage over my competitors right off the bat," Little says.
He's also a big believer in having the customer drive a tractor and use attachments before he buys it. Behind the dealership, he keeps dirt and rock piles so customers can use the loaders and backhoes. If they prefer, the dealership will allow potential buyers to take the tractor home and use it for up to 2 hours.
Internet Sales Growing
It didn't take Little long to discover that the Internet is rapidly becoming an essential sales tool for the rural lifestyle crowd. He's also found that an easily accessible website can dramatically expand his market reach.
"We have a website and now we're selling product all over the U.S.," he says. "This is getting more and more important all the time because even our local customers are emailing us instead of calling. People are just so busy."
Little says the dealership has even sold tractors from its website. "Most of these sales are to people who already know us and have bought from us. If they're knowledgeable about tractors and know what they want, we'll take their specs, match it to the model they need and email them a quote with all of the financials, pricing and delivery information. Then we'll follow up within a day or two by phone if we haven't heard back from them.
"If they don't know what they need, I pick up the phone and call them. The important thing is it's easy to reach us and do business with us. Customers like the option of shopping and doing business over the Internet," says Little.
He also tells of a customer in California who found the dealership through the Internet and now buys most everything he needs from Little Tractor. In fact, he's purchased four or five tractors as well as other equipment from the dealership during the past few years.
"I guess he just likes doing business with us," Little says. "He got stung by a dealer out there and since he's started working with us, he says he doesn't want to work with anyone else.
"Whenever he wants something big, he comes down with a truck and trailer and picks it up and takes it back with him. He makes his living with his equipment and can't afford to be down. He can handle nearly any repair himself, but if he has a service issue, he calls and we talk him through it over the phone. He showed up last year at our open house," Little says.
Hard Work & Customer Care
Phillips, the Kioti TM, notes that while Little Tractor & Equipment's most noticeable success may be measured in sales, service is really the cornerstone of the dealership.
From Phillip's point of view, there's no magic formula or marketing secrets behind how the dealership operates. "It's difficult to define Little Tractor's success because so much of it is the result of James Little's personality and his personal philosophies about hard work and customer service," Phillips says.
"He's at work at 6:30 in the morning and when the store closes at 5:30 he's off delivering tractors, picking up tractors for service or evaluating trade-ins. It's not uncommon that I talk to him at 9 or 10 at night. He's usually on his way back from looking at a trade or dropping a piece of equipment off."
"If I were to sit down with another dealer and they wanted to know what James' secret to success is, I would have to say it's hard work and aggressive marketing. But, by far, it's his business philosophy of taking care of the customer," Phillips says.
"He's instilled this in all of his employees and they follow his lead. They do whatever it takes to make sure the customer is happy. This has done more for his business than anything else because word-of-mouth advertising will either make you or break you."
Little says that his goal is to double sales to $12 million in the next 10 years. While he already has tractors displayed in two other lots around town for sales only, he doesn't believe he'll need to expand to another location in order to do it.
"I don't think that expansion into new areas will be necessary and I can keep my costs down by operating out of this one location. That's not to say that I won't ever build or buy another store," Little says.
He also believes that simply continuing to do what the dealership has done so far is what it'll take. "I feel like hard work is what will do it. If you take care of your customers, the rest will take care of itself."