Pictured Above: The Big Valley Tractor team earns the 2017 Dealership of the Year in the single-store category. Pictured from left to right, front row, are: Will Stonecypher, Eddie Fregoso, Sopheak Serios, Josie Franzia, Lori Lehr, Randy Hardey, Nancy Franzia and Don Franzia. Pictured from left to right, back row are: Andrew Schoenlein, Rob Collins, Brian Lagorio and James Dempsey.
The Franzia family has a track record of successfully bringing new products to the market. Back in 1976, Louis and Josie Franzia, established a Bobcat dealership before many in the area even knew what a skid steer was. Their son, Don, joined the business the next year and catapulted sales for the next 40 years. Don and his wife, Nancy, saw a similar opportunity — and a much-needed chance at diversification — by taking on the Kubota line and creating Big Valley Tractor in 1998. The decision proved to be the right one for the dealership. Last year, Big Valley Tractor had a record year for sales and achieved 69% market share. This impressive performance and other business practices helped them earn the 2017 Rural Lifestyle Dealer single-store Dealership of the Year.
Earning the Tractor Contract
The dealership is located in the San Joaquin Valley, which produces most of the 12.8% of the U.S. agricultural production (as measured by dollar value) that comes from California. Production is diverse and includes almonds, cherries, walnuts, apples, pears, peaches, wine grapes, bell peppers, beans, tomatoes, potatoes and asparagus. The area is also home to dairy and beef cattle and hay producers.
Franzia says many of the major tractor lines already had representation, but there was an opportunity to represent Kubota. “We made our pitch, sharing what I’d done in the past with the Bobcat line. We were holding high market share here in the valley for many years, establishing the dealership as a leader in the compact equipment market. Kubota was looking for a strong dealer to bring their product to market and they saw what we stood for — the higher level of customer service we provided,” he says.
Dominating the Market
Big Valley Tractor had to come up with a strategy to convince farmers to take a chance on a new tractor line and Brian Lagorio, sales manager, turned to harvest rentals. Lagorio joined the dealership in 1999. “The first thing we did was to really go after the farmers with the harvest rental program, which is really a paid demonstration. As the growers started seeing the dependability and the price, they started purchasing them.
“The rentals that came back in were then right for the homeowners and the ‘sundowners,’ who were looking for a more affordable way toward tractor ownership. So from a nonexistent market share, we achieved a superior market share in about 6 years. In the first 8 years, we sold over 1,500 units,” Lagorio says. The rental tractors are generally only rented for a season and return to the dealership with low hours, so Big Valley Tractor is able to maintain a good margin when selling them to rural buyers and they still qualify for Kubota’s programs and warranty. About 85% of Big Valley’s tractor inventory is in the rental program. The dealership achieves a 1.2 inventory turn rate on wholegoods.
Big Valley Tractor
Employees: 14 (5 sales, 7 service/parts, 2 administration)
Major Lines: Kubota
Shortlines: Earth & Turf, Bear Cat, Gearmore, Land Pride, Guardian Ag, Stihl, PBM sprayers, Porters Welding, Rinieri, Schmeiser, Valley Tool and Walker.
Owner: Don and Nancy Franzia
Dealership Management System: CDK
Website Vendor: Tom Rowe & Associates
Lagorio describes his sales motto this way, “When a customer starts talking about a tractor, we ask him, ‘When do you want it delivered?’”
Franzia takes this approach to sales: “When you’re selling a product, they’re always going to tell you ‘no.’ So, I always had ‘no’ going in. OK, I’m going to call on somebody today and he’s going to tell me no. But will he tell me yes?”
He turns a “no” into a “yes” this way: “Being a professional, being prepared, being able to answer questions, being able to walk the customer through the whole sales process to provide the best piece of equipment and offering the best parts, service and rental — and myself.”
Referral incentives have been another successful sales strategy. Early on, Lagorio began rewarding customers with a $100 in-store credit if they gave a referral that resulted in a sale. Over the course of 2 years, one customer had 18 referrals that he then applied toward an attachment. Within 5 years, the dealership was achieving more than 20% referrals. “When you start seeing the referrals, you know you’re doing something right. It became a big part of our business and that’s when we really took off and grew,” Lagorio says.
• Balance focus and diversification, so that you serve your core customers well and don’t rely too heavily on a single manufacturer.
• Solve your hiring problems by “growing” your own service technicians through training and apprenticeship programs.
• Offer incentives so that your satisfied customers are motivated to share their experiences.
• Be vigilant about tracking performance in a variety of ways so that you can make quick adjustments.
Adding the right shortlines also helped Big Valley Tractor diversify. The dealership had carried Woods Equipment, but switched to Land Pride when Kubota chose them as its preferred vendor. They added specialty equipment such as PBM sprayers, Valley Tool, Guardian Ag, Porters Welding, Rinieri and Schmeiser attachments to serve the unique needs of the growers. They also carry Bear Cat, Earth & Turf, Gearmore, STIHL and Walker lines.
Creating Facility Flow
A new facility built in 2001 provides the crucial backdrop for Big Valley Tractor’s growth. The 48,000-square-foot facility on 8.5 acres includes 8,500 square feet of showroom; 18,000 square feet for the shop; and a 50-foot overhang for outdoor displays.
“Customer flow and employee flow were huge. We took ideas from current new tractor dealerships, auto dealerships and Harley-Davidson dealerships,” says Franzia.
Big Valley Tractor opened its Stockton, Calif., facility in 2001. Key features include an 8,500 square-foot showroom, large enough for a full OPE and retail display along with larger equipment, and a 50-foot covered extension for displaying tractors, skid steers, mowers and shortline equipment.
The front of the dealership, just inside the overhang, features 27-foot-high glass doors for driving in equipment, an idea borrowed from RV dealerships. The retail space shows off mowers, tractors, hand-held equipment, seats, clothing, toys, supplies and more. Pricing and re-stocking is performed each day.
What the judges say …
Rural Lifestyle Dealer’s panel of judges sums up Big Valley Tractor’s performance: “Big Valley scored first in revenue generated per employee and first in absorption rate. In fact, they had the best score of all nominees this year, both single and multi-store.”
Another unique feature is a visible service entrance, with a drive-through driveway and an overhang for protection from the weather. The service writers’ office faces the entrance and they view activity through large windows. “People know where to find the service department. You have your highest profit margin in the service department and at many dealerships, you can’t find it,” Franzia says.
Growing the Team
Like many dealerships, finding employees is a challenge, but Big Valley Tractor has found success through its own training programs. “You have to get them at a young age, get them out of a tech school and give them a good place to work. You have to grow them and challenge them. They want a good work atmosphere and good leadership,” Franzia says. The dealership awards a $1,000 scholarship each year to a student pursuing a degree in agriculture and contributes to local FFA and 4H chapters.
“A good leader is a good teacher, a good coach…” – Don Franzia
They also participate in a state apprenticeship program where the state pays tuition to an area technical college and the dealership pays for books and supplies. Andrew Schoenlein, service manager, graduated from the program more than 20 years ago.
On-the-job training once included “on-the-ranch” training. Lagorio brought his first sales team out to his own ranch so they could practice hooking up attachments and loading and unloading trailers. Today, Lagorio trains new salespeople using a “punch list,” where he lists the training tasks for new sales hires, such as completing Kubota’s online training, riding along with a current salesperson and working inside sales for 2 weeks.
How You Can Earn Dealership of the Year
David L. Kahler is retired CEO of Ohio-Michigan Equipment Dealers Assn., Dublin, Ohio, and a Rural Lifestyle Dealer Dealership of the Year judge.
Kahler offers this analysis of the dealerships who have participated in the Dealership of the Year program:
“There are 3 major areas the judges look at that are extremely important and those are revenue per employee, return on assets (ROA) and absorption rate. Since we only started asking for absorption rate number 2 years ago, I took a look, for comparison purposes, on revenue per employee, total sales and ROA.
“The most amazing trend was the vast improvement in the revenue per employee and total sales. Revenue per employee grew from an average of $350,909 in 2013 to $571,308 average in 2017. That is an incredible increase of 62.81% in just 5 years. This is a very positive trend and proves the quality of the nominees is changing.
“Average total sales in 2013 was $16 million … a strong number. But look what happens to the sales numbers in just 5 years. When we compare that 2013 number to nearly $30 million in 2017, it demonstrates a strong increase in the size of the average dealership of the year nominee. I am not one that feels ‘bigger is always better,’ but the numbers sort of speak for themselves.
“As far as ROA, it’s interesting to note that there was virtually no change in the 5-year comparison. The numbers for 2013 were in the 7-9% range, while the 2017 numbers grew very little to a range of 5-12 % on average.
“That is a positive statement, though, because that means that rural equipment dealers are holding their own on ROA when the total sales numbers have increased so drastically. Many times, the ROA can suffer slightly when a dealer gets a lot bigger and acquires more fixed assets, more employees and more rolling stock.
Achieving DOY Status
“We would suggest that a dealer who wants to enter the competition needs their absorption rate in the 60-70% range. If your profits in the parts and service departments can cover 60-70 % of your total expenses, you will be a very strong rural equipment dealers. When we speak to the farm equipment dealers, we want them in the 100% range.
“Strive to push your “revenue generated per employee” to over $600,000. All of our 2017 winners were above that number. It can be done as we had two 2017 nominees in the $1 million dollar range.
“And finally, keep your ROA in the 9-10% range and you will always be a competitive dealer in the DOY contest. All of the other judged areas will fall into a competitive stance when your ROA is strong.”
They also try to promote from within and offer bonuses to employees for referrals. “I think job seekers are looking for a place they can call ‘home,’ where they fit in and where they can grow and learn. And, I think they learn from example. If you have a manager that works hard, I think your employees are going to work hard, too,” Lagorio says.
The dealership also turns to outside training resources, such as through Dale Carnegie, to improve skills such as time management.
Committing Aftermarket Resources
Big Valley Tractor’s parts team includes four parts counter people, a parts manager for the Stockton store as well as a parts director, who oversees the administration and performance for the dealership’s Bobcat locations. The parts counter people are bilingual and they focus on building relationships, just like the sales team.
Big Valley Tractor’s parts team includes four parts counter people, a parts manager for the Stockton, Calif., store as well as a parts director, who oversees the administration and performance for the dealership’s Bobcat location as well. Shown is Gustavo Zamudio, who is a parts specialist.
“Big Valley Tractor is dedicated to building strong, trusted customer relationships and its single-store Dealership of the Year award recognizes their outstanding efforts. We continually hear from customers that the superior product expertise, service and support from Big Valley Tractor is a unique differentiator.”
— Ray Villarreal, director of dealer development, Kubota Tractor Corp.
Big Valley Tractor follows a standard of 80/20 for parts inventory, 80% in stock and 20% order and “one in nine,” where they strive to sell a part within 9 months. Also, if a part has to be ordered twice in 6 months, then it’s stocked regularly. Their goal is to turn their parts inventory 4 times in a year.
The service team includes a director of service (who oversees all the locations), a service manager in Stockton, a shop foreman, a technical foreman (who specializes in diagnostic software), two service writers and 16 service technicians. The service writers have a goal of providing a quote within 36 hours of the equipment coming into the shop.
Generally, the service team achieves 80% for billable hours. Big Valley doesn’t currently offer performance incentives for the service team, but may consider them. “It’s a huge, huge undertaking to get the service team hitting top performance,” says Franzia.
The service team also includes 5 mobile technicians who cover all the locations. They are on call for growers 24x7 from May until November.
Franzia watches several metrics to ensure financial excellence. “I watch gross profits and net profits of sales, parts and service and billable hours. I also watch comebacks in service, which are real killers. And inventory, too. I have a saying ‘Trash to cash.’ You need to move the old inventory out, which sometimes can become trash and you’ve got to turn your used trade-ins. If you don’t, then they become yard art,” Franzia says.
Best in Class Awards
Rural Lifestyle Dealer‘s panel of judges recognize Shaker Equipment Sale, Auburn, Ky., as Best in Class for single stores. The Best in Class award for multi-stores is a tie and is awarded to Johnson Tractor, Janesville, Wis., and WC Tractor, Brenham, Texas. Congratulations to these impressive dealerships for their financial performances and overall outstanding businesses.
Lagorio shares how he monitors performance, “Every manager picks their key performance indicators. I always look at the budget and how we’re doing for this year, our inventory as well as sales and market share. I just go through the reports every month and see where we’re going and where we can improve,” Lagorio says. He also has a personal system of assigning colors to indicate status — red, yellow or green. He says the dealership is going to start using a similar monitoring module in its CDK dealership management system.
Lagorio also watches customer satisfaction measurements through Kubota and those ratings are showing Big Valley Tractor is providing what customers are looking for.
Where the Customers Are
The Big Valley Tractor sales team has finetuned its methods over the years. For instance, about 6 months ago, they began using the CRM module from CDK for tracking relationships and scheduling follow-ups with customers. “Our younger sales staff is comfortable with technology and can easily utilize this function and I can see what they are doing, too,” says Rob Collins, who will soon take over for Lagorio, who is becoming store manager at another location.
Brian Lagorio is sales manager and Don Franzia is owner of Big Valley Tractor, Stockton, Calif. The two are part of a leadership team that has built a dominant market share among the diverse agricultural segment in the San Joaquin Valley.
Collins also helped oversee a revamping of the dealership’s website, which is administered by Tom Rowe and Associates. “For several months, I tracked leads and, by far, our website was our most effective marketing tool. We’ve now implemented a video of the month on Kubota equipment or our shortlines to keep our website fresh,” Collins says.
They hired a marketing person to help with advertising, including Facebook advertising, and special events and they schedule a weekly marketing meeting. During the monthly sales meetings, Collins invites other department managers to share issues and solutions.
Big Valley Tractor Video Series
Rural Lifestyle Dealer conducted extensive video interviews with the Big Valley Tractor leadership team. Go to http://bit.ly/DOYvideos to learn about adding a tractor line, building a new facility, gaining market share, addressing hiring issues and more.
These improvements are making a difference, but Collins says their reputation is the foundation. “I don’t have a sales pitch. I am available and follow through with a good product like Kubota and people find us,” he says. And, he follows simple, proven relationship-building techniques like 6 a.m. breakfast meetings with growers.
Franzia says the future of Big Valley Tractor includes younger employees, like Collins, who will step in and fill leadership roles. They’ve also brought in professional staff members, like a chief financial officer, to bolster their management team.
Franzia is watching technology and what it will mean for their product lines, such as “connected machines.” For instance, being able to perform diagnostics remotely, so the mobile service team can bring exactly what they need when they go on site.
And, the success of the dealership resides in its leadership. How does Franzia define what makes a good leader? “A good teacher, a good coach. You have to first know the product before you can teach it.”