Change can be a disrupter to a business, but for Alex Power Equipment it has led to some of the dealership’s greatest successes. The Alexandria, Minn.- based dealership has seen its fair share of changes over the years, including a changing customer base, change in location, lines carried and even the dealership’s name.
The dealership’s ability to adapt along with its outstanding financial performance and other factors led to its recognition as Rural Lifestyle Dealer’s Dealership of the Year in the single-store category. The dealership carries Kubota, Bobcat, Land Pride, Bush Hog, Cub Cadet, Husqvarna, Honda Power Equipment, Felling Trailers, DCT Trailers and ABU Trailers.
The dealership began as Newhouse Machinery in 1921 by Carl Newhouse as an Oliver dealer. Over the years the dealership’s mainline changed to White and New Holland under Julian Newhouse, Carl’s son. In 1990 when Julian was looking to retire, he had one goal — to keep the business owned and run like a family. He turned to three longtime employees — Allan Buse, Dave Deakins and Tom Townsend — as well as his son Paul. The four took over ownership from Julian and became a Kubota dealer that same year.
In 2000, Buse, Deakins and Townsend bought out Paul Newhouse. At the same time, a rent increase on the facility forced the three partners to reevaluate the dealership’s location. They decided to move the dealership out of downtown and built a new facility off a main highway. During that period, the dealership’s market began to shift.
Alex Power Equipment
Location: Alexandria, Minn.
Shortlines: Bobcat, Land Pride, Bush Hog, Cub Cadet, Husqvarna, Honda Power Equipment, Felling Trailers, DCT Trailers, ABU Trailers
2018 Revenues: $12,435,118
2018 Absorption Rate: 93%
2018 Return on Assets: 11.59%
Dealership Management System: Aspen, by Charter Software
Website & Digital Marketing Vendor: Dealer Spike
“Up until 2000, we were really focused on the livestock business, that was our customer. We sold Gehl and we sold a lot of forage and feeding equipment,” says Buse. “Really, what drives any change is what happens around you. Our area here, because we have all of these lakes, has changed a lot. We still have agriculture. It’s a huge part of our trade area, but the livestock segment has really diminished, and continues to diminish, especially on the dairy side. We only have a few people who raise hogs and the dairies have gotten bigger. And in our immediate county, we cannot have big dairies. They don’t allow it. We have feedlot restrictions that probably most counties don’t have. And again, the lakes have a lot to do with it. We had a lot of ag back in the ‘50s, ‘60s and ‘70s and when we got into the ‘80s and early ‘90s, we tried to really keep up with that. But as we were losing our clientele, it kept getting tougher and tougher.”
As the customer base changed, Newhouse Machinery was selling less hay equipment and New Holland dropped them as a dealer because they weren’t doing enough volume. With all these changes happening at once, Buse, Deakins and Townsend started talking about the future of the business and what they should focus on. With the move out of the downtown store, they decided to change the name of the dealership. “We didn’t want to change our name while Julian Newhouse was still around, so we waited. When we moved out here we changed it to Alex Power, and when we did that, we made a much more concerted effort to determine who our clients were going to be,” Buse says.
When they moved, Alex Power anticipated they could do about the same volume of business with the potential to double in 2 years, explains Buse. “It just took off and then our residential equipment side really took off. It was all location. This road gets 12,000 cars a day. Getting out of there [the old location] was by far the best thing we ever did. We didn’t know how bad we had it there until we moved here. I don’t know how we ever survived downtown. It changed everything, changed our exposure, and that’s really why the residential business took off,” he says.
- Digital marketing tools can help you automate responding to online sales leads and adjust communication based on the customer’s preferences.
- As consumer expectations have changed, so has the expectation that service work should be made a priority, regardless of whether it’s for residential or contractor equipment.
- An evolving customer base requires reevaluating your product lines to ensure continued sales success.
Alex Power Equipment has done better than doubling its business. When the dealership moved in 2000, it was doing about $2.5 million in revenues. At its peak, the dealership brought in $15 million, Deakins says, and in 2018 had revenues of nearly $12.5 million. In September, Buse says Alex Power’s business was up about 21% from last year.
The move and customer change also brought about an attitude shift among the staff. “We had to change our focus on where we were going to go and what we were going to do. I probably went screaming and hollering louder than anybody did because I did not want to do it. I grew up on a dairy farm and I loved the ag side and I did not want to give that up, but it was easy to see why we had to,” says Buse. “If we would have stayed doing what we were doing, we’d have been out of business. We’d have been gone. You look at the ag dealers today and look at what they sell and who they are. We never could have competed with that.”
With all the change, customers stuck with Alex Power. “A lot of the customers still followed us. We’ve got a lot of customers that have changed from Oliver to White to New Holland, and now they’re running Kubota. They’re our customers,” says Deakins.
All this change hasn’t fazed the owners though. “One thing we have is the ability to change fast. We’ve been through it before,” he says. “We don’t get too shook up by change anymore. People drop major vendors and pretty soon they say, ‘What do I do now?’ Well, we just pick ourselves up, dust ourselves off and away we go again.”
As Townsend, now 70, is likely to retire in the next year or so, the ownership team needs to revisit some of the 5-year goals they’ve made, Buse says. “When we first moved out here we were looking at a 10-15 year goal, and we’ve exceeded those goals.
Debra Fredrickson (r) handles both marketing and sales and is working to improve Alex Power Equipment’s online presence. She is also in the process of automating much of the marketing. Here, she talks with Allan Buse (l).
“But Dave and I have just briefly talked about our next 5 years, where we’re going to go and what we’re going to do. By then I’ll be 70 years old, so I either have to quit working or die, I suppose. And then Dave is going to be close to 65. We’ve explored some avenues, but I think we’re just going to have to bring our young people in and do it that way.”
Measuring Parts & Service
The dealership’s motto is “We treat customers the way we want to be treated,” and those words are the highest priority for the staff. To ensure they meet those expectations, they pay attention to shop efficiency and parts inventory. In the shop, Townsend says they aim for 80% efficiency, but adds that troubleshooting today’s equipment can make that more difficult to achieve. This summer, the shop was particularly busy and didn’t experience any down periods. And, it doesn’t matter if it’s a homeowner or a contractor, the same urgency is put on getting the job done.
“Any repairs you’re dealing with are critical to that person. You try to get it done in a timely manner,” he says.
In the parts department, Deakins says, for the most part, they follow the rule that if you don’t sell it 3 times in a year, you shouldn’t have it in the bin. “But, there are things we stock just because we know we might sell them one consecutive year for every year for the last 5 years. That’s something you need and when it’s down it causes major problems [for the customer],” he says. “And then there are small dollar items, things that maybe don’t turn as fast, but you have to balance that out to what it costs to run the shop, too.”
The parts department aims to run at a 35% profit margin, and Alex Power’s absorption rate in 2018 was 93%.
With a diverse customer base of contractors, landscapers and homeowners, balancing customer expectations in the service department is a challenge. Regardless of the type of customer or type of equipment, having it repaired quickly is as important to the lawn & garden customer as it is to the contractor, says service manager and owner Tom Townsend.
One of the biggest challenges for the parts department is vendor supply fill rates because of the amount of equipment they have out in the market from their years of selling. “For example, years ago you might have had one tractor that was good for 15, 20 years, and a lot of the parts were the same. Now, all the changes that the manufacturers do in the computer systems makes it complicated,” Deakins says.
Another challenge Deakins said dealerships may experience, is finding the right fit when hiring for the parts department. He needs someone with a desire to work on computers and has critical thinking skills and can think outside the box. “I remember the guy who trained me, Jack, years ago. He said it takes 3-5 years to develop a parts person in this business. I would say that’s true. It takes 3 years for a good person to be able to know what’s going on enough to be able to take over,” he says.
Alex Power Equipment’s sales team is made up of 5 people — owners Buse and Deakins, Buse’s daughter Debra Fredrickson, Craig Neubarth and Mike Paulson. While each salesperson has a specific area they focus on, everyone sells to all customers based on who has the relationship, Buse explains. “We need to first determine who they are and what they are looking for, and to some extent, that’s how we determine who is going to work with them,” he says. “It becomes a people business and they build a relationship, and that’s where they go.”
Alex Power Equipment uses its own quoting system, rather than using Kubota’s system. Their business system has all of the dealership’s inventory listed, along with its pricing, including any discounts or programs. “Everybody has it at their fingertips and everybody knows where we’re at,” Buse says.
Despite Alex Power Equipment’s increase in sales, the dealership has been able to hold their margins. “Generally, when you start selling more, there’s a reason and, usually, it’s because you drop margins. Our margins have held. Actually, our Kubota margins are up just a couple tenths. Our Bobcat margins are up a couple tenths from a year ago. Our margins haven’t suffered because of the increase in sales,” Buse says.
For Kubota, Alex Power’s margins are around 13% and Bobcat is at about 10.5%. “Bobcat is much more competitive. I actually had a guy call me yesterday on a tractor he saw online, and he called the dealer and the dealer was in another state. He told me that he could buy it for X. And I said well, that’s not nearly what I’ll sell it for. I figured the dealer was going to lose $1,000. So, somebody wasn’t telling me the truth. You run into that stuff all the time,” Buse says.
Alex Power doesn’t pay the sales team commission, but any sales bonuses from the manufacturers go to the salesperson. “I’ve heard of too many cases with commissions where you end up with a dysfunctional sales team where people are competing and it’s not a healthy situation. I know there are ways you can do it, but this has worked well for us,” Buse says.
Dave Deakins, parts manager and owner, says today’s parts employees need to be willing and interested in working on a computer and also possess strong critical thinking skills. He says it takes 3-5 years to fully train a parts person.
Buse says honesty is No. 1 when he looks for a salesperson. “You have to be honest with your customers, and you have to be honest with your employees,” he says. In fact, he says lying would be the quickest way someone would be fired at the dealership. The next quality he looks for is someone with an outgoing personality.
Each person on the sales team sells differently — starting and closing the sale in their own ways. However, as long as each salesperson completes the final paperwork correctly, their processes up to that point aren’t as important.
“I want somebody who’s going to be honest and outgoing and willing to learn because equipment is always changing. We always have to be on Kubota University or Bobcat University and learning what’s new and what’s changing. You just have to be willing to be open to listen and learn,” he says.
One challenge that Alex Power Equipment and many dealerships have experienced is how today’s culture — and customer expectations — have changed. “We’re not Walmart, we all don’t get everything immediately. We see that becoming a little bit more of a struggle. We can’t get something retailed as quick as some people want. But there’s a limit to what we can do. We don’t build it, so there’s a limit,” Buse says. “We have to make sure that we’re not over promising something that we can’t deliver. And it happens. I had a mower deck that sat somewhere for about 3 weeks that was supposed to go on a tractor that was sold. I finally ended up ordering another one. Well, they both showed up the same day.”
Moving Toward Digital Marketing
Prior to officially joining the Alex Power Equipment staff, Fredrickson was a brand manager for a national brand and before that owned her own marketing consulting firm and worked with Alex Power. She now heads up the marketing efforts for the dealership, along with selling. One focus has been to improve the dealership’s digital marketing efforts and move toward marketing automation. She recently switched vendors and is now using Dealer Spike, which allows all the digital marketing to go through one platform. “I get my analytics and my marketing reports through them. We have monthly phone calls with them and everything is just tied together beautifully. From a dealer standpoint, it’s making my life so much easier,”
Fredrickson is working with Dealer Spike to set up messaging templates, and has identified 36 different customer journeys available once they visit the website. There’s a workflow for each of those pathways. So, if someone is interacting with the Alex Power Equipment website, whether they are looking at new inventory, used inventory construction equipment or parts and service, there are different ways people can interact with the business, she explains.
“Marketing automation allows you to continue to have a conversation with a customer once they have engaged and filled out a form on the website, and you’re allowing the customer to be in the driver’s seat about the kind of communication that they’re going to get from you,” Fredrickson says.
The program ties into Charter’s business system, so when something is sold, it will automatically interface with the website so that it is removed, along with being removed from Facebook. She’s just getting started with the system now, and working on getting the inventory connected. But, she says the dealership should go into 2020 fully automated.
While there are some unknowns for the dealership, Buse is confident that they aren’t anywhere near their growth potential. “This year has shown that. We’re probably going to add a couple more techs if we can find them,” he says. “I don’t see us adding any property, but I think we can expand our business another $4-5 million out of this same facility, with more people. I hope that we’re going to grow in our volume and stay profitable, and we’re always looking for new technology. We have to stay on top of things and keep focused if something new comes. We have to be willing to do it.”