Dealer Cost vs. Customer Service and Loyalty

In the end, it is not going to matter whether or not the consumer knows what a dealer pays for a boat from the manufacturer. In the end, what matters most to consumers is the level of customer service that they receive. What matters most is that the consumer feels that they received the best value for what they have purchased.

By Christopher Kourtakis, director of sales and marketing, 360° Industry Solutions — In the end, it is not going to matter whether or not the consumer knows what a dealer pays for a boat from the manufacturer. In the end, what matters most to consumers is the level of customer service that they receive.  What matters most is that the consumer feels that they received the best value for what they have purchased.

Think about it. You are no different than your consumers when you purchase other goods and services. You want to purchase items from the best stores and dealerships that provide the best service. When you purchase a car, yes value is important, but it is also important to know that they have a good service center, that they are open late and that you can get a loaner if your vehicle is in for service.

You go to a certain dealership because they know your name and welcome you the minute you walk through the door. You feel comfortable with everyone in the dealership the moment you enter the building. Do you have access to what the dealership pays for their vehicles? Yes. Do you care? No. What matters most is that the dealership treats you fairly, and that you get a reasonable deal for your money.

I personally have my boat serviced at a dealership that I know trains their mechanics and spends money stocking the right parts for when I need them. Is their labor rate higher? Yes. Do their parts cost more than the others? Yes. I am a typical customer who visits dealerships on a regular basis.

Do you think that any dealer on Boating Industry's Top 100 list is selling product at low margins or refraining from providing superb service to their consumers? Do you think the customers of Russo Marine or MarineMax are worried about a couple of percentage points that the dealership makes on the sale of their boat? They deliver the dream. They provide the consumer with a level of service that they deserve and want.

If you were to ask Mr. Russo how many customers have walked into his dealership and picked out a boat from stock and purchased it without questioning the price, I am sure he would not have enough toes and fingers from his entire staff to count all of those customers. Why do customers do that? Why do they not haggle? Like me, they do it because of the dealership’s reputation and because they know they will receive help when they need it and will be able to attend rendezvous events that the dealerships host.

Our industry has endured a lot over the years. Letting consumers know what a dealer pays for a boat is nothing compared to the other major economic and social events. When you look back in a couple of years, letting customers know dealer costs will not even be mentioned in the same sentence.

In the end, revealing dealer costs to the consumer will not be an issue in the overall scheme of things. As a dealer, you need to keep going to boat shows talking to your customers and meeting new ones to maintain and grow your business. You need to keep using social media to allow your customer to tell others why they love your dealership. Finally, you need to keep doing what you have done to make your dealership the best in your market. Remember … the customer is going to take home with them the product they bought, but more importantly, they will hold onto the feeling they had in your establishment and the way they were treated while they were there. Good customer service goes a long way in this business and that is what everyone should be focusing on.

8 comments

  1. Mr Kourtakis: Have you ever sold boats for an extended period at a boat dealership? Have you ever sold cars or trucks? Are you extremely wealthy and driving your Mercedes to a Mercedes dealership for service?

    In a tight market many customers will drive 50 to 100 miles to save $50 on a boat or a car. They view them as a commodity and they know they can have it serviced and warranty repairs done at the dealership in their neighborhood.
    I own a dealership that offers superb service before, during and after the sales and I have 35 years experience in sales, marketing, management and advertising. I am also a social media strategist. Social media will only help the consumer know exactly where to buy at the lowest price.

    In the real world it will be a disaster for consumers to know what the dealer paid for the boat. Consumers already think boat dealers are making a killing and they think dealers have dealer hold back funds like a car dealership do. Well, as far as I know, boat dealers don't. All this is going to do is dramatically erode margins for the dealers and the manufacturers and reduce profits.

    This business of showing the consumer what dealers paid for their boats is nobody’s business except the dealer and the manufacturer. Get out on the floor and sell a commodity for a living, especially a commodity that every consumer knows exactly what you paid it. You’re in for a rude awakening, my friend.
    That’s the way I see it and nothing in your article convinces me otherwise.

  2. The sky is not falling, it never has been.

    I agree more with Chris then I do Mike even though Mike offers a pretty strong argument. We all have customers in our area that will drive 50 miles to save $50.00, but how many of those folks are our best customers.

    Build a service and cost platform in you dealership that rewards your customers over the long run for making their initial purchase with you and they will stop asking how much and be more interested in when.

    We are giving this site far too much respect already.

    Rob Brown
    Clark Marine

  3. Yes, the consumer considers service the most important single iten after the purchase but before the purchase you are in another world if you think price is not the most important consideration. In over 30 years in selling boats I can honestly say that I could count on one hand the number of prospects who did not negotiate and we sold thousands of boats in 10 different stores. If this web-sitetruly shows dealer cost, and I am sure it will, then the entire model of how boats are priced will have to change to be one that is similar to the car guys. Do we really want to be like the car guys. Don't forget that they sell significantly more units than we do and can therefore spread thier overhead costs so that the individual hit per unit is much lower. Interesting enough I personnaly am aware of a number of car dealers who decided to get into the boat business and none of them were succesful. I wonder why not??

  4. Noel,

    Great point on the automotive dealerships that have tried to get into the marine business and have failed.

    The models are completely different and as you stated, the auto dealers margins are smaller, but their volume is much higher than ours, thus they are able to spread out the profits over various unit sales.

  5. I just checked back,...I must be living in another world, but service is my best up front selling feature, has been for 32 years. As much as we are all the same, every dealership and mindset is still very different.

    If your pricing model is not outlandish this site is going to have little effect. If you are prone to putting it to your customers, you might have issues.

    As I mentioned before, We are giving this Boat Cost site way too much respect already. Jack must be LHAO.

  6. Evan Brookshire

    I was wondering if you had any information regarding total revenue that the total boating industry brings in annually in the United States?

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