Polaris’ Pam Kermisch on marketing past assumptions in the powersports space

Back in 1954 two brothers and a best friend decided they wanted a better way, a faster way to get to their location, and they literally strapped a motor to the back of a sled and created the first snowmobile. It was ingenuity at its best. And when I think about Polaris today, we have recreational vehicles, we have motorcycles, we have off-road vehicles, we have boats, we also have utility vehicles that help people do work smarter. And at the end of the day it's really about getting people outside and helping to have a better way to do things, whether it's working smarter or on the recreational side having the most epic experiences with your friends and family.

Yes. So in 2019 we really took a look at talking to our existing customers, talking to potential intenders of our brands, and talking to people we thought might be interested in what we offer. And we did some great consumer research and what we learned is at the heart of it we tapped into what they really care about. And what we found is what our current existing owners care about, more people could care about. We just had to find the right people, we had to reach out to them, we had to show them how this could fit into their lives and introduce them to our brand. That's really been a huge effort over the past few years to find the right people, show them how this could fit in with what they already do and make it better. And on top of bringing in more new customers, it's also bringing in new people that look a little different than our core customers.

You know, I think when you look at household penetration, off-road vehicles for example is 10 to 12% household penetration. So you're right, it's not something where 70, 80, 90% of the market has one of these. But what I will say is if you think about some of the audiences we tend to attract. So we do attract people who love outdoor recreation, they love being outside, they love adventure, they might do camping, they might do hiking, they might do fishing. We also think about the people who do property maintenance, they're farmers, they're ranchers, they're hunters. So when you think about those populations they are much more likely to buy our products. But if you look at the penetration, even within those we don't have 80, 90% of hunters. So there's still so much penetration opportunity within people who do the activities where it seems like they would really benefit from something that we could offer them.

So I'm kind of a nerd, self-admittedly kind of a nerd, and I really think that CRM and data and analytics played a huge role in this journey. Because prior to having that type of capability we actually didn't know how many customers we had. We had customers for decades but we actually didn't know how many customers. We knew how many units we had sold but units does not equal customers because you have people who've owned more than one over time. So going back a handful of years, we were able to get CRM, take our data in, cleanse the data, dedupe our people, and understand how many customers we had and set some goals and start measuring how many new customers came in each year. And when I say new customers, some were brand new to the category, some had owned competitive vehicles before but had never bought from Polaris, and some may have owned a used Polaris vehicle but had never bought new from us. So it's not a flash in the pan sort of thing, this is a strategy that we really need to go after. And so it became very intentional. Of course as the global leader it's in our best interest to get existing customers to come back to buy again because we have the largest number of existing customers, but we also need to focus on bringing in new people. And we've proven we can do it, so let's do it.

Absolutely. So if you buy a car it has to be warranty registered so that manufacturer will know that you bought a car from them, so if anything should go wrong with warranty they are able to contact you. Very similar, when someone buys one of our vehicles and it gets warranty registered, we receive the customer information. And we certainly can use third party data to append that, but we know who owns that vehicle. We also do have people who visit our website in our dealerships. The vast majority of them we call them multi-line dealerships, so they do sell Polaris but they also may sell Honda, Yamaha, Kawasaki, Can-Am, are competitors. So if you think of it very similar to being in a grocery store and being in a cereal aisle where you have all the competitors right there in the same aisle, you may think you're going to the cereal aisle to buy Frosted Flakes and flip and buy multi-grain Cheerios. A customer can come to our dealership thinking they're going to buy a Polaris Ranger and that salesperson can flip them to a Can-Am Defender. So when you think about it, it is in our best interest with marketing to try to get that customer committed to which brand and which product they want as early in the journey as possible to make sure that they can't get flipped at the last minute at the dealership.

You know, I would say it's less about it being one particular channel because at the end of the day our customers are all over the place in terms of their habits, their consumption habits and whatnot. They're regular people. But what's more important to us is understanding the people who buy our products. So we do have our owners, we know who our owners are, and we can do third party data appending, we can do lookalike modeling to understand. And we can't afford to go after maybe everyone who loves the outdoors, that wouldn't make financial sense. We may not be able to afford to go after everyone who owns one, two, or five acres of property or more around the country or the world. But what we can do is do lookalike modeling and use that data with our media partners to try to get more narrowed in on who are the right hunters that we should be going after, who are the right type of land owners. And part of it is not only being able to find the right people but understanding which populations and which segments actually came to our website, which ones ended up buying, and using that to continually optimize. But also we're doing a lot of really smart marketing things these days where we're using our current inventory, so what inventory is on the ground in each market, and using that with our media partners and dynamic content to be able to reach out to the right people and show them, "This Sportsman that you looked at recently is available right now at this dealer down the block," and trying to drive urgency there, or using other types of data that we might have whether they think they're shopping or not at that moment in time.

Yes. So several years ago we started something called Polaris Adventures. Certainly places rented off-road vehicles in the past but often times they were the old ones, kind of broken down. And it was really important to us from a brand perspective, we wanted to make sure people were in the current vehicles, the most modern ones and the ones that we knew were going to give them the best experience. So we created something called Polaris Adventures and you can go online and you can find Polaris Adventures. You can go to one of 270 locations, 268 of them are in the United States, one is in Mexico, one's in New Zealand. And you can rent a Polaris side-by-side Razor, you can rent a Polaris Slingshot which is a three-wheel roadster, think of a Batmobile, it looks like a Batmobile, it rides on road. You can rent an Indian Motorcycle if you ride motorcycles. And so you can do that in all of these different markets. And I'll tell you, even though I work at the company I have used Polaris Adventures. I've ridden in the dunes in Oregon, I've ridden in the desert in Arizona and Mexico, I've ridden in the mud trails of West Virginia, and all kinds of other markets. And each one of those is a different experience because the terrain is incredibly different. rock crawling in Arizona is completely different than being in the dunes, and is completely different than being in a tight trail, and which is completely different than being where you've got some mud. So I think that in terms of introducing new people to our brand, it's an amazing way to bring in new people to experience it. And you know what? Not all of them are going to go buy one ever, and some will never buy one, some may buy one maybe at a time in life when it fits them better, and others may just put it in their Instagram feed. And guess what, I promise this: if you were to do this activity and you were to put it in your Instagram feed, it is the best FOMO ever. All of your friends are texting you, "Where are you? What are you doing?" and they want a piece of that. So I think it's highly relevant in today's world and I think we're just playing a part of this growing travel market.

So it's interesting. If you think about maybe what you would expect, think about from traditional power sports customers, you know you might think older white male. And historically maybe that's how the category had been, particularly with ATVs. Like I said, half of our customers now are younger women, multicultural, so let's blow that up right now. But what I will say is going back a number of years ago we created a product called the Slingshot. Polaris Slingshot, like I said it's a three-wheeled vehicle, it rides on road, it's five and a half inches from the ground, open air cockpit, and it's very auto-like right. So now you can actually get one that is automatic or manual. And when we started with this vehicle we assumed it was going to be about performance, because that's what a lot of power sports customers like. And if you look at it, it kind of looks aggressive, so it looks like it's going to go super fast. We marketed it, we even did demos on racetracks because it was all about performance, and it was doing okay, not phenomenal. And we actually looked at the data and the data showed we had a much higher percentage of multicultural customers who own this vehicle, and that was really not typical of the industry. So we did consumer insights research to understand what brought them to Slingshot, why did they love it. And what we found was they weren't coming in because of performance, it was the style that really appealed to them, and they loved that when they drove around in this Slingshot, heads turned. And when we said there's something to this, let's start marketing that way. First of all, I think the brand is 40 plus percent multicultural customers today. But on top of that, the white customers that are buying this vehicle love the style, the personalization, they love the same things. And what's interesting is when you go to these Slingshot meetups, there's a lot of local groups, clubs that have organized and they all get together. When you look at the owners that show up, it is the most diverse group of people you've ever seen. Multicultural, white, old, young, and it might not be a group of people you ever would have imagined congregating, but they are loving each other and checking out each other's Slingshots and talking about getting together and how much they love it. And there's this common community that has brought these people together. So I think we've learned some great lessons about sometimes you think you know, and one of the number one rules of marketing is you don't know. Don't make assumptions, you need to actually listen to customers, learn from them, and be willing to adapt. That's been an awesome learning and really opened our eyes to opportunity within power sports.

Absolutely. You know what? Here's what I will tell you. Going back, I joined Polaris in 2015 and we had done some research on the Indian Motorcycle brand and the path to purchase. And back then the number one way people came into the brand was word of mouth. That's been probably for centuries and for decades, right? It's word of mouth. And in motorcycles it might have been your friends and family but you go to a truck stop and someone else is there and you're checking out their bike and you're asking them if they like it. The beautiful thing today is that definitely still happens a lot but with digital and social media people can learn from and share with people they don't even know. And so you see people when they're shopping for a vehicle they will ask, "How do you like yours? What do you like? What don't you like?" And it's authentic word of mouth. So from a brand perspective, if you create something wonderful and people love it and you make them feel valued and appreciated as customers, then hopefully they're the ones out there selling for you.

I don't think so. What I will say is getting outside with friends and family and sharing experiences is something people, especially our younger people, love to do. I think a lot of our younger customers will tell you that if they're new to the workforce or if they're in school, they feel handcuffed to their responsibilities sometimes. When you get outside, you put the phone in the glove box and you go out for a ride and you just turn the tunes on, you have a great time, you'll get back to the phone later, no question. And you're going to stop and capture a lot of content and share with your friends on Snapchat and whatnot, but it is 100% about sharing experiences and they love that. But I will tell you, going back in time, innovation has always fueled our category. That's just the new news, people always want the newest, latest thing. And for a long time it was power, horsepower, is it more CCs, is it bigger, better, stronger, faster. I will tell you technology has been playing a very large role now in what people are choosing to shop for. So a couple proof points are we have something called Ride Command. So I want you to think about it, if you were off-roading or going on a snowmobile ride, you're not on roads and a lot of times you lose cell service out there. One of the biggest fears people have is getting lost. You're out there in the middle of the woods and you get lost, you're out there in the middle of the desert dunes, you get lost. We have Ride Command technology that the maps will work even when your cell phone service doesn't work and that's super helpful. It also has a capability called Group Ride. So say I go out with five different Razors of friends and we want to ride together but I don't want to ride so close that I'm inhaling your dust or your exhaust, so we want to spread out. But you might come to a fork in the road and take a left and I go to the right, now we lose each other, that's not fun either. The Ride Command has a group ride function where I can see all the other Razors in my group, so we can ride together, I'm doing air quotes, but we can separate and then I still know where everyone is. So technology, it's not technology for technology's sake, it's actually making the ride experience better. I think that is extremely relevant to our younger customers.

For sure. You know, at my house, at least in the beginning I was Clorox wiping the groceries, so I think we all kind of have vague memories of those days. And life wasn't very fun because you were trapped inside unless you could go outside on a walk or do something. And we saw our business really soar because on one hand from a recreation standpoint it was something that you could do safely outside. Actually think about off-road riding: you could be off-road riding with a bunch of friends and you could each be in your own vehicle, so you were safe, you're wearing a helmet. I spent that first summer of 2020 a lot of weekends out on our boat and out there the world felt normal. So for sure we saw sales surge. And we were concerned though, thinking okay this is great, but when people have other options to spend their money on, are they going to just trade in all these vehicles and flood the market and suddenly we're not going to have a sustainable healthy business that we've been having? It's not the case. We actually look very much at our repurchase rates and we look at short term one year, we look at three, we look at five year, we look at ten year. When you look at the one and three-year repurchase rates, they are very healthy and the five-year repurchase rate is very, very strong. Which tells you that the customers we brought in in 2020, 2021, they aren't just abandoning. They actually have found something that really works for them and they're continuing to come back and buy again. And by the way, they're going to tell their friends and family. So we believe that it's a good example of I always say never waste a good crisis. The pandemic was tough for a lot of reasons but it certainly gave our business a boost and brought in a lot of new customers and it seems like it's a very healthy population of people we brought in.