Nowadays, customers aren’t buying new units or doing big accessory remodels on their bikes, or even buying big-ticket apparel packages. The cash isn’t there. Now they’re spending in drips and drabs instead of chunks and lumps. So it’s time to change your expectations of customer spending habits, and thus your selling habits and product offerings. Riders lucky enough to still have a job or some form of regular income now typically budget for smaller amounts of “fun money” from each paycheck. Because many are living from paycheck to paycheck these days, your window of opportunity is even smaller, especially when most of these paychecks are distributed once every two weeks. It’s time to be “paycheck-friendly.” This is a new concept to me, too.
If customers can’t buy the parts or accessories they want on $100 to $200 every two weeks, then they’ll save up for a few weeks until they can. But as we all know, saving can be hard, especially when new P&A is staring you in the face. The customer who fancies that flat-black Vance & Hines pipe also may want the contrast-cut black wheels to match — and even the black air filter, too. Chances are, he can’t afford all of this at once. This is where you swoop in to save the day: Help customers achieve their dream bikes by offering layaway plans from six to eight weeks out, with payments in two-week increments. Help them get there g-r-a-d-u-a-l-l-y, rather than in one felled swoop. Paycheck-friendly.
Interestingly, Sears recently brought back its layaway plan: an eight-week pre-pay program customers can implement online. Why? It’s an effort to help customers buy more sequentially by forcing them to save for what they want. Simple. Pay as you go. It sounds old-fashioned. It is. And it works.
Help your customers better visualize their end goals, and help them get there. Paint the picture, because your customers may have little imagination and may need to see the end results for themselves. Arrange and group your products either from lowest cost to highest cost, or package them into modular kits that permit your customer to build from paycheck to paycheck. See the chart for a few examples of programs for four pay periods in eight weeks.
How about calling this your “Eight-Week Build Plan” or “Customize Your Motorcycle in Eight Weeks.” I like “Pay as You Personalize.” There’s no financial risk on your end. You’re only helping your customers see more clearly through the fog of personal finance to get to a machine they’d really like. Look at yourself as an interior designer who provides the “after” picture and an associated budget. The customer still pays as the project progresses, but at least they are more confident in the outcome while the payments are stretched out.
Are you a naysayer of this method? Perhaps you think this will only aid customers in changing their minds on where to buy their bolt-on or apparel products, and they’ll go to the Internet instead. To prevent this, if it’s a mechanical installation, be sure to incentivize the labor rate at the end of the eight-week period.
If it’s not going to be ultimately installed in your service department, then here is what you can do: For a product or service, provide a “cumulative credit” which accrues to the project at week eight. Take the apparel kit in the chart, for example. The earned credit could be worth enough to buy an extra set of winter gloves on top of the summer gloves bought in week two. Notice “credit” is not a “discount.” Discounting is the easy way out and cuts your GP terribly. If you have to give away something these days, it should not be retail dollars — it should be wholesale dollars. Use the apparel credit above as an example. The winter gloves sell for $100 MSRP. If you give your customer a “discount” of $100 off of all the accumulated four apparel items in the eighth-week goal, he walks out happy and with $100 of (retail) beer money in his pocket. If you offer the $100 “credit” instead, you let only $58 walk out the door (your cost on the additional “free” gloves). The customer, however, will be happier with the extra gloves.
Build loyalty and return visits by helping customers imagine what they can buy not just today, but cumulatively over the next few months. Stair-stepping it out for them and enticing them with a reward credit at the end makes your dealership more fun to shop in — and paycheck-friendly, too.
This story originally appeared in the Dealernews July 2010 issue.