Wally Godfrey (left), sales and marketing; Kevin Godfrey, owner; and Kevin Clark, general manager and sales, hold the plaque that recognizes Godfrey Bros. as Farm Equipment's 2014 Dealership of the Year in the small-store operation category.
Category: Small-Store Operation
Major Line: John Deere
Shortline: Kuhn Krause, Knight, Hardi, Stihl, Honda, Schulte and Frontier
2013 Revenues: $20,073,403
2013 Market Share: 63.2%
2013 Return on Assets: 9%
2013 Parts & Service Absorption: 84% Service; 61% Parts
3-Year Revenue Growth:
2011: $12,000,000 (33%)
2012: $16,800,000 (28%)
2013: $20,073,403 (16%)
Single-store dealers who handle John Deere farm equipment are becoming a vanishing breed. Kevin Godfrey knows this. He also knows other small Deere dealers who have been squeezed out of the business to make way for the company's "bigger is better" model for its retailers. He's feeling the pressure and understands the push for larger multi-location dealerships isn't going to go away; it's how Deere wants it.
Godfrey says the dealership's tenuous working arrangement with its major supplier hasn't made it easy taking care of his customers. But, so far, he's been able to defy the odds, and these same customers have remained loyal to the Godfrey Bros. dealership since his father and uncle acquired the Jonesville, Mich., location in 1974.
He explains, "You just have to work around it and keep your customers first" when talking about the obstacles he contends with regularly, which includes Deere urging him to sell out or close down.
In fact, Godfrey Bros. is working around it well enough to have earned more than $1 million in revenue for each of its 18 employees in 2013. Godfrey says it looks like the dealership will do just as well or even better in 2014.
This and an overall exceptional performance in the past few years is what led to Godfrey Bros. being selected by an independent panel of judges as Farm Equipment's 2014 Dealership of the Year in the Small-Store Operation category.
In addition to total revenues of slightly over $20 million last year, the judges pointed to the dealership's market share of 63.2%, ROA of 9% and an absorption rate for service of 84% and for parts of 61% as reasons for their selection. Despite being surrounded by what Godfrey calls some "really good multi-store dealerships," Godfrey Bros.' revenues jumped by 33% in 2011, 28% in 2012 and 16% in 2013.
Godfrey Bros. has seen 43% sales revenue growth over the last 3 years.
For the record, Godfrey says a few years ago he approached Deere about expanding and didn't get far. "Another Deere store became available 3 or 4 years ago, but we were told we wouldn't get the opportunity to buy it. So, it doesn't really matter. We don't have a choice."
It's Not Personal
Godfrey says the dealership couldn't succeed if he took his situation with Deere personally. "The bottom line is they're in control, this is the game and I'm in it," he says. "Each day we have to win more battles than we lose. You can't let the other stuff consume you or take it personally, because it isn't. It's business."
Keeping it business is what allows Godfrey Bros. to prosper. For example, he says, Deere puts a premium on market share, so the dealership makes it one of its priorities. "It's the main thing we get judged on," says Godfrey. "To keep that John Deere sign in the window, they want market share."
While the dealership achieved just over 63% market share in 2013, Godfrey says it's an ambiguous target at best that changes year-by-year and the dealership only knows where it stands after the fact. "We find out how we did the previous year on November 15," Godfrey explains. "It's not like they tell you next year you need 42% or 45% market share. It's always an unknown and the rules can change from one year to the next."
He adds that he sees dealers of all colors and brands in the area becoming more competitive and aggressive, which also adds to the ongoing challenge of maintaining a healthy market share. "We just have to be creative and do what we can to keep market share and stay in business," Godfrey says. "We do that by offering personalized services to our farmers and taking care of their needs. Regardless of the dollars they spend or whether they buy a lawnmower or a combine, we strive to take good care of all of our customers. If we make a mistake, our customers know they can tell us and it will get resolved."
MUD & Margins
Regardless of the circumstances, Godfrey says he knows they need to work with farmers to get the deal done and stay competitive. "We don't have the extra margins that some of the big dealers have who are offering multi-unit discounts (MUD), but we have to do the deal. Like my dad said, 'If you make $100, it's $100 more than you had.' Market share is the number one driver for Deere, so we do what we have to do."
At the same time, he realizes gaining market share is a double-edged sword. "You can go broke trying to get market share, but if we're not selling, you'll go broke too," he says.
Godfrey points out that most of his customers don't typically purchase multiple pieces of equipment at one time. "In our area, we've never really done much in the way of MUD deals and rolling equipment every year isn't as prevalent here as it is in other areas. Most of our customers buy one or two pieces a year and they tend to hold on to them for 2-3 years or longer. The biggest farmer in the area has about 10,000 acres, but a big majority of our customers have 1,000-3,000 acre farms," he says.
Godfrey Bros. extended its Wi-Fi coverage to the test field behind the dealership to allow technicians to verify all adjustments and corrections have been made to customers' equipment.
Attention to the Basics
While Godfrey monitors many of the metrics that dealerships typically watch closely, on a day-to-day basis, he pays particular attention to parts sales, accounts receivable and wholegoods inventory. At the same time, short-term swings don't cause him alarm.
Using parts sales as an example, he explains, "Fluctuations in parts sales could be weather generated. Today, parts sales could be really slow, but yesterday it was raining, so we sold a lot more than today. I really look at the month-end totals and compare that way. If parts sales are down for a month, then I'm talking to Howie and John in the parts department and trying to figure out what might be causing the change," he says.
"We'll also look at what our competition is doing to see if we're losing business to them. Maybe they're running a special program or offering different discounts or free shipping. We'll evaluate the situation to see if it's competition generated or if it's an in-store issue," he says.
An example of an in-store issue, he explains, is the dealership's parts pre-pay discounts. Godfrey says this is the type of program that needs to be constantly evaluated. "Three months from now that program might not be working as well as it did, so we'll need to change the direction of our marketing and promotions."
He says he relies heavily on the parts department staff to communicate regularly with their ideas to improve sales. "It goes back to having quality people who have the best interest of the dealership in mind to come up with creative ideas."
Another example is their input resulted in a program to aggressively promote diesel engine fluid. "It was their idea to sell DEF as a price leader and we were able to get some new people in the door who weren't our typical farm customers, but who needed DEF. This worked out great for us and we've continued to push it," Godfrey says.
Godfrey Bros. prides itself on the quality of employees working in the parts department, which owner Kevin Godfrey calls the "backbone of any dealership."
'Backbone of the Operation'
Godfrey often refers to the parts segment of his business to highlight the success of the dealership because he believes it's a differentiator. It's what sets Godfrey Bros. apart from the competition, and focuses directly on the importance of good people. More often than not, he says, customers are looking for advice as much as they are for a specific part when they stop into the dealership.
"A lot of times when farmers come in, they're coming to talk to our parts people. They want their expertise. So having knowledgeable people behind the parts counter is key," Godfrey says.
And it goes beyond experience and knowledge, he adds. "We have quality employees in our parts department. If a farmer needs a part, he can call and we'll get it for him after hours or anytime. This is how we define customer care," he adds. "Parts is the number one department of any dealership because of the money it generates. We've always put a strong focus on it; taking care of the customer and turning parts. That's the backbone of the operation."
"Each day we have to win more battles than we lose. You can't let the other stuff consume you or take it personally, because it isn't. It's business ..."
Godfrey takes every opportunity to reinforce to customers that there are good people on staff who want to take care of them. "I make a point of regularly telling our customers, 'These are quality people who want to take care of you. Use them when you need them.' Our people don't have a problem coming in to get parts after hours. This is especially true for our dairy farmers. If a hose breaks that is used for feeding the cows, our people know time is a big issue," he says.
He believes the dealership has been more aggressive with parts availability than most other dealers. "We maintain a higher inventory to keep customers coming to us vs. going to another dealer. And, if we don't have the part we can get it to them no later than the next morning," he says.
Trade-Ins: Educating the Customer
Like most dealers, Godfrey Bros. faces challenges on the used equipment side of its business. However, since the dealership's customer base tends more toward medium-sized farmers, the dealership isn't confronted with the build up of 500 or 600 horsepower tractors or class 9 combines that some dealerships are facing. "The medium-size producers aren't stepping up to buy that equipment and big farmers are going to buy new. Somebody's going to have to make an adjustment as we return to $4 or $5 corn. Luckily, we won't have those battles coming due to the makeup of our customer base," Godfrey says.
What the Judges Say
"Even though they only have 18 employees, they generated over $20 million in total sales with a very good 'Dollars generated per employee'" ... "Their dominance in the category was very strong with the highest absorption rate and highest 3-year growth at 40% with no acquisitions."
He says the market for used combines is particularly tough. "When you go to auctions, the base prices on combines are dramatically lower than what a lot of dealers are asking for the units they have on their lots. Some I've seen are priced two-thirds higher than the auction prices. The market is still slow and dealers are still trying to put too much into them; they're not reacting quickly enough to true auction prices," Godfrey says.
The sales team at Godfrey Bros. works with customers to educate them on trade-in values and used equipment pricing. "Our salespeople will sit down with the customer and go over the pricing with them. We'll show them what a piece of equipment is going for on different websites and how many of them are currently available. Then, we explain the work we have to put into the piece of equipment in terms of service and parts.
"We tell them if they want our services, they've got to help us here on trade-in values. We just try and do the best job we can on educating them why we're offering them a certain price for their trade-in," Godfrey explains.
He says that personal attention carries over to product training, as well. The dealership prefers to educate its customers on a one-on-one basis after a purchase by spending time with them in the field to make sure they're familiar with the operation and features of the equipment.
"Doing clinics for a few hours and offering a free lunch is harder because farmers have become so individualized," Godfrey says. "Plus, they're going to so many different clinics already for seed and chemicals that you're competing for their time. What true new information are you really giving them product wise in those few hours?"
When the dealership does host a clinic, it is to a smaller targeted group of 10-20 customers. Godfrey says they are sure to have a specific topic in mind to keep the clinic focused. "You can go over people's head so quick that we focus the content and try to keep the group involved."
When it comes to precision farming products, the dealership also sticks to one-on-one tutorials. Again, because he believes that each farmer's needs are so dramatically different when it comes to Deere's precision farming products that it becomes too challenging to put on a group clinic that benefits everyone. Instead, one of the AMS staff members will sit down with the customer and go over his particular needs and answer any questions and concerns.
Godfrey Bros. has 6 service technicians, with the majority of the shop space dedicated to larger equipment. The shop, as well as the rest of the dealership, utilizes in-floor heating to maximize energy efficiency.
Godfrey Bros. places a lot of value on its employees, a number of whom have been with the dealership for 20-plus years. "You hear a lot about dealers having a hard time getting good employees, but we've not had that problem. We have several who have been working here since high school and have been with us 30 years or more. As soon as they come to work here, we show them that we value them," Godfrey says.
He adds that, just because unemployment may be high, doesn't mean you can turn employees. "It takes such a long time to train employees for dealership jobs and then make sure they have the skills needed to do the job, that if you're turning over help regularly you're wasting a lot of money. Keeping those good employees has always been high priority for us," he says.
For Godfrey, having good, quality employees is best for both the dealership and its customers. "Talking to farmers, they want to work with quality people." He stresses the key to keeping quality people is making sure employees have their own time outside of work. "As an example, over Memorial Day while other dealers were open, we were closed just like we are every year. Our customers know how to get a hold of us if they need a part or some other kind of help. It's not worth it having the entire staff here that day when they can be home enjoying the holiday like most other people," Godfrey says.
The dealership has good employees in place right now, but Godfrey recognizes that with the average age of the employees in their late 40s or 50s the situation could change in a few years. He anticipates they will have some employees looking to retire in the next 5 or 6 years. To help keep and attract new employees, Godfrey Bros. offers an attractive benefits package, including covering all employee healthcare and giving them 160 hours of paid time off annually. "We just give them the 160 hours. What they do with it is up to them," says Godfrey.
Over the last 3 years the dealership has embraced technology and how it can enhance the customer experience. "The biggest change we've made over the last few years has been the use of more technology and giving customers greater access. For example, now customers can pull their invoices up online from home," Godfrey says.
The dealership has also added TV monitors to its showroom to promote products and parts and service specials. A few years ago the dealership extended its Wi-Fi coverage and now technicians can work on equipment in a test field behind the shop. Godfrey says the test field and extended Wi-Fi make it possible for technicians to confirm problems have been resolved without having to take the equipment back to the farmer's field for verification.
The dealership has also invested in a drone that it rents to farmers. "We're being aggressive and proactive on embracing new technology like drones and having it available for customers to photograph their fields and work with the technology," Godfrey says. The dealership currently only has one drone available for renting, but Godfrey says he is considering adding them to their product lineup if there is enough interest from his customers.
Looking ahead, Godfrey says staying on top of the technology will be one of their biggest challenges over the next 5 years.
Bouncing Back from Disaster
Ten years ago Godfrey Bros. faced one of its biggest challenges - a fire destroyed nearly three-quarters of the main building. While some expected the dealership to close its doors then, owner Kevin Godfrey had other plans. "I couldn't just close up shop, I had to rebuild," he says.
Thanks to their business system with PFW, only about a day's worth of data was lost in the fire. For the next year, Godfrey Bros. worked out of a smaller building on the property shown here. With little support from its main supplier, the dealership rebuilt and today the facility is 4 times the size of the original building.
While sales were down that year following the fire, Godfrey's customers stuck with them and business has not only bounced back but grown over the last decade.
Godfrey knows it will continue to be tough sledding for Deere's remaining small dealers, including Godfrey Bros., but he says he's still enjoying himself and not ready yet to throw in the towel. "I'm only 53 and just to sell out for x-dollars isn't my goal. My sons work here and we're still having fun."
He likens his approach to operating his business to that of a Chevy dealership vs. a Mercedes dealership. "Our customers don't expect us to have marble floors where they're afraid to come into the store because they have manure or mud on their boots. We want our customers to be comfortable, but we still have a nice facility. They know we have to make money to update our facilities and equipment. We bought new semis a few months ago and we replaced two forklifts that were 7 years old. We put a lot back into the dealership to make sure our technicians have good equipment and a comfortable place to work."
At the same time he knows that the demands on all dealerships will continue to mount, not only from his customers, but even more so from equipment suppliers.
"Farmers have always been demanding customers. That's fine because they're spending a lot of money. They should be demanding," he says.
But Godfrey expects that more pressure will come from John Deere. He says the equipment maker has begun hinting that its dealers will need to employ agronomists and offer agronomic services. This, he adds, could be another obstacle for dealers, especially the smaller ones.
For the moment, Godfrey is trying to plan for the time when some of his best employees decide to retire.
"We've added a fourth person to our parts department just to help out and begin learning the job because it takes so much time to do it well. We have a tech attending Owens Community College who will be coming to work here. So we're planning for it."
But the conversation tends to come back to Deere. "We want to be a Deere dealer," says Godfrey. "They have a great product. We like the product. If they want to take their ball and not play with us ... we're still going to do something. We invested too much here to just walk away. It would be tough. We'd look around to see what else is available and figure it out from there.
"We're survivors. We've put a lot back into our facilities so when times get tough we're ready for it. We don't have a mortgage or anything like that. We're basically debt free."
In the meantime, Godfrey says the plan is to be the best single-store dealership selling Deere equipment. In other words, they'll keep on doing the same things that earned them the honor of being named a Farm Equipment Dealership of the Year.