What can the cycling industry learn from Ducati?

The first part of CIN’s, ‘What can the cycling industry learn from automotive and motorcycle industries?‘ series sees us talking with Italian motorcycle brand Ducati, the Bologna based makers of design award winning, WSBK and MotoGP conquering, performance and lifestyle motorcycles.

For readers this ‘when specialist motorcycle maker meets volume car manufacturer’ can easily be explored as ‘when bicycle manufacturer(s) meet car manufacturer(s)’ – offering a unique insight, and inspiration for business change.

Here, we explore how the legendary Italian motorcycle manufacturer experienced becoming Audi owned, part of the wider Volkswagen Group, and what this meant for a low volume (61,562 units in 2022), specialist, Italian motorcycle business, as it became part of a global, volume focused, German auto business.

Our conversation then focused on questions around manufacturing process (supplier relationship) optimization, organizational culture change, business structure, process adaption, business systems, and tool evolution – things like ERP, inventory management software, and CRM – where these are used to great effect in the auto industry, managing OEM supply, distribution, and retailer relationships.

Giorgio Favaretto has worked for Ducati for almost 17 years, and has spent approaching 4 years as the Head of E-Bicycle Business for the Bologna based brand.

Over to you Giorgio….

Well, Simon, it’s certainly a very interesting time. I’m very happy to have this talk with CIN.

To open the conversation, I should say that, as a head of e-bicycle business in Ducati, there are topics which I am happy to discuss, for example, how the automotive company can change or contribute for and in the bicycle industry. I can give you my own idea of how this can be, could be, done, what will be the difference, what are the differences that I see, and have seen, between the bicycle industry and the automotive industry.

I’ll start from the moment that Ducati was acquired by Audi, which is part of the Volkswagen Group. I take a statement from my CEO who said that ‘Audi is the best shareholder’, expanding on this, highlighting three positive things.

First of all, a great respect for the brand. The company was left it in Italy, it was left to the Italian management, so Audi, from the start, didn’t want to change Ducati’s DNA.

Second, they didn’t want to change the positioning of our values, style, sophistication, performance. These are an integral part of the Ducati DNA, core brand values before the entrance of Volkswagen Group – this is very, very important.

Third, by joining the Volkswagen Group, the company gained more financial solidity, and a transformation in the production processes, which becomes more solid, but always with a balance between the creativity and the passion; that is fundamental for brands like Ducati. At the same time, we embrace a more German way to work, so more precise, attentive, also with the cadence of planning. These two, mixed, were key to the success that we have seen so far.

Now factor in the investment in and passion to go racing, because racing requires a commitment to R&D, which requires a lot of investment, and passion. On that, our owner never reduced the commitment. (In 2022 Ducati achieved a world first in motorcycle racing, winning both MotoGP and WSBK titles in the same season. 2023 saw this feat repeated, with the addition of the World Supersport title. Looking to the near future, Ducati is also developing an electric race bike which will become the MotoE series bike in 2024)

So, from this 2012, €747 million (US$909 million), acquisition, we can say that it was the best solution possible. As the business goes forward from the acquisition, every year motorcycles become more complex, more sophisticated, and so does the customers’ expectation.

Cycling industry comparisons

In the highly competitive environment of automotive dealerships everything is tracked because it is essential for long-term success. Tools, strategically placed, in support of a mapped-out process, reduce effort needed, making tasks less time-consuming for the dealers, as well as delivering better experience for customers – a more profitable and positive experience for everyone.

Now, the 2023 cycling industry is with the growth of the e-bikes, becoming closer to automotive, but in delivery is, in fact, very close to apparel: High seasonality, high discount, and not so much tracking about the sell-out trend.

I think the automotive world can bring more value here, maybe even more than in product development itself.

 Working in a considered fashion with your retail partners

If I’ve learnt one thing in my professional career it is the importance of mutual benefit between partners: In order to unlock long-term advantages, and success, strategic partnerships must deliver mutual benefits.

A truly omnichannel approach

Our Ducati e-bicycle are available both at the Ducati dealers and online through a dedicated eCommerce platform (today available in the EU only), but, since we play as a team, a brand, and a global company, our eCommerce system is designed to work with the Ducati dealer network. Our online customers can choose home delivery, or delivery to the dealer. In the second case the customer will collect the e-bicycle “ready to ride”, from the dealer, at no additional cost.

I’m sure many others arrived at this conclusion. The only way to work together – physical shops and online – in the connected world is as an omnichannel company.

Our goal is to evolve step by step our multichannel system by turning into a truly omnichannel system where the client can buy online choosing what our dealers already have in stock. To make it possible you must have evidence of the network inventory (as mentioned we must measure the sell in and the sell out).

You market online, and you support your brands community of owners and fans online, so you sell online. Naturally enough, you’ve created the reason why for a customer to buy your model. An omnichannel approach means you can buy here and collect at any retailer, knowing that you’ll have the same service at all of the brands’ retailer partners: The price is consistent, and the customer experience is tracked and measured.

The market requires more and more focus on the customer experience. To be clear, customer experience starts from efficiency of processes for the development of the product, and the supply of the product. At the same time, also, the customer experience from the entrance into the Ducati world, to the continuum of the customer journey (where our dealers deliver to the end customer – our Ducati riders, or ‘Ducatista’). So, we rely on many different processes in order to assure the result of the success of the Ducati strategy, the company strategy, which is totally focused around the customer experience

For the company, measuring the Customer Experience through a CRM system is the key to business survival, and business success.

We then have dealer KPIs specifically related to the customer experience (for example the customer satisfaction, and how much the customer would suggest your product or your brand to others). The achievement of these KPIs are part of requirements to our dealers.

This is the reason why we don’t limit just collecting customer data through warranty registration forms that are often not very complete or engaging for customer.

Making Customer Relationship Management powerful

For Ducati, our passion is shared with our dealers, customers, and brand fans via planned, mapped, tested, and measured processes, to ensure the brand is consistently represented as we wish. This is all possible with the CRM tools that we have consolidated in Ducati, and you’ll find across the automotive industry, which I see starting to be used in the bicycle industry, at brand level.

These tools help to achieve not only results in terms of customer satisfaction, redemption of the initiative, but also other areas related to the business processes, including order management. It’s all implemented in one unique system.

The entire business owns the customer journey

From the creation of the lead to the tracking of the opportunity, when the clients enter into the showroom, or contact us via our website, it’s a multi-channel approach. From the delivery of the bicycle or motorcycle they buy, through and across the post-sale ownership experience – we have always a system, the same system, that follows this customer journey.

Restructuring processes. Restructuring business partnerships.

In the bicycle sector the warranty procedure is very particular because dealers must refer to each third party components manufacturer with different warranty request procedures, same as for the spare parts supply. (In cycling, what I see is that) it’s very fragmented and time consuming.

In the motorcycle sector the dealer follow one warranty procedure with one Point Of Contact; that is always the manufacturer.

Exploring the warranty process flow – if the shop is not so structured, and (the distributor) not so clearly very focused on (end) customer – this risks a very bad customer experience. This fragmented flow risks to have a big cost, monetarily (financially) and reputationally.

 Tools, tools, business tools….

Recently I have had the opportunity to speak with several bicycle shops (all multi-brand) about the current situation in general, and the challenges of the bicycle industry. After that I perceived the necessity and the importance to work on a more sustainable business model, not based on discounts according to high stock commitments, but on providing process and tools (CRM and lean order management, network inventory tracking, financial service, omnichannel system, spare parts and warranty management) with the aim to strategically and systematically increase our, and our partners, long term objectives.