People, Product, Capital – The Overly Simple Answer
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People, Product, Capital – The Overly Simple Answer
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This episode’s guest is Scott Montgomery, CEO and Founder of Crank Tank – a company offering CEO consulting, marketing, and Omni Channel strategy to brands and businesses. Scott’s impressive background in managing businesses ranges from the origins of Cannondale Europe to the reintroduction of Scott bikes to the US market. Scott has played a pivotal role in guiding well-known brands to excellence. As CEO of Club Ride Apparel, he took the company to next level operations achieving 13.5 times sales growth. Additional CEO roles with Nutcase and Reynolds Cycling make Scott a global leader whose input and guidance you don’t want to miss.
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People, Product, Capital – The Overly Simple Answer
SUMMARY KEYWORDS
retailers, bike, brands, scott, supplier, industry, bicycle, people, bike shop, sales, ride, company, thinking, email, working, mountain bike, digital marketing, market, dtc, buy
SPEAKERS
Heather Mason, NBDA , Scott Montgomery
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 NBA. This is President Heather Mason. If you’re a first time listener, be sure to check out the previous episodes. Please do us a favor and leave a review that helps members of our industry find our podcast. This podcast is designed specifically for the bicycle industry dedicated to strengthening our retailers and cycling community. Today’s guest is Scott McHenry, CEO and founder of crank tank, a company offering SEO consulting, marketing and omni channel strategy to brands and businesses. His specialty is managing businesses and Scott has an impressive history in the bicycle industry. From the origins of Cannondale Europe to the reintroduction of Scott bikes to the US market, Scott has played a pivotal role in guiding well known brands to excellence. as CEO of club ride apparel, he took the company to next level operations, achieving 13.5 times sales growth. Additional CEO roles with nutcase and Reynold cycling, make Scott a global leader. I’m thankful to call him a friend and look forward to learning from him today. So without further ado, let’s get into today’s episode. Welcome Scott to bicycle retail radio. How are you?
Scott Montgomery 01:31
Great. Thanks for having me, Heather.
Heather Mason 01:33
Oh, my pleasure. I just back from Seattle, right? Yeah, we
Scott Montgomery 01:36
had such a good time. It was such an uplifting, kind of week. And there was so many highlights. The weather was perfect, like 60 degree days. There were so many fresh faces I’ve felt from going there for I don’t know how many years, they were just a lot of young, particularly more ethnicity more, I would call it 15 to 30. Few less moms in strollers, because that makes sense. Probably school and and some other conflicts. But overall, what is a great event and I think all the brands that attended were super happy. And then some of the brands that didn’t attend, I think they would felt sorry that they hadn’t but they will surely be contacting Frank and no sales crew, Sara, for the spring. So if you if you did miss out, don’t wait call Sarah or the lifetime crew right away, because it’s going to be 100% booked out by spring, I’m sure.
Heather Mason 02:39
Yeah, I’m so excited. You know, we had best intentions to go and at the last minute with, you know, conflicting shows, and lots lots happening here at MBTI. decided not to but looking at all the photos and hearing the reports. I’m looking forward to April, it’s the end of my lifetime. Now it just, you know, a lot of energy going into that show. We need it. We need it.
Scott Montgomery 02:59
We do. And yeah, it’s gonna be great for the spring. And hopefully we’ll have good weather. But usually that’s been taken care of itself over the last years with the kind of mid April date.
Heather Mason 03:12
You know, so we’ve been exchanging emails for the past couple months, and you know, all of a sudden, it just happened that we could get together with our calendars and make this conversation happen today. And with the interesting times in the industry, I’m really looking forward to your insight. But before we dive into that, you know, I did your bio, I mean such an impressive background and you’ve brought so much to our industry. For our listeners who might not you know, know about you or even the path to now Could you give us a little bit about, you know, how you’ve just grown through the industry over the years? Well, you’re
Scott Montgomery 03:47
overly kind but was pretty lucky that when I was 10 years old, my father started Cannondale, so that’s probably every for person like myself who loved riding bikes at a young age was kind of a dream come true, though. Obviously, Cannondale in the early stages was more about seat bags and, and things like that than it was bicycles. But yeah, I was just very lucky to have that happen. And my father was the kind of father that really put me to work. I started at $1 an hour, and that’s laughable. But it was kind of to keep me busy over holidays and vacations. And I was just so lucky to grow up in that environment.
Heather Mason 04:30
So you move to highlights you move to Europe, and then Japan for kennedale. I mean, were you full on at that point, like was this were you fully vested in the growth and success of the company?
Scott Montgomery 04:42
Yeah, I had finished college and I was about to sign up for Business School, actually. And my father was like, Scott, don’t spend your time doing that. I’ll give you an MBA in the real world. And I said, Okay, and he did that he in the first year and a half. I was a kid. I worked I think in every department of the company, including r&d, including in the warehouse, I did a lot of I was, you know, unloaded trucks and shipped boxes. I worked on the, on the production floor on the assembly line, all those kinds of things. So literally, it was one night and my father called me and as he liked to do he, he was a guy that liked to work into late into the night and that was if you want to get something accomplished with him, he did much better to do it at six or seven at night than he did at eight or nine. And he said, Hey, we’re thinking about starting Cannondale Europe, would you have an interesting going and I was like, no problem. You know, it was a little disruptive to find somebody to rent my house, fortunately, ended a very nice relationship with an young woman, but I was off in literally two weeks with a credit card and, and a cheap suit. So
Heather Mason 06:00
I can’t even imagine how exciting that must have been. And I think when I first met you, it was at interbike many years and but you were with club right at the time. And I know you spent three years with the brand, drastically increasing sales, but and I know Cannondale did apparel, but this was, you know, coming from bikes were their unique challenges and your role at Club ride.
Scott Montgomery 06:24
Well, you know, I actually had spent quite a bit of time in the apparel realm at Cannondale, so is pretty familiar with it. We had a very strong clothing designer at that time that I was lucky enough to hire. And then Patty Nielsen, who’s had a strong history of designing apparel, got promoted. And we did a good, really good in that in that segment of the market. So it was a really good experience for me. And we did see souls, which nobody remember, but we’re like, you know, mountain biking shoes. And so I had a lot of a lot of understanding with it. And my curling or who had founded the company kind of had this Western take, which was, of course, very appropriate of kind of the plaid shirt. And we were fortunate to have some really good funding from a local, you know, kind of angel investor. So yeah, it was a lot of fun. I enjoyed it. We did grow a lot it apparel is a tough business. So as a lot of people will tell you.
Heather Mason 07:29
I’m a huge fan of club ride. They actually did our MBA shirts, and we have some really cool shirts we’ve been wearing to all the shows. I sounds like you have just an entrepreneurial spirit. Like Is this something that? Did you run open up bike shop? Like I would think that would be like a natural thing, right?
Scott Montgomery 07:44
Yeah, sure did. The it’s kind of a funny one. So I lived in a small apartment when we were young. Our family was very modest at that point. And I don’t know why I remember this. But I know the rent was $113 a month. And there was a two story apartments and they were brick and they had garages in the back. And somewhere along the way, some person wasn’t using their garage for whatever reason. So we just come a deer that and painted the front of the garage door with bike shop on it. And we just started doing repairs. And I was like can and I had some older kids that I hung around with and we’d fixed bikes in the neighborhood. So that isn’t I would call a real bike shop. But that was my bike shop experience.
Heather Mason 08:34
I love that. It’s like It’s like how Eric started, right?
Scott Montgomery 08:37
Yeah, it is. And his story is a lot more successful. I also worked at bike shops to like I spent a summer at young shop in Nantucket. Working the floor there. So yeah, I have a lot of good memories of working in bike stores.
Heather Mason 08:51
So it’s so great to have the vision of the industry from multiple sides. It really allows you to just you know, approach everything with more knowledge. But let’s talk about cranking the website is crank tank dotnet tell us more about the consulting business and how that started.
Scott Montgomery 09:10
Yeah, well, I’m one on my first started at my kind of my first job was CEO of nutcase, which kind of came along was a great opportunity. But I wanted to make sure that I was building a business that also I could own because after working a club ride and where I was a minority shareholder, and Scott, where I was a minority shareholder. I wanted to be in a situation where we didn’t have an outside owner. So anyway, I I got to work with Michael Morrow at at nutcase and I would go actually back and forth to Portland every week on week off and then in the week that I wasn’t In Portland, about half of the time I had that wasn’t committed to wood to keep the cost of my services lower for him. And that’s when we started adding additional product segments, when we really started concentrating on the marketing that when Adrian came into the business, as the business partner, we really started focusing on and then I was lucky enough in in both cases, when I was both at with Reynolds, which I did the same thing basically, both times we really got digital marketing going at both companies and used that in both companies to really case study. How shifting from maybe traditional marketing of a lot of print and a lot of teams, to much more digital marketing with a lot more email, Google and Facebook type advertising, still doing direct to publisher or, or digital ads, but really moving towards a digital centric. And so that made a big difference. And then as the company has grown, and we’re at about 15 people now 12 full time and we use three or four subcontractors for part time, which allows us to handle some additional growth. We’ve gotten more and more accustomed to really in focused on the digital marketing, and then I still do a fair amount of industry work. As you know, there’s a lot of companies that have recently been sold, I don’t know if I can remember the names of them. And I’m joking. Just leave it at that because I’ve signed a lot of NDA A’s in my life. But so there’s been with the bike and mobility industry taking off the there’s a lot of private equity interest in our space right now, as many people know. And that’s generated a fair amount of advisory work, which is super interesting as well.
Heather Mason 11:54
Yeah, I had, you know, this boom has definitely sparked a lot of interest in our industry. And, you know, as President of the MBDA, people reach out to me asking for consulting. So I can only imagine how busy but the digital landscape is something that’s changing so rapidly. Scott, are you working with brands and retailers or just brands?
Scott Montgomery 12:15
Yeah, we, the majority of our clients are brands, but we have three retail partnerships right now. So we do work with retailers, they tend to be more scaled, or larger, just because it’s probably hard to activate some of the digital marketing skills without a higher sales volume. But yeah, we like working with retailers. But I wouldn’t say it’s our focus, if they reach out to us, we certainly talked to him, but our the majority of our clients are the brands themselves.
Heather Mason 12:49
I would imagine that, you know, getting on a phone call with you, there’s just so much knowledge that you have, it’s probably it’s probably eye opening. And I have a lot of retailers who do reach out and say, Can you tell me some brands or some other retailers who are doing, you know, omni channel really well? And you know, there’s a few, but it’s definitely a growing segment. You’re thinking about the current state of the industry, the boom? I mean, what are your thoughts, Scott? Like? What are you seeing?
Scott Montgomery 13:16
Well, obviously, it’s been a an amazing time. And I think, you know, we’ve seen record growth and record profitability out of 2020. And, and most of that is continued for 2021. Though there have been some, I would say, maybe third tier layer of retailers who haven’t been able to get enough product, which is certainly been a big challenge for them. That we all are obviously very aware of. But yeah, it’s it’s been an amazing time transformative. I think the thing we always hope that everybody’s done with this gift in time is really try to put aside money and save some money for the future. Because you never know, and I don’t think this on, you know, uncontrolled growth will be sustainable, probably into the future.
Heather Mason 14:09
I feel like we had a nice opportunity for a really nice, almost reset button, you know, where we could come out cash positive. But the conversations with retailers right now are, you know, how long will this keep going on, which we’re MBDA is trying to help with a consumer research report that will be coming out in November. Great. And retailers are thinking strategy and looking at that backorder less than the number of bikes they have coming in. If you are a retailer Scott, where would you be focused right now?
Scott Montgomery 14:39
Well, certainly, inventory management is really really important. I was actually on with a retailer first thing this morning and I was cautioning them to really watch because when the NFP kind of recalled pre COVID retailers really weren’t doing pre seasons to any significant number, they were making a commitment usually to one, two or three brands. But they weren’t, you know, doing these massive pre seasons. And then when COVID got rolling, obviously, it really required that because the factories needed the commitment and the suppliers were pushing for it. So what I saw is a lot of retailers did significant increases and tended to add more brands kind of it’s two ways to protect them on their, on their, let’s say, their future availability. But I am seeing now is we’re seeing some of the, I would say a slight return to normal, I wouldn’t call it I don’t think it’s going to drop to the 2019 level, but I don’t know if it will be sustainable with the 2020 level either. So let’s call it a split splitting the difference in nice growth, I think it’s really important for retailers to go back to their suppliers if and really track sell through month over month. And if sell through is staying strong, keep the orders coming. But if sell through has dropped, they need to ask first of all for terms again, I think that’s a an imperative. And the suppliers have the finances to do that. Do they really need to watch cash flow because I just visited a retailer literally coming back from sea otter, and he’d paid for for bikes that had come in in September that he had wanted in April. And you can’t, especially in a mountain region, you can’t be paying cash for bikes that are gonna sit on the floor all winter and not be sold to spring. So just I think that’s my biggest advice, manage inventory and manage cash flow. Because if it does slow, some you don’t want to be all of a sudden cash poor.
Heather Mason 16:51
Yeah, that’s, that’s fantastic advice. And, you know, definitely what we’re hearing from conversations with retailers. You know, I would say from your various roles throughout your career, I’m sure you’ve had a lot of relationship building, you know, working on the supply side and working with retailers. Any tips for retailers on, let’s say, handling those relationships with maybe the top three bikes suppliers? Or, you know, how do we ask for, you know, how do we ask for what we need? Or what’s any, any Sage wisdom for us?
Scott Montgomery 17:22
Well, I think you have to kind of take these pre seasons and, and kind of view them as a forecast. And I know there are some brands that have really strict dealer orders about how much you can cancel, and things like that, I think it’s just really important to go back to that supplier, especially when it’s maybe 50% or more of your business, or maybe you know, what usually is the case, maybe 60% for your top and maybe 20% for your second and then maybe you’ve spread around another 20% amongst two or three kind of backup brands. And really be honest with them. And, and, and don’t hesitate to have the discussion of if the product arrived late, please, you must give us extended terms. And then if I really have over ordered for 2022 and maybe even kind of a crazy forecast order for 2023 that you got to go back to the 2022 orders and do some trimming. If in fact your sell through is not sustainable. Because otherwise you’re just going to put yourself in a in a terrible cash bind come next spring.
Heather Mason 18:36
Yeah. And you know, retailers often ask me or they’ll say, I asked my rep or I told my Rep. I mean, are we talking are these conversations with the rep Scott or do you advise going threat to the brand or maybe your credit you know, financial person or who should who should retailers be talking to when they need to make some maybe adjustments or asked for some liberties?
Scott Montgomery 18:59
That’s a great question. I would tend to say all of the above. I think it’s always important to start with the rep because I think the repple is your front lines and you don’t want to have that person feel like they were sidestepped so make it aware but then I think having a discussion with the credit manager is also a really good idea because oftentimes they can help out I mean, there’s clearly going to be some situations where one markets different than another either because of the seasonality. We live in an a ski town market so you know a bike just isn’t sellable. Oftentimes in October November that in a you know a phoenix or Dallas or Orlando is still very great riding season so I would be talking also with credit and then I would kick it upstairs to the regional manager or the VP of sales. Get as many people involved as you can so that you you have a favorite verbal outcome, because the key here is is, you know, the next five years, nobody is looking at a retailer from a one year two year relationship, if you’re thinking a minimum of five years, if not 10 years.
Heather Mason 20:14
And the word relationship, right, I’m thinking, you know, we’ve been pushing unity, and we’ve been pushing like the ecosystem of the industry and working together, smarter, to become stronger. So just thinking of how a retailer could stand out to a supplier, and you’ve worked with so many brands, is there a way that a retailer could really be a great retailer, you know, making an impression that a supplier is going to talk about in a positive way?
Scott Montgomery 20:43
That’s a tough question. Because there’s so many ways. I mean, I think every retailer wants to try to differentiate themselves. But I think, certainly right now, you have to get strong at managing e bikes, and E bike repairs. That’s a great way to stand out and as a retailer, and believe it or not another way that I would, which isn’t totally answering your question, but one that comes to mind that I learned from Rob Santa who’s a local retailer that here and catch him. And what he has is a ski network of dealers, one in Vermont. So we’re in Idaho. You know, most people don’t know where Idaho is, it’s next Iowa or something like that. But I’m bad joke. But anyway, you know, we’re between Salt Lake and in Portland, let’s say, but, so he would have a partner retailer in Vermont, he’d have a partner retailer in Colorado, and he’d have a partner retailer in Reno or Tahoe or something like that. And then if one of the area’s had a snow drought, they would work amongst each other to share inventory. So that hopefully, the, you know, if it happens to be a year where New England is just getting hammered, and the West isn’t, they would move inventory around amongst each other. And that would be something I would really encourage retailers to do is to find some markets that are similar to theirs, but maybe with a little bit different mix. And if you find yourself in a situation where you’ve done everything you can do to alter your inventory supply with your key supplier and you still find you have an overage or a shortage to try to just have that shortlist of retailers that you could work together with because then you could more effectively move the inventory and hopefully sell it at full price. Because we all know that the discounting is really detrimental to the bottom line.
Heather Mason 22:54
Yeah, no, I love that idea. That’s fantastic advice. Now I’m thinking about snow to think about scaling. is Scott earlier in our conversation. He touched a little bit on retailers bringing in new brands, you know, just making sure that that they had they had inventory during the boom. Thinking about adding brands or maybe cutting back, we don’t want too many skews. Do you feel like there’s a better choice there for retailers? You know, should we keep bringing in brands? Or should we try to limit it to certain skews?
Scott Montgomery 23:28
Can that’s just a such a, you know, an unknown question right now, like, you know, I know, there’s some key suppliers that, for example, do a lot of their production in Vietnam, because it has much more favorable tariff situation than, say, China. So but according to some different sources I have, you know, there, Vietnam has been shut down for quite a few days due to COVID issues. So I think it’s really hard to, to play, you know, to know which one, which brand is going to get the inventory. But if I had to guess I think what is probably going to happen is at the end of the day, you’re going to go back to your perceived closest partner, usually one of the big four. And that’s going to be your go to brand that you support the most and you’re probably going to cut the mid or maybe that third or fourth or fifth brand you brought in during COVID will feel more the pain. But hopefully you try to be fair. And you know, treat everybody is on a level playing field if you value them for the long term, but it’s so hard to know. Because of this, the volatility of everything from the logistics, you know, containers were $25,000 in the last few months that were 2500 pre COVID. And that, of course is you know, been something we’re all digesting In the form of higher retail prices for the foreseeable future?
Heather Mason 25:03
Yeah, I was having a couple of conversations at Capitol West just about, you know, the added free expenses and how we deal with it. And it’s, it’s challenging. In on the same side, we have the threat of direct to consumer sales, you know, retailers are really struggling with this. And we’re trying to remain positive about the role that the bicycle retailer does have. And I think OFF AIR earlier, you and I were talking a little bit about the service departments, and there are benefits. Can you expand on that a little bit?
Scott Montgomery 25:41
Yeah, well, I think that bikes will not reach the level of direct consumer, probably ever that say, shoes and helmets, and particularly items that are easy to ship and very high and Skids, you know, helmets are always a challenging one, because they, you have to have the right size, and then you got colors, and then it’s up or downhill or is it for road riding. So, you know, with those kinds of areas, I think we foresee that by 2030, there could be up to 50% of those items of their total sales transact DTC, and my definition of DTC would be both other companies webstore, the, the retailer’s, webstore, and the Amazon. So we know it’s going to keep growing. Some of the research I trip track says by 2025, it will have grown to around 25% of the total market. So that’s going to be big challenges. And I think that’s why we’re obviously seeing shopping malls, for example, really take a lot of pain that fortunately, has sidestepped our industry. But I think it’s really important to turn the service department into a revenue department and as brace service and in charge for it. And I would even go to a two tiered service rate. If it’s my primary, or one of my four or five brands, and you bought the bike for me, I might have a service rate of x. And if somebody is walking in with a, an E bike from a non brand, and now I’m going to have to service it to me, that’s where that that Labor Rate really needs to go up, because you’re probably gonna have to review the manuals, you might have to set an account up with them, there’s going to be extra steps. So I think it’s very fair. But I would discourage Okay, you can’t, with so many brands being sold due to see can’t work on every battery and motor system out there. But I think I would embrace them because I see two things. And that was part of the conversation I had with a retailer this morning, is first of all, a lot of those people will probably be sorry, they bought the $1,000 call it starter e bike that are you know, been sold to some of these, call it five to 6 million new participants that were lucky enough to walk into our, our stores and into the market over the last year and a half. So if you can really embrace that person, maybe get them rolling again, on their, whatever, e bike, and then you have that opportunity to come back and say, well, let’s go with a Bosch or Shimano steps from my primary brand. And here’s why that’s going to be a much better experience for you. So I think there’s a I think you’ve got to really build up service departments. And if I had to make one other guess, I would think that the style it almost reminds me of what Tesla’s doing. You know, they don’t have really nice dealerships on Madison Avenue for the most part Yes, they do have some beautiful mall stores, but they’re not expanding, those are probably cutting them back. But they’re tending to just go into more utilitarian type spaces. And then they have good service, but they don’t worry about a fancy showroom and and, you know, on the main street and so I would tend to think of maybe downsizing my retail spot when my lease comes up because there’s a pretty good chance some of your accessories and apparel sales might go down and increasing the service department and then definitely having options for delivery options for pickup and options for more service but at a very favorable to the retailer rate because yes, you’re going to have to pay more and, and you know, sending somebody on a 20 minute drive to pick up somebody spiked to service it. I mean, you’ve got to build for that.
Heather Mason 29:59
Yeah, well Talking about expanding expanding the service center expanding your fit services that you offer. There’s a lot of opportunities. I love that you wrap it right you must mountain road.
Scott Montgomery 30:14
I do at all I have way too many bikes in my garage, we have a, we have a three car garage. And I think between my wife and I and don’t even talk to me when our kids are home for the summer, but I know we have at least 10 bikes. So I think the only thing that I’m not doing very much of anymore is road biking. And it’s just a we have amazing gravel roads. I have a bike path that literally I can jump on leaving my office and ride 11 miles home. So that’s perfect for E commuting. And then I have a mountain bike, acoustic as I like to say. And of course I’m a mountain bike, which has a lot more travel for doing IE mountain biking. So yeah, a lot of bikes in the household and I definitely love riding.
Heather Mason 31:06
I definitely agree with you my road bike has not seen as much pavement I have my gravel bike and I’ve been so I haven’t gotten into the E bike market I have I literally when I was with Bianchi rode one of our he rode bikes, you know, through a parking lot on a demo. But I mean, what are you thinking about this growth in the E bike market? I mean, you you have an E bike so
Scott Montgomery 31:27
yeah, I actually have two right now. Yes, one one for mom and one for commuting. Well, you know, it’s it’s been interesting because I’ve kind of been on both sides of this. So if you go back to that kind of 8687 prehistoric years, I was part of the bringing the mountain bike boom from call at West to East. When I started Cannondale Europe and I can remember standing with the Dutch banker and he was like, we’re Dutch. You don’t know anything about bikes and he was right. We sold a lot of mountain bikes to Europeans before the European brands jumped on board. And then of course the same thing went the other direction with the Rode bike boom around our love him or hate him Lance Armstrong, which really grew the market and of course we did that with Seiko early on and that was huge benefit to Cannondale. So this time I think really clearly the momentum is in Europe and now we’re playing catch up I mean, certain markets in Europe are already at 70 or 80% of revenue is coming from a bike related so personally I think it will reach the same level in the United States it’s going to be slightly different I think we’re gonna obviously have more e mountain bikes for sport than we’re ever going to have commuter bikes and you know if you’re lucky enough to live in a city like ours where it’s very commuter friendly then we’re a Portland Wow. When I was running that case, what a great city to live in and commute. I never I never had a car there I did. I did do a car to go a few two times when I really needed but I had to literally rain snow, sleet, I rode my bike and it was just an inexpensive steel beater three speed but it was perfect and never got stolen and commuted. So anyway, I’m getting off course. The reality is I think the E bikes are going to become the same situation I think we will get to not have the units but of the revenue, I think we will get to the 70% range. Is it going to happen between now and 2030? Or now and 28? I don’t know or 25 but it’s definitely coming so I think it’s super important to be embrace it and i think you know there was a time in Utah even I think talked about this where there were some people that were like, Oh, he bikes, you can turn your back on a bikes anymore, and there’s not even a discussion Matter of fact, at sea otter I didn’t have one conversation that was negative around me bikes. And there were tons of mud sea otter, it’s just a non discussion. It’s like, what do you like to do? And I think the only other thing that I love so much about the bike is and I’m an example of it is just another bike in your garage because I don’t ride my acoustic mountain bike any less than I used to. I think you just ride more because coming back to your question, it’s so great. What if there’s nothing better than writing your email or your E commuting bike home? It’s better than two beers I can promise you that you just put you in a good mood for the evening.
Heather Mason 34:41
Yeah, I mean, I never like so we’re even seeing like pro racers using e bikes for like their their easy day or they’re, you know, where they they don’t want to go hard but they still want to get the miles in. You know, I saw gentlemen on the trails the other morning, just like I had a hard ride yesterday. So today I’m on this bike. It’s just another Bike now it’s exciting times in the bicycle industry because e bikes are expanding the category, you know, to get expand the word cyclist, even to what that means. But I feel some retailers have this like love and hate Scott. You know, the margins maybe aren’t as good battery safety, you know, we’re really trying to navigate recycling and battery safety, and then just sort of financial, you know, to bring in five to 10 ebikes for the net 30 day dating, it makes it it’s hard. any guidance that you could offer on managing ebike planning and sales for retailers?
Scott Montgomery 35:40
Well, the battery safety issue is certainly one we’re all going to grapple with. You know, we’re seeing it in the car side, too, you know that. If you get a car fire with a Tesla, don’t show up with a 300 gallon pumper and expect to put it out, you almost have to just let it burn to the ground and and watch it for. Yeah, so I think we’re going to, we’re going to need to need, we’re going to have legislation around e bikes. And I think certainly, I think if there’s one thing scary is the idea of just so many of these, let’s say inexpensive ebikes that are coming to the market that probably will turn over sooner than later. But I I think we have to just recognize that there’s going to be any bike for every category. And I don’t know whether it’s gravel mountain road. And in many ways it will expand the market, particularly I think it’s a couple’s or it’s I now can ride with my son, he’s on an acoustic I can ride he I can keep up with him when he’s 22. And faster. Or, you know, we can both write acoustic and just accept the fact somewhere along the way is going to drop me. So I don’t know if I totally answered this question, because it’s a tricky one. But I suffice to say, I think we have to, you have to lean on your your suppliers to give you daily non ebikes. That is a given. And I think we don’t like this trend that we’re seeing right now from the supplier side of shortening terms. I don’t think it’s necessary. It’s not like the the I mean, we have now nine, essentially billion dollar companies in the industry if not two, or two and a half billion. So those companies all have the bank financing, and all have the balance sheets to support dating, and so to over, over suck up the cash out of the retailers. I just don’t think it’s fair. And I don’t think it’s in the best interest of the supplier, nor the retailer. So I guess that would be my biggest comment is you just can’t do that you need to end but don’t wait for the bill to come due and then pass 30 to have the discussion. Have the discussion with the supplier upfront. Oh, you have 50 bikes ready for me on October 20? No problem, but I’ll take them but you have to give me that April, May June tight dating. You can’t ship them to me net 30 even though if I say no, you’ll ship them to somebody else. It’s just not the right. The right thing to do.
Heather Mason 38:24
That’s fantastic advice. Yeah, I was working with MPD just looking at some some data when it came to E bike sales and it’s astonishing the growth and I have to tell you, Scott, maybe two or three shops a week new e bike shops opening. Have you noticed that to you by specific? Yeah. Okay, just thinking why have you in the hot seat here. So many topics just come up all the time with our retailers a lot right now on employees, wages, employee retention, and training. Can you speak on any any of that, Scott?
Scott Montgomery 39:05
Yeah, well, I think it’s really the same. And my father taught me many moons ago. You know, the three keys to success, people product and capital, and you need all three and if you have all three, it’s just down to hard work. So I think really people is where it all starts and you have to invest in your people in multi facets one, pay them more. Yes. That’s what’s happening. And you need to be generous with perks, whether it’s employee purchase on the brands that you carry, or we offer in crank tank iski paths that you can go take your lunch and go do three runs Yes, very lucky when you’re literally a half a mile so you can actually do a three run lunch and be back in your desk or office. In an hour, you know, we have a Sprinter van that we share that we use for going to events like sea otter, but we also let employees use it. So you know, just trying to get creative. And I think as we all know, with Gen Z, they have been nicely spoiled. They’ve never lived through a recession. they’ve, they’ve had of, you know, unlike some other generations where they in 2008, not a fun time to be looking for a job out of college when unemployment was massive. So I think you just got to be really aggressive and competitive to hold on people. And then the only other thing we’re doing a lot of is trying to make training, almost a weekly mentoree. Setting aside an hour, at the very least, if not two hours, to just study. And in our case that’s getting better at email marketing are getting better at analyzing row ads in Google and Facebook and things like that. But you have to invest in them. So they have an opportunity to grow with your company, but also it keeps them invigorated and challenged, and so they can do their job. Well, nothing is static anymore. As we both know, whether it’s trying to figure out a new Bosch system. It’s different than the one that came in three weeks ago, because it’s a 22 model and you’ve been working on the 21 since who knows when so yeah, definitely investing in in getting as creative as you can to ask people what they want and then really listen to them to keep them retained.
Heather Mason 41:45
Some that’s an amazing benefits that you offer your employees I love that the ski with lunchtime ski fabulous Yeah, I was gonna ask you about your suggestion on employee training and you know, so often you know, we’re giving a webinar at the NBA or we are you know, even our podcast and it’s the owner or the manager, getting educated about what’s happening in the industry, but we have to it’s like so important to make sure our staff is also engaged and make them a more dynamic individual and more you know, vested in their job right I just think that’s so critical.
Scott Montgomery 42:24
Yeah, I think the only other thing I could pass along that was another thing my father taught me is don’t try to put people in boxes. So if somebody really likes For example, we have this in our organization if somebody is really likes email marketing, but doesn’t like say direct publisher which would be say working with outside and mountain bike action and basically then let them have extra time and what they’re good at and then let them be known inside the organization that they’re the best at that at the company. And then don’t try to make everybody check off all 10 boxes to be good at it. If somebody may be using example really likes e bikes, then get them let them be the best e bike service person in your company and train others as opposed to try to make them the best at everything because I think especially with the complexities around E and non all the different auto auto shifting and electric shifting and everything we’re looking at, it’s just impossible to be good at everything and I know in my organization are our organizations more accurate You know, there’s so many things that I go to our team members all the time and ask them how to do it to learn from them so that might be an area that it’s helpful to people is let them do what they’re good at as opposed to be bested everything that their job description required.
Heather Mason 43:57
Yeah, and when we’re doing something you know, we like to you know, something you’re good at you you don’t normally like and you want to do a really really great job. So we often tell retailers that they are not the brands that they carry, don’t define them but their store their unique store is their brand and how important it is that they have a culture that they can get across to their employees or their community. And you’ve worked with so many brands you know, successfully bringing you know Scott bikes to the US market. So for a bicycle retailer, anything you might stress to keep them and their unique brand fresh.
Scott Montgomery 44:37
Well one thing I would really encourage that I think most retailers can get better at and hey guess what also brands is really email marketing. And I think the if we watch the evolution of the business we’ve really seen it go from I can remember cop Been in pasting 100 email addresses, you know, in in the CC or the BCC so they wouldn’t see it. That was the beginning of email marketing. But now it’s really evolved from Constant Contact then to, it went to MailChimp. And now MailChimp has gone to clay vo. And that’s really the preferred email system out there. And so I think in general, email marketing needs to be embraced by retailers more, because you can set up segments. So like, for example, if Scott Montgomery doesn’t like road, then don’t send me an email that encourages me to buy road shoes or encourages me to buy, you know, road bikes, so segmenting your customers so that you send me the kind of emails that maybe everybody gets the service email, but only the mountain biker gets the Oh, hey, we just got a delivery of, of x brand mountain bikes in call today. And then the other one that I think is just essential, even though it’s expensive, and there’s a cost to it, but to me is drop off and pick up. It needs to be expensive, because pay, you’re hiring a person and you’re supporting the cost of the Sprinter van or the transit van. But I think I think that will do well for you. And then it also lets the customer know you’re interested in in their convenience, which is a big deterrent from them to go ahead and buy from, say, a DTC only brand.
Heather Mason 46:35
Yeah, that was a conversation that came up at the Capitol West show consumers, you know, wanna buy it, where they are. And now it has to be simple and convenient and easy. And that’s hard right now for retailers. You know, we have to we have to get there in our industry, and we’re headed that way the communication with customers segmentation. Yeah, I can’t agree with you more in that regard. The bike boom, left us with just this new consumer, these new, you know, non cyclists walking into bike shops. And we really, our digital marketing strategies have to be just totally dialed. So we have, you know, smart e tailing was really helpful in the industry, giving retailers a quick and easy way to get a webstore online. Any pointers, though, for retailers, maybe want to take it to the next level and improve their digital marketing strategies? And beyond just having a website?
Scott Montgomery 47:35
Yeah, I think it really depends on your scale. I think if you’re, let’s say below a half million, I’m not sure that it’s, you’re going to have the opportunity to really invest heavily in digital. But I think as you scale especially, it’s probably a magic number, around 3 million and 5 million, then you really start to have the revenue, that you’ve got to be able to put a team probably in place to do digital marketing efficiently and effectively. And we are big fans of Shopify because they have really so many options, you can do a basic account at 29 a month and you can go up to a Shopify plus at, you know, 2500 a month give or take and sell all over the world with, you know, eight or nine clone sites certainly allows you to go into other markets. So I think everybody has to find their own balance with digital marketing, but I certainly as you’re cracking that 1 million mark, you’ve got to at the very least, of course capture their email when when the purchase it occurs, and then have follow up you know, the the email 6090 days later, how’s your bike going? Are you happy? Have you thought about buying a pair of shoes, maybe even a segment of shoes where you email me to two years after I bought this shoes and say, Hey, time to think about maybe another shoe or your shoe might have had laces and now we’ve got a boa shoe option. Those kinds of things. really cater to the to the customer, and make sure that they are feeling embraced.
Heather Mason 49:34
It’s it’s customer centric, and this is what we want. We want to you know, let people know that when we’re asking for their email. It isn’t what we want to spam them. It’s because we want to give them information. I’m thinking of automated like service reminders, it would be so great to be able to send a note out Hey, it’s been 30 days. It’s a great time to come back in. I mean, Scott, should this be something that we’re investing Almost a certain percentage should we be hiring to fill? I almost feel like the ROI of bringing someone in on your staff. If you’re doing it correctly, you know, could pay off is this something that retailers should be considering, like adding a specific person to their team?
Scott Montgomery 50:17
Well, it’s, that’s always hard to make those decisions, because there’s so many polls at all the different directions. But I think the nice part, at least with clay, vo is that it’s a, it’s a reasonable cost option to consider it. And certainly taking somebody who maybe already is a good communicator, or maybe writes well, or maybe has a journal and lism or an English background. And considering to say, Hey, would you go through the clay vo Academy, learn that and then be in a position where they could take it over for the company, and maybe encourage somebody, I think that’s probably where I would start if if you’re on the lower end of the revenue scale. And as much as I hate to say to SMS is imperative from here on in, yes, some people will opt out. That’s understood and you, you don’t want to be SMS to every day, or every week even. But certainly using your example, if I had bought a bike, and it’s 90 days, I should get an SMS, even if it’s not automated, even though there’s all sorts of automated ways to do that, from somebody at the store saying, hey, it’s 90 days, bring it in for that quick tune, or that free tune that came with the purchase or that, you know, we’ll do it for some motivating price. And maybe if you purchase something today, we’ll give you $10 off on on that purchase some something to motivate them to act.
Heather Mason 51:52
Yeah. And I know me, if I got a text, it’s time to bring my bike, I’d be happy. I’d be like, Oh, sweet, thanks for the reminder, you know, so Scott, we hosted the bicycle retailer excellence awards earlier this year. I don’t know how familiar you are with the program, but it’s a rebrand of the America’s best bike shop. program. And I’ve asked some of our for, you know, former guests on our podcast, in their opinion. And I’d like to ask you, what makes an excellent bicycle retailer?
Scott Montgomery 52:24
Well, I’m sorry, I wasn’t able to attend that event. As you know, I was in Park City at the time, but there was some obstruction there that I can’t quite recall. Just leave it at that. But um, now I think at the end of the day, it really just comes back to that overly simple answer people product capital. You know, we want retailers that have honest, hardworking employees, we, we certainly want them to carry our brands. And you know, there’s obviously the, as a retailer to get the best brands you can. And it’s hard to beat Fox racing at this point for apparel and helmets. And, you know, there are other brands and other segments that separated themselves that we all know well. And then you know, I think just very big diligence to watching that bottom line, I think is the thing they can get away from you very quickly, when a business has grown a lot is how when the sales are overly good, it seems like you know, the more you bought, the more you sold, but then really being mindful of that cash flow and watching it carefully. And then if it does get lower than you’re comfortable with reacting quickly, because more businesses go out of my father taught this to me to more businesses go away, because of cash flow issues, then profitability issues, quite frankly.
Heather Mason 53:54
Could we flip this just because of the position that you’re in and working with so many brands? If we did a supplier of excellence award? Maybe we maybe we need to do this but in your opinion, what traits might make a supplier excellent to two retailers?
Scott Montgomery 54:13
Well, the overriding word that comes to mind when you ask that it’s just the word fair. But let me give you an example of a way that I think is really fair in it as it relates to digital marketing. I think more and more brands need to have a kind of a we call an omni pricing strategy. So it’s going to be harder and harder to tell people they can’t sell on a channel. And but if for example, since we’re in the middle of it right now, we’re almost a month away from the beginning of cyber madness, which is for our company the busiest two weeks of the year. He the the strategy that we’re recommending that suppliers need Take is to inform your retailers that you’re going to be on sale, whether it’s 10% off on the first day and free freight or what it is, and then give the retailer a chance to buy some extra inventory. If you can set it aside or if you can find it, which of course is tricky in some situations, but and then let the retailer go 10% off or match the the offer, because if your DTC site is at the same, and your Amazon is at the same, and your retailer all at the same, then it’s a competitive playing field in the marketing that you probably spend, as the brand is probably going to lift all three channels. And and that’s fair, but I think what not is not fair increasingly, in a go forward is to have a 20 off sale on the DTC or allow Amazon to not be managed properly. And then, you know, expect the retailer to have the consumer coming in and going, Hey, that cool helmets 20 bucks less if you match the price, I’ll buy it from you. But if not, I’m going to go buy it on Amazon or something. I think we’ve got a we’ve got to keep a level playing field.
Heather Mason 56:19
Yeah, I mean, how many times have we heard you know, a retailer said I wouldn’t I wouldn’t have been upset if I had known and I could have bought more and gotten in on it. I that’s great. All right, just about out of time here. What’s coming up for you? What, what’s your focus for the coming year? Are you going to any of the trade shows cab to Easter.
Scott Montgomery 56:40
You know, for right now, I’m not going to go to the capital shows. But I will keep going to events. I’ve already reserved hotel rooms for the new Frankfurt show and euro bike. And clearly we’ll be back at sea otter, Franken, Sara and Ben all know that from. So we’ll be back at those events. And then we’ve, we also have, have a leg in three different industries, bike, outdoor and ski. So that keeps me going back to the Outdoor Retailer show. And it also keeps us going most likely to the SAA show. So and we’d like staying in those three businesses because if you live in this beautiful Ketchum, Idaho, you have that opportunity to do all those activities. So it’s almost an employee relations thing if if nothing else.
Heather Mason 57:36
So Scott, I usually asked Do you mind sharing your contact information? If we have brands or retailers listening that might want to learn more about you? Or get some further, you know, advice that you know, on some of the topics we touched on? Would you share your contact info?
Scott Montgomery 57:52
Oh, of course. That’s easy. It’s got at crank tank. That’s one word.net. And you can also go to crank tank.net, the website, and if you really want to my mobile is 208-409-6366. If I’m having dinner with my wife, I’m not going to answer but if I’m sitting in an airport, I’d rather probably talk to you then the stranger next to me.
Heather Mason 58:17
I love that and yeah, on the crank tank dotnet website. I was on there last night, a great blog who is writing all that content? Someone? Yoshi,
Scott Montgomery 58:28
that’s me. Well, thanks, thanks.
Heather Mason 58:33
I read our listeners should definitely go check that blog out. Fantastic. How you getting the, the ideas were, you know, has that come to you?
Scott Montgomery 58:43
Well, we have a Monday staff meeting that because of COVID right now we’re most of us are either at their desks or a few people are working from home. But we usually kick around the ideas and then I’ve taken it on myself to do it because I don’t know. Otherwise it doesn’t get done. But the way everybody in the office has, has ideas and so easy pull it around and and then ultimately I write it And fortunately, my grammar is less than stellar. So Lars has been kind enough to edit and improve my my presentation so I’m a little lucky there. I get some I get some pro skills behind me.
Heather Mason 59:23
I think it’s I think it’s you’re an excellent writer, and I’m a big fan. So well Scott, thank you for coming on bicycle, retail radio. It’s been awesome to have this conversation and hopefully we see each other in person soon. And I mean, I don’t know maybe I need to make a trip out to see you. I’m thinking about snow right now. You’re
Scott Montgomery 59:42
you’re welcome to come visit us in Sun Valley. And if not, we’ll certainly make sure and have a coffee or beer if you’ve got time at sea otter.
Heather Mason 59:51
For sure. Yeah, so thank you. That is it. I invite you to connect with me and come on bicycle retail radio and share your story with our listeners. There’s lots of love for our industry. There’s lots of great webinars coming up look at the NBDA website. If you’d like to support the show the best way is share your favorite episodes with your friends online on social media. We appreciate your support. Thank you for listening. And with us we
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