About a half hour north of Sacramento, Calif., and a bit more than an hour west of the iconic Lake Tahoe, sits the small community of Newcastle (population 1,225), home to Affordable RV Rentals. The family-run RV rentals, service and unit sales business is hitting an underserved sweet spot for northern California’s booming RV customers.
R.J. Lemke, the company’s operations manager, says the growing business has found a competitive niche in the RV market with 50 or so units for rent at any given time, giving the dealership a low-cost entry for younger RVers.
“Like most dealerships, our typical customer is still a Baby Boomer – but with a strong rental and service business – we get a chance to engage with a much younger clientele as well,” he says, noting that the company offers a complete range of rental units to entice customers across a broad spectrum of experience with RVs. “That is really important when you think about the long-term sustainability of the business.”
Lemke notes that the dealership – which sells about 75 units a year and services between 120 and 140 units a month – benefits greatly from this broad range of customer demographics.
“We certainly enjoy our proximity to a couple of retirement communities in the surrounding communities, but we also see that for the industry to stay profitable we have to aim at a younger demographic,” he says, noting that the company’s more than two decades in the business has given it a longer-term perspective on creating strong relationships with customers.
“What we’ve found is that when you can engage with younger customers – whether it’s for service or rental or sales – you can establish a relationship that will last of long time,” he adds. “As they have kids, they upgrade, and when those kids then leave home, they start to move back down into smaller units. Being able to support your customers as their lifestyles change is a great way to ensure your long-term growth.”
Affordable RV owner Dora Lemke and son, RJ, the operations manager for the business, are pictured on the company’s sales lot.
A Hands-on Family Business
Taking the long view on growth opportunities in the RV business might come a little easier for Lemke given that he very literally grew up in the business. His father has owned a large dealership in the Sacramento since the late 1970s and his mom founded Affordable RV Rentals in 1996. Lemke grew up hanging around both businesses and joined the team at Affordable RV Rentals immediately upon graduating from high school in 2004.
“I feel fortunate to have been literally born into the industry,” he says. “For as long as I can remember, my family has been in the RV business, and it was always a really fun aspect of my childhood.”
Seeing as he’s probably worked nearly every position conceivable in the RV business, Lemke doesn’t find it particularly surprising that on any given day, he might be as likely to be working next to the technicians as he is to be engaging with customers.
“Today, you might find me out wrenching and helping out with service and tomorrow I might be working in sales in nice clothes,” he says. “That’s a big part of what I love about this business.”
That depth of background also is a competitive advantage when it comes to building – and retaining – a competitive team across the dealership, according to Lemke.
“We consider ourselves a family business, and the staff is an extension of the family,” he says. “Finding and keeping a productive core team is absolutely crucial to being competitive today. Working side by side with the team, they know I’m willing to get my hands dirty – not just pushing paper – if that’s what it takes to best serve a customer.”
Lemke says the company has a great group of long-term employees, which he acknowledges is a luxury not every dealership enjoys.
“Finding the right techs is definitely among the most challenging parts of the business,” says Lemke. “The thing that works for us – and also seems to work for the applicant – is getting them in the shop for a week-long tryout. In the RV business, you’ve got to truly know the ins and outs. A couple of our leads were basically handymen. They had a little 110-volt experience, a little 12-volt, a little automotive. It’s hard to quantify that on a piece of paper.
“A lot of times, a tech will come in with a certain certificate, but maybe they haven’t really used it and haven’t retained that knowledge,” he continues. “A tryout gives the company a better sense of what they can do, and it gives the tech a sense of what it’s like to work here.”
So far, that approach to finding and retaining talent is working.
“We’ve been extremely fortunate,” Lemke says. “While other dealerships will get a tech for six months and have them leave, we just don’t have that constant turnover. Some of our techs have been here for 15 years. That contributes to our success.”
Jay Brown, a painter at Affordable RV, works on a customer’s motorhome.
Smart Growth on the Horizon
With a broad base of services, rentals and units for sale – and a staff of eight techs and 17 other employees – Affordable RV Rentals is poised for continued growth in coming years. Currently, the dealership operates on about 2 acres, with three buildings spread over two levels, making it necessary to regularly shift units around the lot to accommodate workflow, says Lemke.
“The current lot wasn’t designed for RVs, so we do a lot shuffling and it’s really inefficient,” he says, noting that one building fits eight 40-foot units while another features two 55-foot-deep
bays and a full paint booth for paint and body work, which comes in very handy for the company’s rental business.
“In the rental business, the reality is that people are always crashing,” he says, with a laugh. “We stopped renting the biggest diesel pushers, but I bet we’re still having one in 15 that do some sort of damage. It’s kind of comical.”
To address the inefficiencies of its current space, Lemke says a new facility is in the works about 10 minutes away, in Auburn, Calif. The new facility will be purpose built and include four more service buildings on an additional 3 acres.
“The buildings should be going up soon,” Lemke says. “And we’re hoping to have construction complete by mid-2020. The layout has been designed to give each tech their own bay, off the pavement and out of the heat. That will allow them to pull a job in and work it from A to Z without having to move it around.
“We don’t want to outgrow ourselves,” he continues. “But we know we can serve our customers better and do it in a manner that we don’t sacrifice any quality or reliability in the process.”
That extra, purpose-built space, should support growth in not only the service business, but also in sales. Of the dealership’s total 75 units of average annual sales, about 70 percent are new units. The remainder are units that are aging out of their rental fleet, usually after about two seasons.
“One thing we do, I think, better than almost anyone is a very thorough assessment of our rental fleet,” Lemke says. “We’ll only sell used units that are in great condition. Everything else goes through auctions.”
Regarding growth in the dealership’s service business, while the new space will add capacity, the constraint remains the sheer number of technicians needed to serve the addressable market size. “We don’t advertise our service business at all, frankly, and that won’t change any time soon,” he says. “With more techs we could take more work, but we’re currently running about four weeks out – and that’s in the dead of winter. We care more about serving our existing customers well than making a quick buck or two more. I think that speaks volumes.”
The company’s technicians are up for nearly any task, and Affordable RV has developed a reputation as the go-to source for hitch installations, particularly Demco products.
Brittany Collins, Affordable RV’s parts and warranty manager, completes paperwork on an order.
The Only Constant is Change
“The bulk of our work comes from repeat business and some customers have been coming since before I graduated high school,” Lemke says with a chuckle. “And many have known my mom for as long as we’ve been here.
“In this business, it’s a really small community, so trust is the critical factor to any dealership’s success,” he adds. “A lot of things come out around the campfire. We get a lot of groups of friends that camp together. If someone has a good experience, they will talk about it, and our phone will ring. We hear all the time, ‘I was at the fire with Ken, and he suggested I come down.’
“Obviously, we’re in business to make money, but our customers tell us they trust us to be honest and fair with them. We always try to live up to that. I wish everyone did the same.”
That customer-centric approach is one of the only things that has stayed the same in the more than two decades since Affordable RV Rentals opened. Ever evolving technology in RVs has kept the dealership on its toes, as has the emergence of online retail and social media.
“Obviously, the internet has changed everything – good, bad or indifferent,” Lemke says. “Online reviews. Competitive pricing. It’s a lot. How we address it is we compete where we can and bow out when we can’t. You’ll always have someone who says they can find something for cheaper online, but is Amazon going to stand behind that product? We will.
“Some of that you really can’t fight, so we don’t waste our time,” he adds. “If you can get a customer in the door and show them a positive first experience, you’ll get a second crack.”
The RV business has always been one based on relationships, particularly for those who are working where they grew up.
“This is the town I grew up in and this is my community,” says Lemke. “So, it’s a little different than in a bigger city. That’s pretty cool. We sponsor a lot of local Little Leagues, the two high schools, all of that. Giving back to the community is something we can do because we’ve been blessed. It’s all positive.”
At the end of the day, making (and keeping) customers happy is what Lemke says he loves about the RV business he grew up in.
“Having come up in this industry, the one thing I’ve always loved the most is that we’re in the business of making people happy,” he says. “RVs are toys for grown-ups. The customers become friends, show you pictures of their trips, all of that. It’s more personal than just looking at numbers. The customers typically have expendable income and this is how they’re choosing to spend it, which draws a certain type of person.
“When I see people, they’re generally very happy, having a good time,” Lemke says. “This is an industry for fun.”