It’s quite obvious Tim Sherman is a Harley-Davidson fan.
The Cleveland native can remember as a child asking his dad for a model of a chopper. Well, his father went to the toy counter — back when there were toy counters — and asked for a model of a chopper. When he got home, he handed 6-year-old Sherman a green Army helicopter. After all, he wanted a chopper, right? It didn’t end there.
During his years at Ohio State working on a marketing degree, he did a case study on Harley-Davidson as part of his course work. Motorcycles were clearly on his mind. It was college. He and his buddies were going to go learn to play guitars, go to Europe, buy motorcycles, the whole deal. This never happened. He wasn’t done yet.
Out of college he sent a resume to The Motor Co., but an ongoing recession and a company emerging from the AMF years resulted in “a thank you very much, but no thank you” response. It would take a short stint at Xerox, the purchase of his first Harley and the rejection of the corporate lifestyle before Sherman realized what his ultimate goal was — to own a Harley-Davidson dealership.
“Back then you could, in 1984 or so, you could pick up a Harley dealership for $50,000 to $100,000, not including the property. They were for sale in the back of Easyriders magazine,” Sherman says. “Harley would have a full-page ad saying ‘these locations’ are available. So I sent for [a dealer package] and I read the package, and of course, all you needed was experience and money and I didn’t have either.”
After taking a position at A.D. Farrow’s Columbus, Ohio, store and learning the ins and outs of the dealership, Sherman eventually reached the point where he was ready to pull the trigger. Armed with the backing of two investors, Sherman finally — it was a long time since that green Army helicopter — landed his dealership, the store that would eventually become a Top 100 dealership, Signature Harley-Davidson. He even hand-delivered his dealer package to The Motor Co. in Milwaukee, something a guard at the Juneau Avenue offices told him he’d never seen done.
And he didn’t stop there. Sherman and his partners went on to acquire Toledo Harley-Davidson in 2003, an underperforming store about 20 miles away. He now owns the two stores in one contiguous market, and talking about one and not the other is a little like favoring one twin over its sibling, he says.
Sherman notes that both stores are carefully coordinated to operate smoothly in the same market. The MotorClothes manager oversees both locations, as does the general sales manager for motorcycles. The stores’ proximity with each other also allows customers to buy a part or product at one store and return it to the other. The two locations also coordinate overstocks and promotions.
“It’s very, very nice to have two stores in one contiguous market from a convenience-to-the-customer standpoint,” he says. “There’s two inventories to work from. We combine MotorClothes and parts orders for economies of scale.” Selectionwise, he says it’s better because inventory between the two stores can be juggled so that customers at either have a great selection from which to choose.
So yes, the two stores do a great job of covering this corner of Ohio, but for the purposes of this story, Signature — which does $12 million a year in revenue — will be the focus.
When customers walk through the doors of Signature Harley-Davidson they’re presented with a huge display of new and used motorcycles. This is, of course, after they’re treated to the recorded rumbling of a V-twin motor that acts as the door chime.
Pre-owned bikes are a huge part of Signature’s business. This is an approach that goes back to when Sherman first opened the doors at its previous, tiny location. Based on his experience as sales manager at A.D. Farrow, he knew that used bikes would sell in this neck of the woods. “When we bought the store, I rented four semi-truck trailers and put them behind the dealership so I could sell used motorcycles because my original allocation was 91 bikes,” he explains. At a time when bikes were sold before they hit the floor, this wasn’t a good time to have only 91 new motorcycles.
While he moved away from pre-owned sales a bit during Harley’s boom years, it became pretty clear that when The Motor Co. cut back on production he’d have to get back into the used bike business. It’s a matter of generating new customers, he says, and used bike buyers replace new bike buyers pretty quickly, especially when manufacturing output is scaled back.
“If they cut back, say, 250 of my new bikes, which is about what happened, and I can replace that with 250 used bikes, I’ve got 250 new customers who are excited, who are fresh, who are buying — and I’ve also brought back many of my older customers who may have gotten away from riding,” Sherman says. He adds that when previous customers come back into the fold, they don’t come back and buy new bikes, especially when they’re looking at used bikes that are going for about half of what they went for new. “It’s really about the customer flow. If you can’t replace those new bike customers, those new bike sales you used to have … you’ve got to replace them with used customers,” he says. “How else do you maintain the same staff level? How do you stay open seven days a week? How do you pay the bills if you’ve got only half your customers walking through the door?”
To aid pre-owned sales, Signature employs a reconditioning specialist in the service department whose job it is to buff, polish, shine and tweak bikes back into showroom-perfect condition. “Oh my God, he’s awesome,” says Kris Everitt, Signature’s female general manager. “He’s very good at what he does. People come into the store, look around and ask, ‘Where are the used bikes?’ and we’ll point to the motorcycle right in front of them.
“When they do go out on the floor, it makes all the difference in the world,” she adds. “I think it’s probably the best return on investment we have in the entire store.”
Bringing in a pre-owned bike customer means that the store also has a future buyer of MotorClothes, parts and accessories, and service. “We encourage them to go through the same [store] path as if they were a new customer,” Everitt says. “We find out what kind of riding they’re going to do, whether they’re going to have a passenger. We make sure they’ve got a helmet, gloves, all the riding gear, maybe a rain suit. Next, they go through parts and we see if they want to customize it. We take them back to service to meet the staff back there. They go through the whole store.”
GOT IT IN GEAR
While many powersports dealers excel at moving metal, some often stumble a bit with the merchandising and displaying that should be an integral part of any retail store. But Signature has a couple of core strengths behind it that help in this area. Both investing partners have strong retail experience, and the MotorClothes’ manager and two of that department’s employees worked together at Jacobson’s, a high-end retail store.
Merchandising is a big part of the look of the store. According to the Top 100 entry, they mix and display parts, accessories and apparel throughout all the departments, “to keep shoppers thinking of more than just what they came in for.” Everitt says the apparel employees are great at coming up with incredible and eye-catching displays.
Over the winter, they put together a heated gear display in the service department, powering up all the products so that customers riding out of the cold and into service could see just how warm their parts could be if only they had the heated gear. Another time, they assembled a display of high-visibility gear with a big sign that said “Can you see me now?”
The employees also put together displays of women’s accessories such as hats, belts and purses, and often integrate “blinged-out” parts and accessories into the women’s clothing section to catch the eyes of female riders.
What kind of impact does all this planning have on the bottom line? The MotorClothes department generates about 15 percent of the store’s overall sales.
“You’re not going to come into the showroom at the beginning of the month and then come back two weeks later and see the same products displayed when you walk in the door,” Everitt says. “You’re going to see something completely different. They’re constantly mixing and moving that stuff around.”
One of the other benefits of having such strong retail experience on the team (both management and employees) is that the store started implementing detailed retailing procedures such as “open-to-buys” — a system that uses planned sales forecasts and stock turn requirements to determine optimum stocking levels — well before many other dealers. All of this allows Signature to keep on top of what its customers want.
For instance, in MotorClothes, it’s imperative that the manager knows exactly what the store has in stock, Sherman says. Same for parts. To help with this Sherman runs what he calls an “open book store.”
“Every week when we have a meeting, they will get their numbers and their budget numbers,” he says. They know what they have coming in on P.O.s. They know what they have available to spend, and they know what they have spent for the month and where their inventory levels are. Nonmoving is on there as well.” He shares all of this information and keeps very close tabs on it as well, keeping watch on turns, nonmoving inventory, levels by category, all so they have an accurate picture of what’s moving and what’s not.
He explains that it’s very easy to have too much inventory, so it’s important to not only track all the right numbers, but share them with employees. “They know how to read my stuff. They know what we made this year. It’s not a problem. They have to know,” Sherman says.
He says he knows dealers who can’t believe that he shares his numbers with his employees. His response? Why wouldn’t he? It’s empowering for employees to know this information because it’s instant feedback on their performance. “How can they feel good unless they know how well they perform?” he says. “How can they know what they’re shooting for?”
The overall goal, Sherman says, is to make customers feel like they’re part of the Signature family, and this is something that goes beyond customer service. In fact, he thinks that phrase has become so hollow and meaningless in the retail world, he doesn’t even like to use it. When his employees tell him they’ve made a customer “happy,” he tells them to shoot for “satisfied.”
“Happy would have been getting it for free yesterday and you doing the break in for them. That would be happy. Satisfied? I’d be thrilled if we can reach satisfied based on people’s expectation levels these days,” Sherman says. “We strive for happy, but we’re not going to hang our hat on happy because satisfied is going to keep us making lots of money.
“Don’t kid yourself to think that you made your customer happy. Work to make them happy, but don’t believe you made them happy because you’ve got to keep trying harder. We’re still completely about the experience. You’ve got to be able to get them to get in their car and come here.”
This story originally appeared in the Dealernews April 2011 issue.