Malcolm Smith Hits the Top In Business and Competition

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If you've ever thrown a leg over a bike, chances are you know of Malcolm Smith. Fans and enthusiasts of the sport have grown up watching the eight-time ISDT gold medalist, Baja racer and Hall of Famer's exploits immortalized in the moto-entertainment staple On Any Sunday. Likewise, if you've worked your way up in this industry, you probably started hearing Smith's name the second you started pushing a broom across the shop floor.

But what you might not know is that Smith's racing career and business acumen developed at the same breakneck speed.

While he was honing his racing skills, he was earning extra cash assembling 50cc Super Cubs for pioneer Honda dealer Rush "Pappy" Mott. While his racing exploits were making Husqvarna a household name, he also ran his own service business. And, as he was putting the sport of motorcycling on the silver screen, he was running his own dealership.

Today, many of his racing trophies adorn what is his true crown jewel: a 66,000 sq. ft., two-level mega dealership he opened in November 2006 in Riverside, Calif., east of Los Angeles. Smith spent 10 years buying out seven properties in an aging neighborhood before constructing his ideal store.

Smith started his dealership by buying K&N Motorcycles from K&N Engineering founders Norm McDonald and Kenny Johnson in 1970. (Prior to that he bought their service business and ran that.) Smith's dealership grew at such a steady clip that by 1975 he had expanded to a larger location. (As irony would have it, the day he broke ground at his latest location, bulldozers were plowing the original location — and a little corner of motorcycling history along with it — to make way for a new freeway interchange.)

Sporting a modern-yet-inviting interior design and architectural style, Malcolm Smith Motorsports features a customer lounge with free Wi-Fi, an extensive service department, an area devoted to bargain items, plenty of floor space to show off rides from BMW, BRP, Can-Am, KYMCO, Suzuki, Yamaha, and Husqvarna, as well as an entire KTM boutique.

But for all its flash, at the heart of Malcolm Smith Motorsports lie solid business fundamentals that Smith learned early in his career and has applied throughout his upward trajectory.

CUSTOMERS FOR LIFE

First and foremost, Smith strives to cement lifelong customer relationships. And that comes down to the Golden Rule: "The biggest thing is to treat your customers like you want to be treated, and to get your employees to do [the same]."

That second part is the challenge, Smith says. Employees often don't realize how much it costs to get customers and how easy it is to lose them.

For example, if a customer hasn't been initially treated well, and simply wants a deal on something to make things right, Smith exhorts his employees to work a deal and make the customer happy. This might seem counterintuitive to some well-meaning employees who think they're trying to save the shop some money, Smith says. Keeping customers happy is not only the right thing to do, but the only thing to do to keep those customers coming back. "They'll be a customer from then on," he notes.

To help employees take the long view on customer relationships and sharpen their service game, Malcom Smith Motorsports continually hones its customer service with regular quality and assurance surveys.

"For every bike that's sold, we call them after a week with a real simple questionnaire asking, 'How were you treated in the sales department? Are you happy with your motorcycle? Was the financing good? What would you like us to tell Malcolm?'" Smith explains. "Once we started doing that we got complaints down to 5 percent."

"We want their money, no doubt about it," Smith says. "But we want it steady and even and fairly. That builds customer longevity. I've got guys that come in here who are 16 years old now and say, 'My grandfather brought me in here.'"

To keep the relationship going, the dealership organizes bike nights, group rides, maintenance clinics and other events to attract customers even when they're not in the market to buy.

IT PAYS TO ADVERTISE

At about the time Smith started his dealership, Bruce Brown came to him to pitch On Any Sunday. Initially Smith begged off because he was busy wrapping his head around his dealership, but after a couple of weeks, Brown called Smith back asking whether he'd freed up some time. Smith agreed to join in.

"And boy, if I hadn't, I'd be kicking myself," Smith says. "I got $100 million or $200 million worth of publicity from that [movie]."

From that point forward, advertising and promotions have been a cornerstone of Malcolm Smith Motorsports, which regularly advertises via 30- and 60-second radio and cable spots, print advertising in industry and enthusiast publications, and Web banners on enthusiast sites. The local papers often report on Smith, and he does radio interviews and hosts large events such as the open house held for the new dealership.

Simple business basics can go a long way. For instance, how many dealership employees know the true cost of any given part? Smith says it's a worthwhile exercise. While working for Pappy Mott, Smith one day spied a catalog and was shocked at the gap between the shop's retail prices and its dealer costs.

"We had a good rapport, and I said, 'Pappy, you're a crook! You're doubling your money,'" Smith recalls. "So he said, 'OK, I made $10, but here's the budget,' and he broke it down for me, and said, 'Of that $10, I'm keeping 50 cents.'"

Smith says that lesson taught him how to understand his margins intimately, and he's thrived on advice like that, as well as insights from a financially savvy stepfather who loaned him seed money to start his business. But it wasn't a no-cost loan, which gave Smith an early understanding that there are no mulligans in business.

"I had to pay the bank interest rate; I had to pay late fees," Smith says. "I mean, that man taught me business."

WALKING THE WALK

Smith comes from the "walk the floor" school of management, and although he's suffered multiple leg fractures (including one that nearly resulted in amputation) Smith makes it a point to cruise every square foot of his business regularly to see what he can find. He might get an idea on how to better showcase product, or spot a mistake, such as a new model helmet accidentally stowed in a bargain bin.

But walking the floor has a second benefit — a people benefit. By making a point to patrol his business, Smith gets to interface with his customers, as well as with his staff.

To ensure his employees put his golden rules into play, Smith says he strives to recruit the right attitude.

"I look for people who are winners," he says. "I like to get a young guy in here who has a lot of get-up-and-go, and then after four or five years he moves on and starts his own business — well, that's OK. I want someone with a natural 'go get 'em' instinct. I was one of those guys."

Smith's staff is continually coming up with creative solutions to tough challenges. For example, Smith once gave an employee a budget and a deadline to modify a tank for servicing watercraft so that it would accommodate larger craft. Shortly thereafter the employee had devised a whole system for loading the craft in and out of the tank.

"I'm learning stuff from them all the time," he says with a proud smile.

A former program manager at the Motorcycle Industry Council, David Kopf is a freelance writer, editor and marketing consultant.