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Powersports Business Interview With VP of Arctic Cat Snowmobiles


(4/3/2020)

ArcticInsider Editor Note: Here's a reprint of a recent Powersports Business interview conducted with Craig Kennedy, Arctic Cat Vice President by Snowmobile Editor, Nick Longworth. I've edited the original for length, and its still lengthy, but since we're all quarantined, we can practice the age old tradition of actually reading versus scrolling.  BTW - 15 more days to get in your Snowmageddon order.

 

Arctic Cat Alters Its Ways In Snow – Changing Industry Leads, to Innovation, New Sales and Distribution Strategies

Arctic Cat Vice President Craig Kennedy

At the annual “Unofficial kick-off” to the snowmobiling season this past September at Haydays in North Branch, Mn, Arctic Cat officials pulled media members into a closed-trailer meeting on its lot, and had an honest conversation.

They admitted the company had heard the rumors from consumers questioning its commitment to the industry (especially after being purchased by manufacturing giant Textron a few years earlier). On that day Arctic Cat Vice President, Craig Kennedy, told a different story. 

The company knew it had to make innovative changes to adapt with a changing marketplace, or risk losing its consumer base entirely. Kennedy said the company was committed to remaining successful, and carving a path forward, while reiterating that media outlets and dealerships would begin to see the change in company culture with increased communication and brand consistency. According to Kennedy, they had heard the complaints and things were going to change. It was the beginning of a new age for Arctic Cat.

Arctic Cat's Spring Only Order Program Snowmageddon

SNOWMAGEDDON

It wasn’t long until the company followed suit and began making positive news of its own for the public.

In October Arctic Cat offered an unprecedented early unveiling, previewing 24 of its model year 2021 lineup to the public allowing access to snowmobiles and specs that historically hasn’t been available until months later, near the end of the season. As further enticement for consumers, the company offered discounts on accessory packages for deposits placed before December 31st.

The shift in sales strategy was noticed immediately throughout the industry and left numerous dealerships and consumers wondering.

“If you looked at the standard rotation of the industry, it was set up to offer a spring program with a measured amount of success, and then we would allow a certain amount of wholesale goods to be available in-season,” explained Kennedy.

“The product being available in-season created risk from a business standpoint, which is where all the heavy discounting comes from – if you predict too much extra inventory to be available in-season, suddenly there might be so much that discounts need to extend to inventory that is now three and four years old: you’re spending thousands and thousands of dollars just to get product out the door. You can imagine what that does to the value of your product in general; you’re not only hurting the product as far as devaluing new goods, but you’re also devaluing the trade-in value of the used product as well. We decided we needed to go about this in a different way.”

According to Cat the “way less traveled” was met with success. Consumers can now only order new Arctic Cat models through the spring-only “Snowmageddon” Program offered exclusively through Cat dealerships. 

“We had a very successful first year. We far over-achieved what our expectations were for the year. It was very successful and although we were teaching the dealer network about this new technique after 20 or 30 years of doing it the same way, we were pleased with its success all around considering we went through such big changes all at one time,” Kennedy said.

“At the beginning of the switch there was a lot of trepidation – concern about what was going to happen and how this would work. You run into the scenario where people are just learning it for the first time, and now that they understand how this is played, they are readyfor the future. Many dealers are extremely excited – we’re all very excited for model year 2021.”

While outwardly Snowmageddon seems to limit the window of purchasing opportunity for a consumer on the surface, it follows a strategic supply and demand model to allow each machine to retain its value when maintained properly, which in turn keeps customers happy in the long run.

“Consumers really like the value proposition we’re able to offer. Those that turn vehicles over every two years are really liking this because they’re actually able to see the value of their used product increasing at the same time – the sleds will have more value going forward,” Kennedy said. 

You can order your new 2021 Online with Arctic Cat

 

ONLINE ORDERING

The company also began to adopt new ways in which consumers could order the machines themselves. From your own home and phone, you can seemingly purchase almost anything these days – why not a snowmobile?

Following cues from the automotive industry and services such as Amazon, this season Cat has instituted online ordering through its website to allow consumers to avoid the physical trip to the dealership, if they prefer.

“It’s not hard to look at what’s happening, which is a new way of going about business using online shopping. We see that as the future,” Kennedy said. “We were already headed down that avenue, and this was just the natural progression for us – to have somebody be able to sit on their couch and press the ‘Go’ button on a new snowmobile.

But that’s not to say the dealership is being cut out of the process. When a consumer places a deposit online it generates an order with a reference number for Arctic Cat, the consumer and the dealership. The consumer has the ability to define which dealership the order is assigned to if a previous relationship has already been established, otherwise the nearest geographically located dealership is selected by Arctic Cat.

The dealer then accepts the order and begins the communication process with the customer. Instead of relying on salesmanship, the dealership is now allowed more time for customer service and retention – a pivotal component of repeat business sometimes neglected during a busy “selling season”.

“We were a little skeptical at first, but if the consumer feels more confident buying the sled online, and it makes it easier for them, then we are all for it,” said P.J. Wanderscheid, general manager of Country Cat in Sauk Centre, Mn. “It might spur some new interest if the buyer does not have a dealer close to them.”

The 2021 Right-sized Blast Line-up

INTRODUCING A BLAST

In addition to new ways to order its products, Cat has also been introducing new technology itself to continue to offer consumers new options and stay at the forefront of the positive news cycle.

In 2018 Arctic Cat introduced iACT (Now ATAC for 2021) an interactive, fully adjustable suspension system controlled from your handlebar. In 2019 they introduced the Alpha single-beam rear suspension for their mountain snowmobiles and for the 2021 model year, they’ve continued innovation within the market.

Offering a new line-up of 7/8 right-sized chassis under the Blast lineup, amongst its continued mountain, crossover, trail and utility offerings.

“The message we’ve put out by being ‘troublemakers’ in the industry resonates for not only the products we’re offering, but the way we go about our business,” Kennedy said. “We don’t plan to be stationary. We plan to make sure that we are challenging the status quo.”

After a substantial amount of customer research to understand what consumers are looking for, Kennedy noted the company was looking to recapture some of what made the business so competitive throughout the 80s and 90s.

“Something that came back to us was that these snowmobiles are growing in cost and size every year. We needed to provide a vehicle that was accessible to the average consumer, but also had capabilities so it wasn’t taking any shortcuts and could actually provide a midsize snowmobile experience meant for everyone. That was the idea behind the Blast,” said Kennedy.

"The response has been crazy excited. Several dealers have been able to demo ride the sled and the response has been incredible – they truly had a blast, on the Blast. I think it will surprise a lot of consumers – it’s a fun ride and lighter than the average-sized snowmobile; its agility is greater than what you would have for a full-sized snowmobile,” said Kennedy.

“This is going to bring people back to what other machines felt like as far as size and agility, with a much more advanced suspension (and engine). We feel there is a big priority to bring access to a greater percentage of people. With this Blast model we’re doing our part to make sure we allow people the opportunity to get back into the sport or have a product that is much more suitable for a member of the family.”

Far from preparing an exit strategy from the industry, Kennedy says Team Arctic has its eyes pointed toward the future.

“We intend to be around for a long time; for many, many more years. Just because we’re changing the way we do business, does not mean we have any thoughts of exiting it,” Kennedy said. “We have a strong brand and following. We intend to continue to grow the snowmobile business.”



Comments (17):

kawcat says:
4/3/2020 11:34:00 AM

good to hear something straight from arctic cat. But there site still needs some polishing. I agree it is a great value for dealer and consumer not to be forced an over priced machine that later will be discounted depending on winter but they should allow the dealer to stock a few basic units for the impulse buyer. also some of us cant afford to order a sled until we sell our old sled so Spring is a terrible time to invest in a new sled. Also sad to see they went like the rest of the industry and stopped making parts for older models. It would be wiser to not start the preorder until spring like normal. It makes the costumer feel that this sled is already old having seen it for the last 4 months and takes away the sizzle of a new model. Plus it gives the competition plenty of time to react and out do your product. Also would be nice to find out what is going on with parts? Im guessing they went not stocking parts like every manufacturing is doing so and hiccup causes massive back order.
Don says:
4/3/2020 2:25:00 PM

I’ve been crowing about this since I bought my 2020 T-Cat (which is the best of the breed thus far by the way), any business needs to make money and turn over their inventory, by thinning under performing dealers and the inventory pipeline of older units, Cat has made a wise move all while turning the industry on its ear. If you think the other mfgs haven’t taken notice (while offering rebates on current units) go back under your rock. The demo ride program which I think is being supported by Cat’s not showing up at many of the regional “static display” snow shows and is a brilliant move to put the customer on a new unit that they can ride. I’ve heard “I won’t buy anything I can’t ride”, Cat is the only manufacturer that is doing this, sure some dealers can let you ride the current year snowmobile but no one has the next years unit available for test rides. Everyone wants a “brand new” chassis except for the “brand new” price that would have to be paid. Even the new Polaris is an evolution of an existing chassis.
My hopes for Cat’s next steps: color choice options, electronics gps, mapping options etc. and of course I said “options” which means extra cost to the consumer if they so desire.
Phil says:
4/3/2020 3:48:00 PM

I think Arctic Cat is really hurting its sales by closing down all the small dealers. I have been on Arctic Cats since 1988 but now with the closures the nearest Cat dealer is 275 miles away. There are 4 Polaris dealers within 100 miles. This has to turn customers to another brand.
Derek says:
4/3/2020 6:23:00 PM

AC is getting left behind in terms of spring order options, new engine displacements (650/850cc), suspension advancements, etc. Look at the new 650 Matryx from Polaris, that engine size is perfect at 650cc for that HP class. I almost spring ordered a 2021 Polaris 850 XCR, but stayed true to my Cat roots. Come on AC go back to sweet awesome graphics like the mid 90's ZR's and ZRT's or even the Firecat's
Rick Schafer says:
4/4/2020 9:34:00 AM

I would like to understand the thinking/strategy of the dealer closures. Obviously if a dealer isn't moving product it makes sense. But I have heard that some of the dealers were moving product but yet were dropped.

Also would like to see more options when spring ordering!
STEVO says:
4/4/2020 1:23:00 PM

Hey Kennedy hope you are listening to the guys here or cat will die Nuff said. Oh yea U will just look for another job just like the Textron idiots u have no passion or care about the business or the sport all u want is money like the Bosses. Thats why AC is almost D.O.A. Roger and the old crew cared about the sport.
Kevin says:
4/4/2020 3:37:00 PM

I appreciate the article and like a lot of what was said - especially listening better. IMO AC lost it’s identity and in doing so lost it’s way. They are very clearly changing that now. Not just words. The ‘troublemaker’ identity is perfect and the new sales approach reflects new thinking. Now it’s time to stay on the gas. They have a way to go, but they have done enough for me to believe they mean business and will turn this around.

Regarding dealers - wouldn’t the new sales model better support smaller businesses carrying the brand? In the last 10-15 years the superstores have taken over and with that saving a few hundred dollars replaced a strong dealer - customer relationship.
Ken says:
4/5/2020 5:53:00 AM

I'm totally on board and liking what Cat is doing with innovation, demo rides, ordering online and the whole smowmageddon things. My biggest complaint is the dealers and lack of them. No one on here or forums has explained or justified the lose of dealers. I don't understand why there is not a dealer in every town now. They do not have to stock any units unless they want to. They can carry some PG&A, (Parts, Garments and Accessories). They can do maintenance, repairs and service. I'm not talking just about being a Cat dealer. I'm saying this can be added to any local repair shop, boat dealer and even vehicle dealers. Back in the 70's when my dad bought us our first new 1973 El Tigre 250 it was from a boat dealer in town. Boat dealers in town and around carried Cats up until the 2005s or so. I remember purchasing my new 2005 Sabercat from the local boat dealer. Since then I've had to travel to purchase my sleds.

Now days to bring my sled into the dealer, I purchased it from, is a day to and from and then another day to and from to pick it up if I want any kind of maintenance, service or recall done. I do have a closer dealer, still too far away, but, I know for a fact, that if you did not purchase your sled from them you do not get the proper service from them. "Oh, you did not purchase the sled from us". "it's at least two to three weeks before we can get to it". The dealer you purchased it from. "Sure, bring it right in." It's still at least a week or more before it's done though. If I need service or repairs on my F150 an appointment is made, with my dealer in town, and most every time I can wait for it. I know it depends on what needs done but oil changes and other minor service items I can wait for it. If it's longer they will even pick up my vehicle and drop it off when complete. Now that's service! Why can't Cat do that? I have a Ski-Doo and Polaris Dealer in my town. They do it.

I just got done summarizing two of my Cats. Changed chain case oil. "What a pain!" Changed plugs, took off clutches and cleaned, changed belts, greased the skid and cleaned the sleds. If I had a dealer in town I would have gladly paid them to do this.

While going through my 2019, still under warranty, I noticed some gunk or black type stuff in my coolant tank. Guess what I need to do?

Some one please explain or justify to me that this can not be done. Bring back dealers. All I see is lost sales. Thanks.
Ken says:
4/5/2020 6:44:00 AM

Sorry for going on but I would also like to add that this is not just for sleds even though I have 10 other cat sleds. I'm also talking about my other Cat products. I have a 2013 Wildcat4 and guess what I need to do with that. Yup, change oil, clean air filter, transfer case oil and plugs. I need new brakes soon too. I also have two 1997 Tigersharks. Guess what I need to do with those to get them ready for summer. They even have new engines in them. If I had a Cat dealer in town they would get my money. Thanks for listening. Hope Cat is listening.
Flintstone says:
4/6/2020 5:30:00 PM

I’d rate the 2020 as ok, I really think it is the rear suspension that is holding this sled back.
Think fun factor!! Arctic cat think fun factor you guys. I promise you, fun factor opens wallets.
JimR says:
4/6/2020 6:19:00 PM

If you think of fun factor as skis to the sky's then I don't want anything to do with your idea of fun factor. My 2015 rode really good. My 2018 rode even better and my 2020 is about as good as it gets. Rarely ever bottomed out and was by far the flattest cornering sled I have ever been on. I rode the Axys and the G4 and neither one of them was better. Doo maybe better fit and finish but butt ugly. Poo? Nothing. All opinion of mine of course.
Andy says:
4/6/2020 8:48:00 PM

I think its a smart business model. As far as sleds are concerned. An 850 or 880 would be great for the 2 strokers. Not that they need it, however, the market is demanding it, so I think they should entertain it. Also, some tweaks to the rear skid to make it even more plush would go a long way. A higher seat is needed on the procross ZR line. More storage areas and clean up the dash area. As much as I like the gauge, you need something a little more modern and robust. Built in gps... etc.. Cat is going in the right direction, but they need to accelerate it a bit faster then they are now... But, I like how the inventory is low and the prices of new sleds and used sleds hold their value a lot more.
Glad2BGone says:
4/7/2020 3:58:00 PM

Oh sure, they're listening, alright. LOL You betcha. Build to order. Value proposition. Balancing the channel. A new age. A new day. I heard that crap a million times. We are trying to help you, Mr. Dealer, as they stick the knife in your back. But this time we mean it! LOL More lies from the Textron fools. Heaven help the dealers who are hanging on.
jj says:
4/8/2020 6:32:00 PM

Textron won't give a definitive answer to anyone with the cutting of dealers. All a bunch of bs about under performing dealers and left over units not selling. Yet some dealers that were selling and some that haven't been in the business long enough to know if they were gonna stay small or become the next big store got pulled. But then they go to a spring only order. Well that would of actually worked great with small dealers. As a truck driver came to pick up our units he simply told us they won't say anything but it all has to do with your location to a tracker off road dealer. We were told in our area due to the size of population we would have to be 50 miles away from any tracker dealers/bass pro shops. Its the only thing making sense to me on why they dropped the dealers. And I even get why they would do that. Hell tracker came in and offered to buy more atvs/utvs then they have ever sold but with a contingency of getting rid of dealers near their dealers. It would be nice if Textron would of just came out and given real answers.
Glad2BGone says:
4/9/2020 8:50:00 PM

I won't post a link here, as I imagine it would be taken down, but I still receive the quarterly Arctic Cat dealer survey results. As has been par, and virus aside, Arctic Cat dealer sentiment/outlook is at historic lows, and is well below the industry average. When you read the dealer comments it is amazing they are still in business. The dirt side is a total shambles. They can fool some of the people some of the time, but they aren't fooling the dealers whose livelihoods are being ruined, and they certainly aren't fooling the consumers who are staying away in droves. Their dirt market share is down to 6%. They are 5th in ATV, and 6th in SxS share. Even Honda has passed them in the SxS market. Absolutely pitiful.
Kurt says:
4/10/2020 2:13:00 AM

Coming from Alaska and when I mention the fact I ride arctic cat. I get laughed at. I get the jokes but now im starting to believe it. The Arctic Cat dealers up here have to diverse or die which most of them have. If I dont see a change here soon im jumping ship. My buddys 20 Doo smokes my 19 mountain cat in everything but looks and comfort.

Ive ridden cats my whole life. Dont force me to jump ship. With no dealer support and worthless technology/halfa** tech that bends and brakes
Mr Know it all says:
4/10/2020 3:39:00 PM

All manufacturers have long forgotten that the dealer is the face of their machines. They think these boiler room dealers are going to retain customers and keep the sport going. Money and margins has turned this in to a w&%re market and closing your dealer that youve know since you were a kid is crazy. Other dealers have thrown in the towel because the factory bullies them and screws them over. The sport on the whole is is trouble because of many factors.

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