Strategies executed:
– Emphasized customer service above all else to build customer loyalty and positive word-of-mouth marketing.
– Identified solid business locations and seized opportunities to penetrate new markets.
– Expanded from one auto dealership in 1982 to 21 in 2004 to take advantage of business synergies and minimize costs.
In 1974, John Bergstrom and his brother, Richard, opened "The Old Post Office," a bar and restaurant in Neenah.
At the time, John was a car salesman, and Richard was a banker at First Wisconsin in Milwaukee. They ran the restaurant on the side.
In the early 1980s, the Bergstrom brothers sold their restaurant. They decided to get into the car business, and they built their first automobile dealership in 1982, a Chevrolet dealership in Neenah.
"There weren’t any Chevrolet dealerships in Neenah at the time, and GM gave us a chance," John Bergstrom said.
They took full advantage of that chance. Today, Bergstrom Automotive, based in Neenah, is the largest auto dealership chain in the state. The company owns 21 dealerships in Wisconsin, has about $800 million in annual sales and employs about 1,600 people.
"It’s been a good business for us," said John Bergstrom, chairman and chief executive officer of Bergstrom Automotive. Richard Bergstrom is the president of the company.
John Bergstrom said the company’s key to success has been its emphasis on customer satisfaction.
"Our focus has never been on how many units we’ve sold or how much money we’ve made," he said. "Our focus has always been on the customer satisfaction rankings."
Last year, Bergstrom was named the top automotive dealer in the United States by Time magazine.
"The thing that differentiates us (from other auto dealers) is we just focus on outstanding guest service," Bergstrom said. "If we take good care of them, they will come back, and they will tell their friends. It has paid dividends to us."
The company has learned how to treat customers better from working with Lexus and Saturn, Bergstrom said, two car manufacturers known for high levels of customer service.
Bergstrom said his company could not execute its strategy of providing a high level of customer service without quality employees.
"We treat (our employees) like business partners," Bergstrom said. "This is a long-term relationship. We train almost everyone from within."
Bergstrom welcomes high school students in co-op programs to work in the dealerships’ service departments. Many of those students work for Bergstrom while they attend technical school and are hired full-time after they graduate.
Providing a high level of customer service also has helped Bergstrom execute the company’s strategy of adding more dealerships. The company has opened nine new dealerships in the last five years, including Bergstrom Hummer of Milwaukee in 2002 and Bergstrom Chevrolet of Milwaukee this year.
The company has added more dealerships to take advantage of synergies that allow the dealerships to keep prices low, Bergstrom said.
Auto manufacturers have helped that expansion by notifying Bergstrom about opportunities to add more dealerships. The auto manufacturers offer that assistance because they notice the high customer satisfaction rankings Bergstrom has received.
"All of our manufacturing partners keep track of the people that buy cars from us," he said. "They keep track of (the customer’s) experience. When you are pushing for outstanding customer service, you get the attention of your manufacturing partners. There’s a tendency for them to help you."
Bergstrom’s new Chevrolet dealership in Milwaukee is one example of an opportunity pointed out by an auto manufacturer.
"In Milwaukee, GM called us and said, ‘We would like you to be our retailer here,’" Bergstrom said.
So, Bergstrom Automotive bought a Chevrolet dealership on Brown Deer Road in Milwaukee and a Menomonee Falls Chevrolet dealership and closed both, replacing them with a new dealership, Bergstrom Chevrolet, built next to the Bergstrom Hummer dealership on Metro Boulevard on the far northwest side of Milwaukee.
The Milwaukee Bergstrom Hummer dealership is in a highly visible location just east of U.S. Highway 45. Choosing the right location for an auto dealership is critical to sales success, Bergstrom said.
"You certainly want to get to a position where you are easily accessible to as large a population base as possible," he said. "You want to be on a major thoroughfare close to an intersection."
The Milwaukee Hummer dealership is one of four Bergstrom has in the state. The Hummers are gaining popularity, Bergstrom said.
"There’s an awful lot of people that love the outdoors," Bergstrom said. "Those are the people that are buying them. We have seen the future products GM is going to build for Hummer. They are smaller, less expensive, but still have the Hummer characteristics. We’re very excited."
Bergstrom said he also is excited about his company’s prospects in the Milwaukee market, even though did not tap into the largest city in the state until 2002.
"We think that Milwaukee is a tremendous opportunity for our company," said Bergstrom, a Marquette University graduate and a member of the board of trustees for Marquette, the Medical College of Wisconsin, Wisconsin Energy Corp. and Midwest Air Group Inc.
"I spend a lot of time in Milwaukee," he said.
May 28, 2004 Small Business Times, Milwaukee, WI
