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Leading Out Retail

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In this episode, John Robinson, owner of Johnny Velo Bikes in Columbus, Ohio, and board member of the NBDA is back to interview Donny Perry, author of Leading Out Retail. In Leading Out Retail, Perry combines hundreds of hours of research, a rich trove of social science, and his counterintuitive insights as he explains a paradigm shift in the industry of bicycle retail. Within this paradigm shift, Perry teaches retailers simple strategies on how to increase profit through service, what the most important question to ask every customer is, and how to manage the dreaded Timmy Factor.

Leading Out Retail

Wed, 9/2 • 1:08:22

SUMMARY KEYWORDS

bike shop, bike, people, business, customer, discounting, book, industry, service, retailers, sell, price, point, year, shop, person, brands, pay, sales, working

SPEAKERS

John Robinson, Tara Kuipers, Donny Perry, Kent Cranford

John Robinson 00:10

You are listening to bicycle retail radio, brought to you by the National bicycle Dealers Association. Hello, and thank you. You’re listening to the bicycle retailer radio brought to you by the National bike Dealers Association. Our mission here is to help specialty bike retailers take controller businesses, providing leading edge education and to help them to be competitive in today’s market. My guest today is Donnie Perry, author of leaning out retail and I am john Robinson, owner of Johnny Vela bikes, and also a board member of NVDA. Donnie, thank you very much for joining us today.

Donny Perry 00:47

Thanks for having me. This is great.

John Robinson 00:49

Donnie, you’ve been an industry veteran for a long time now why don’t you just kind of give our audience here a little bit of background where you started out how you got into the industry and kind of leading up to what I would call the, in my opinion anyway, the Bible of the industry. So, go right ahead.

Donny Perry 01:06

I’m really flattered. That’s a super nice, to say that. I think like a lot of people in this industry, I was a lifelong cyclist. And at some point, that transitioned into working in bike shops, which at one point transitioned into some steps towards a career in the industry. I grew up in Des Moines, Iowa, where I had most of my bike shop experience. I started working at Specialized and their education department at TCU in 2008, was there for nearly a decade. More recently, I’ve worked with Velofix. And along that timeline, I’ve, I’ve had the privilege of meeting and working with hundreds of independent bike retailers and digging into their businesses and understanding their challenges and what they’re going through. And I’ve always really taken an interest to this particular industry and the tweaks we can make on the operational side to make it better for everyone. You know, that’s great. And Donnie, I got I got to tell you here, I’m a big fan of this book. My shops only been in business now for three years. But prior to me opening, I think I read your book three times. It is full of notes in the margins, and bent pages and I have to say to anyone thinking about opening a bike shop, this should be the first thing you read. It is full of all kinds of information from how to run your staff, how to train your staff, how to price bikes, and discounting and marketing and training. I mean, it covers almost every aspect out there that I’m aware of. And actually, going through this once a year, I’d make myself reread it. So, I’ve read it three additional times. And every time I go back through Donny, I gotta tell you, I find something new or something that popped up. And it’s like, you know, I ignored that advice. And I should have made a note of that. So again, I just think the book has been, it’s very instrumental, and I think trying to raise the professionalism of the industry, as well as addressing learning how to run a bike shop profitably. So again, thank you very much. I am so flattered that it is the most loving intro that book has ever received. I’m really happy it’s working out for you. Thank you for that.

John Robinson 03:37

Well Thank you. So enough about my love of the book, but why don’t we delve in a little bit? What made you decide to write the book?

Donny Perry 03:46

So, at the time the book came – the book’s actually it’s getting up there and it’s broken its teen years now. So, I wrote it in 2014. And at the time, I had been doing quite a bit of work that Specialized in the SPCU departments working with some great people there to help them develop courses on management and merchandising and inventory planning. And I was just, I just found myself consumed with all of these ideas, and I needed an outlet for that. And at the time, Specialized wasn’t really the most perfect place for it. And I just found myself late at night typing it out, typing it out. And then for a new one, I had something on my hands and I just emailed a couple of friends and said, “Hey, I wrote this, hope you like it,” and then I left it.

John Robinson 04:31

Great. Now in the book, you kind of – it is a little bit older now – But you even back then you kind of painted a pretty grim picture. And actually, you It’s nice to see too that you were quoting NBDA data about the closings of IBRs. And I guess I should say you prefer the term IBR, which is…

Donny Perry 04:51

IBR stands for independent bicycle retailer opposed to the IBD or the dealer and I prefer that term just because dealer to me implies a certain type of negative connotation to it, that it’s making a deal that it’s doing something that’s more price centric, where a retailer is a term for me that identifies something larger, that it’s a business that we’re running here.

John Robinson 05:17

Okay, even then you were looking at, you know, the data of the number of IBR is closing. Do you see that? I mean, you went out as far as making predictions into the, you know, I think up into the up to 2030, or something of what the number of bike shops was gonna look like. Do you still believe that? Or do you see that kind of changing now?

Donny Perry 05:39

So the way I put the book together was I was looking back since the beginning of the century, up until then, and saying, hey, we’ve got a decline in the number of independent bike retailers in North America. And this decline seems to be pretty linear. And what would it look like if this decline continued over the next five years, 10 years so on. And my point with that first chapter was just to kind of illustrate that the path that we’re currently on can’t be the same. There has to be some type of change or a different approach to how we’re running these businesses. Because what has gotten us to here is not what’s going to get us through the next five years or the next 10 years. The industry has done a really good job since the mid-teens to make some really big transitions, we’ve seen some we’ve seen some retailers who are big, who have gotten bigger. We’ve seen some retailers who are a little more niche to they’ve gotten even more niche or more specific with their riders. And overall, this is a great response because in general, the middle seems to be getting squeezed as hard as it possibly can. We have large brands that are going to wreck we have gross margins that seem to be in decline each year. We have rebates that are going into decline or going away each year. And so it’s important that as independent retailers, everyone steps up and says, “How can I reach my customer a different way treat my customer in a different way to make myself a more viable option now and each year after?”

John Robinson 07:16

Okay, well, that’s great. It’s kind of interesting too, as I read that it never swayed me not to want open a bike shop. I think, more than anything, it made me realize I can do this the right way. And I can be a bike shop that’s going to be active in the community and coin to market right and look professional and treat customers the right way. And so, to me, it was kind of a call to arms that, hey, I’m going to do this right. I’m not going to be one of these ones that are closing. So, I kind of took it the other way to his motivation.

Donny Perry 07:54

That’s great. That’s great to hear.

John Robinson 07:57

There’s a lot of trends that have been happening and you kind of deal with some of them in your book too. You know, you talk about internet and mobile. And you know more recently right now we’re even talking about calendar year versus model year, some of the companies have come out and said that they’re going to be moving to a calendar year. What are you seeing? Do you still kind of stick with the same things? We’re going to be doing more mobile more internet? Or have you kind of changed that a little bit?

Donny Perry 08:25

Let me address the mobile piece and but I want to come back to the calendar year piece first. So, if we look at some of the large players, the big three in this industry, they have done an exceptional job over the past 30, 40, or 50 years, taking every square inch of retail space in North America. So, if you go to a brick and mortar bike shop, the odds of that shop carrying one of a few brands, it’s pretty good. But that doesn’t mean that the other 90 brands went away. It means that they just started reaching consumers in a different way. And that has put this really interesting problem for a lot of people to saw about on the table, which is when we want to take a bike and sell it to a consumer, but that bike either through the logistics of how we packed it, or through some type of mandate, and the government says we have to have it built and assembled in a certain way, it’s going to create a lot of interesting problems for people to solve. And that’s where I think mobile and companies like Velofix, I think they’re in a really strong position, take advantage of that going forward. And I think that brands, we can look at someone like Canyon for example, saying, “Hey, you know what, we’re just going to use a much bigger box and make this thing much easier to assemble for the consumer.” I think that’s going to happen more going forward. And I think we’ll start to see some of the more legacy brands even leaning into some of those approaches over the next years. It’s at some point, it’s going to be unavoidable and the dark horse in the room here would be if Amazon ever wanted to look into this and address it in a manner that they seem appropriate. They could probably solve that problem fairly quick with the resources at hand. On the model year, I’ve always found model years, John, I’ve always found these things so interesting because we can talk about one brand is launching mid-year and one brand is launching a calendar year and so on and so on. To me, that’s not what I’m seeing. All I’m seeing is how is this brand trying to win mindshare? From the retailer or the consumer earlier? Or more appropriately? How are they trying to win wallet share? When I look at retailers, and they have to sign up with a pretty big buy in at one point the year from this company? Well, it behooves you to be the first company out. And so, everyone opening up at a certain time pushing back ahead of the other person a little bit. I see this more as a tactical play to try to win some revenue commitments early from the retail network. Not necessarily something that is good or driven to the consumer with the consumer mindset in mind.

John Robinson 11:07

How does calendar year, too, kind of, affect versus model year effect discounting?

Donny Perry 11:14

How does calendar year versus model year affect discounting? I’m not sure for me, I’m not sure that it does. I think that it’s when I look at these brands choosing calendar year, they’re saying, I’m going to get my group of retailers together and I’m going to have them sign a commitment with me before the person who launches in model year. As those bikes hit the floor, they’re all being sold at the same time and this kind of is more of a decision made by that particular retailer and the people work in the floor. Not so much on the calendar year watch.

John Robinson 11:53

Okay, we in our shop this past year to we kind of made a stand that a 2019 bike versus a 2020 bike still has two wheels still has the same group set for the most part. For most of the consumers other than the higher end bikes, it’s going to function properly, it’s just going to have a different paint job. And so, we actually and in your book, you talk about discounting and not doing discounts and things like that. And I didn’t pay attention to that my first couple years, my first couple years was I didn’t want to lose a customer. And so, if I needed to discount or if someone asked me if I could do a discount, I went ahead and did that. But over time, I started looking and I’m like, I can’t be viable if I continue having margins like this. So, we started to draw that back a little bit. And then this past year, we actually went ahead and decided, you know what, no more discounts. January through March were phenomenal for us even before COVID hit. And I don’t think we lost any business because that. I took all my sales tags that I did on my 2019 bikes, I threw them away, and I kept the regular price. And if a customer comes in, and they say, you know, can you give me a deal on this, I might give them a little deal on a 2019 bike, but it’s not going to say, Hey, here’s a deal. 20% off right away. No. And the customer, for the most part is fine with that. So, I didn’t listen to your advice in your book, beginning, and you know on page 51, I had a big thing on here, no discounts. And that’s really kind of helped us change our profitability even dramatically within the first quarter. Before COVID really hit.

Donny Perry 13:43

First of all, kudos to you. That’s a big step that a lot of people have trouble taking. And a lot of people never, never make, and you’re absolutely right. Discounting is a virus that just eats away at any of the profitability that a retailer can create. You know, you made a really Interesting point there that there is a certain belief that a product’s valued degrades over time. And that really needs to be put in question because we can go on a really low, low side here and say, let’s look at a black medium glove sells for $30. Now, this year’s version of that is going to be $30. When the new version comes out next year, the price degradation of that glove is nothing, you’re going to be able to sell both for 30 bucks. Now, if you take that up really high to like the 9000, or the $10,000 bicycle, that consumer and that level of investment is probably going to be pretty keen on when the new model came.

John Robinson 14:46

Yes, I would agree with you.

Donny Perry 14:48

So, at the high level when the new model of that version comes out, the price degradation there can be pretty extreme. And that’s when you want to focus on like, not necessarily on the fly discounting, “Can I make it a deal” but using some type of campaign or strategic sale to get rid of this legacy inventory, because you just you want that off the books.

John Robinson 15:10

And one of the things I your book kind of focuses on too Is it really kind of got us to kind of focus a little bit more is switching the conversation from price to value. And maybe you could talk a little bit about that too.

Donny Perry 15:28

Sure. So, when you – let me back up. I don’t know when buying a bicycle became this like price negotiable event for people. It happened long before me but for a lot of people that go into a bike shop and they approach it a lot like they’re buying a house, land, or a car like you know, I gotta do some type of deal here. And there’s probably plenty of easily Googleable articles that reinforce that mentality. And so, when I look at selling product in a bike shop, I don’t want to try to focus everything on to unit economics of this one thing, because it very quickly turns to price. I can start to talk about the benefits of the product, but ultimately, it’s going to come to price. So, I need to take the conversation beyond that item to other things. And so that can be done by chunking or bundling a package together where you can say, “Hey, my name is Donny, and here at Donny’s bike shop, one thing we do is that with the purchase of this bike, we also do this level of service or this level of service package or one service a year that you get with this particular promotion,” whatever it may be. Now, there’s been a version of this that has existed and a lot of people have done it, where they’ve said, “Yeah, we’ll give you a free tune up in the first year or we’ll give you a 10% off all your parts and accessories” or whatever, they’re attempting to do it. I just think you really need to dive in on that. You need to build marketing around that you need fixtures on the floor around that you need to have that be scripted for everybody who’s going to talk about selling a bike. That is what they go to. And it’s not this small throwaway statement that you put out there that just says “yeah, free service for life when you buy it from us.”

John Robinson 17:15

We actually branded kind of our value statement; we call it a five-way promise. And there’s five different items that we talk to everyone coming in buying a bike that’s important to, you know, we do a 90 day price match guarantee and 30 day tune up, lifetime fit adjustments and some other things like that as well. So we actually branded it so that, you know, it’s on our website, It’s in our store, and we have a conversation about that and then we kind of lead it into, you really want to have a conversation with the customer about you’re entering to a relationship. And when you buy this bike, you’re going to need to come in you’re going to need to feel like the shop listens to you and they trust you or you trust them and things like that. And so, we try and really kind of sway or point the arrow away from price and look at it as 10 years down the road, you know, are you going to trust this shop? Is this shop going to be around? That’s kind of how we do it, we kind of sell the value of our shop in our process.

Donny Perry 18:22

Something I believe is I don’t believe people are necessarily looking at your business at a point of value at that particular time. In terms of like, the thing you can you have the thing I want, and you can sell it to me, that’s not the value proposition in their mind. I think a lot of people knowingly or unknowingly the value that they find is what is what can you provide over the long term? What can you tell me today that I’m going to need in 30 days and 60 days? How can you help me make sure that I get the most out of this investment right now? And that’s never going to be with a 10% discount right now. It’s always good to be with some advice, consultation, or coaching down the line. And if you can take that, bundle it, get the marketing tweak on it so that everybody on the floor can give that pitch and in 15-20 seconds, that is going to be the magic sprinkle dust that gets business moving.

John Robinson 19:19

Yeah, I would agree. Let’s talk a little bit about in your book, you talk a lot about pricing models. And you go into a lot about consumer psychology relating to price and how salespeople can leverage that. you go into pricing around service, bundling, and understanding product price degradation to can you just kind of hit on some of the highlights that you see? I’m a big fan of pricing models and consumer behavior. And I’ve read Paco Underhill and I’ve actually seen him speak and things like that, but can you talk a little bit more about consumer behavior and how they react to pricing?

Donny Perry 20:00

Yeah, and I think it’s, I think the best place to talk about this is probably in the service department. Because everything else for most bike shops in the world, you don’t really control the supply chain. Shimano, or SRAM, or some other brand is going to dictate the price points for you. And so, you don’t really have a lot of options in terms of how to set that price up for your success. It is what it is. But on the service side of your business, you have this really awesome opportunity to take advantage of putting your package together that leverages the consumer psychology in a way where they feel like they’re winning and at the same time, you’re winning and making sure that you’re appropriately compensated for your time. One of the areas I talked about in the book is everything around the service menu. And the service menu. I think a lot of retailers they get into it and they’re just really busy when they started out and how they jump into that service menu as they say, what is the person down the street doing? I’ll do that and I’ll either raise it five bucks or do it five bucks cheaper whatever it may be. My approach is that when you look at the service menu, what you have here is an opportunity to create something that could ideally get about 20% even to 30% of your total revenue of business that’s done properly. And some tricks to that would be to recognize a linear pricing menu versus an exponential pricing menu. And what I mean by that is, I think a lot of menus will go in and say my base level service is $50. My next level service is $100, and my top level is $150. The price points between these three is exactly the same $50, $100, and $150. And for any of those retailers that have a three-tier linear pricing model, they’re selling a boatload of everything at the bottom. And the way they can get around that is by creating an exponential menu. And so that would be say, my base level is $50. My next level up is $125, then I have this $175 service. But at my very top level, it’s something ridiculous. It’s like a $400, $500, $600 service really high. And what that does is it puts a price at the top, that essentially dictates the value proposition of everything below. So, we can look at this bundle and say, someone out here is clearly paying $500 for this top tier service. Why else is it on the menu on now my $175 service on my $125 service look reasonable. They look like viable options, and I’m not instantly drawn to the bottom. The next thing I think a lot of retailers can do is they can really take on what they’re naming these services. A lot of times we use nomenclature that’s common to our industry, we would say things like tune up, and we would say like overhaul for someone who’s just getting into the sport or hasn’t been around for a while, what do these things mean? And I would, I would encourage the retailers try to find some type of naming convention where it’s either two star to five star or its record labels where it’s like, bronze, silver, gold, whatever it might be, so that when just looking at the name and you’re the customer that doesn’t want to read the 55 points of things you’re gonna do underneath it. They know this is better than that.

Kent Cranford 23:33

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John Robinson 23:52

Do you want to know what my shops nomenclature is?

Donny Perry 23:55

Would love to hear it.

John Robinson 23:56

So, I lived in three different locations, three different streets in our community. They started with apartments then kind of starter homes and kind of the house I live in today and then kind of the most expensive street in our neighborhood. So, we have the Arcadia, the Kelso the Dunedin, and the Henderson plans. And for the people in our community, they know right away why those are placed that way. So again, a tip from your book I took to heart and yeah, and our price plan goes from a cheap fixie type overhaul, that sort of thing, $35 to $379 and our $75 tune up, which is our average type of tune up that we do, typically turns into about $154 all things said and done as we’re checking stuff in.

Donny Perry 24:50

That’s great to hear. And I love the localization of them by name, it illustrates something that it’s super it’s super great because it works for you and works in your neighborhood and that’s a great approach to take.

John Robinson 25:03

Okay. You didn’t really talk too much about this, but you really, you have a formula for this too on the pricing plans and how much percent each should go up and that sort of thing, too. So, for the person that is just hey my competitor across the street has this price, you actually have some science behind it, as well. And maybe you could just talk briefly about that, too.

Donny Perry 25:28

Yeah, so let’s take a fourth-tier menu here. At the very bottom level, if I’m building a store right now, that bottom level tier is going to be – it’s going to be really nothing more than tire inflation, lubing the chain, and maybe a quick check on make sure things are tying down, but I’m not going to touch brakes, I’m not going to touch derailleurs. I’m going to give you a quote for service at that bottom level. You want to bottom level, that whatever that price may be, whether it’s $35 or $100, you want that to be the number that instantly that customer is committed to without thought, because they’re moving on to the next thing. The next one up, that’s when I would do probably your standard tune up service where you’re going through derailleur and brake adjustments just by turning the wheels or wiping down the frame and so on. Now, the formula gets in between your two middle tiers, you want the two middle tiers to be closest in price, because you want to upgrade someone from the number two to the number three. And my big trick for doing that is, it’s a pretty simple approach. And that is that all your detailing and cleaning happens at your third level up. So that’s where we’re going to fully wipe down the frame, clean the tires, get out the pipe cleaner, get behind the brakes, we’re going to really make sure this is clean, because look, you’ve been down here and I’ve been down this road as well where you could spend four hours adjusting the derailleur. And it’s like the hardest job in your life. You walk it out to the customer, and they say, Wow, that’s really clean. You’re just you’re just baffled. Like, why? Why? Well, for me, I’m just going to make sure I sell that. So, when someone comes in and they say, what service do I need? You say, hey, this was the most popular, but would you like us to clean them, too? And it’s like, “Yeah, I would like to clean up” like “no problem, I’m just gonna upgrade next service, then.” Then your top tier, the one that’s this insane price can be a whole list of things that you’re doing, or you can start to add in some parts and accessories to it. Like there’s free brake pads in there, or there’s a free tire or there’s a free – two free bottle bottles, whatever you want to bundle up there to make it seem extreme. It doesn’t matter. You can make that thing as free as you want. Because you’re only going to sell a handful of them a year anyway, they can almost be lost theaters for you. It’s going to be in those middle two that are really the profitability drivers.

John Robinson 28:01

Yeah, we replace the cables, the cable housing, the brake pads, and the bar tape is all included in that top tier.

Donny Perry 28:09

And someone’s probably out there asking like, hey, I want to do that but cables and housing the pricing on that thing is all over the place. Bar tape is all over the place. Grips pricing is all over the place. For me, I just say just give them the best stuff. Because again, there’s going to be so few of those purchased anyway. And there’s no reason why when they’re paying that amount, we shouldn’t just be giving them the best out of the gate anyway, just build it into the pricing model to begin.

John Robinson 28:36

Yes. Great. So, kind of switching a little bit from pricing. you delve a lot into your book, which is I haven’t mentioned the name yet. I don’t know. It’s actually called Leading Out Retail, again by Donny Perry here but in Leading Out Retail you go into managing service technicians and sales leads and you kind of put together a way for someone, especially starting out could create a, I think, a very cohesive culture within the bike shop between service and sales. Could you talk a little bit about that?

Donny Perry 29:19

Yeah, you know, it’s a lot of retailers’ approach this in a lot of different ways. And I want to say at the outset here, I don’t know if anything’s wrong, I think it’s about finding what’s right for you. And there are some businesses that draw a clear line and say, Hey, this is service department, this is the front of the house. They don’t interactive skill sets are completely different. And we’re going to manage them this way. They’re paid in different ways and so on. And then there are people who, for a lot of cases, just because they run smaller businesses, need people who are transitioning front to back so on. For me, I think that it’s key to take a look at the role and the person and what you want done and focus in fairly early on is there a stage growth to this role that I want that person to go through. So a lot of times, it would say, you know, if we’re working with the technician, we’re going to have that technician work under somebody for the first year, they’re going to do some builds and flat tire changes, and they’re going to work their way up. But there doesn’t seem to be necessarily the same type of scale approach on the front side of the house, where it’s, hey, I’m going to have this person just sit at the cash register. And this person is going to sit at the cash register for the first two weeks until they learn every single function on that. And then they’re going to move to helmets, and then they’re going to move to shoes, and then they’re going to move to another area and then then they can start selling bikes, oftentimes they just get thrown in and say you’re a salesperson now and in the next four hours, I’m going to need you to learn everything that I’ve learned over the past 10 years and be just as good as I am to take everyone through this entire sales process. So, I think it’s important as leaders in this industry and as business owners, that we take a serious look at how we’re scaling and growing people up through that role, not just so it’s profitable for us, but so that it’s a good investment for them, and they feel like they’re growing as well in the company.

John Robinson 31:21

You know, I think that’s a really good point. I have a small shop, so I just call everyone a team lead. They’re not service leads or sales leads, they’re team leads, and everyone has the capability of working where they’re needed, whether it’s in the back in the service area, or on the sales floor. Now granted, there are people who are much more adept in the service area than other people. But the leads on the, in the front of the shop, for example, as well, know that when things get busy, they can jump in, they can fix flats, they can do some minor adjustments and things like that. And when we’re slower, we often want to bring them back into that area and kind of show them some of the techniques, you know, whether it’s, you know, overhauling a hub or a bottom bracket or things like that, so that not only can they see how it’s done, they can explain it to a customer in the front of the shop, why they need this type of service done as well. So that’s worked really well for us. And another thing I would say, too, we actually have through our local high schools, internship programs, and a lot of them are required to you know, they have to work one afternoon a week or something like that. And I’ve reached out to local high schools, and I’ve had two interns. I just picked up another intern, and some of these interns, you know, number one, it’s free labor. But these guys and girls want to learn. They really want to learn more about the bike shop and they’re passionate about bikes and things like that. So I would much rather hire someone who has a passion about biking and not know anything, then have to hire someone that thinks, you know, hey, I worked at this shop down the street, I know everything. That’s not going to fit well with in my own culture that I’ve developed. So

Donny Perry 33:23

You’re in a really lucky position if there’s a mini kind of local community service or program that’s kind of bringing people up through that to hopefully have careers in this industry. That’s, that’s a really great that you get to take advantage of that. You know, if the if I look at any role and any bike shop, I always think that there’s one role that I put the most investment in, or I would say it’s probably going to be one of the most expensive roles to have in the business. And that is the person who can effectively write service tickets. Because that person not only has a great motivation, is great at working with people and talking to people sometimes when they’re at their most upset, but they also have this technical aptitude that’s off the charts that can be able to say, these are the things we need to get done that are gonna break down in 30 days, and these are the things we’re gonna break down in 90 days. And here’s how we’re going to get all of this done right now, so that you are going to be a set up cyclist for the next six months, whatever it might be. It’s the most – to me, it’s the most important role. And if there’s a top of the pyramid that we should be developing towards, it’s that service writer role.

John Robinson 34:37

Great. And you actually your book, you go in with a lot of lists like opening lists, closing lists, service, checking lists, things like that. We usually have lists my two different stands in our shop one is a service check in Stand, and there’s an actual list there to make sure that they go through everything on the bike. The other is on the sales checkout stand. And what I found is when people buy a bike from us, you know, we’re a 1400 square foot shop. So, there’s not a lot of room, they wind up leaning the bike up against the POS station or that sort of thing and it kind of gets in the way. So, the whole idea is we put on a check in Stand, there’s a list of things they need to review with the customer. Do you want to do water bottles and by the way, here’s water bottles within arm’s reach. Let’s hold them up and show it to the frame. Let’s talk about your you know, psi, do you understand what level of inflation you need to have for your tires. And oh, by the way, here’s a pump. Let me show you how to operate the pump and things like that. So, we’ve taken some of those lists that you’ve hit on in your book and utilize them at check-in stands in service check in and sales checkout stands.

Donny Perry 35:49

I am a student of the Checklist Manifesto. It’s a book by Atul Gawande it’s a great book, I highly recommend it, but I am a person who has to create a list for absolutely everything. And oftentimes in and just working with customers, we try to go through that same process where it’s like, hey, I need you to think about tubes and tools and shoes and socks and pedals and cleats. And at some point, the customer just mentally just breaks down. And they’re like, I need you to stop talking. I can’t handle it anymore, or worse, the salesperson at some point loses confidence. And they just stop early if they’re like, you know what I feel like I’ve got enough money here, and I’ve sold enough today to meet my quota or whatever. So what we did and what we’ve illustrated in the book is we’ve created an essentials cards and this is a very guerrilla tactic, but it works a three by five index card that says, hey, here are things you need to put on your body. Here are things you put on your bike; I need you to look through this list. You want to know what a four pump is important. And you just start the conversation there and that way, the customer has the entire list. They can work through it themselves. They don’t necessarily need to be guided through it every single time by your sales staff, but they invent habits and take home and say you know what other people want these things, this might be my checklist as well, that I’m going to use over the next few months. When I go back to that shop.

John Robinson 37:17

See, I actually have a something that I want to share with you that checklist. I took that card, but I put it all on one side and I extended the card to make it longer, so it’s perforated. And what I do is I have each customer that comes in that takes a test ride, we call it make them fill out the waiver. So, they have this card and it says bike and body and things that they might need. But then there’s also a separate section that they have to fill out their name, address, telephone number and email. There’s some legalese like for bullet points, I asked my attorney can you give me a waiver that’s real short, I got two pages. So, I took those two pages. I made a four bullet points. And then they have to sign the bottom of that. So, before they get on a test ride, they’ve been kind of notified, okay, I have to act responsibly when I ride the bike. Would it hold up in court, no. But in their mind, they’re gonna think, yes, I have to be responsible. I said, I would, and I signed this. But in the same regard, one of the bullet points says, I agree to allow you to contact me. So now I have their email and their phone numbers. So, what happens is if they walk out of our store, without that, without a bike, we perforate the cards, separate it. And then on the back of it, there is a place for notes, where we write what they rode, our five-way promise is there, and our contact information is there. So, if they’re going to go shop around to any other store, I want them to make sure they can do an apples to apples.

Donny Perry 38:50

I love that. Yeah, I love that approach.

John Robinson 38:53

On the back of that waiver portion that they signed. We write down what they test rode and so sometimes when I’m not busy or things like that, I’ll have to say, you know, let’s go ahead and text this person or email them. Thanks for coming out for a test ride today. If you have any additional questions, please feel free to give us call just little things like that. So, we’ve kind of taken it and expanded it a little bit. And it’s worked tremendously well for us.

Donny Perry 39:22

There’s probably someone right now listening to this, who works for some point of sale company who’s clawing their ears out because there’s a digital solution in the software that addresses this. And we’re here kind of pitching this older school way. But I think I think what you’re doing is perfect. I think that’s great. You want to get that information you want to be able to contact the customer. data capture is so huge, but we should probably call out that for those folks out there that don’t want to go that route, there’s 100 different digital tools that are executing the exact same thing. And if you can make that a natural step in your process, when they come in the store, by all means that works just as well.

John Robinson 40:02

Yeah, no, I wish I could digitize it I’ve tried. It’s just everything I’ve done just seems to fail because everyone forgets to do that step because they got to go to the computer to do it, where they got the card there. But we were talking more too about personnel and managing the staff and things like that. Industry pay is a topic I think you’re very opinionated about as well. Can you kind of talk a little bit about your feeling towards pay in the bicycle industry?

Donny Perry 40:34

Yeah, And the reason I am passionate about pay in this industry is because we know that independent bicycle retailers, it’s rarely a high profit business. Some of them I remember working for this guy back in the Des Moines, and he would always say, “I’m here to make a living. I’m not here to make a killing.” And it just grated at me because it’s him just kind of commenting, Like, hey, we’re not going to make a lot of money. And then that just has a downstream effect. It has a downstream effect where, hey, we’re not making a lot of money, therefore, we can’t pay a lot. And when we can’t pay a lot, either we have a high turnover and our staff or have their passion kind of stagnates over time. And we just all of a sudden don’t have this industry that we can build upon, as well as we can. So, when I look at, hey, I am looking at it a little bit differently than I think a lot of other people to and that I want to take, first of all the money. Let’s talk about the money last. I want to talk about all the other things as employers we’re bringing to our employees, these different types of wealth that we’re putting out there for them and say, are we doing this first. one of them I’ve already touched on, which is how are we developing people over time. So very few people and I would say anyone, definitely taking the time to listen to this podcast. very few People want to have People working for them that have absolutely no ambition or motivation in their lives, that that type of person and they are out there, but it’s probably not healthy person to have in the business. You want people who want to go after something. So as a business owner or leader, what is your development path for them? I think it’s a, it’s a coming on to business owners to say, hey, on your first day, in your first 90 days, you’re going to learn these skills. And these skills are transferable to these other industries over your first year you’re going to learn this and over first two years, you’re going to learn that and you create a series of developmental tools for them, so that they have something to continually look forward to. You can even take it to a really firm agreement john, where you could say, if you make it 10 years with me, I’ll open a store for you. Right and get crazy with it, whatever it is, give them something to look forward to. The next thing so I have seven of these so hang on. The first one is the first one was developmental. The next thing is Organizational and that is this organizational wealth in the business. That means, are you as a business leader providing the tools that everyone needs to effectively do their job? Now that could be Is it the most structured and well-built POS system? Is it a proper tool selection? Do you have a bike wash Bay? Do you have tool replacement that’s easy to do? Do you have proper aprons, aprons that you’re supplying? Every one of these, they seem small, but if you don’t have it, at some point, someone’s like gosh, I just hate doing this task or hate coming here because I don’t have this thing. I have to work around this one item.

John Robinson 43:42

I remember getting a sonic parts washer in the shop and my service staff was too thrilled with it.

Donny Perry 43:51

And a lot of times the tech a lot of times your staff don’t know what to ask for. Or they don’t have the courage to ask for it. So, it’s important as the manager, the owner to kind of go out there and see what is the next thing that I can get that makes their life while they work easier. The third thing is the social wealth, which is something in our industry we don’t necessarily worry about but there are cases and that is john, are you a nice person to work with and work for? Do you say thank you? Do you say hello? Do you take an interest in your employee’s lives? Do you give them an opportunity to speak up and learn about other people? That kind of social wealth and camaraderie is so important. also is like what type of customers do I have coming in? Are my customers generally happy people? Or do they come in upset all the time? social wealth is one and moral wealth is another one and I think moral wealth is very relevant right now, which is, do I believe in the mission of this business as an employee? Do I support that whether it’s a left leaning or right leaning or what other type of point of view that’s going on in the world that business takes Am I behind that too? I hope that that is one of the great things when you start working with companies that are dedicated to supporting communities at a certain level or giving to charities a certain level. It creates a pride in showing up to work each day.

Tara Kuipers 45:19

Have you heard of P2 groups and wondered what they are? P2 stands for the profitability project. And while profitability is that the focus of everything we do, we do so much more P2 group members share their expertise and their insights. They ask questions and they exchange resources to make sure every member is profitable and successful in every aspect of bike shop ownership. Reach out today so we can tell you more.

John Robinson 45:54

We’ve been very fortunate right now as a bike been an essential bike business been essential During this whole thing, and we wanted to kind of go out and do something for our community. And so, what we did is we have this thing called bike Clintonville, which is a map. It’s a safe biking route to local businesses and things like that. But we put it on a T shirt, with the map on the back, and we highlighted some of my favorite local businesses. And then a few of those businesses agreed to sell the T shirt as well. So, we’re not just selling the T shirt in my shop, we’re selling it in our local market at our local beer store, that sort of thing. And all of the proceeds, I’ve paid for all the cost of the shirt, are all going to help an organization dedicated to feeding, housing and assistance with medical bills for service employees in the industry that are affected by what’s going on right now with COVID and as a community we’re all alone on that. It’s just it’s been crazy to me. we’re doing a second run of T shirts now because you know, sold out of the first. So, yeah, it is kind of advertised, but that’s not what I’m doing it, but our community recognizes it as we are being proactive within our community.

Donny Perry 47:17

And the community responds to that. And, and I’m sure at some point, you’re going to get the staff together and you’re going to have a celebration moment where you say, we did this together, we created this investment that we gave to this community. And then for your staff, they’re just that much more engaged and behind your vision and business. The other three types of wealth are professional, environmental, and financial. The professional wealth is if we’re if we’re being real at some points unless they’re going to open up another store and you’re going to keep expanding. If you’re going to stay a single unit or the same size business, You’re going to have turnover and staff and so the professional wealth is What skill sets or credibility Are you giving that person that gets them their next job? That gets them a better pay that gets them a better title at their next position? The environmental wealth is just the general health of the space. Is it good lighting? Is it good air conditioning, good heat in the winter is there floor mats on the floors, the gloves, you have breathing masks when you need them or IMS when you need them, like the environmental Well, now, the last one, john is financial, the pay we’re giving them and I want to back up here. JOHN, imagine if you were this employer, you do absolutely nothing to develop your people. You don’t get them any new tools when they need them. You don’t get them the parts washer when they need them. Imagine if the customers or you are a really rude person to work with. Now, none of this is true. We’re on a hypothetical. But imagine that if you support nothing in the community, imagine then if Working at your place of business gives them no credibility at their next job. And imagine if the lights are burnt out. And there’s a rough smell in the bike shop. Now, all of a sudden, you have all that piling up. Now, as someone working there, what do you need to pay that person to get them to show up every day? The volume knob turns up really high. So, we focus on money because it’s the easiest to quantify. We can see I’m making this much an hour this year. But what we really need to be doing is putting some quantifiable metrics around how we’re developing people. We’re providing organizational wealth, social, professional, and so on. So that financial wealth is just an element of it. Now, of course, it’s an important one, but it’s going to be much higher than any business wants it to be if we don’t have some type of strategy around everything else.

John Robinson 49:57

Very good. And you would call those your x factors then?

Donny Perry 50:01

I would call those the type of x factors yeah that that as business owners if you don’t have an eye towards them things can slip through the cracks and what’s important to people gets missed and you end up focusing on pay and end up coming back every quarter or every half year saying I need more. I need more I need more.

John Robinson 50:21

Okay very good. diving in just a little bit I know we could go on for hours here about this but Selling. selling in a bike shop. not just selling to the customer, but do you when incent, do you do bonuses Do you do Commission’s? What are your thoughts on that?

Donny Perry 50:42

For – I think I think everybody has a different approach here. I’ll tell you what I tend to lean towards and what I respond to. It doesn’t mean that it’s the right thing for everybody. And what I like to do is I like to have a very effective scoreboard for the team to be working off of. now, that scoreboard will show me some continued metrics that will show me how much did you sell in labor dollars? How much did you sell in bikes? And how much did you sell in parts, accessories, apparel, and so on. It shows me Our average transaction price, it shows me our units per transaction. And then it shows you how much revenue you’ve made per the hour you work here. And I want to make sure that I have that scoreboard going up at least once a week, a lot of point of sale systems will kind of dump this out automatically. So, it’s a pretty simple, simple tool to have. And what you’re going to have, if you stack them, you’re going to have someone at the top and you’re going to have someone at the bottom. And what I like to do is I like to congratulate the person at the top. Occasionally I’ll say incentivize them or throw spiff around getting a target or selling a thing that was difficult to sell. But what I would never do is punish the person at the bottom. I celebrate the person at the top and I provide tools to the people at the bottom a lot like professional sports team. If they had a bad year, no one’s calling it out. They’re just getting the best pick on the draft next year. Right? So, it’s like celebrating the winners and supporting the people at the bottom. And you do that every week so that the staff understands what is important to you as a business leader, what is important to the business to thrive, and they understand how they can adjust their metrics. The real great thing here is that as business owners, it’s very difficult for one person to have the highest labor sales, the highest DNA sales, the highest units, the highest everything. There’s going there’s always going to be something that they can be working on to improve and an area for you as a coach to focus.

John Robinson 52:44

Okay, very good. yeah, I did something recently I don’t pay bonuses, or I don’t pay commissions anyway, and I’ve seen kind of some negative things coming out of that. As someone goes approaches a customer, they find they do Need a light, okay, they’re going to kind of dump them if they see another person kind of coming in the store, hoping that person’s going to be wanting to purchase a bike. So, I previous store I worked before as well did the same thing. They did not do commissions or anything like that. And it really bred, what I felt was a really good camaraderie amongst service and sales because you didn’t have service all “Hey, you’re getting spiffs” or anything like that and to the sales group and vice versa. And I tried something just recently and I regretted doing that. And I said, “You know what, today, whoever sells the most bikes, here’s a $50 bill.” And immediately I saw what I hated. Well, I would have sold that bike, but I was helping with this and that person got you know, and there was this whole thing again of I could have done better or you know, this competitiveness that just to me Doesn’t evoke the level of customer service I want at my store. I want everyone to be treated the same regardless if they’re coming in to buy a light or a bike. So, I immediately regretted doing that.

Donny Perry 54:12

there is a way around that, where if you want to have a trigger to incentivize, but you don’t want to create this individual commission that that breeds that environment. And that is to set a few targets for the entire team as a whole and you reward the entire team equally should those targets get hit. So, you could say these are the targets for the month week per day, whatever it may be, and but I need I have a revenue target and I have a gross margin target. That revenue target is going to mean people are selling the bikes. That gross margin target means people are selling computers and service and everything else because they see we got to trigger both of these. Now, everybody if we hit this goal for the day, everybody gets a prize 50 bucks or a pizza or whatever. But if we hit this stretch goal that’s 20%, 30% Above that, I’m going to triple everyone’s reward on that. And all of a sudden, you have this camaraderie that just naturally falls into place where people say, you know what? It’s not about what I sell it’s about what we sell. And I might not be the best person to sell this bike. So, I’m going to go grab the best person in sales, and I’m going to go there, and I’m going to support them while they’re doing that. And also, the team figures out where they slot in best and how they can support each other to achieve that goal.

John Robinson 55:32

No, I would agree. We do kind of something similar. I just thought I’d test this one thing out. And I again, I regretted doing that afterwards. But you have done a lot of stuff after writing this book. And I guess, after writing it, what would you add to it today? Would it be something dealing with location, what would you add to this book?

Donny Perry 55:57

The first thing I would add is copy editing. Let me tell anybody out there who’s going to write a book, hire an editor, don’t attempt to do it to yourself. Do it yourself. You know, the second thing is interesting that you mentioned location. Because since I wrote this book, my career has naturally driven me into a lot of opportunities to kind of help people on the real estate side. And one of the areas there that I think a lot of retailers is starting out or at a point where they have to consider whether or not they move or expand is, are they in the right location, and how do they find the right location? So, one of the one of the tools I filter out here was this. It’s a non-pneumonic device where it goes from A to G, and that is the anchor, the Battlezone, The convenience, the demographic, the environment, the foot traffic, and the geographic. And so, if we look at your business, john, where are you at? Are you thinking about expanding or thinking about getting a second location soon?

John Robinson 56:59

Well, we’re originally, we’re about halfway into our lease right now and I’m myself to I’m going, what do I do next? You know, do I stay? Do I go do I expand? Can I expand those types of things, we are sandwiched in kind of a little pocket area that has a lot of patios out in front. There’s a bike trail at the end of our street where you can ride all the way from Columbus, Ohio to Cleveland or Cincinnati. So, we’re very close to the bike trail, which is a big plus the community behind us is very quiet too. So, it’s very good for a test ride, that sort of thing. Then we have a lot of very healthy, fast casual type restaurants. It’s kind of a little destination area with patios and stuff like that. So, we get a lot of foot traffic, just someone coming in after they’ve had a meal, just looking and things like that. And so from that standpoint, it’s A big bonus because I’m getting people in not even thinking about bikes and I can’t tell you how many times I’ve had someone say, I was just going to get chicken and I’m walking out with a bike. I mean that happened lots. So our foot traffic does create a good amount of sales and visibility for when those people do decide to buy a bike so I’m kind of do I mess with the formula which is working very well now myself, or, you know, we’re sandwiched in there were 1400 square feet and we are at capacity, we go vertical as much as we can in our shop, so… well let’s go through that and grade that on this and maybe test out my hypothesis on this. So the first thing I look I look at when I look at a location is what are the anchors, and an anchor is any business or attraction nearby That’s Going to drive a similar clientele that you’re going after. So if you look at a bike shop, I think some of the obvious ones would be like, well, maybe if I get next to a fitness center, or if I get next to Lulu lemon or outdoor voices or some brand like that, then that can be my anchor. I’m getting like-minded people. But an anchor can also be, I am near the trail, you know, it’s, I’m at the base of the mountain bike trail, and that the runs up or down, whatever. So, what is my anchor? And how can I leverage that, or do I have a good anchor that’s then going after? The next one is the battle zone. And the battle zone is how close Am I to my competitor? There’re two approaches here. One approach is I need to be as far away from my competitor so that I have retail gravitation tuning. The other approach. If you truly think you can beat that competitor is how close can I get to them. because when there are two bike shops next door to each other, their traffic triples over the one solo bike shop across town. Because everyone says, hey, there’s two bike shops there, we’re going to go, and we can do some comparison on services and prices. It’s the same mentality if you ever see like a mile stretch of road that’s got every single auto dealer on that road. They’re next to each other so that they can create some competition and share customers well within a mile of me opening my shop Originally there were four bike shops all on the same street within a mile. And I knew none of them were doing what they needed to in the community. And I knew the community would back me if I did this. And so, we went in one is a quarter mile away. The other two are about three quarters to a mile away. And within our first year, year and a half, two of them closed. one has reopened under different ownership, but they just weren’t serving the needs of our community. And I knew going in there that, you know, I was planting a flag, and this is what we were going to do. So, I was ready for a fight with that. And I think we do good with that. So that’s Battlezone. But what’s the next one?

Donny Perry 1:01:21

The next one is the convenience and for an IBR, the convenience is do people have an easy way to get here. Now for some places, like if you’re in Southern California, then it’s like, Hey, are you right at the off ramp? Because that’s easy. I don’t want to be kind of pushing through all the neighborhoods. If you’re in Brooklyn, it’s like, do you have parking in front or parking lot and back that I can get to you? Or are you at near a train station I can I can jump on? So, it’s like, are you at a conveniently accessible point to the people you want to be accessible to. And there are times when you’re like, hey, this looks like a great property. It’s in this in this strip mall, it’s got a, you know, a lot of people are walking by and so on. But in terms of my demographic, it might not be that convenient for them to come to the center of town. So, it’s one piece is the convenience and the access to the business. That leads to the fourth one, which is the demographic there are clusters of every city that has the demographic you’re going after. And that usually depends on the range of bikes that you prefer to sell. If you’re looking to sell more towards family oriented, it’s commute city oriented, am I opening up on in the neighborhood or in the side of town that I should be opening up on to address a demographic that also helps all of your kind of localized marketing as well because you have people driving by the place you want to have driving by the place. The third is environmental and this is something you’re bumping into it sounds like which is Do you have enough space to do the to operate the business within and that square footage and then can I afford this space does it have right the right key the right AC the right windows for me, just the box itself that you’re going to move this business into does it meet all the metrics that you need around it. The next one is foot traffic sounds like you got great foot traffic, it sounds like you got a strong enough crew that they’ve been able to convert some of that foot traffic and you can hit all of these things are so far and end up that nobody walks in front of the store ever. So, you want to find a business that has the right foot traffic. And the last one is geographic and this is a really specific point to our business where do I have a bike shop at a location where someone can effectively test ride the bike do I have a bike shop where a group ride is going to stop by afterwards or before Do I have a location that they can go out on the trail, a lot of shops they have to make compromises At some point, and this is tends to be one of the places they make compromises where they invest so much in their business. But that one incredibly important point of test, ride. They’re like, yeah, just go out into this really broken-down alley back here, when there’s going to be some suspect characters. I’m sorry about that. That’s all we have. Now, there’s something that’s important to every business owner in that list. But it’s important to go after that. when retailers don’t when they don’t address any of those things. And they tend to just say, what come in or just put me in the cheapest place that I can get right now. what they do is they just defer their spend, instead of spending on the square footage, now they have to spend on all the marketing and all the awareness to get people to go out of the way from where they normally would go. They call themselves destination locations, but really what they’re what they’re saying with that is we underspent on the lease I have overspend on the marketing and get people to go outside of their norm to come to my, to my business.

John Robinson 1:05:07

Yeah, it’s interesting because I was at a bike manufacturer class and talking to some other people from across the country. And one guy next to me is from Denver, you know, he’s going, “Oh, yeah, my lease, Oh, my gosh, my lease is horrible.” And I’m like, “well, what’s your square footage?” And he told me I’m like, “that’s what I’m paying.” And I knew I was paying a premium, because I kind of figured my marketing and advertising dollars given my location and given that 30,000 cars drive by my location daily, and people are out walking around eating ice cream and things like that right in front of my shop. And it’s a corner. So, you know, there’s windows on both sides. I know I’m paying a premium, but I kind of figured I’d take some of that marketing and advertising dollars and direct it towards that instead. And I’m glad I did.

Donny Perry 1:06:01

That’s exactly the way to think about it. The cost per square foot, you’re gonna pay a premium somewhere, you’re they’re paying it early on in the lease, we’re gonna pay it in the advertising and awareness to do afterwards.

John Robinson 1:06:12

Yeah, well, I’m kind of with everything going on thinking some larger spaces at some more affordable prices might be coming down the line, but we’ll wait and see.

Donny Perry 1:06:25

well, this is where I am not to not to bring this full circle. But this is where you know, a future around what mobility looks like for independent retailers like you. You know, a lot of brands are opening up opportunities, especially with COVID and the pandemic, to facilitate the delivery to people at their home. And if you start to approach it from that point of view, then all of a sudden, your needs for your brick and mortar space change completely, because all sudden you don’t need foot traffic. You don’t need to necessarily be within your demographic. You don’t maybe need that same convenience to get in front of your customer. If you’re the one that’s actually taking the step to bring it to them.

John Robinson 1:07:05

yeah, yeah, no, that’s a good point. Any other advice? You might? I know we’ve kind of hit on a lot here. We’re kind of at the top of the hour, but anything else?

Donny Perry 1:07:15

JOHN, I think this has been a lot to consume for people out there, I think –

John Robinson 1:07:23

It’s all in the book, so you can read it.

Donny Perry 1:07:25

Absolutely. You know, if there’s anything I think I would just say the book is called Leading Out Retail. It’s by me, Donny Perry, and if anybody has any questions at all, they can find me anywhere online. I’m at Donny Perry everywhere. Well, and we will end with that Donny, thank you very much and you are listening to Bicycle Retail Radio. If you’re not a member of the NBDA and you are listening in to this, we’re kind of like Public Radio. So, join forces with us, pay a little guilt money and help support the industry. Take care. 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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John Robinson reinvented his career and life in 2017 after over 20 years in a successful corporate career in sales and marketing. Opening Johnny Velo Bikes in Columbus, Ohio Robinson has been able to bring his business, marketing, PR, and consulting to every aspect of his shop’s operations. His first year in business, the local chamber of commerce named Robinson Businessperson of the Year and by year two he joined the NBDA Board of Directors wanting to raise the level of professionalism in our industry. Robinson holds a BA in Public Relations from Ohio Dominican University and an MBA from Capital University.

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.

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