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Frank McMillan – Founder of Ensure Protect, Developer of R.I.D.E.S. (Ride it Daily Extended Service)

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An industry veteran and visionary in leading real-time service contracts and insurance consulting.

Meet Frank McMillian.

Founder of Ensure Protect, developer of R.I.D.E.S, (Ride it Daily Extended Service), Frank brings years of experience to the mic.  Co-founding the first online real-time service contract solution.

Later adopted by Dell and Amazon, Frank brings to the conversation an in-depth look at his platform R.I.D.E.S, he shares the vision of the program, the profitability aspect, and the tools for retailers to implement now. More than service contract conversation, we talk about customer service, customer retention, racing sea otter, and all the personal bits that lend themselves to success.

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Frank McMillan

Tue, 3/9

SUMMARY KEYWORDS

rides, bike, dealer, people, sell, customer, bicycle, developed, shop, industry, service, cover, program, frank, buy, bike shop, thought, started, elliptical machine, consumer

SPEAKERS

Heather Mason, Frank McMillan, NBDA

NBDA   00:10

You are listening to bicycle retail radio brought to you by the National bicycle Dealers Association.

Heather Mason  00:16

Welcome to another episode of bicycle retail radio brought to you by the NBDA. I am Heather Mason, thank you for listening. If you’re a first time listener, be sure to check out all the previous episodes. Do us a favor and leave a review. It helps members of our industry find our podcast. Today’s guest is Frank McMillan, founder of insure protect developer of rides, which is ride it daily extended service and industry veteran there’s so much to say about Frank. He’s not only a visionary and leading real time service contract and insurance consulting, but he’s been married for 42 years. He’s an athlete who has completed over 30 triathlons. And he even developed a writable elliptical machine called karma. Once presenter at the bicycle Leadership Conference and an overall great guy. Welcome, Frank.

Frank McMillan  01:06

Thanks,

Heather Mason  01:07

Frank, it has been absolutely amazing to get to know you over the past few weeks. And I want to thank you for your support of the MBTA. Can you tell us how you got connected with the MBTA?

Frank McMillan  01:19

Yeah, it was it wasn’t easy. But it was worth the effort. I had gone to an Interbike show or two had studied the industry and looked at where we wanted to focus service contracts, which certainly wasn’t, you know, in target and Walmart and certainly wasn’t in sporting goods stores. It was for the independent bike dealer. So we felt we needed to find out who worked for the independent bike dealers and who was a great representative and advocate of them. And we found the NBDA. So we reached out and tried to get some meetings going it was difficult finally hooked up with Chad, and Chad hooked us up with your predecessor. So that’s how we hooked up.

Heather Mason  01:58

We are so happy to have you part of the MBDA. And I know Chad, he speaks so highly of your services. And so we had a phone call out last week you and I and I know you’re usually out traveling and in shops, meeting people. Where are you today?

Frank McMillan  02:12

I’m in Santa Cruz, California in our in our new office located over here. So it feels good. And you know, as they say out here, Surf’s up. No, there’s a lot of places to ride. We love it over here, we could ride the road highway one, we can ride them out Santa Cruz Mountains in the redwoods. So it’s a great place to have an office.

Heather Mason  02:30

Yeah, I think maybe I’ll need to come visit. So I’m so excited to dive right into this. I know you and I had a conversation this week about just your long and interesting career. And I know our listeners will find some great insights out of our conversation. But normally, like I do, before we get started, the MBTA is so thankful for our Association members. And this week, a good friend of mine Brooklyn bicycle company came on as an associate member and support. And I’m just so thankful for Ryan. And I know that he believes that his mission mirrors ours, and he is truly invested in supporting the bicycle industry. So if you want to connect with Ryan at Ryan at Brooklyn bicycle company, if you’re an IBD, looking for another brand, I highly suggest that Okay, so Frank, this past year, everyone’s been kind of starting a lot of the conversations. Have you been this past year? How is your working environment then with COVID? Did you have any adjustments or any issues this past year that you’re kind of still I don’t know, struggling through or have motivated you and the 2021?

Frank McMillan  03:32

Yeah, I think we’re coming out of it. But we’re a high touch third party administrator, when we roll programs, we like to get out into our dealers and help them understand not only how to communicate to their customers about them, but actually how to sell them how to do their systems integration, that type of thing. And we were Believe it or not, in the middle of a rollout in a dealer that has 125 stores that we rolled out March 1 of last year. And and I had to pull everybody out on March 13. Because COVID just started taking off, they’re located in the Midwest. And you know, I think they thought they were potentially impervious to it. And it became obvious that they were not and so we pulled our team off. And so that means that my team became really adept at go to meetings and you know, zoom meetings like we’re on right now and that type of thing, but that affects our ability. The other thing that dramatically affected as we just rolled out right at a couple p two meetings, introduce the people at the end of 2019. And and so we thought oh 2020 Here we go. And then you know, as we know, the independent bike dealers had to deal with this huge increase of people that found biking again, is huge increase of service and then this huge unavailability of bicycle product of the supply chain just got whacked. And so I think people were a little bit reticent to spend time learning about a new program. Make their time available for us. So we were really happy that things are settling down a little bit, and we can get back out there and talk to people. We’re enjoying some beautiful rollouts right now.

Heather Mason  05:09

Well, Frank, I mean, you and I have talked a little bit about the rides program and the rollout to bike shops, but I had no idea about the timing. How like this past year affected the rollout. So I want to know so much more about rides, but I, I’m like such a simple person. And you put this term out that was third party administer TPA, for people who I have no idea, can you help us understand what that is?

Frank McMillan  05:33

What does that yeah, this is, this is actually super important for our industry, and what separates us from our competitors. So I’m glad you asked that. If you think about an extended service contract or repair with maintenance contracts, there’s actually five different parties involved with that there’s the consumer, right, or the end user that’s going to buy the coverage, right, they want to cover whatever their product is, in this case, the bicycle, you know, whether it’s $1,000 bike or a $5,000 bike, it’s still their bike, and they want to ride it right? In trusted a dealer to to put them into that bike. Instead, the dealer has represented to that consumer, this is what your terms conditions are, this is what your coverages are. And the consumer pays that dealer a sum of money, let’s say 200 bucks, right, there’s some sum of money. And for that, they get now the coverage, that dealer then reports that sale to a third party administrator, we would be the third party. That’s right. And our job is to not only create the terms and conditions, right, it’s not only to manage the data of the consumers that own these things, so that we can find them service, right, whether that’s the dealer that sold the tune, or if they’re traveling somewhere, and they need service on on their bicycle, because it breaks when they’re out and about on vacation, right? The third party administrator manages service manages data and manages the risk Association and and all these things that can customer thinks they’re buying, well, that third party administrator, hands a lot of the money that they get paid from the dealer over to an insurance company, right. And that insurance company stands behind the product, they’re obligated, by law regulated to hold that money in a reserve fund that has to be available to pay for the claims or the services that the consumer thinks they bought from the dealer, right. And the administrator managers that they’re the fiduciary, between the dealer and that that insurance company, right, and the fifth party is the service center, right? So that when the customer’s product, Grace, and that service center services it, okay, they get paid, they get paid out of that reserve funds that the administrator manages. And so what happened in our industry is a bunch of the administrators got purchased by insurance companies. So you think about if an insurance company owns IT administrator, and it’s a public company, the administrator is obligated to try to make money for the shareholders of that insurance company that is not conducive to great customer service and saying yes to claims it’s conducive to trying to figure out potentially how to find the exclusions and say no, right. And that’s not a healthy relationship, as far as we’re concerned. So when we saw the industry changing, in 2015 2016, we said, you know, what, we need to bring Administrative Services back to the industry, right. And we developed, our company focused on writing programs that make sense for the industries we love, right? I’m an avid biker. So we developed the rise program, when we found out there really was not appropriate programs out there, because the programs were out there were being presented by insurance companies that own service centers, or not their own service centers that own you know, administrators, or administrators that are selling directly to consumers and trying to cut out the retailers. Right. So, as an independent third party administrator, we developed this program, the rise program in such a way that that you’d be comfortable selling it to your grandma, right? It’s like, she’s really getting coverage on her bike. She’s really getting annual maintenance, there really aren’t a bunch of exclusions, right? It’s, it’s something that covers what it should cover. That’s what it’s about, and our insurance. Our insurance company loves it because we didn’t underwrite it and go out inexpensively. We developed the program First, the one you’d want to buy or the one you’d want to sell, and then we priced it, and then we brought it to the insurance company actuaries they signed off on it, they’re comfortable with it, and that way we can afford in the program can afford to pay the service center which in most cases ivds have their own right, they can afford to pay them their shop rates, their going rates, their posted rates, just like it should that way the consumers always be in terminate, you know, there They become the priority. Right? They’re well taken care of, and they love it. They feel it, they definitely feel it. So. So they’re lost? Sorry, a long answer. No, it’s short question. But that’s what a TPA does, we make sure that a consumer gets taken care of, and that the money is paid to that service center for doing the work. That’s our jobs.

Heather Mason  10:19

Yeah. Frank, I, I’m so glad that you, you know, took the time to explain that because it really, it really puts that like authentic human connection in that customer service focus forward, and that what you’re offering is a great product. So for our our bike retailers, listening, you know, stay tuned to learn more about rides, which is a program that you can offer at your shop, and consumers who are listening, pay attention to learning more about rides, and go to your local shop and tell them about this. So there’s lots of good information we’re going to get into here, Frank, I know you’re an athlete, and I want to know, just kind of your past you started in retail, like, how did you tell us a little bit about your career path?

Frank McMillan  10:58

Yeah, I was I was a from a family of seven. And the folks were, they were from the depression generation you worked. And you know, I was you know, from went from the paper route to retail, so and TVs and stereos, which I really loved and my first trainers, here I am. 17 are teaching us along with these stereos and appliances, you’re going to sell these extended service plans. I’m like, wow, we can make more money doing this. This is great. But I’m the kid in the class that raised his hand and said, Well, what do you do with the money? How did you figure out what to charge? Because I’ve always loved math. And they’re like, the trainers are like, well, that’s really not appropriate to this class, you know? Yeah, it is, we should know that. But they cut me off. The next day, the owner of that company called me and said, Hey, we understand you asked some questions in this training class, how would you like to learn and they flew me to LA, it was my second slide ever in my life, they flew me to LA, and spent a week teaching me about loss ratios and risk and in all kinds of neat stuff, frequency and severity that I used to this day. So I accidentally became a warranty dude, when I was 17. And then that carried me through my path, we developed warranty programs and extended service programs all the way up to 1989. We had an earthquake here actually, in Santa Cruz, that, that wiped out three of our stores. And that was the best career path was a long time in retail running these programs, both at retail and on the risk side. And then Transamerica on the pyramid up here in San Francisco, after that earthquake, call this up and called me up specifically and said, hey, how would you like to help us launch an extended service planning program? So that’s when I went into insurance. That’s how I got into the insurance regulatory side.

Heather Mason  12:41

That’s such a cool story, think that your unique way of thinking you know, your questioning actually got someone’s attention, right. And so the conversations I’ve had with you every time I’m taking notes and writing down stuff, because you just drop all these, like, really insightful ways of looking at things. So I can and I know, part of what arises is like, you’ll go into shops and train the staff. So I think that’s amazing. But you mentioned to me earlier that you created some service contracts solutions that are even adapted by Dell and Amazon. Tell me

Frank McMillan  13:13

Yeah, so. So in, in 1999, I had been the Senior VP of this big administrative company called back and in 1999, myself in this current CFO of this company and CEO of this company, we were co founders in a company that developed a real time delivery system of extended service plant quoting right so if you think about 99 everybody was coming out with with.com right? dell.com buy it now. Calm amazon.com you name it right.com was exposing overstock.com that was an early really big one. And you’re probably too young to remember that the reality is, is we wanted to level the playing field between.com and brick and mortar we want to enable.com to sell extended service plans How could you put it in there? How could you populate it? How do you flag the right products? And how what is the database look like? So that when a customer clicks on a product, it reaches out and delivers back there, their manufacturer’s warranty and the options to buy extended plans right so we raised 25 million bucks we developed this stuff and we launched 119 different key dealers we ended up selling our company off couple years later which was pretty cool, but that’s what that was was first real time voting delivery system and you see everybody with it now you go on to buy your insurance or this or that everybody’s got all these real time voting mechanisms online. And some of them are made from, you know, our original programs, so it’s pretty cool thing so um, I do know overstock

Heather Mason  14:52

now, Oh, my gosh, I was just brainstorming out as you were talking right there, Franken. I’m thinking about rides and I’m thinking about when we talk about To our IBD retailers about their online presence, and I’m wondering like they’re selling bikes online for pickup on in store, can they add the option of the service contract online? Like I? Yeah, that’s a thing that we should talk about eventually.

Frank McMillan  15:15

Yes, yes. So the currently, our associates and friends in the NBDA, they most of them seem to use a one company’s ability or solution to deliver their stuff up well, we really should do is integrate with those people so that when people sign up, and they want to push a button to have that show up, you know, we can take you on to some of our current clients, and you can see how their delivery comes up. We haven’t had a ride stealer implement that yet. Because I think they need to rely on smart detailing, I believe, to go ahead and do that integration. So maybe, you know, you and I can make a call to them and figure out how to do that. Because that would be a great benefit for those dealers. If their customers see that opportunity to buy a rise. They’re going to ask about it in the store, when they got to pick it up. It’ll just it’ll just increase the attachment rate. I’m sure.

Heather Mason  16:10

This is why I love just talking because we come up with the next the next thing, right?

Frank McMillan  16:15

Exactly.

Heather Mason  16:17

Frankly, think we got to like just rewind that a little bit. Because you and I know what rides is and I’m so excited about it. I’ve never personally like when I had my shop, we didn’t offer service contracts. But can you for our listeners, for our listeners who own bike shops, what is rides? Exactly.

Frank McMillan  16:34

So, so rides is an extended service program. Okay, that’s what they’re called extended service. It’s not an extended warranty. it differentiates itself from an extended warranty dramatically because manufacturer’s warranty basically cover defects in materials and workmanship. Well, if you extended that, you’re not going to cover things like wear and tear, you’re not going to cover annual maintenance, you’re certainly not going to cover accidental damage. Right? So, so rides was developed thinking, Okay, I’m a writer, how many times have I gone over the bars? or How many times have I, you know, broken this or that? What would a rider need? Okay, so rides covers, essentially, just about anything you think, can break on your bike, right. So you wear your chain out, it’s going to be covered. You go over the handlebars, you break your levers, or your shifters that’s covered, you jump bottom, your shock out that’s covered, you’re hauling down and downhill on your on your road bike, and you go into a turn and talk about your wheel. Because your spokes weren’t tightened up enough, that’s covered, right, it’s a program that was put together, that retailers can look their customers in the face and say, Look, you’re buying this bike, you may or may not know how to maintain it, but we can maintain it for you here. And on top of that we can offer you coverage that the manufacturer and frankly our competitors do not. And when the when the dealer sells that to a consumer, they will attach that plan to the bike in what whatever was installed on that bike of the time, that creates a value of the bike, and they sell the plan. And based upon the value of the bike, the price of the plan is determined by the value of the bike and the length of coverage that a customer wants. So currently, the options and wanting some coverage are two or three years from the date of purchase. And the reason we don’t started at the end of the manufacturer’s warranty. Instead, the date of purchase is because we cover things that the manufacturer does not like I was saying so you know, you can take your bike out, or you’re from upstate New York, or where I was just in the Midwest where it was like I storms and freezing. There’s people that go out and ride in that stuff. They use the fat bike, the fat tires right there not to ride with studded tires, or you fall over you break your hanger or you damage your bike that’s not covered by manufacturer in the in the dealer should have to cover that. But what are the customers do they covered? You sold me this and it didn’t keep me up, right? In this case, the dealer can sell it, they make about 50 points when they sell it. And when the customer comes in, they don’t have to say hey, that’s not covered, right? What they get to do instead is let’s take care of, you know, they just go look up the customer validate they have coverage, go ahead and create the work or in get authorization for that do the worker and we reimburse them their posted shop rates for doing that. So whether it’s a repair, that’s just from wear and tear, or whether it’s a repair from accidental damage, or whether it’s an annual maintenance, you know, they’re going to be reimbursed for that. So they make money when they sell it. They make money when they service it, but to me, the most important part is that they hold on to their customer. Yeah, because of a customer. If a customer has a brake on a bike, there’s nothing that guarantees if they’re going back into the selling shop. They might go to they might go to a closer shop somewhere else who knows you know, try to find Find a cheaper alternative and stuff if they have rides attached, guess what, they’re gonna come back into that shop. So it’s a way to hold on to your customers get returned business in the shop while you’re working on their bike is what they’re gonna do. They’re gonna buy how much they’re gonna buy new clothes, they’re gonna buy that cool shirt, that somebody sells to raise money for their local people, they’re going to who knows what they’re gonna buy maybe a new set of pedals, maybe some new tires, they’re gonna buy other stuff, right? There are things we don’t cover. There is fine print, but it’s simple. It’s abuse and misuse. acts of God right. So if there’s an earthquake and it gets smashed by earthquake that’s not covered. And then consumables. In our case, the consumable list is really short, right? It’s literally no baloney. It’s stuff that we should consider consumables, it’s it’s tape on handlebars, that wears out, it doesn’t affect the operation of the bike, it’s your tires, and your tubes, right? Those are consumable. So we like to just say, it’s cosmetics, it’s consumables, and it’s rubber. That’s it, that’s a pretty easy way to get that point across. We do cover rotors, we do cover chains, right, we cover what we should, you know, you break your break your seat posts, because you’re hopping off something and you come down too hard. After your voice drops down, or you learn how to talk again, and that the C post needs repair, we’ll go ahead and replace that C post for you. So we’ve covered a lot of stuff. There’s a lot of neat stuff in there. We’ve covered in bikes. I am cool.

Heather Mason  21:31

I’m loving listening to you talk and I and I wish our listeners could see you because you are so enthused, I’m seeing it I’m like, and the way you describe the accidents that could happen when you’re riding or the parts of a bike. Did you develop rides? Because of your athletic background? What is it like three Iron Man’s and 30 triathlons? Like is there a connection there?

Frank McMillan  21:52

No, there’s not the you just asked me to send a bio. So I had to send that but I I developed rides literally because I was in my first interbike shows. And I walked around and I found a couple what I thought were really poorly developed programs for the bicycle industry. And being a you know, being a 40 year underwriter, I get masks, and I understand what frequency is how often something’s going to break in, I understand what severity is, what’s the average cost of stuff are and how you develop rates. So the way that you can develop a cheap warranty program is you could just not cover a lot of stuff, which will lower your frequency. Or you can play flat rates, which will lower your average severity, right? So so you can go out with a program that covers less, but that’s not beneficial to the consumer. And it’s really not beneficial to the retailer selling it, if he has to say, well, that’s not covered, right? If the retailer is able to look customer in the eye, and say, Look at this program, they’re going to get behind it and they’re going to sell it. So when I was at interbike, I’m just like cheese, there’s got to be other options. So I started investigating found an OEM program out there that I thought needed some work. And I said, You know what, I’m going to develop this program and started to work on it. And then you you know, when you do that, as an administrator, you have to find the appropriate insurance company that wants to stand behind. So you have to develop those relationships. And then the filings are wild. I mean, the amount of filing you have to do to be able to sell it in all the different states where where the NVDA dealers are. That’s that’s quite an undertaking. Expensive undertaking, but, but we’re good. So I developed it out of passion for the bike industry. I am an avid writer, like you said, I’ve done a bunch of those, but my big passion is mountain biking, I like to get dirty.

Heather Mason  23:41

You know, that’s why we get along so well. Frank. Okay, so you have several shops are using rides right now, what are like some of the feedback you’re hearing

Frank McMillan  23:57

the the shops are digging it, the people that are selling it or digging it, they find it simple to sell, they find it easy to administrate, you know, to get claims on, they’ve requested that we develop some phone applications that make it easier to do stuff. So we’re working on a bunch of back end stuff. We just developed some quick ip whitelisting to make it really easy for the shops to come in and just look up a customer and validate that they have coverage. So the feedback we’re getting is they love to sell it. They love the profit margin. It’s simple to report. They just want us to continue to facilitate the back end, but a little bit more. But I think everybody you know, always wants that to happen. And yeah, for the most part, I think it’d be talked to you know, some of our original members that came aboard, they’re going to tell you we’re pretty easy to deal with on claims and stuff. You know, stuff. I’m happy to give you their names, but I have a feeling you might be reached out to them anyway.

Heather Mason  24:51

Yeah, no, Frank, that’s that’s great feedback. You know, you just contributed recently to our outspoken blog. Thank you for that. And a lot of the article i thought was centered around This thought of impeccable, undeniably excellent customer service and in how you feel like rides really offers the shop the ability to offer that like at the heart of at the heart of it. So can you walk us through like that thought pattern? I know you contribute to the blog, but not everyone reads that.

Frank McMillan  25:17

Well, you know. So, yeah, which they should I agree, but what I am, I think what I’m trying to get across is one thing that that makes bike dealers especially independent by dealers way different than your typical retail that has cashiers ring and stuff up as people come through, you know, the aisles, that type thing is by dealers, first of all themselves. Love the industry. That’s, that’s what I find everywhere. But secondly, they develop a rapport with their customers they go through and they properly qualifying, who’s going to use it, what are you replacing? How often do you ride? What kind of riding do you have? What are the bikes, that they develop a q&a with the customer that makes the customer feel comfortable, you know, as opposed to walk in? Hey, do you carry e bikes? Yeah, they’re over there, right, and then the customer doesn’t know what they’re looking at. But when it comes to ivds, they spend time with people qualifying them so that they can pain in their head, what are the two or three options I’m going to present to this customer and when they present to you let them do the test ride or whatever they’re going to do, that’s excellent customer service, they make sure that they get the customer into the right product. And then they go ahead and get them the right accessories, they know how to add on, they know how to tell the customer, you know, you really shouldn’t leave without this set of gloves, that helmet, the right type of riding shoes and clips if you need them. You know, if you’re riding in a cold area, let’s sell you all this new premium stuff. So they understand suggestions selling cross selling, add on selling, I could go on and on upselling. But that is important because this is another accessory for them. It’s another product that helps complete the deal. And that’s what I love about working with bike shop. So I mean, we do programs that are made, you just ring up at the register, they scan them they’re done. And you know the customer grabs that we sent a little documentation The next day, here’s your deck page and your terms conditions. But bike shops are different. So so we love bike shops, we love the way that they treat people in. And so we’re committed, we’re going to do training, you know, we’re going to give more version of how to integrate that in there. And we’re going to ask them questions, how do you deliver this and we try to integrate our training with their approach their customers, culture is a big deal. Customer Service culture is a big deal. And it’s going away, you know, if these dealers want to separate themselves, from Amazon, or from the bike OEMs that are selling and competing with them, whether it’s online or open a shop across the street, you know, how they separate is by excellent customer service, and then top it off for the rights program. You know, that’s the way I look at it, it is it is a value add, that’s valuable to that consumer is valuable. That shop owner is valuable to the service guys in the back. Everybody’s weighing in on this thing. And it’s priced in such a way that it makes sense. So so that’s that’s might have been too long of an answer. But no,

Heather Mason  28:12

no, I can’t, I can’t agree with you more especially we’re talking about the new cyclists from this past year who have found our sport, right. And it’s so critical that their experience at the retail environment and with the IBD has to be has to get them ready to become a cyclist it has to leave them like just easily entered into the sport and like just a bike shop has their back and then they feel supported. And this is exactly what you’re saying. It’s it’s giving them all the tools to be a great cyclist. And then if something happens to their bike, or if there’s a failure, they can come back and then they don’t have to worry about it. Like it’s just seamless.

Frank McMillan  28:51

Exactly. Yeah. So in the bike and the bike shop owner, I’m gonna play on what you’re talking about new cyclists, they may have expectation that a bicycle is like the wireless phone, right? Here, nothing’s gonna happen to it, you know, oh, I broke my screen, I’ll bring it to the mall guy. And we’ll put a new lousy screen on there. That’s not basically they’re electromechanical devices, you know, nowadays, I mean, they’re definitely mechanical nowadays are often electromechanical. their expectations are not necessarily based in reality, this type of product in in the it behooves that dealer, like you said, to prepare those people. And part of that is to talk about, you know what, I want to make sure you understand the manufacturer’s warranty covers this, we’re going to give you free annual maintenance or whatever that dealer to and by the way, on top of that, we have this program which will enable you to come back in for an annual maintenance or three depending on what they want. And if you’re out trying some new writing, that you’re not quite prepared for yet and you fall over in But setting up pretty good. We’re even going to cover that though I really you know, cuz you notice people buying new bikes, lots of them buy a more expensive bike because they envision themselves being Superman and riding anywhere they want. And then they find that they don’t quite have that capability developed yet, and it’s nice to have rides there to go with them.

Heather Mason  30:19

Yeah, I that’s it, I really hope that our listeners really keep that point is that these new cyclists that are coming into the sport, have no expectations, they don’t know anything. It’s really your spot to educate them and provide them that you talked frank about retaining customers and how when shops offer rides, and they have customers who sign up for it, they’re automatically going to be coming back to their shop. But is there any way that offering a program like rides can attract new customers to someone shop?

Frank McMillan  30:48

Absolutely. So in a couple ways, if you’re out looking for a bike, and you’re online, nowadays, some of the online searches, show the customers the different shops that have that, that bike in stock, right? If they walk into one bike dealer, and that guy is just trying to sell them the bike, and that’s it, and doesn’t give him great service. And they walk into this other dealer and find out that they can protect their bike, that’s a great way to steal a customer from another bike shop. And it really is, I mean, that gives you an edge. If the customer is shopping online, oh, I think I’m gonna buy this because it’s $100 cheaper, or you know, whatever their driving thing is, but they realize, you know, when they’re in that shop gray, you know, you may buy that online, or maybe the shop has a price matching policy match. You know, we may match that price for you. But we also want to make sure that you get all the accessories you need and the rights. This is just part of the thing that separates them from their competitors and separates definitely from the big boxes, right, but separate some from online for sure.

NBDA   31:54

Bicycle retail radio is supported by our NBDA members, all our member benefits can be found at nbda.com. Join the NBDA today.

Heather Mason  32:06

Thank you told me once, I think we were having maybe a quick phone call that you had just taken a call from someone who had like been on a bike trip and broke down and needed to find a shop locally who took part in rides for repair.

Frank McMillan  32:20

Well, we’ve done that actually quite a bit. So I was probably talking to you about a young lady that bought a bike from Johnny velo out in Ohio. And this young lady and her best friend rode across country, literally went out to Oregon, and they wrote across country and it was really cute. We were getting calls from her dad, oh, my daughter’s out there, you know, you really can’t have her call us directly. You don’t have to translate. You know, it seems like all those calls came in at five or 6am on Sunday mornings, because she’s waking up, she needs your bike to make her miles that day. It was cute. I mean, we were able to fix your bike in Washington, we were able to fix it. In Oregon, we were able to fix her up in in Montana, in the middle of in the middle of you know, National Forest, she actually got a ride from the Ranger to the nearest bike shop. It was like the coolest thing.

Heather Mason  33:16

So she was taking advantage of her rides contract that she had signed up for and then finding the shops to go to based on that.

Frank McMillan  33:26

Just call us up and we’re asking, okay, what’s your issue? What’s going on? And we were calling shops, and going Hey, because remember, this is a time of COVID there were some shops that were backed up. 3456 whatever that time is we call them up say, Hey, we have this young lady, we really need you to get her in this morning. You know, if you could they get all excited? Oh, I have a daughter, you know. So sometimes, sometimes personal touch is a lot better than an app, you know, because an app you’re just going to look through and that type of thing personal touch by somebody that is in partnership with a dealer and looking out for the best interest of a consumer can be super cool.

Heather Mason  34:06

You know, that gives me goosebumps to hear. That’s that’s impeccable customer service, for sure. Frank, I’m gonna put you in the hot seat. So give me the lowdown. And I’m sure shops are like, okay, they’ve got step pricing. How am I going to make money? Like if a shop signs up to offer a program like rides, then where are we gonna make money off of it? Like it’s good for the consumer and good for the shop? I mean, how can it be good for everyone?

Frank McMillan  34:32

Yes. So so the way the way it works is I talked about frequencies to vary. So we’ve calculated how often people will get claims and what the average cost is. So here’s here’s how it works. For a shop. We know if this is offered to 100% of the people. Most of the shops offering right now are closing about a 3030 plus percent attachment rate. But there’s a rule in our business called the 20 3050 rule, right? We know if you offer to everybody two out of 10 people By plans on everything down, right, whether it’s their phone or car, you know, you name it their computer, they buy a plan. So offering it to 100% of the people, you’re going to get a 20% attachment rate, right? 30% of the people don’t like them, they’re like you, they don’t buy them, you know, you didn’t you don’t buy them. That’s probably why you didn’t offer of, I’m guessing you might buy him you might have on me on the hot seat, I put you right back on the hot seat. But the other 50% of the people buy him when somebody takes the time to explain and tells him the value of the program and that type of thing. So if you’re a retailer, do this math, if you close to 33% attach rate, or just call it a 30% pass rate. And the average plan is 50% profit, right. And the average plan is about 200 bucks, it’s simple math, but it comes down to you’re going to add about 6% revenue stream at a 30% attachment rate. Because the average value of the plan is about 20% of the value of the selling price, the products you sell, you’re going to add about 30 about 6% to the revenue stream at 50 points. That’s that’s really good. And the dealer, the NBDA dealer is not paying up front for this, right we we waive the signup fee for them the integration fee everything else because they’re part of the NVDA. So they they get the supplies, they get the training, they integrate into their system they offer to their consumers, they report their sales to us weekly, monthly nightly, what it depending upon the size, right? And they pay once a month, right? So they hold on to the revenue, they pass 50% on to us we pass part of that to the insurance company, right? So you’re asking, how does everybody make money? Well, we know a certain percentage of people are going to get me a certain percentage of the people are going to have accidents, or they’re going to have failures. And we know exactly what their percentages are. And the pricing is developed on that if we’re wrong, then the insurance company has to stand behind that they have to take the risk. If we’re right, then the amount of reserves sitting in there should go down to zero should be perfect, you know, other than their margin, right? If we’re too high, then there’s going to be something called excess reserves. And that will enable us to lower the price moving forward, it will be based upon data. So calculating any rates right are are based upon numbers and data. That’s it right. But you just watch it, you watch it earn out and you adjust it where needed. And everybody’s in good shape, the customer is going to be in good shape, because they’re insured, they meet all the regulations and all the states the retailer is in good shape. Because he made money, we saw that he’s going to get paid shop race because the insurance company is obligated to make sure that those guys get paid whether or not they run out of money.

Heather Mason  37:53

Well now now I feel a little bit I mean, listening to the data, right? I feel a little bit foolish that I didn’t consider this before for my for my retail environment. But sometimes Frank, it’s like, it’s like the rolling out something new rolling out a new program, like what I’m trying to do everything as it is, you know, as a small business owner. So do you help with that? Do you like I don’t even know, how do you interleave? If a shop wants to sign up? What are the next steps? Like? Do you help them with their hang tags for the bikes? Or is

Frank McMillan  38:22

Yeah, so we send the shop. So let’s talk about that. So that we send the shops, brochures, we’ll send them as many as they need, you know, generally speaking, we send about 250 per location to start, right. But if there’s something like crazy, we’ll send the bar we’ll send a blast. And if it’s a if it’s a big company will private label it, we’ll leave and tweak the program a little bit to meet their needs, their pricing needs, you know, their their sweet spots or their sales, right. But we’ll send them the brochures, we’ll send them hang tags, and we send them the counter cards, the counter cards are pretty cool. They just stand up and say just about anything that can go wrong with your bike is handled. So it’s visual aids that they can use to sell. Now on top of that we train them either on go to or face to face, right. And they get they’re entitled to face to face training, if they sell over 1000 bikes a year, which for some dealers, they’re sitting right on, right there selling 100 bikes a month to just under that. And we’ll do face to face training for those guys. If it’s smaller than that, then it becomes difficult for us to rationalize the visits, right, just from an ROI standpoint,

Heather Mason  38:30

virtually as far as these days. Right.

Frank McMillan  39:32

What’s that?

Heather Mason  39:33

I was just saying virtually we can do so much to like, you know, you could just get on a call.

Frank McMillan  39:38

Yeah, for sure. So So the biggest challenge that we seem to have from some of them is how do they put their their skews into their system. So there’s two primary systems out there that seem to be in use. One is the Send, right, those generic shoes are already in that system. They did that for us. They have a customized program that obviously They’re going to need to put those skews in the system if they’re on lightspeed, which seems to be the other one, same thing, right? So the ideas you need to load in your skews, the cost of those skews the retail, you want to sell those that we have suggested retail, the brochures that they can price it any way they want, right? And then they should put the description. Is this a two year? You know, with one maintenance? Is it a two year with three? maintenances per year? Right? Is it a three year with one? So that’s that’s the setup there setup is to get the skews in the system, so they can sell it and make some money? Yeah, and report those sales to us. These are what we sold. Here’s the bikes. We sold it on. That’s it. So that’s the biggest challenge for them not selling we’ll get trained up, we’ll get them trained up, we’ll get into supplies. They’re they’re in business, but some of them, you know, I’m like, this is like you said,

Heather Mason  40:49

Yeah, like, I split up my day, like priorities, right. And sometimes, like I tackle the easier things even if they’re not priority one, don’t tell anyone. But you know, like the major things, the big priorities, like the ones that are gonna make you money, those should be the ones that you sit down. And it sounds like if someone sits down in front of their POS and gets these skews, set up and get that done, they’ve tackled a big priority. It’s pretty easy to implement from what you’re saying,

Frank McMillan  41:13

Yeah, we just rolled one dealer. And he he was so funny. He goes, so do you have these excuse? I go, yeah, the skis, you’re on brochures, but let me send you the skews and the costs and everything, make it super serious. It’s on your agreement. But let me send you a really simple integratable one that’s already got product descriptions, everything else I sent it over to me, he goes, Oh, this is great. Because I sent it to him in Excel. And I set it to CSV. So he could he literally was able to upload it directly into a system and he was selling the next day.

Heather Mason  41:45

Yeah, I think Yeah.

Frank McMillan  41:47

He integrated on a Friday he was selling on a Saturday.

Heather Mason  41:50

I think sometimes in our brain, we make up these like, Oh my god, it’s gonna be so hard to get this going. But once we sit down and do it, it’s actually Oh, that’s not that bad. You know?

Frank McMillan  42:00

Yeah, it’s and for dealers, it can’t pull reports out of their system, right, which for some is more difficult than others. We even have a log on, where they can log on to the web, and manually enter and then there it is put in there in there, what’s installed, they put in the price point, it has a drop down select plan that you sold, give us the customer’s name information at the break information that automatically uploads into our system, we turn that into an invoice form. So if they don’t have the ability to pull it out of their system, push it in the file format. We’ve created a an online app for them that page, it’s super easy. It’s just a dealer log in and away they go.

Heather Mason  42:37

Yeah, that’s awesome. So and thank you for working so closely with the MBTA on rides, it’s the means a lot to us. So as I’m listening to you, and I’m also thinking, Okay, this, like Frank’s got so much everything I throw at you, you just like come back with an awesome answer. But you told me you presented at the bicycle Leadership Conference once What were you present on? How was that experience?

Frank McMillan  43:00

It was, it was customer service in house service contracts integrate into that for not only income, but customer retention. That’s what it was about. So I know Franco Hannon and some of the different people over there. I even raced in the sea otter three times. And instead of BLC, it was just a presentation, you see people get up there and digress. So but I do want to share siata with you so. So I consider myself in pretty good shape. And at that point, you know, even for an old dude 62 I’m active. And so at that point, I had just finished my first diamond and I was training for my second and I was feeling really, really good. And I’m like, Oh, I want to race cars cross country. So they have the pro division. And then they have you know, then they raid a 12345 and I’m thinking I’m a one I’m gonna you know, I’m in such great shape but, and I get out there in my age group. And I’m looking at these guys and their legs are like this. I didn’t realize they were like pros that just didn’t want to race in the pros, right? I should have been into a four or five. So I get out there and I take up and there’s a there’s a section at 20.2 bouncers section that where you go down the sand, and I snapped, I snapped my chain. So so first of all before before we started the Laguna Seca Speedway, if you’ve ever been out there, right, yeah, it’s incredible. So it’s all foggy in the morning, we take off and I am like falling behind and all these guys are disappearing into into the forest before I’m even off the racetrack. And I’m like, wow, these guys are really fast, you know, and I’m like going, so I ended up breaking my chain, fixing my chain breaking the chain again, towards the end. And I come in and the announcers like Well, what do we have here? Wow, an hour and 10 minutes behind the last finisher and his crew Frankly, I came in last place and they thought I had sagged out or disappeared or walked away and shame and said, I finished that thing. That was a really good experience. I went back and next year he came in last place again. And then the following year, I actually, you know, raised in the group, I should erased it, but that’s great. I can’t wait till we get that event back again.

Heather Mason  45:24

I was gonna say at least you like did it. And I love that you shared your story. It’s

Frank McMillan  45:29

pretty funny, I think.

Heather Mason  45:32

Oh my god. So 42 years of marriage, three kids amazing career, I know you’re well networked in the industry. Because, you know, everyone seems to know you. Talk to you. So any great tips you want to share that you have learned throughout the years?

Frank McMillan  45:47

Yeah, first of all, be nice. That’s those two words carry a long, long bond way, right? number two’s the sales thing that we learned, which is listen, if all you’re doing is present, you’re not listening. And you’re not thinking about your customers, or your family, or your friends, or your representative. So I can go on and on about that, right? And then participate, you know, be be part of this solution. If you got something to complain about, figure out why you need to complain about it, instead of being part of what fixes Sony, you know, I’m not, I’m not the smartest guy in the room all the time. But I think being raised in a family of seven kids and marrying into a family with six kids and, and just being around a lot of people all the time you realize there’s huge diversity within your own home. Right? There’s huge diversity within your own family. And if you embrace that, you’ll embrace the diversity when you walk out of your house, you’ll brace the diversity between dealers in Florida, Louisiana, New York, upstate New York, New York City, Wisconsin, Arizona, Southern Cal northern Cal, you talk about differences, you know, the choose to embrace differences in culture. And if you do that, I think you really get to enjoy life, you know, your fear level will just go away. You know, if you’re if you’re curious, and you enjoy being surprised you’re you enjoy learning things, you know, you don’t know about I think that’s it. So that’s for the dealers, just listen to your customers, you know, ask him some stuff, you know, maybe throw a personal question or two in there. They want to be important. If you ask questions, people feel kind of important, you know, I should just talk about them. So I don’t know. I don’t have that much. From from a management standpoint, treat your employees like they are fellow business people respect that. Don’t Don’t assume they know everything, you know, right? You can’t take 40 something years in business, hire a new kid and expect them to just get it by osmosis. So to me, our job as adults are our job as as business owners is to help our young people see an opportunity in an industry and maybe look up to us a little bit that this is you can combine fun with business right that there’s there’s things to learn, you know, what, what is inventory turn? What does it mean? backorder? What does it mean? How long to come in? How do I plan my store? What’s the right product mix? Why do I have this product mix? You know, how do we reach out to our customers and advertise and then talk to your young kids ask them how they reach their fellow people right? How do we bring new people into the industry I’m I’m fearful that the bike industry will age out like I saw the consumer electronics industry aged out, you know, it’s like what happened to the service, the servicers, the guys that would work on appliances, you know, what happened, you know, we need to make sure that the NBDA the dealers need to make sure that youth is brought into this business I love what a lot of these different companies do and organizations do to teach young people about the industry go out and learn how to be a tech and this and that we can do that internally in the stores those of us that need the text and need the service we’re happy to write checks and get involved with these dot orgs and do what we need to do but as business owners think about that, who’s going to follow your story you know, I don’t know what your exit strategy or whatever it is, but it may be just selling it to the kids that you’re teaching to be wonderful business owner so that’s probably way too long to answer you know, there’s so much to go on with

Heather Mason  49:36

Frank again, I think your insight is spot on there and a focus of ours at the MBA has been to really try to reach the individuals within the shop and make them members to so we can better educate the individuals you know what you say succession I know that a lot of employers need to look at their employees as potentials to take over and further this business and industries. But you know, all of your background I we haven’t even talked About karma, the elliptical machine that you so you were involved in creating this machine and you brought it to interbike to introduce it correct? Is that what I remember? You told me. But that gives you such a unique perspective from this side too, because you kind of really bet on every facet of the bicycle like industry and this customer service experience, right? Would you say?

Frank McMillan  50:21

Yeah, I think that the manufacturing side is too much overlooked by people how intense it is. And so, me and two of my brothers and one of our best friends are all avid skiers, I belong to a group of guys called the rods, which are the radical old dudes, and we, we ride together and we ski together. And during certain months, if you’re not skiing, you still want to stay in shape. And the elliptical machine in the clubs is a great way to do that. And we’re like, That’s stupid. We live in California, why don’t we got to go to a club. So we we invented karva, which was a race, elliptical machine, you know, two wheels on the front one on the back, we had different gearing, we electrified it. And in order to do that, develop the right steering mechanism, which we ended up patenting, we had to spend a lot of time a lot of blueprinting, one of my brother’s a CNC engineer, he’s like, brilliant, Ted, one of our priorities is brilliant. And we started to design a sand course, my job was to deal with the warranty and the regulations and the legal stuff, and all that kind of stuff. But we spent a lot of time once we developed the product that we like, we spent a lot of time in Taiwan, we spent a lot of time in China, meeting with different manufacturers to have it actually made. So we understand the bomb process. I mean, starting with nothing, creating stuff out of just metal, taking it into the different types of alloys and different stuff, we wanted to use, developing it, patenting it, bringing it over sending the designs going over and looking at the first design selecting the manufacturer we want putting the orders in, right the big checks, having that stuff load up into the containers coming across unloading it ourselves

Heather Mason  52:01

so much going on.

Frank McMillan  52:04

It was like a great experience in selling the heck out of you know, putting up a website, and so on and so on plans, of course, extended service plans. And that was a great experience. So when we, when we talk to the guys in the shops, we talk about it from Yeah, I get it, I understand why can I understand why you may need to substitute that piece for that case, just goes to take care of it. And we also understand what they’re going through right now. You know, the supply chain is nuts. You know, we have this big program, big program in the firearms industry. And people shoot the farms, they need to maintain them, right, they need to do field stripping, cleaning. Well, you talk about a decimation to an industry you walk into this partner of ours, this one company sells hundreds of 1000s I mean, hundreds of 1000s of guns, right? And they’re their shelves are literally 1/10 the inventory right now of what they’ve had. I mean, it’s starting to come back but they’re all using the same metal they’re using the same stuff that you know, a lot of bikes are, you know, so So what’s the moral story sell high end bikes, so carbon fiber

Heather Mason  53:13

service plans, right? If we don’t have enough product, this is another way to make revenue, right? So

Frank McMillan  53:17

exactly, I mean, add add to that, and then and then people can take they can afford to take care of the bikes that fail. You’ll keep that customer till they’re ready to buy a new bike and that’s a beautiful thing.

Heather Mason  53:28

Okay, Frank, last last question for the hot seat today. Give listeners retailers who are listening one action item for today.

Frank McMillan  53:40

Complete the merge of our brand new micro Are you talking about for them or for me?

Heather Mason  53:48

Don’t Give them yours.

Frank McMillan  53:51

For all of you guys. Sorry about that. Your action item today is to give us a call. And in sign up for rides. You know, do it give us a call ask questions. I can even give you that phone number, but I bet you Heather’s gonna give it to you so well,

Heather Mason  54:06

Frank, I was gonna tell people to learn more about rides on the MBTA website. But why don’t you go ahead and give the phone number I don’t know it.

Frank McMillan  54:15

It’s it’s 8664 rides and rides is spelled ri D e s on the phone number so we can make it seven numbers. That’s pretty easy. Remember 18664 rides, you do that? It’s gonna come into us? We’ll answer it. You may even talk to me as I say

Heather Mason  54:35

Can they talk to you?

Frank McMillan  54:37

Yeah, you there’s a good chance you’ll talk to me it’s it goes into you know the systems it goes into your system and you hit one you say you know I kind of baloney But well, we’ll take care of you real quick.

Heather Mason  54:48

Thank you have been great. Thank you for sharing about yourself and your business and for your support of the MBA and our retailers for supporting me. I mean, these past couple of weeks. We’ve definitely been in Touch quite often. So thank you.

Frank McMillan  55:01

Well, thank you. Yeah.

Heather Mason  55:04

It’s not the end. But that is it. Thank you for listening today. I invite you to connect with me and come on bicycle retail radio and share your story with our listeners. Lots of love for our industry. There’s lots of great webinars and member networking meetings coming up. If you’d like to support the show, don’t forget to subscribe to the show on Spotify or Apple podcasts, share your favorite episodes, with your friends and on social media. And thank you for listening. See you back here soon. And with this we go.

NBDA   55:34

This has been bicycle retail radio by the National bicycle Dealers Association. For more information on membership, and member benefits, join us at nbda.com

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The NBDA has been here since 1946, representing and empowering specialty bicycle dealers in the United States through education, communications, research, advocacy, member discount programs, and promotional opportunities. As shops are facing never-before-seen circumstances, these resources offer a lifeline. Together, we will weather this. We at the NBDA will not waver in our commitment to serving our members even during this challenging time—but we need your support.

Now is the time to become a member as we join together to make one another stronger. Whether you’re a retailer or an industry partner, your membership in the NBDA is one of the best investments you’ll make this year. 

Learn more about the benefits of being a member and join now.

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