The Boating Industry 2008 Top 100

There’s nothing like tough times to set Boating Industry’s Top 100 Dealers apart from the rest of the marine market.
This year’s Top 100 Dealers certainly haven’t been immune to the effects of the recent economic downturn. But through it all, they have reacted differently than your average dealer. The Top 100 Dealers have adopted processes and procedures that allow them to make precision cuts in some areas, spend smarter in others, and increase their investment in still others, as opposed to wildly slashing costs like so many others have been doing.
Their results speak for themselves. In 2007, a year that saw the powerboat market decline nearly 10 percent, the Top 100 Dealers averaged more than 5.75 percent growth. They did so by adapting to the needs of the market and by continuing to invest in their future. More Top 100 Dealers built new locations this year than ever before, and many others renovated at least part of their facility. In addition, many of the Top 100 Dealers increased employee training, tested new marketing initiatives and added customer lifestyle events to keep boaters on the water.
The cream of the crop among this year’s Top 100 Dealers found great success in diversifying their businesses. They bolstered their service department revenues with new programs and maximized every opportunity in finance and insurance. They expanded their pro-shop offerings and created new services to keep customers coming back.
The efforts proved worthwhile in more than just revenues, as these dealers’ finished the year with a net profit of 4.45 percent, on average. And a number of those dealers hit the coveted 10-percent-net mark.
In a year of belt tightening where nearly every dealer was forced to evaluate the viability of all revenue streams and expense line items, the Top 100 Dealers never lost sight of the most important aspect of their business: customer satisfaction. The Top 100 Dealers registered an average customer satisfaction score of 96.1 percent, the highest tally every recorded by a class of Top 100 Dealers. And not by accident. These dealers made great efforts to focus on satisfying customers in every corner of their business, adding extra steps to their processes and ultimately satisfying customers at a pace well above the industry average.
It took such focused efforts to perform as well as they did throughout the year. In fact, in every area of their business, these Top 100 Dealers used innovation and outstanding business practices to ensure their success.
Finding alternatives
When it comes to surviving difficult times, the most effective strategy that the Top 100 Dealers employed was one of diversification. For many, the creation of alternative profit centers was key, but for nearly all, an emphasis on anything other than new unit sales was a must.
Overall, unit sales for the Top 100 Dealers made up 73.7 percent of total revenue, and the service department followed with 10.3 percent of revenue in 2007. The F&I department accounted for 1.6 percent of all revenue, while parts and accessories, marina business and the all-inclusive “other” category accounted for 6.7, 2.4 and 5.3 percent of revenue, respectively.
Chief among all re-prioritized areas of focus was one of the highest-margin centers in the company — the service department.
Consider Hall Marine Group (Ranked 5; See Top 5 profile, page 54), for example. This summer, Hall, based in Lake Wylie, S.C., began to experience the effects of the economic challenges. One of the first strategies it put in place for overcoming the downturn was to re-emphasize the use of its “work to be done later” log. It consists of a list of work that the company’s technicians notice needs to be completed during the year, but is not urgent. The service department then uses it to keep busy during the off-season by calling those customers to schedule the work to be done.
Lynnhaven Marine (Ranked 25) made similar efforts in its service department. The company expanded its target market for engine and rigging service beyond its own sales and storage customers, and it also changed the commission program for its service staff, hired more technicians and improved its productivity tracking methods, in an effort to bolster its service department. And it worked. The changes added up to an 11-percent increase in labor during the first quarter of 2008 and an 18-percent increase in work order parts. In addition, its overall service revenue increased in 2007.
Likewise, Marine Center of Indiana (Ranked 31), Indianapolis, has been benefiting from its service department success. When its 2006 sales dropped 10 percent, it was a wake-up call for the dealership. But through a series of drastic changes, including a renewed focus on service, Marine Center grew 30 percent in 2007 and was ahead of last year as of mid-summer 2008, which it attributes mainly to its service department.
There may be no stronger service department in the marine industry than that found at Prince William Marine Sales (Ranked 3; See Top 5 profile, page 46). The Woodbridge, Va.-based, one-location dealership was founded on its service department, and co-owner and CEO Carlton Phillips puts an incredible focus on this department.
“Prince William is a service business that happens to sell boats,” Phillips says. “Boating is fun when the boat works. Despite the fact that sales generate higher gross revenues, it is the outstanding and reputable service work that drives both repeat customers and new customers to our dealership.”
Always boasting a high efficiency score—117 percent efficient in 2007—Prince William uses a stringent customer service focus to ensure that its service department operates efficiently. And to attract more service work, the dealership executes myriad promotions specifically designed for the department. They include such opportunities as courtesy inspections, free maintenance classes, preventative maintenance “counseling,” and e-mailable forms for services such as winterization requests.
To grow its business, Gage Marine (Ranked 63), Williams Bay, Wis., introduced a tiered repair and maintenance program that resulted in a $100,000 increase in revenue and a 24-percent increase in profits in the service and parts departments. It also launched a 24/7 call-in service hotline.
Russo Marine (Ranked 8) created a brochure to promote its Serious About Service program, which serves as an owner’s guidebook on how to get service from the company.
At Kelly’s Port (Ranked 38; See Editor’s Pick, page 68), service became an incredibly important part of not only the company’s revenue centers but also its culture toward satisfying customers. The company created a same-day service guarantee and also established the role of an efficiency foreman, whereby three employees walk around the facility and find out the status of service jobs to determine if the technicians need assistance, helping the company achieve better overall productivity.
And more alternatives
But the Top 100 didn’t always rely on such tried and true methods for finding additional revenue.
Mark Lassila, president of Marine Connection (Ranked 6), West Palm Beach, Fla., says the key to surviving in today’s marine market is “aggressively pursuing whatever market is producing results, not doing things the same old ways and expecting different results, and going out to find new customers, not waiting for them to find us.”
The dealership has done exactly that — in places that you might not suspect. It launched a number of initiatives designed to capture those segments of the market performing well in the downturn. For example, it created an ad campaign and a separate Web site — marineconnection.ca — to target dealers and consumers in Canada.
“Buyers from other parts of the country are looking to Florida for used boat connections,” he explains. “They’re much more comfortable making a purchase from a bricks-and-mortar dealership, offering extended warranties, etc.”
Galati Yacht Sales (Ranked 1), in addition to focusing on a just-launched worldwide brokerage part of its company, also entered the fractional ownership business. The program allows consumers to pay for product based on actual use time via a multi-year lease product, and the company believes it will allow more consumers the opportunity to enjoy a higher level of yachting fun, at a fraction of the cost and time, so they can focus on simply enjoying their on-water experience.
While Port Harbor Marine (Ranked 23) may not have gone so far out of its area to find business, it did place an emphasis on a part of its business that hadn’t had such a focus in the past: storage. The company launched a storage challenge competition in order to capture more business. Management set goals and promoted potential rewards, and it worked as the company’s storage business grew.
Back at Kelly’s Port (Ranked 38), the company, through GE Capital Solutions’ At the Customer For the Customer program, analyzed its sales department and found that there were customers who were being dropped when they were at the company’s highway location. To correct the problem, Kelly’s Port hired a second full-time F&I manager to work that showroom location. This helped bolster the F&I business while also taking some of the load off of their current F&I manager, who was working six days a week.
On the move
Frankly, despite what has proven to be a down market, the Top 100 Dealers continue to stand strong, perhaps slowed somewhat in their plans for growth, but unshaken by external circumstances. They are on the move and growing, both in year-over-year revenue and in the quality and in some individual instances, in the number of their locations.
MasterCraft Boats of Arizona (Ranked 51), in fact, is one of 64 companies in the Top 100 that saw revenue growth year-over-year. They’re also one of a number of Top 100 Dealers that renovated a location, or built, added or purchased another location.
Baert Marine (Ranked 68), for example, invested more than $2 million into a new state-of-the-art showroom and service center.
Action Water Sports (Ranked 15), Hudsonville, Mich., completely renovated its largest location, during which the size of its showroom doubled. The company also added a surf section with 20-inch flat screens, a women’s wake section and another 108-inch screen to showcase the latest watersports DVDs. The dealership, which says it has responded to economic conditions by marketing more aggressively, has already used it to hold two winter movie premiers.
Singleton Marine Group (Ranked 12), opened a new pre-owned boat super center in addition to opening a facility at both LaPrade’s Marina and one at Seneca, S.C.
Parker Boat Co. (Ranked 20) designed and built its new six-acre Parker Boats of Daytona facility from the ground up, incorporating everything the company has learned in 80 years of continuous operation, explains Roy Parker Jr.
“You might think it’s a bad move to open a second location during a downturn in the industry,” he says, “ but we feel it puts us in an ideal position to pick up market share from other dealers in the area, especially when their customers see how happy our customers are and how we’re taking care of them.”
A focus on taking care of the customers is exactly what Rod Malone was doing when he and his Sail & Ski Centers (Ranked 4; See Top 5 profile, page 50) purchased a marina behind the company’s Lakeway location.
The newly named Sail & Ski Yacht Club “is being developed into a facility that will provide a convenient and unique access to the boating lifestyle for the patrons of The Sail & Ski Centers,” Malone explains. “The acquisition fulfilled a long-standing goal to own a marina that would synergize the Sail & Ski operations and give us access to the water and slip facilities that no other dealer in our market could achieve.”
The acquisition of a marina on Lake Champlain in Plattsburgh, N.Y., was part of a long-term strategy for Saratoga Boatworks (Ranked 77), as well. Jeff Olson, president and GM of the Saratoga Springs, N.Y.-based dealership, says “we need to have the wet slips in order to capture a larger and higher-margin share of the business.”
It’s the pursuit of such growth and opportunity that continues to motivate the Top 100 Dealers to great success, despite today’s challenging economic climate.
The financial factor
While no one could have predicted the severity of this year’s economic decline, there was really no surprise that the American economy would be a tough place to do business in 2007 and into 2008. Boat sales began a steady decline as early as the end of 2004. Factor in the declining housing market that has been unfolding for the past few years, and most businesses — especially those like boating who find themselves in a category dominated by discretionary spending — would need a strong financial focus in order to find success.
There may be no better method for wrapping your mind around your financials than by joining a 20 Group. And some dealers, including Basa’s Marine (Ranked 97), Bolingbrook, Ill., joined a 20 Group specifically to help them battle the economic challenges they were seeing. In fact, Slalom Shop Boats & Yachts (Ranked 16), Lewisville, Texas, even joined a second 20 Group, joining other dealers such as Parks Marina (Ranked 17), Okoboji, Iowa, Arrowhead Boat Sales (Ranked 14), Ketchum, Okla., and Rambo Marine (Ranked 58), Hazel Green, Ala., that also belong to two 20 Groups.
The Sportsman (Ranked 41) of San Benito, Texas, benefited greatly from its membership in such a group, by using the budget template provided by Spader Business Management to not only forecast its budget plan for the year, but to do so with two such budgets. The first budget served as its beginning goal for the year, but knowing that “the current economic downturn in the marine industry brought new challenges to the table,” owner and president Rob Youker developed a Plan B budget.
And that’s a good thing: This contingency plan was implemented in the spring, and it helped Youker plan, in advance, where he could make cutbacks. What’s truly amazing about the Plan B version, which outlined month-by-month seasonal trends for sales and expenses, was that it actually planned for a greater net profit as a percentage of sales, an accomplishment that would have most likely been unattainable had he been forced to adjust on the fly.
Another dealer who used his 20 Group meetings to gain an early indication of the downturn that was slowly moving its way toward his dealership in northern Virginia was Joe Hoffmaster. The president of Hoffmaster’s Marina (Ranked 76), Woodbridge, Va., also began analyzing his financial performance from July 1 through June 30, in addition to the standard calendar year accounting cycle. This process, he explains, shows different trends and it has served to reinforce what the company’s actions should be moving into 2009.
All throughout the list, the Top 100 Dealers put greater effort into and spent greater time analyzing their financial status.
The management team at Galati Yacht Sales (Ranked 1; See Top 5 Profile, page 38), for example, monitors a weekly “Flash Report,” which provides a recap of forecasted sales for each month by location, along with an inventory report that highlights the number of units and dollars within each location by brand. Galati, based in Anna Maria, Fla., added several new areas to the report that provide the team their revenue goal by location in order to hit their individual net profit goals.
At Seattle Boat Co. (Ranked 2; See Top 5 Profile, page 42), the management team, led by president and CEO Alan Bohling, out-performs the market by monitoring a number of budgetary reports. On a companywide basis, the management team keeps an eye on its vital factors report, which compares financial, productivity, quality and business development statistics; and its annual business plan matrix, which outlines project goals for each year. And on a departmental basis, the company also monitors daily health reports in service and daily over/under sales reports.
Moving forward
The 2009 model year doesn’t look to hold any brighter hopes than the results of 2007 and 2008. The Top 100 Dealer applications arrived to our offices well before talk of any bailout package, the collapse of several banks and worldwide stock markets, the worsening credit crunch, and of course, the presidential election of 2008.
By the time those events arrived, the Top 100 Dealers were deep in the throes of positioning their businesses for enduring a prolonged, difficult economic climate. And while the main focal points of such positioning revolved around similar topics, unique approaches for corrective action helped to solidify their businesses.
Bosun’s Marine (Ranked 65) focused on a wide range of areas to help it navigate through slower times. “We started by looking at ourselves in the mirror very closely and analyzing everything we do and why we do it,” explains President Tim Leedham. “Nothing was off limits for reconsideration, tweaking, throwing out or even creating anew.”
With that in mind, Bosun’s, of Mashpee, Mass., after a long, thorough analysis and with the help of an outside consultant, redefined and enhanced its management structure. It implemented a “directorship” system whereby directors of specific operations, replacing store GMs, help implement and ensure a companywide, consistently high level of performance, customer satisfaction, efficiency and profitability. This has helped the company align its goals and missions, and it creates consistencies throughout its different locations.
In the end, through this and myriad other changes, such as reduced operating, semi-fixed and floor plan expenses, layoffs and other strategic moves, the company reduced its projected expenses by $37,500 per month for the second half of 2008.
When it comes to aligning goals throughout the company, there may be no better example than the highest-ranking newcomer to the Top 100 Dealers, Pride Marine Group (Ranked 11), Bracebridge, Ontario, Canada. The company, facing an appreciating dollar, was being hampered by diminishing gross margins.
To counteract the problem, Pride Marine held a companywide meeting that focused on the importance of gross margins, or available income, and aligned all efforts toward maximizing this dollar figure. Management created a cross-company, expense committee to examine where it could save 20 percent of its expenses without sacrificing customer experiences. With all employees aligned toward this mission, the company has been able to succeed in otherwise trying circumstances.
This was a year where most dealers were faced with similarly difficult situations. It took creativity to find their way out. For most dealers, there was no other option but to cut expenses. And while never an enviable task, in most cases, cutbacks meant layoffs. Consider: This year’s Top 100 Dealers operated 278 store locations with 4,773 employees for an average of 17.2 employees per location. While the individual dealers from the 2007 list vary, last year’s crop of Top 100 Dealers staffed 12 more locations but employed 514 more employees, at an average of 18.3 employees per location.
Where the Top 100 Dealers stand out in their ability to make the right cuts in the right places is found in the processes and procedures they used to determine their layoff strategies.
Port Harbor Marine (Ranked 23), for example, used a teaching from one of its Spader Business Management 20 Group meetings called Dot Therapy. This process, explains Port Harbor President Rob Soucy, aids in evaluating employees by using a grading system featuring colored dots. Blue dots denote a superstar; red dots an underperformer, with two levels, or dots, in between. At Port Harbor, South Portland, Maine, some of the red dots were terminated, and others were met with and addressed with the knowledge that if they did not perform, they would be let go, as well.
“The process was eye-opening,” Soucy says, and it has “also allowed us as a company to pre-identify our ‘anchors’ in the event cuts need to be made.”
JOA Marine (Ranked 21), Marietta, Ga., used a similar evaluation method. The company employed a profiling service to evaluate all of its employees, make decisions about reassigning responsibilities and ultimately laying off employees, saving more than $1 million in payroll expense.
As an example of how it worked, a mid-level manager, who was a great employee with a great attitude, was never late and always very detail-oriented, had an income level that did not match his performance from a sales standpoint, explains JOA Marine President Darren Matthews. Through Omnia Profiling, the company began to understand two things about this person: First, he had too much empathy for customers and struggled with asking the difficult closing questions; and second, he wasn’t handling confrontation reasonably and typically cut to the quickest and easiest solution, which in sales of course, means diminishing margins.
Through open, honest discussion, the profiling helped the company match this great employee with a role that fit his personality. He was moved into an administrative position that allowed him to stay out of those confrontations, and the company gained a valuable, details guy in a behind-the-scenes role where he watches over the costs by confronting numbers that don’t talk back.
On the market
Many other dealers within the Top 100 looked for easier decisions to make when it came to cutting costs. One of the largest line items they turned to was marketing expenses.
The average 2008 Top 100 Dealer spent 3.27 percent of its total revenue on marketing and advertising, which is down more than 40 percent from the 5.5 percent of revenue that the 2007 class of Top 100 Dealers averaged in marketing expenditures. Here again, however, rather than using a slash and burn technique, they chose to remain visible to the public, employing strategic decision making to find appropriate cuts.
With more than 2,000 customers it services on an annual basis, Hagadone Marine Group (Ranked 35), Coeur d’Alene, Idaho, uses a strategic marketing plan to develop and meet its high revenue expectations. To adjust for economic conditions, Hagadone re-evaluated its marketing and operating expenditures, making adjustments when necessary to meet financial goals while maintaining customer quality and satisfaction.
For example, its August “Raft Up” is the dealership’s most popular customer event. Instead of canceling it, which the company says would have reflected poorly on it, Hagadone approached suppliers, business partners and vendors to come up with half of the budget for the event, saving the company about $10,000.
The trend toward re-allocating expenses to online marketing continues, as well. Singleton Marine Group (Ranked 12), Dadeville, Ala., was one of a number of dealers that has created an eBay store, generating pure profit from products that may have never sold by merely sitting on the company’s shelves. Lynnhaven Marine (Ranked 25), Virginia Beach, Va., also followed a growing trend of Top 100 Dealers who have begun posting videos that help to brand their company on YouTube.
At Baert Marine (Ranked 68), the company created an all-new Web site and increased its Web marketing by more than 1,000 percent, says President Warren Kelly. Additionally, the Middleton, Mass.-based dealer brought together all Massachusetts-based Grady-White Boats dealers to create and market a new Web site (www.gradywhiteboatsma.com) to drive consumers to the dealers’ individual sites.
And numerous dealers, including Redline Watersports (Ranked 61), Madison, Wis., and MasterCraft Dealer Services (Ranked 36), formerly Utah Watersports of Holladay, Utah, used Google Analytics to help determine the effectiveness of the company’s online marketing.
Creativity wasn’t limited to the Internet, however. At Russo Marine (Ranked 8) Medford, Mass., the company used a 27-foot Winnebago motorhome that it had taken in on trade to create what it calls The Boating Bus. After having it wrapped with graphics to promote Discover Boating, Russo’s boat brands and its dealership, management created a 5,000-mile travel itinerary for the vehicle.
With its primary purpose being “to go where our prospective customers work, shop and play,” explains Larry Russo, Sr., president and CEO, The Boating Bus makes appearances at all boat shows and marine events in the area. “We take it to shopping malls, sports stadiums, state fairs and anywhere else where we can get attention.” And to top it off, Russo Marine employees are on a rotating schedule to drive The Boating Bus back and forth to work for a week, giving the company lots of exposure and saving employees’ gas money.
Texas Marine (Ranked 66), Beaumont, Texas, launched a campaign to promote the affordability of boating as a low-cost alternative to an expensive traveling family vacation.
“We are educating customers, showing them that boating in more close-to-home destinations can provide more vacation time at much less expense,” says Mike Hebert, president. “To combat high fuel costs, we are showing the customer that the average boater actually spends relatively small amounts of money on gas.” To erase any further doubts, Texas Marine promoted “Free Gas For a Year” with new boat purchases.
Like many Canadian dealers, Rayburn’s Marine World (Ranked 34), Kelowna, British Columbia, Canada, says it didn’t face as many economic challenges as its U.S. counterparts, but the company admits it has had to do some things differently. In particular, fluctuations in the exchange rate caused the company to begin advertising its boat prices in U.S. currency, which management says has stopped cross-border shopping and has given its customers an advantage for the most part.
Innovative promotions have been the name of the game when it comes to marketing, and perhaps none of the Top 100 Dealers were better at it than Nautical Enterprises (Ranked 18). The San Diego-based parent company to H&S Yacht Sales and Southwestern Yacht Sales launched numerous promotions to encourage boat purchases. Consider its “Buy a Boat, Get a Harley (or Smart Car or BMW)” promo, or sales events where the dealer paid the sales tax, financing for six months to a year, or the customer’s slip fees. The company also offered boat shopping sprees where its customers could choose up to $15,000 in free electronics or take $10,000 cash back.
Similarly, Arrowhead Boat Sales (Ranked 14) used a barrage of offers such as free service for a year, free winterizations, slip rentals and free gas to help close deals.
Closer to the customer
When times are tough and business is difficult to come by, staying as close to current customers as possible has been a valuable strategy for many of the Top 100 Dealers. In fact, among this group of elite dealers, there remains great hope in not just making the sale, but growing their business.
Tom Mack of South Shore Marine (Ranked 37), Huron, Ohio, may have explained it best when he said, “The industry is down, but far from dead … there are still plenty of boaters out there and families with an unending passion for boating. What is essentially different is that it takes more time to find these customers in this market. We are just working harder to find them.
“What is also encouraging, is that the basic needs that customers value have not changed. There is still plenty of business out there where people will pay good money or even premium dollars for quality, convenience, consistency, customer service and good value.”
Don MacKenzie, general manager of Boats, Inc. (Ranked 39), Niantic, Conn., agrees. “Times, they are a changin’,” he says. “How one reacts and adapts to those changes, especially in trying times like these, will ultimately reflect on the overall success of the company.”
The 2008 class of Top 100 Dealers went to considerable lengths to ensure that they were focusing on providing those very attributes in chasing every sale. Like many other dealers, for example, Hardin Marine Arrowhead (Ranked 99), Lake Arrowhead, Calif., created a customer relations specialist position, which oversees and manages all aspects of the company’s customer satisfaction program.
The strategy for overcoming economic conditions at Parker Boats (Ranked 20; See Editor’s Pick, page 70) involves refocusing on existing customers, and many of their year-over-year improvements reflect that. For example, they, too, hired a CSI coordinator, and also engaged market research firm Comprehensive Loyalty, created a monthly e-newsletter, increased the number of staff dedicated to getaways and added a customer appreciation night.
“In these market conditions,” explains Roy Parker, Jr., “we have to keep our customers boating, or we are going to lose them.”
His company offers some of the most extravagant customer boat trips among the Top 100 Dealers. Every year, the dealership president and his team personally lead two Atlantic Ocean expeditions. The premier Parker Boats Getaways event is the Bahamas Trip each June, which takes customers to the Abacos Islands. An extended trip for a smaller group then continues on to the Exumas. Then, in July, the dealership also offers a week-long trip to Bimini. The dealership brings technicians and spare parts along so most problems that arise can be handled.
The sales team members at Parker Boats use electronic frames that display photos of the events as a sales tool, and the company boasts that an average of 30 percent of the customers who participate in these trips upgrade to a new boat in less than 12 months.
“By offering more and better boating events than our competitors each year,” Parker explains, “we achieve our goal of helping our customers enjoy their boats and secure loyalty at the same time.”
Like many dealers throughout the Southeast, Mount Dora Boating Center (Ranked 84) has not only faced the industry downturn, but also three straight years of drought. One of its strategies for managing these conditions has been to add to its events calendar.
For example, the dealership created a “Discover Boating Demo Days.” By working with the City of Mount Dora, the Marine Industry of Central Florida and Discover Boating, it assembled a group of nine dealers with more than 40 new boats in the water for a weekend filled with demonstrations; exhibitions of skiing, wakeboarding, knee boarding and tubing; a Poker Run; and seminars offered by Discover Boating’s “Boating Guy,” Keith Ammons.
Other dealers collaborated as well. Bassett Boat Co. (Ranked 24), based in Springfield, Mass., brought together all the dealers near its Warwick, R.I., facility for a special weekend boat show. The dealers pooled their money, filled Bassett’s parking lot with boats, did not charge admission, and marketed it as a “Boat Buying Weekend.” The event, bolstered by a far-reaching marketing budget, resulted in a well-qualified group of attendees and good number of sales, according to the company.
JOA Marine (Ranked 21) used a similar strategy. The company, in collaboration with other local dealers, formed the first-ever Georgia International Boat Show. Held at JOA’s facilities for the largest in-water experience available in the state, the event offered buyers “the opportunity to see for themselves that we had plenty of water,” and the dealers offered consumers a chance to ride before they bought, as well.
In Austin, Texas, Boat Town (Ranked 57) teamed up with other area dealers, including several Top 100 Dealers, to create an exciting boat show format, according to Clayton Raven, president. The dealers banded together, each contributing funds for the event, and used 90 percent of the pooled money to promote boating in Central Texas and drive people to the group’s recently launched Web site: www.boatrequired.com. At past public shows, 71 percent of the group’s funds had gone to pay for promoters, building rental, security, ticket takers and so forth.
Still, though, with all the collaboration, all the promotions and all the special events, oftentimes getting the sale still comes down to making the extra effort.
At Harborside Yacht Sales (Ranked 56), Clinton, Conn., management created a Boat Prospect Form to help capture sales. Instead of turning away customers that desire boats the dealership doesn’t offer, the company’s salespeople fill out the form and then buy or locate the boats for those customers, relieving them of Internet searches and phone calls.
Every night at MasterCraft Boats of Arizona (Ranked 51), Phoenix, one of the owners calls each customer that visited the store during the day, thanking them for coming in and giving the dealership the opportunity for their business.
Cleaning house
If there is a single biggest challenge that today’s Top 100 Dealers face, it is their inventory levels. Nearly every dealer on the list was forced at one time or another to make adjustments to its inventory levels, processes or strategies.
This year’s class of Top 100 Dealers averaged 2.12 new unit inventory turns in 2007, which is more than twice the industry average — for a normal year. Despite the fact that many dealers needed to make all efforts to capture sales, the Top 100 Dealers managed to continue with strong margins, realizing a collective average of 18.6 percent gross margin on new units. This was made possible through innovative methods for moving product.
At SunDance Marine (Ranked 52), Fort Lauderdale, Fla., for example, an executive purchasing committee was created to set limits on inventory based on market conditions. This team puts all purchases through a rigorous evaluation process.
To help it reduce inventory levels, Hoffmaster’s Marina (Ranked 76) created a Web page this past April where dealers can view and download available inventory. The company also invited salespeople from a like-brand dealership to work the 2008 Washington, D.C. Show from its booth, paying them split commissions on Hoffmaster’s Marina deals and encouraging them to do the same.
Lake Union Sea Ray (Ranked 30), Seattle, features one of the most extensive inventory management systems in the industry. Kevin Roggenbuck, president and CEO, has developed a tool that tracks existing inventory, ordered boats, shipped boats, forecasted and actual sales. Based upon a target inventory level that management enters for year-end inventory, the program suggests needed orders and calculates turns.
It is so detailed that the company breaks it down by each model, manufacturer and all units combined. The database is stored on the company’s shared drive and is updated weekly. Then, on a monthly basis, management uses the “pipeline” tool to evaluate new unit inventory by model and category.
“While turns increase or decrease seasonally,” Roggenbuck explains, “we don’t want to get over-loaded on inventory, nor do we want to run out of units to sell.”
Surrounded by a tough Great Lakes market, South Shore Marine (Ranked 37), has made great efforts to manage its inventory successfully. The company aims to minimize hold time for each new unit, so next to each listing on its inventory spread sheet is a bold number that updates daily indicating the number of days the unit has been on its books. Every 90 days the number changes color, indicating the need to re-strategize the company’s position on that unit.
“The Great Lakes market seems flat at best for growth,” explains President Tom Mack. “So if we are growing, it seems logical to rethink the question in terms of ‘how do we gain market share from our competitors while managing inventory turns.’ ”
The strategy has worked as South Shore has grown its revenues for each of the last two years, despite the tough market.
Strategies like this, both in inventory control and throughout their businesses are what make the Top 100 Dealers such strong companies.