LS Tractor recently wrapped up a series of regional dealer conferences, its first endeavor into larger dealer meetings, and Rural Lifestyle Dealer talked with Mike Blount, CEO, about those interactions with dealers and the company’s plans for 2019.
The Korean-based company is celebrating its 10th year in the U.S. and has earned four consecutive Dealer’s Choice Awards for tractor manufacturers from the Equipment Dealers Assn. (EDA), the only brand to have achieved that level of recognition.
Mike Blount took over as CEO in 2017, succeeding Deryk Johannes, who had served as CEO since 2009.
Rural Lifestyle Dealer: What was the feedback from dealers at the regional meetings?
Mike Blount: This was the first time we've really done meetings of this nature. We've had some small regional meetings within our territories, but this year we held true regional conferences.
I think for a smaller company like LS, dealers were impressed with the level of professionalism and the vision and focus that the team showed at the meetings. Some questions that dealers would have asked, we addressed up front, like the vision for the company and key areas of focus. We're really focused on retail. Retail aligns the company’s motivation with that of our dealer partners. We're focused on helping our dealers grow their businesses as opposed to focusing on just how much inventory they're holding. That keeps them healthy, helps their bottom line and helps their ability to support our customers. That's a sustainable strategy.
RLD: Other manufacturers are talking about renewed focus on retail. What does that mean for LS Tractor?
Blount: Many companies count success as getting the unit from the warehouse into the dealer’s inventory and they don't really follow through from there. A lot of companies say they do, but they really do not. Most of our programs and support focus on the dealer retailing that unit to a customer.
If you could see the internal dashboards of a company, that will tell you their main focus. For instance, if they are looking at shipments, that's not a retail focus, regardless of what they say. Our metrics are focused on tracking the number of units that dealers register, which is when a dealer gets paid. If you look at my organization, my employees’ success, performance and evaluations are all tied to the dealer retailing that unit.
A lot of people say LS has done a really good job of implementing strategic steps that align with a retail focus. For that reason, I think we have one of the healthier retail channels in the industry.
RLD: How does LS Tractor help its dealers increase sales?
Blount: Right now, we’re focused on helping dealers develop marketing plans, monitor store traffic, etc. Helping a dealer understand the market is one thing, but also tracking their success and giving them margins is very important. These programs are not novel, but it comes back again to the motivation of the organization.
RLD: What are your goals for 2019?
Blount: We think we have a lot of upside in the market. We are still one of the smaller companies, but we have a very good value product. We are well positioned vs. some of the larger companies and we expect our dealers to show significant growth going forward.
One of the things we're doing is helping dealers with sales training. As a young company, we haven't had the kind of support materials that are required to help dealers grow. Training on the service side as well as the marketing side will help them develop and will be instrumental in growing the business. Those are some of the things we're doing differently than we have in the past and I think that's going to pay out tremendously for us. We expect to grow a little faster than the market rate, so we should see some market share increases.
RLD: Where do you see opportunities for growth?
Blount: We're growing well in the West, but I think we've under performed in the Central part of the country. A lot of that has to do with being understaffed and we’re adding additional resources in those areas and I expect that to pay off in the next 12-14 months. We'll add at least one additional business manager, so the business managers will be able to focus on smaller territories.
RLD: What are your plans for your dealer network?
Blount: We want to grow our dealer network because we have areas that aren't doing as well as we'd like. But there's a balance between growing a network and improving the forms of existing channels. We have a high percentage of our existing channel that is still under performing. Some of it's because they don't have the right skill set, they don't have the right capacity in terms of technicians. We're working with dealers to help build good business plans to justify adding resources to support growth in the business.
Keep in mind, we've been selling units down for about 10 years, so our population is growing. As the population grows, dealers have to continue to grow in order to provide the right level of service and support for our customers.
RLD: What has been the pace of growth in the dealer network over the past 10 years?
Blount: It's been steady over the last 10 years. What's more important right now, probably more than anything else, is the quality of our dealers. They have to be able to prove they can sell customers on their dealerships.
We're not really looking at adding a lot of dealers other than in specific areas where we need to improve coverage. It's more about improving the capability of the existing channel. Having a lot of dealers is not nearly as important as having good dealers that can represent your brand well and have the right capacity and capability to provide good service and support, building strong customer satisfaction.
RLD: LS Tractor has been recognized four times now as the Dealer’s Choice recipient for tractor manufacturers in the Equipment Dealers Assn.’s Dealer-Manufacturer Relations survey. Are there areas that you are working to improve?
Blount: We will continue to focus on increasing our understanding of our customers business and how we help them achieve their objectives. As our customer base grows the demand on our dealers increases and we must be prepared to provide a high level of service and support.
For example, we have dramatically improved our parts inventory which has improved our dealers’ ability to service customers.
RLD: What do you see ahead for the market?
Blount: We anticipate continued growth in the lower horsepower segment. We have a strong portfolio of products in this area with good reliability offering customers a great value vs. other alternatives in the market.