Question: How do you determine if you should eliminate one of your wholegoods lines?
In 60-plus years, we have sold almost every brand of lawn equipment. As a dealer, each brand we represented had its own challenges. In the end, the decision to carry or drop a particular brand was mostly made by our customers. It is easy to drop a brand that our customers no longer accepted. We always felt dropping a popular brand was going to hurt our business. In the past, this was true; by dropping a brand, it meant we could no longer provide our customers with the parts and support we promised them. A popular brand would most likely be picked up by another dealer.
With Toro, we had a respected brand that our business and reputation was built on. After almost 60 years, our name was synonymous with Toro’s. Unfortunately, the last 30 years of our relationship was with the “Distributor from Hell.” For many years, both my father and I agonized with the decision to drop the Toro line because of this distributor. In the end, the distributor’s non-support of our dealership was damaging our reputation with our customers.
It’s now three years post-Toro and the decision we agonized over for so many years was a non-issue. We are still servicing our Toro customers without skipping a beat. We provide our customers with parts and service, thanks to aftermarket suppliers and other parts outlets. With Big Box sales and the lack of servicing dealers, Toro is still a profitable brand for us without all the costs of stocking equipment and warranty support. That distributorship has been sold, but not soon enough to save a 58-year relationship.
Our businesses once lived and died by “our brands.” We were loyal soldiers who stood up for our brands in good times and bad. Our manufacturers supported us and our territories, and appreciated our loyalty. Today, the manufacturers took the reputations we built for them and sold it to the highest bidder. My Toro distributor set up a non-servicing dealer across the street because he had a new building. Today, we must only support the brands that support us.
— Rob Leiser
Leiser’s Sales and Rental
In evaluating a wholegoods line, I consider the percentage of business capital the line requires and then compare that to the percentage the line contributes to profit to get a sense of return on investment.
I also consider the risk factor associated with the line. Do we have to commit to large orders well in advance of the season, and absorb miscalculations, market shifts, and unfavorable weather? And, if so, are the margins adequate for the level of risk associated with the product line? Does the line have abnormally high warranty claims, and are we compensated properly for those warranty repairs? Is the line making our business “look good,” or is it actually damaging our reputation for quality products and service?
I also consider our sales territory. Do we have a reasonably sized exclusive market in which to be profitable, or are we forced to compete in a market saturated with other retailers carrying the same line?
And finally, I consider our relationship with the wholegoods supplier? Do we have to fight an overly aggressive salesman every time he comes by, are we are finding ourselves with high backorders in season, or are our warranty claims too often denied, underfunded, or languish for months before being paid? If so, then it’s definitely time to consider dropping the line.
Once every year, I evaluate our product lines. Non-performers and problematic lines are dropped. At the same time, we may bring in a new line. It is an ongoing evolutionary process designed to improve the quality, the perfomance and the profitability of the products that we supply to our customers.
— Roger Zerkle, owner
Flat Rock, Ill.
I used to be a “nice guy,” and would wind up with too many lines. This creates many problems: 1) You lose focus; 2) Stocking even just “fast-moving parts” for each line dries up cash and takes up space; 3) You have no leverage with any one rep; 4) The average customer gets confused quickly with too many choices. On choosing who to keep: 1) Name recognition; 2) Can you trust the rep, does he have your back, or will he sell you down the river?; 3) How good is the tech dept?; 4) Can you file warranty quickly, receive credit quickly without losing your shirt?; and 5) Is everybody and their brother selling the same line, or can the customer purchase the same product online for less $? I’m sorry to say that none of my lines grade out a 5, but a 4 is better than a 2.
— Dean Davis
We look at each line as to how much profit it contributes to our company. We also consider the carrying costs involved with each line. No profit, too expensive to carry, no more of that line!
— Daniel J. D’Arcy, president
When you start having this question in your mind, chances are you have gone too far in trying to be everything to everybody!
It does happen, and the quicker it is dealt with, the better for your business, as well as your customers. Things to look at are sales, parts, as well as the service end.
By sales, does it really make a noticeable difference in your bottom line? Or, is it just another piece of equipment that you might already be selling in other brands? It does require more time for training! Do you pay on delivery, or is it on floor plan? Could it be hurting your main line by cutting the billboard effect?
For the parts, are they easily attainable, or are they hard to get, indifferent with extra shipping costs, delays or duplicate to other lines? Here again, more lines, more training!
Is it a line that the shop might benefit from an increase in regular service work as the equipment requires more maintenance? Will there be an excess of warranties to be written, and how do they pay them?
One thing that I’ve found, with the different sales staff you might actually have them pushing customers in a confusing way when one has preference over another make by the staff. It can be a possible plus to have the different brands for making more profitable sales when in a competitive dealer area.
The KISS Principle is the best system for multi-employee departments. That’s coming from someone who likes to be everything to everybody!
— Art White
White’s Farm Supply Inc.
I look at the sales volume, reliability, customer satisfaction, parts availability, gross profit, life of the unit, and warranty coverage. If a customer buys a machine from us and is unhappy with its performance or reliability, or it does not meet their expectations, they are likely to make their next purchase elsewhere. I also look at the parts availability and costs to our dealership to support the product, because if we have to wait for backordered parts and store the machine while waiting, it affects our work flow and production.
We specialize in quick turnaround of our customers’ machines and have a reputation built around that, especially our commmercial accounts as downtime costs them while waiting for a machine to be fixed. If we can’t service it, we won’t sell it.
— Mike Burke, president
Burke Power Equipment Inc.
I think it is necessary to consider removing a product line only if you consider all of the factors involved in retailing and servicing the product line. Does the product give your customers the service they expect from the product? Does your distributor provide you with programs to retail the product for a profit and continue your services to the customer? If the product and distributor do not fill in these needs, then it is time to consider removing the product from your store. If our business would require removing a product line even though the above are being met very well, then it would require considering your customer base for retailing the product and how much profit that product line provides versus other product lines. Choosing to remove a product line is a difficult decision no matter how or why you decide.
— Tim Bockelman, owner/manager
Gil’s Four Seasons Lawn Equipment
In my opinion, the deletion of a product line is mostly done due to a manufacturer not keeping up their part. If I sell a customer a new product and it needs a part, for whatever reason, I need to be able to get that part.
If the parts are not available for an extended period of time, over a week, then I look bad for selling the product. My customers are trying to make a living. This poses a real problem, from what I have seen, for the handheld product manufacturers. Due to corporate buyouts, company mergers, whatever, they have been dropping the ball on repair parts supply. I have customers telling me that they have gone and purchased an inferior product, due to not being able to get parts or even wholegoods. One company I am aware of has not been shipping due to restructuring, and I lost one if not more sales.
This is just a sample of things I would see as a good way to get your product removed from our stores.
— Dennis Little, service manager
Scotts Power Equipment of Illinois
One way is by fact that the line is not selling well. I also consider the line’s distributor. After awhile, the honeymoon is over. Then, they will start treating you differently, more like an employee than a dealer. I’ve quit lines in the past over this. My main line I carry now, I’ve had over 34 years. It’s my bread and butter of equipment sales, and I strongly feel that I’m viewed as an employee, and treated as such. But I’m so committed to this line, I can’t eliminate it, and they know it. But they would get rid of me in a heartbeat and not look back. There are days I would cut my nose off, just to spite my face as we say, and get rid of them, but it would most likely put me out of business. But, it sure would feel good at the moment.
— Tony Nation
Nation’s Small Engine Inc.
Hot Springs, Ark.
There are three main factors that we evaluate when determining what wholegood product lines we should keep or eliminate. First is, of course, the “return on investment.” This does not necessarily always mean profit margin in our case. It’s factors such as the type and volume of traffic the product generates, how many units we are able to sell into the marketplace, is the setup time equal to or greater than the margin generated, etc. The second is customer satisfaction. Is the line making the customers happy? Does the product perform to customer expectations and MY expectations? Is it something that I am comfortable associating with my reputation? If a warranty issue occurs, is it easily resolved? Third and perhaps the deciding factor, is how am I, as a dealer, treated by the manufacturer and/or distributor? Do they at least act like they’re happy that I am their dealer, or do they act like they are doing me a favor by “allowing” me to sell their products? Is it a partnership-type relationship? Do they see the people who have purchased their product from me as MY customers, THEIR customers, or OUR customers? If I get treated badly by the manufacturer or distributor, then that is the first factor in me showing them the door. The relationship should NEVER be adversarial. We BOTH must profit doing business together. All of these are questions that must be balanced out. If in the end there are more in the “go” side than the “keep” side, we start looking for a replacement line or a change in our scope of business.
— Mark Moss¸ general manager
Marcus Moss Lawn & Garden Center
We have several different lines of equipment, so we keep an eye on profit margins and inventory turns. If a product line comes to a point where it no longer creates a decent profit margin, then we will eliminate it. We have been fortunate not to have had to eliminate many in our history.
— Terry Coffin, president
Beard’s Outdoor Power Equipment
Every month, we receive a report for both parts and wholegoods sales from our computer (c-Systems). It shows not only the total dollars sold, but also the profit margins. Usually at the end of the year, I evaluate slower-moving and less-profitable lines. I will keep a line that I have had for a very long time so that we can still service and sell parts to our customers with that product. If I have had problems with a distributor or manufacturer, I have occasionally dropped a product line.
— Sally Miller
I use multiple criteria when evaluating business decisions such as this: sales data; service efficiency; and finally, I always ask, “What’s in it for us?”
The sales data, I get from our business management system. I review this information every six to nine months. I look at what sells, what doesn’t, and why.
I also look at whether or not we can service the line efficiently (i.e. parts availability for servicing). Can we train salespeople effectively to contrast differing lines? With bench service being the priority, parts availability is the biggest factor.
Finally, “What’s in it for us?” Recently, I migrated our business to Stihl Elite, which basically means Stihl-only. While we still service some other manufacturers, we sell Stihl wholegoods. The answer to my question of “What’s in it for us?”…extra margin on parts, extra margin on units, and a generally better response from our distributor. It didn’t hurt that 85-90 percent of our unit sales were already Stihl, thus making it an easy decision. The only real difference for us was we just made more money the next morning for doing the same thing. I would also add that the Stihl Elite emblem next to our name on Stihl’s Web site is probably the best marketing tool we have had for five years.
I don’t like redundancy between lines either. Each line must provide us a unique solution and complement our other offerings. I feel that customers come to us to know the “best” solution. If a dealer has three, four, five (I’ve actually seen seven “brands” — not models — brands of string trimmers on dealers’ walls?!?…Are you kidding?), what message are they sending? By the time we see the customer, they’ve had it with “choice.” Now they want something that works, year after year after year. This also goes back to efficiency; we are really good at selling our brand. We have also been able to streamline our parts room. We can now focus our limited capital on stocking the right parts, in sufficient quantity, to provide premium service.
The only other factor is, I don’t carry what the box stores carry. I don’t feel I should help them compete against us. Also, I didn’t get a say in helping the customer choose the right machine for their job, and rarely does the box store help either. Now, with this said, I do service some of the units they sell, just so I can show the customer what a “pile” they purchased.
— Paul Lasiter, operations manager
Mason’s Saw and Lawnmower Service, Inc.
El Cajon, Calif.
Good question. We just stopped selling a wholegood handheld line. The main reason was customer dissatisfaction due to frequent failures related to quality problems. As a commercial customer dealer, the product we sell must be dependable or the customer will switch to another brand. We had big engine problems with the line’s most powerful backpack blower, and then clutch and drive shaft problems with the line’s most popular size trimmer. Sales were dropping, and we started seeing other brands on the trailers that came in. Changes in the industry gave us some freedom, so we went out searching. What we found was Stihl is a perfect match. It is a high-quality product with great name recognition and fantastic technical support. We made the change, and the response from our customers has been 100-percent positive. Not only have sales increased, but so has my customer base.
— Matthew Borden, owner
Ed & Matt Equipment
When looking at a line to add or drop, we look at margins in wholegoods and parts, where the product is shipped from, and what they pay for warranty. We are done with suppliers that do not pay retail shop labor rates.
— Mark Reynolds
Reynolds Lawn and Leisure, Inc.
That’s a good one. How long you had it, and how many units sold — also warranty issues.
— Joe Higgins, owner
Joe’s Small Engine Repair
If I don’t have much profit margin and/or if I get a lot of warranty claims.
— John Pendleton, owner
John Pendleton Lawnmower Service
New Bloomfield, Mo.
The decision on whether or not to eliminate a line would be based solely on the profitably of that line vs. profit of the other lines being carried.
— Murray Wood, president
If it’s not selling, eliminate it.
— Gregg Jones, parts manager
We did recently drop one of our wholegood lines, and we based some on previous sales, warranty issues. Also, if we get a lot of service bulletins, that tells you they have a problem.
— Kay Annear, VP & secretary
Annear Equipment, Inc.
If and when a manufacturer is unloyal to me — case in point (when X, Y and Z companies) all went to big box — let big box fix ‘em.
— Donny Black, owner
BBE Lawn and Garden