Going to a press event for Victory Motorcycles offers a unique insight into the philosophy of the Minnesota-based OEM.
It was one of the first OEMs to hold events that gave motorcycle journalists a chance to ride every bike in its lineup, which is a good way to compare models back-to-back. The emphasis, the company says, is on the performance of machines and their rideability. What better way to check than to hop from a Vision to a Cross Country to a Hammer S?
Victory also does something that this reporter doesn't often see with the other OEMs, this too speaks to the emphasis on the technological advantages of its bikes. In addition to the bikes, Victory brings along practically its entire engineering department. Have a question about the chassis on the Cross Roads, ask engineer James Holroyd. He's been riding with you the whole time. Wondering about the completely rebuilt transmissions for the entire 2011 lineup? James is your man. As are the handful of other official Victory gearheads present.
On a recent press event in Southwestern Colorado, Victory again brought along the crew for the ride — many of whom rode in from Minnesota and were carrying on to Sturgis, S.D. for the rally. These guys love the motorcycles they design and build and they want to share their passion. Victory general manager Steve Menneto offers that this is done by design.
These are the guys who put 1,000s of butt-miles on the bikes — in addition to the million or so more racked up in the testing lab. Who better to make the connection between the high level of tech and the consumer Victory is trying to reach: the guys who love to ride lots of motorcycle miles, Menneto says. Bringing them along reinforces this connection.
But the emphasis on engineering is just one notch of the continuous loop that drives Victory's business, a continuum that includes product development, customer satisfaction and dealer satisfaction. One drives the other drives the other and so on. From this formula, the company develops sales and marketing tools, plans Core Victory apparel and accessories and continual product improvement.
Take the new CORE Custom program, which allows a rider to customize a Cross Roads in 48 possible combinations at a display on the showroom floor. The program lets the customer see how the bike will look with accessories such as saddlebags, highway bars and windshields and then ride home on the bike they create. The program, developed in concert with Victory Dealer Advisory Council allows dealers to stock less parts inventory and few units while catering to their customers.
Similarly, Victory has standardized the engine platform across its entire lineup by putting 106/6 motors in all the bikes and has reconfigured and upgraded the transmission. "Victory is always looking for ways to increase dealer profit opportunity and productivity," Menneto says. "The standardization of the engine platform simplifies the knowledge required of dealership technicians when servicing Victorys."
What about appealing to new sales prospects, feed the Victory faithful and help dealers turn shoppers into buyers? The company has doubled the number of big rigs in its demo rider program and tripled the number of available demo bikes — it should be running about 21,000 demos through dealerships this year. Again, it's all part of the loop.
After logging a couple hundred miles on various Victory models from Grand Junction, Colo., to Telluride, Colo., Dealernews sat down with Menneto and marketing director, Rod Krois, to discuss Victory's current and future place in the motorcycle market, it's off-shore expansion plans and its laser-like focus on monitoring customer satisfaction.
(this interview was edited for style and clarity)
Dealernews: Where is Victory at with the American motorcycle buyer?
Rod Krois: Victory celebrated its’ 10th year in business in 2009, and today is moving into the next phase where we connect motorcycle enthusiasts who are passionate about the ride with our employees who are passionate about building high quality motorcycles. You’ve seen us move away from the slogan, “The New American Motorcycle” to “Fuel It.” We are focused on fueling the passion of motorcycle enthusiasts in whatever way they feel. Victory is still American, is still built in Spirit Lake, Iowa and still values and promotes “American Made."
DN: Has the brand now become something other than "the other American motorcycle?"
Steve Menneto: I think it has reached that point. When you look back at the anecdotal feedback that we get when we survey riders, I think we've established the differences, the compelling modern styling of our bikes, some performance advantages, the differences in ride and so forth. I think we've clearly carved our way out of the shadow. But, we're respectful of Harely-Davidson because they were the ones that began this whole category.
I think that what the riders have said back to us is, 'OK, you're here, but what does it mean? Where do you want to go?" That's what the "Fuel It" campaign is about. We're saying that our people who make our bikes are obsessed with riding motorcycles, high-quality motorcycles at a high level. The riders we're going after, the motorcycle enthusiasts, are people who desire quality bikes. They want bikes that handle, that they can have fun with at a high speed or [in] technical riding. That's where both our employees are obsessed with it and our consumers are obsessed with it. that's where we're making that connection that's where we're fueling the love of motorcycling.
DN: Who is the core Victory customer?
SM: I think it's the new and the seasoned rider. I the key is it's a person who is into doing thousands of miles a year. It's about getting on the bike and it's not about the destination or the event, it's about the ride. That's our person. If you think about it, even at the core of our Polaris heritage it's always been about ride and handling. That's the person we're going after. They can be new. They can be seasoned riders but it's the folks looking for high quality bikes that they can take anywhere.
DN: Has it been more difficult to penetrate the American market than earlier thought?
SM: Sure, it was difficult. We were going into a marketplace that was defined by a corporation that everybody knew, a tremendous brand. One of the top 50 brands in the world. So that was the difficult part. What was interesting was where we wanted to go from day one to where we are now has been a bumpy road. We're not where we want to be in terms of volume. We're not where we want to be in terms of where our brand is and where our overall dealer network is. We wanted that to grow more, but it hasn't. We've added a lot more resources here to make that happen. That's our job, to make that happen.
Where we've done an awesome job is going from where we were with our product to where we are today. If you look at the V92C and then the Cross Country, or any of our cruiser products, I think that exceeded our beginning plan. I think with products, we're where we want to be and we're exceeding in some areas. And with brand and distribution we've still have a lot of work to do.
DN: How has the economy affected Victory's growth?
SM: The last few years have been tough, but it's what’s nice is we got the data back last night that we beat the market by 30 percent last month. We'd love to have the wind at our back with the industry. We don't but we're gaining marketshare and we're doing well. It's probably slowed us down a little bit, I think our volumes would be doing better.
We're not getting off the gas now either. If you look at Victory we're hammering down on a lot of the investments. … Our dealer base grew by 10 percent, both in North America and international so we're getting more dealers. We're also making an investment in our marketing team. The product's there now the brand's gotta grow and the dealer base has got to grow. That's where we're focused and investing.
DN: Has the economic downturn helped Victory gain marketshare?
SM: I think what you're seeing is Victory, as well as Polaris, has been on the gas investing in products. That's how we've been winning for over 55 years. That's how we've been winning in Victory by investing in new product. That's why we are winning while others are pulling back. We're not gaining share because the economy is falling. We're not just picking it up. It's a convergence of being on the gas with new products, expanding our touring line, and connecting to our customer in a new way. That’s the way we're winning in a downturn.
DN: Victory pays very close attention to customer satisfaction. Why is this so important for the brand?
RK: It goes back to establishing credibility in the marketplace and having a third-party endorsement in key areas of your business like product satisfaction or in our recent dealer base with Pied Piper. Having those sanctioned activities and a third-party perspective that's really independent [is important for] the consumer and the industry. When you're building a brand those are the things that are invaluable.
DN: How do you take such things as J.D. Power scores and Pied Piper results and put them into practice?
RK: The engineering group brings [that information] into its methodology. They take [the scores] into how they attack development. They reference those strengths and weaknesses as they work through development and make them a part of the company's business processes.
(Krois says they also use the Pied Piper data to develop sales tools for Victory dealers and then use the service again assess progress. "We established a No. 1 in satisfaction for sales prospects this year. I think that's no doubt related to the focus over the last two or three years that we've seen as an evolution of that score.")
SM: We're doing the same thing with our demos. We doubled the number of rigs and tripled the number of demo bikes. But at the same time, we've put in a process that says, 'OK, this is the proper way to run a demo program.' (Menneto says this increase in the demo fleet is the direct result of consumer demand for more demo rides.)
This is a real way to connect with potential customers as well as with our own customers who might be saying, 'I bought an '03 Vegas and it's time to upgrade or change.' Or maybe they're getting into touring. What a great opportunity to get your own customers or your sales prospects to come back and try the new bikes.
RK: When it comes to demos, our dealer network is an extension of our brand. The demo program — getting butts on seats — is our biggest competitive advantage hands down. There is no sales tool, no ad campaign that is a substitute for riding. (Victory's goal now, Krois says, is to give dealers the knowledge and the tools to turn those demo riders into buyers.)
DN: How have the dealers responded to the demo program?
RK: It's been by far the most well-accepted program [we've run]. You want them to have a mainstream business practice that they do day in and day out and then use demos as a tool to organize an event, to develop it into their business. I think it's been one of our sweet-spot tools. It's the essence of our brand coming to life if you think about the product getting connected with our dealers who represent our brand. (Krois adds that the company is now encouraging its dealers to leverage their customer base by connecting Victory owners with sales prospects and the demo programs to get potential buyers onto bikes. "That owner base represents a huge opportunity as brand advocates," he says.)
SM: We have some dealers have local VMCs (Victory Motorcycle Club) come in and they love it. Not only do you have 13, 15 bikes that come in from the corporation that people can ride but you also connect with your local motorcycle club. It's a great opportunity to ride bikes. And in the background, the dealer knows it's a business opportunity to close more bike sales
DN: How does Victory monitor satisfaction within its dealer base?
SM: We have a dealer advisory council advisory council that Victory is a part of. Three times a year we send out a survey of all our dealers. We ask them questions: What's Victory doing right? What's Victory doing wrong? What would you like us to continuing doing? We get the [actual written responses] back and we read them."
"We make adjustments. This whole Core Custom idea is a great example. In March we met with our dealer council in Vegas. And we presented the Core Custom idea to them. They gave us feedback, 'Change this. Change that.' So we changed it. Met with them again. Said here's our changes launched it at the dealer show and they were like blown away. They were like, 'Wow, you guys did exactly what we asked you to do.'
DN: How helpful is this?
SM: If we can get the blessing of the dealer base and say hey is this going to make a difference in your business? That's what we look for, that they give us that blessing and then we move ahead. If they don't agree and we say we still think we have a strong idea but ask, 'How would you change it to be successful?' We take their input and make the adjustments.
We're looking at from a consumer's standpoint. Where they're saying 'I want flexibility.' So we've got to make sure that as leaders of the business we've got to pay attention to our customer, the rider and the dealer. They're both important to us."
DN: Dealers have long seen themselves as motorcycle shops, not retailers. Is there an effort to emphasize the retail aspect of the business?
SM: We talk about it as is you're running a retail store. If you look, the average selling price on our bikes is $14,500 to $15,000. These are big purchases for consumers so you have to act accordingly. You have to manage accordingly. It's an effort on our part through Rod's message and his retail selling tools, and working with our sales force to assist the dealers in starting to think, 'I'm running a store not a shop.' You have a shop in the back, that's great, but you have a store in the front and that's where you've got to make it happen.
We know they're independent businesses, but we have to put out the resources to help them focus on retailing as well as repairing. It's a major effort.
DN: What's the backstory on the Cross Country and Cross Roads and why is Victory venturing further into the touring market?
SM: When you look at the Vision, the Vision was about showing what we could do as a company, technologywise, stylinywise. So we took it and stretched it way far, but we always knew in the back of our mind that coming right behind it was that more traditional bagger look. So there was a purpose to the Vision, to show what we're capable of. We knew that we were coming with the baggers and you see that they're traditional baggers but with more compelling modern styling, with the smooth flowing lines … that's a concept we don't lose.
That's the story. We knew it was coming. We had a plan. As we expanded our touring line we had to get into that area. I think we showed what Victory was capable of with the Vision and I think we also showed what Victory is capable of in the Cross bikes in terms of styling and performance advantage at a competitive price.
RK: The touring segment is the largest opportunity in heavyweight motorcycles in terms of volume. In 2007, we successfully launched our first touring model, the Victory Vision. Vision was a modern style luxury touring motorcycle, with unique styling and performance it generated a tremendous following.
The Cross bikes have surpassed all expectations relating to customer appeal and market share performance. The Cross bikes have hit the heart of the traditional touring market. Victory now has world class solutions to each of the major touring market segments, which makes us very excited about our future.
DN: Why is it important that Victory expand its Pure Victory branded apparel and accessories line?
SM: It's important to our customers, that's why it should be important to our dealers. It's a profit opportunity. The guys who really get into it and do it well make really good money. I don't want to call it low-hanging fruit because it takes a lot of work. Upselling consumers is like the old McDonald's thing, 'Would you like fries with that today?' It's like, 'Would you like a leather jacket with that?' You've got to get into that mentality and have that process. That's what we're trying to work on. We've got to give you that content, that Victory gear, and we have to give you the process.
DN: What's driving Polaris and Victory's push into off-shore expansion?
SM: As you look at the macroeconomics, you'll see emerging markets like India, China, Brazil. They're where the futures going to be and they're also developed motorcycle markets. We are excited about our opportunities in North American and Europe, they're developed markets and we're going to continue to do well and push our products there, but we still think there's an opportunity to introduce people to our brand in the emerging markets and that's where the push is coming. Not only for Victory, but for Polaris in general. We know that we can do well there. We've done well in Europe, but we can continue to expand. We know that eventually we have to be there in the emerging markets to grow our business. There's opportunity in it for Victory to grow our company. There's opportunity for overseas dealers to grow their business.
DN: What's your take on the near/far future of the industry?
SM: We do that as a company, forecast where we think the industry's going to go. We think we've been through the worst of it. That's probably the consensus if you talk to folks who do forecasting, who are involved in the industry directly. The customer's changing though. That's the big challenge. That's probably the biggest thing that I'd focus on in the industry. Not so much the volumes. There's going to be slow to mild growth as GDP returns. It's not going to be the ramp up that we saw in the early 2000s, late 1990s, where we were just humming. It's going to be slow chug. But the consumer's changing and the companies that meet their needs creatively are the ones that are going to do well. That's where we're trying to position our group, to really look at it and say, 'How can we really meet the rider's needs and then the dealer's and then our business? If we can get all those aligned and do it well we think there's a lot of opportunity left in this industry.
DN: What's so different about this new consumer?
RK: You have multiple things happening. You have an aging demographic — the baby boomers who shape any industry as they go through it — and we're trying to meet the needs of that group with the touring products you see now. Obviously there's an upcoming generation of bikers that not only has different expectations of their product, but also the way they get the information about those products and about that brand. We consciously recognize both fronts and so now we're trying to look at how we market to this up-and-coming group? How do we connect with them
Our web activity and our social network activity has been one of the main strategies we've employed within the last six to eight months. The baby boomer may not be as tech savvy, but they still access their information this way.
(Krois says the company has to stay on top of quickly shifting technology and the ways that people communicate. One such way, he says, is through smart tag technology in Victory's sales materials. Customer can use applications on their smart phones to access a treasure trove of extra information such as videos and photos for a particular bike model. Victory is also working with cable TV providers to set up an interactive television program that gives consumers product info, videos and images right in their living room.)
DN: Can you elaborate on Victory's relationship with its military customers?
RK: The military segment is important to Victory not only because they have such a high passion for motorcycles, but because of who they are and what they represent in their service to the country. At our most recent Dealer show we were honored to present the first Victory military pin to Colonel Dick Fox to kick off our second half plan – which includes a military segment focus. We will launch Hometown Heroes online this fall. The programs gives consumers an opportunity to nominate heroes from their local markets for a chance to win a Victory. Additionally, we are partnering with Operation Gratitude (a group that ships cards, letters and gifts overseas) to have Victory dealers serve as outlets for consumer donations this fall. Victory values the strong connection we have with our military customers and we’ll continue to honor them in the future.
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