Case Study: Stihl, Inc.
For nearly a century, STIHL had been a leader in the handheld outdoor power equipment category, having invented the chainsaw. As shopper convenience and low prices at Big Box chains attract foot traffic, would STIHL be able to maintain, and even grow, its market leadership utilizing an unexpected go-to-market strategy?
The answer might surprise you….
Winning With A Counter-Intuitive Distribution Strategy
With STIHL competing against at least 15 distinct brands in the Handheld Outdoor Power Equipment subset, the company sought to differentiate itself from the competition by providing unmatchable sales advice and service to its customers.
How? By working exclusively with 8,000 independent retailers who had their own “skin in the game.”
It seemed counter-intuitive — how could you choose to walk away from the enormous volume opportunity offered by Big Box partners? Instead, the company went all-in on person-to-person connections like sales coaching and financial support for its dealer network, and proper training, repairs, advice, safety education, and skilled product selection for consumers — distinct advantages Big Boxes either typically weren’t interested in or couldn’t offer.
Cutting Your Own Path
Several years earlier, STIHL, in a key finding, concluded that high-volume distribution channels like home centers and mass merchants didn’t offer consumers top-level service and support. And in an era of cost-cutting and intense price competition, the company realized that big boxes had no incentive to change, dictating 100% of the terms of any relationship. Still, playing ball with these category killers is tempting because the sales volume they offer is mind-boggling.
So STIHL made other plans, which included working extremely closely with its dealers. The company invested significantly in its independent dealers’ showroom construction costs — and not as a loan. In addition, STIHL provides regular dealer training on the proper use and maintenance of its products. STIHL’s dealers, who are customers themselves after all, rate the company as a “high performer” when it comes to executing fundamentals or going the extra mile in a relationship. And this has a trickle down effect to end-users.
On the Internet, STIHL leveraged its website as a “hybrid channel,” directing shoppers to the nearest dealer — purposely, and strategically, limiting functionality on its own site to data collection it shared with dealers, while also building robust web pages for dealers to use on their own sites.
Print and TV advertising playfully communicated STIHL’s decision to walk away from the Big Boxes. On TV, the company’s execution opened with a fresh-faced home center employee, unable to properly help a customer, running to a nearby STIHL dealer for help. And in print ads, the company put all of its faith in its dealer network, demonstrating in the strongest possible way that it would support its dealers and be different in an important way.
Gaining Share in A Down Market
The big question: Did it work? Yes.
And, while STIHL continues to keep an eye on shifting demographics and consumer needs, the complete focus and dedication on its own dealer network has paid big dividends for the company. In fact, not only did STIHL gain market share when other brands, and even the Big Boxes, faltered a bit around 2008, STIHL has also acquired a home-and-garden partner brand that had chosen the Big Box path, saw its share erode, and opted to retrench, also leveraging the STIHL independent dealer network.
STIHL is pleased because the strategy has paid off, its independent dealers are pleased because STIHL is a committed partner, and consumers are pleased because, though it may not be as convenient as a quick trip to the home center, the level of service and trust at a STIHL dealer is unmatchable by a Big Box