Maverick Motorsports: Sleds, hogs and profits

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Most snowmobile dealers can only hope for heavy snow, but for Maverick Motorsports of Laramie the white stuff is a certainty. The Top 100 retailer is the sledding tourist’s first stop at the base of Wyoming’s popular Snowy Range.

But the 30,000 sq. ft. dealership isn’t as seasonal as it sounds. It has two showrooms, each with its own parts counter. One is dedicated to Harley-Davidson. The other is twice as big and houses Honda and Can-Am during the spring and summer, then in October transforms into a snowmobiler’s wonderland. Last fall it held more than 100 new Ski-Doos, and PG&A was overflowing.

Snow’s a guarantee but not the economy or number of tourists. So three years ago the store’s managers began to focus on cost-cutting instead of sales volume. The result was that 2010 was its most profitable year in the past five, with revenue unchanged from 2009 even with half the employees. During this economic winter, Maverick Motorsports has not just survived, but fortified. Which means it will be in good shape come spring.

SLED HEADS
There’s actually a third showroom to mention. The dealership has a 20,000 sq. ft. sister store, Maverick Motorsports of Cheyenne, 45 miles to the west in the state’s capital. The locations carry the same vehicle brands, but the climatically milder Cheyenne focuses on streetbikes and ATVs. It refers Ski-Doo customers to Laramie.

“We tried to sell sleds at Cheyenne, and the problem is our Laramie store is such a powerful snowmobile hub,” says Justin Johnson, co-owner of both stores (and the guy wearing a stocking cap on this month’s cover). “The training and parts knowledge is pretty specialized. You don’t find too many people who have that level of snowmobile background.”

Real estate developer Seth Ward and Johnson bought both stores in 2005. The latter had operated dealerships in the past. “Everywhere I’ve ever went I’ve terminated snowmobiles, every dealership except for this one,” Johnson says. “Snowmobiles have never been a real profitable endeavor until this store.”

More than 70 percent of Laramie’s customers are from out of state — not only because of tourism, but because of the store’s proximity to the Colorado border and Wyoming’s lower taxes. “It’s beneficial for the Colorado guys to come up 90 miles and buy a snowmobile from me,” says general manager Scott Bowers. “Same for Nebraska. Those are our two biggest states.”

Snowmobiles are half of Laramie’s unit sales; Harleys and ATVs split the difference. Most local customers are farmers and ranchers with a penchant for Honda quads and generators, including special-ordered big equipment such as water pumps. The store didn’t sell many Honda streetbikes last year, though Cheyenne did.

Maverick Motorsports often bids on fleet sales offered by such entities as the local University of Wyoming, the U.S. Forest Service and the state’s Game and Fish Department. “Fleet sales are a lot of work, but I don’t bid them unless we make a little bit of money,” Bowers says. “And hunting is so big in this area of the country that it’s nice to see the Game and Fish guys riding our product.” Tourists hail from all over the Midwest: Iowa, the Dakotas, Michigan, Minnesota, Wisconsin, Kansas. When their sleds break down on the mountain, they often trade them in at Laramie for new ones. The store also buys units from auctions and private parties. About 16 percent of its major-unit revenue is from used, up from 10 percent the year before.

Because customers are widespread, Maverick spends half its advertising budget on the Internet to generate vehicle leads that are responsible for three to seven sales a month, if not more. The store’s PSN website (www.mavericklaramie.com) is updated at least every other day, with units uploading automatically to the Trader websites. Maverick also makes good use of eBay, posting mostly new BRP units and some new Honda.

Being a tourist store has given rise to a more unusual service: snowmobile storage. For $399, Maverick Motorsports will store a sled for up to six months in racks holding three high. The initial idea was to allow people to leave their machines during the summer. Most people, however, store during the winter so they can travel back and forth without hauling their sleds over icy roads. Then on the last trip of the year they take them home. “We just charge a little bit more for having to take them in and out of the racks,” Bowers says.

Similarly, Maverick promotes that it will ship special orders to customers. Says Bowers: “I have people who are from Iowa, and they come in and say, ‘Man, if you just had this jacket in a large.’ I say, ‘Well, let’s get it done. I’ll ship it to your house, and by the time you’re done with vacation, it’ll be there.’”

TVs in the showroom are tuned to the Weather Channel. “It’s huge for us out here,” Bowers says. “Everybody likes to catch the local-on-the-8’s. The first thing after driving from Nebraska, they want to see gray clouds for the next 10 days. We’ve also added a flat-screen to our video area. We sell a lot of snowmobile videos.”

A computer is available for customers to check Weather.com and SNOTEL sites. It also assists employees in selling and activating SPOT hardware, a satellite messenger that lets people transmit information and GPS coordinates even where cell phones don’t work. “So you can call for help anywhere in the mountains,” Bowers says. “I won’t leave home without it.”

Klim is the store’s main snow apparel brand. “In the past couple of years Klim has just excelled to the top of that industry,” Bowers says. “This year we’re trying to get a team effort to sell as much Klim as we can.” He’s also a fan of the relatively new S4 Optics. “They’re a great $40 goggle, which is pretty cheap for a double-pane.”

Bowers negotiated for two years for Maverick Motorsports to become the first powersports dealership to carry Under Armour apparel. “It fits our long underwear. That’s why we got it, because we sell so much long underwear.” The store has since added the brand’s camo outerwear and even its gear for runners. “We’re trying to bring in some of the college crowd and other people into our store for the retail environment,” Bowers says. “We’re not trying to become a mall, but at the same time it’s nice that we can cross over a bit.” Also helping in this endeavor are Oakley and Spy Optics.

Speaking of college kids, they rarely buy scooters due to the harsh climate, but they do buy quads. “We can license ATVs here in Wyoming,” Bowers explains. “You can ride them on the road just like a motorcycle. It’s part of our culture.”

When Maverick Motorsports couldn’t find vent kits to its liking for the XP chassis, it began to make its own in-house. The store sells $70 plastic kits and $150 powder-coated aluminum ones with which customers can mix and match inner and outer colors. More than half of sled customers opt for one or the other.

Bowers and one of his techs showed further ingenuity by converting a vending machine into a 24-hour dispenser of Harley-­Davidson T-shirts. The machine sits outside in front of the showroom and offers various sizes of a store-branded design in black or gray. Customers swipe their credit cards to pay $25. Bowers got the idea when he saw a group of riders gathered in the store’s parking lot after-hours during the week of the Sturgis Rally — when the store is open seven days a week, offering priority service and a $29.95 oil change.

SNOWBALL EFFECT IN REVERSE
So Maverick Motorsports is interesting. But it wasn’t always profitable, even when it had much heavier sales. In fact, Bowers transferred to Laramie from Cheyenne in 2007 to help balance the books with Johnson, using a monthly budget system created by Spader Business Management. “We’ve definitely shifted our focus from top-line revenue to how much we were spending,” Johnson remembers. In doing so, they would decrease staff from 25 to 11.

Most of the cuts occurred in the sales department. The only full-time salespeople left are Bowers and the F&I manager. Otherwise, the store has empowered its two parts managers to initiate and complete sales. Bowers also instated a storewide commission plan for referrals. “If the receptionist talks to somebody at her family reunion and gets them to come in to buy a bike, I handle the deal and pay her what a salesman would have made,” he says.

The store already had emphasized cross-training due to its two showrooms. Cash register employees alternate from one side to the other depending on the season. Other staff members remain tied to a showroom, essentially becoming one- or two-man operations during their off-seasons. “It also gives your employees more credibility because both snowmobilers and Harley people are finicky about who they talk to,” Bowers says. “My big-bearded Harley parts manager wouldn’t have much credibility working on the Ski-Doo side and vice versa.”

Even so, all employees take product training offered by the three OEMs. The store also has an in-house training sales manual that borrows ideas from various sources. “Our crew has been really receptive to learning more and taking more on,” Johnson says with pride. “Without them and their hard work, we wouldn’t exist.”

Bowers and Johnson reduced the bloated service department to three technicians, one of whom doubles as service writer. They raised the hourly shop rate to $119 from $89. “Service was one of the things that took the longest to morph,” Bowers notes. “But once it finally got there, it did pretty predictable business. … The big thing was, if we’re working on it, we’re making money doing it.”

Maverick Motorsports also shuttered a rentals business, allowing it to reduce its hours. It sold much of its fleet to another rentals store for which it now makes referrals and does service. “We just decided that rentals wasn’t worth the time and energy that was being put into it for the few dollars we were taking out,” Bowers says. “We thought we could easily make those up by focusing our employees on customers coming in.” In addition, he hated trying to collect for sled damages. “It seemed like things got wrecked a lot, but nobody ever wrecked them.”

The store also shut down the website it had developed, and returned to PSN. “The level of work just wasn’t worth it,” Johnson says. “The management of it alone was just killing us, so we went back to a cookie-cutter provider and tried to individualize the site the best we could.”

Inventory control is the fastest way to cut costs. This is especially true for Maverick’s metric side in the fall and winter. “Everything is pre-season in the snowmobile business,” Bowers says. “We order in March, and then it all shows up in August.” That’s why last fall the showroom was stuffed with only sleds and related items. “The parts department has overgrown in the sales department because there are so many coats and bibs and gloves,” he says, “but as that shrinks down, we start to cycle stuff back in.” ATVs, for example, start reappearing in about six weeks.

Not to suggest everything isn’t merchandised well. In 2009, Maverick won the BRP Playground Challenge for best showroom display (it’s won top regional Ski-Doo dealer several times).

Laramie’s sled season is October through March, with intense door swings from Christmas through Presidents Day. But even with this five-month season, the store’s previous owners had overstocked sleds by blindly following Ski-Doo’s recommendations. “The culture was ‘Sell as many as we can and don’t worry about margin,’” Johnson says.

To fix this problem, Johnson and Bowers eventually decided to order no new sleds for the ’08-’09 season. “We just sat back for one year and took our lumps and cleaned out our inventory,” Johnson says. “When we ran out, we bought inventory from other dealers. We did the right thing for the business, not the OEM.”

The plan now is to order just enough to run out, then buy sleds from other dealers to save in flooring and storage costs. This year Laramie will retail nearly 100 sleds after once selling 150-plus, “which was a lot to try to get rid of,” Bowers says.

The store buys similarly from Honda (Harley last year had the opposite problem: shortages). “We order what’s on our budget. It’s that simple,” Johnson says, adding that the OEMs can’t exert the pressure they once did. “People aren’t lined up to become a Ski-Doo dealer in this environment.” The refocus on margin over volume led to the big turnaround in profitability. The store is now making 12 percent to 15 percent on new sleds, 18 percent to 25 percent on used.

“This has been a priceless education,” Johnson says. “We’ll all benefit from the pains of going through this downturn.”

This story originally appeared in the Dealernews January 2011 issue.