John Deere has entered into an alliance with Honda Power Equipment similar to an earlier alliance with Stihl Inc. As John Deere continues to build a buying experience for John Deere customers of carefully selected brands and products, Honda is now able to grow its reach in a market of shrinking dealers. John Deere dealers will have to go through the same qualifying processes as other Honda hopefuls, but there is still some concern among existing Honda dealers.
Building a buying experience, growing sales
John Deere has developed a sales model for their dealers that creates a controlled sales environment. The company carefully selected Stihl handheld products to supplement their lawn tractor and push mower lines. Now, John Deere has decided to allow dealers to sign up to sell Honda walk-behind mowers, generators, tillers, water pumps and snow blowers, further rounding out the dealer offering.
"After careful consideration, Deere and Honda picked each other," says Maureen McCormack, media relations manager, John Deere Turf Division. "Both companies are known globally for having impeccable reputations, and share a similar culture of quality and concern for customers. And of course, both companies have complementary product offerings."
Deere has also decided to stop offering their walk-behind units in the U.S. after 2012, and allow Honda's equivalent models to sell in their place. "This agreement primarily affects residential walk-behind equipment, but also extends to the 21-inch walk-behind commercial mowers (WE80 and WE85)," McCormack explains.
With the number of dealers available for recruitment limited, this opens up more possibilities for Honda to reach a larger customer base.
"Honda is always looking to grow their national servicing dealer network," says Rock Reed, assistant vice president of the Honda Power Equipment Division. "With John Deere announcing their plan to not make lawnmowers in the future, it was the perfect opportunity for us to expand our sales."
Honda dealer concern vs. trust
With the agreement in place, John Deere dealers can start signing up to sell the Honda equipment in late 2011. They will be asked to go through the same qualifying process as all the dealers before them. This news is receiving mixed reviews among existing Honda dealers.
"All of the John Deere dealers, just like our Honda dealers, are afforded the opportunity to apply—and we want to sell all of our product lines through all of the locations," explains Reed. "The qualification process will be the same for all, regardless of who they are."
The first concern from many Honda dealers is whether a John Deere dealer can offer Honda products regardless of their proximity to an existing Honda dealer.
"We have four John Deere dealers with 25 miles of our store, one is less than six miles away," says Joe Fobes, store manager for Engelhart GreenSmith in Madison, WI. "Besides already competing with two Farm & Fleets and two Home Depot stores, we will now be sharing our market with up to three additional John Deere dealers as well."
This concern from dealers was expected by Honda, but they assure that the differences in their market segments will help dealers to maintain their own customer base in their area.
"Most dealers have a natural concern that there is a retailer in their area. We don’t expect to lose any dealers out of this action," says Reed. "In the power equipment industry, because of the variance in customer types of rental, construction and government, there are no territorial boundaries. The customer base is unique and doesn’t collide as much as you think."
There are, however, existing Honda dealers who trust that Honda will protect them from John Deere dealers setting up right in their area. "John Deere dealers have the opportunity to be a Honda dealer, but they still have to go through Honda qualifications—and part of that is territory," says Roger Smith of Chilton Turf Center with two locations in Tennessee. "There is nothing to worry about except the John Deere dealer across the street. I do trust that Honda will not qualify a dealer if there is a proximity issue."