You might say Tom Rigg is a contrarian among equipment dealers who work in the rural lifestyle market.
While many dealers believe selling iron paves the way to profitability, Rigg has built a 4-store dealer network with $15 million in 2009 sales focusing on the “back side” of the business: parts and service.
Placing an emphasis on this segment of equipment retailing — something farm equipment dealers have been doing for several years to boost profitability — is how Rigg has grown each of his new locations. He thinks a lot of money is being left on the table by OPE dealerships because parts and service departments aren’t being run efficiently.
“I truly believe if you do that really well, the front end just comes along,” says Rigg, who’s been working in dealerships since high school. “Customers will come back and buy product from you. I don’t care who you ask, the best profit in this business is in parts and service.”
Steady Trail of Growth
Rigg’s OPE has 4 locations in northwestern Indiana, a region with a stable population of native residents, colleges both large and small, and a growing contingent of Chicagoans who are building second homes or moving there altogether to enjoy the quiet lifestyle.
Rigg grew up in Valparaiso, Ind., and it’s not a coincidence that he became an equipment dealer. In high school, he worked at an International Harvester dealership as part of a vocational-ag program.
He started in set-up, moved to the parts room and later became parts manager. “I did almost everything there. It just became really easy for me and I loved it,” Rigg says.
After 10 years of learning the ropes, Rigg decided to start his own business. His father helped him buy a building on a 1-acre lot in Valparaiso, and Rigg’s OPE was founded in 1981. While Rigg was busy growing his dealership, he was also running his own lawn care business. In 1999, Rigg built a second dealership in LaPorte, Ind., 23 miles away.
After carrying numerous lines of outdoor power equipment, Rigg’s OPE is now an exclusive Stihl dealer. Dealerships that know the lines they carry inside and out can be better performers, says owner Tom Rigg.
The landmark year for Rigg’s business growth came in 2005. Acknowledging that running two dealerships and a side business was taking a toll on him, he took on a partner, Geoff Blanco, a transplanted Chicagoan and IT business owner who was tiring of constant global travel.
Blanco had moved into a house down the street from Rigg and they met when Blanco walked into the Valparaiso store to buy a mower. “Three lawn mowers, a tractor and a loader later, he was in love with this stuff, and we became really good friends,” Rigg recalls.
Rigg was looking for a business manager when Blanco floated a proposal to become a business partner.
“Our understanding was if we were going to do this together, we needed 2 more stores to support us,” Rigg says. Blanco and Rigg moved the Valparaiso location to a 12,000-square-foot building in the same city and built another store of the same size in Mishawaka, Ind., a thriving, retail-heavy suburb of South Bend.
An 8,000-square-foot store would follow in Lafayette, Ind. Rigg is currently renting a building but working on plans for a permanent location.
Finding the Right People
Major expansions can be difficult for dealers when it comes to managing the inventory and getting the sales and service mindset consistent across all locations.
But Rigg says the biggest challenge for him is finding enough talented people. He enjoys nothing more than watching an enthusiastic employee work his way up through a dealership, and he also knows the frustration of getting burned.
Tom Rigg once used pictures to show a technician how his colleague in another store moved high-turnover parts to the parts counter to boost efficiency. “Do you want to walk back there 45 times a day for a spark plug, or do you want to stand right there?” Rigg asked him. “It will work for them if they can just get it in their head.
Rigg sees a lot of himself in Jerry Klemczak, the store manager in Mishawaka who was hired from a newspaper ad. He’s worked his way up from the parts room to mechanic to his present job.
“He’s just a sharp young man. Being a mechanic wasn’t good enough for him. His wife pushed him more than I even did. He wanted more. He went back to school, got a degree while he worked for me, and later he mentioned that he might do something different.
“And I’m thinking, ‘You need to be doing something different for me.’ ”
Rigg talked about what he expects from employees:
Honesty and Integrity. Just one wrong hiring decision can cause ramifications that last a long time. In the LaPorte store last year, Rigg hired a new manager who was “awful” and “did some awful things,” he says.
“And it didn’t take long before the phone was ringing. The customers will always get to me sooner or later. And I’m watching the figures on a weekly basis, to see what parts and service is doing, seeing what retail is doing. It took us a little while to get him out of there. We lost almost a year there.”
Rigg has appointed a salesman from that dealership to be store manager and he’s “bringing it right back and doing a great job. Employees have got to be on the same page with me. They have to know why I’m upset, or why I’m not upset.”
RIGG'S OUTDOOR POWER EQUIPMENT
Locations: Lafayette, LaPorte, Mishawaka and Valparaiso, Ind.
Major line: Kubota
Shortlines: Cub Cadet, Land Pride, Dixie Chopper, Hustler, Stihl, Western (snowplows)
Sales: $15 million in 2009 from
Dedication. “Employees have to understand this is a make-hay-while-the-sun-shines type of business. We’ve got 3 months here to make a living, and the rest of it’s kind of fluff,” he says. “So that means you’re away from your house and wife and kids a lot. I don’t like that either, but you need to know that up front. Can you do this or not?
“I like people, and I like to pay well and provide insurance for them, but I want them to give me 140% in April, May and June. It takes love and dedication that not everybody has.”
Problem-Solving Skills. Rigg surrounds himself with the best people he can find — even if they don’t have a background in agriculture or outdoor power equipment. They might have a new insight about a challenge or problem, and sometimes the good ’ole boy network becomes too entrenched.
Rigg says Blanco impressed him immediately with his ability to communicate his fresh perspective on problem solving. After Blanco came aboard, Rigg was trying to land Kubota as a mainline supplier but spinning his wheels. Reps from New Holland had been in the office, too, pushing him to sign a contract.
“Geoff went around the territory rep for Kubota and got to someone else there. He asked them, ‘How much equipment are you selling in these counties? I know we can do better than what you’re doing now,’ Rigg recalls. “Kubota called me and said ‘Give us 12 hours.’ We signed with them within 24 hours, and it’s been a great thing for us.”
But getting fresh-thinking employees in the door can be tough, he adds, because the OPE industry often lags behind in areas like technology.
“With McDonald’s or Burger King, they don’t think anything of tearing down a building that isn’t working and building a new one. This industry has always been behind the rest of the world. The motorcycle and the automotive people are so far ahead of us that it’s hard to hire people from those places.”
The Service Mentality
Rigg hasn’t forgotten about his early days working as a parts manager. Today, he’s pushing the importance of stocking parts and professional service even harder at his 4 dealerships.
In years past, it would be typical for Rigg’s dealerships to handle parts and service work adequately in the slower summer or winter months but allow business to get out of control in the heavy spring season. Important steps like estimating were often skipped.
Last fall, Rigg decided to attack these issues more proactively. He took some of his service technicians to seminars put on by well-known OPE dealer consultant Bob Clements so they could learn how to organize and run their parts and service departments more efficiently. This allowed Rigg to identify employees who were on the same page with him.
“One of the guys came back home with all kinds of ideas and began making changes immediately,” he says of Aaron Schultz, a technician at his Valparaiso store. Among other things, Schultz took junk out of the draws under the parts counter and replaced it with fast-moving products like filters and spark plugs so customers could be served more quickly.
Technicians also rearranged the parts department and installed Stanley Vidmar cabinets so parts can be organized more logically, and closer to the parts counter where customer interaction was taking place.
Rigg says he took two other technicians to the same seminars and they didn’t do anything differently afterward, forcing him to show them pictures of what was done in Valparaiso. “It has to be in the guy’s head. He has to get what you’re talking about.”
There were other changes at the Valparaiso dealership, too. Rigg hired a part-time person to do the washing and cleaning of the equipment and bathrooms, blade sharpening and loading and unloading of customer vehicles. This let the technicians stay on their jobs and rack up more labor dollars.
He also started segmenting customers, creating separate compartments for work orders that give the highest priority to Rigg’s OPE customers, followed closely by landscape contractors and warranty claims. “Our goal is to not let Rigg’s customers get past 7 days waiting for their work to be done.”
Another idea implemented in the Valparaiso shop was pulling parts needed for certain jobs the day before so technicians can start immediately the next day. This also lets technicians know if parts for some jobs aren’t in stock, eliminating unnecessary trips in and out of the shop with equipment.
And Rigg is pushing estimates more than ever at his stores. He says most customers don’t like surprises, but will agree to repairs if they know what’s coming.
“There are some car dealerships that have ruined it,” Rigg says. “The flip side is if someone’s lawn mower is here and needs a belt they didn’t ask for, and it breaks 2 days later, they’re not happy because you didn’t tell them. Now we’ve got to charge them again and do all the stuff again that we don’t have time to do.
“Look the machine over first, do the estimate and give the customer their choice up front. If they don’t want fix it, that’s OK. I just did what they asked, and I have it in print. You’ll come out better in the end, and nobody is mad at anybody. And it makes you more money.”
What’s been the result of all these moves?
Rigg has seen record parts sales in all 4 stores the last two months. And in April, the Valparaiso shop recorded $65,000 in labor dollars, compared to a goal of $50,000 based on 3-year historical figures. All this was done with one less full-time mechanic in Valparaiso than last year.
“It’s having the best people, but it’s also about efficiencies. What I see different, too, is that nobody is throwing things, nobody is overworked or stressed out or upset. We’re 7 days behind, and that’s not bad in our business. “We’re after saving minutes with the mechanics, the parts people the service writers, everybody,” he says. “We’re down to chasing minutes.”
Choosing Brands Wisely
Rigg says his ability to sell to equipment to rural lifestylers improved when he signed with Kubota because it allowed him to extend the range of tractors and other equipment he offered customers.
And Kubota’s alliance with Land Pride gave him access to a number of attachments to package with the tractors.
“It’s more because customers like it than because they need it. They just want it,” he says of the attachments. “Backhoes were our first big thing. Guys would buy those and park them next to the BMW in the garage. It had more to do with wanting it because they might have to dig a hole some day.
“It was interesting and eye-opening all at the same time. Kubota has a huge share of it, and they seem to chase it better than anybody. It’s worked out really well.”
Kubota’s presence also lets Rigg take on more construction equipment, which usually means higher hours and more frequent service work. He expects Kubota’s compact track loaders will be popular. “It’s kind of a fun market. The plumbers, light construction and landscape markets use them, and guys are plowing snow with them.”
But Rigg doesn’t advise dealers to carry every line available. After Blanco came on as a partner, they evaluated their equipment lineup and decided to drop some brands.
Rigg’s philosophy now is to carry equipment that has a good reputation and sells itself, rather than carrying brands that might be exceptional but have no brand awareness — Stihl being one example. About a year ago, Rigg’s OPE became an exclusive Stihl dealer. Rigg also doesn’t want sales people to spend time selling products like string trimmers or tillers with low margins.
Dealerships that have intimate knowledge of the brands they carry are better at what they do, he says.
“At the end of the day, you want to know what’s wrong with the machine, and what’s not wrong with it. If you try to sell one of those and one of those, you get stressed out. There are too many things you don’t know,” Rigg says.
“There are times when we’ve serviced everything that comes through the door. That’s how I grew the new stores. That’s how I felt I had to grow them to get enough service business to hire enough people to keep it going. So I took on some things that I didn’t like. But it got our name out there and got us going, and when we got deep enough we could back off do what we do best.”