Your advantage here

Under the pressure of the economic downturn, most boat dealerships are finding themselves on the downward spiral of competing on price. How can you survive when your profits are being eroded, your cash is being depleted and you can’t afford to retain employees let alone reinvest in your business?

There is a solution, albeit not a quick and easy one. It is to adopt a company culture in which your business competes on the unique advantages it offers.

The marketplace is changing rapidly. Boat builders and dealers are going out of business. Strategies are being overhauled. Distribution networks are being reshaped. Consumers’ priorities have shifted. And, believe it or not, new opportunities have emerged for business owners willing and able to successfully adjust their strategy and take advantage of the current climate.

In other words, it’s time to identify, evaluate and capitalize on your dealership’s competitive advantages. Here’s how:

Do the analysis
Rod Malone, president of The Sail & Ski Centers, Austin, Texas, can list off his company’s competitive advantages: first-class, well-maintained facilities; top-tier brands; financial strength and stability; and experienced, educated employees – and those are just the tangible ones.
His confidence in them, however, comes from more than just his passion for the business. Each year, as part of the company’s strategy and marketing planning process, Sail & Ski conducts a competitive analysis that lists the strengths and weaknesses of each dealer it competes against by market.

“We formally do an analysis of our competition near the start of the upcoming model year because it has bearing on our purchasing and inventory strategies for the near term,” Malone says. “We also do quarterly market share analysis, as well as looking at our competition’s category quarterly sales trends, to understand opportunities that we may be missing. In fact, we have developed such a continuous awareness of our competition that it now greatly influences our marketing strategies on a daily basis.”

That competitive analysis is based on customer feedback, discussions between salespeople and the basic knowledge of other dealers that comes from operating in a small community.

“In our presentation with customers, we don’t slam other dealers, but we do proactively point out things that we know are good comparative items,” Malone explains. “We never say, ‘Boat dealer X has dirty inventory,’ but we would say, ‘Please notice that our inventory is clean and in good shape in comparison to other dealerships.’ We do suggest they ask the salespeople at other dealerships how long they’ve been in business, how long the salesperson has been representing a certain product line, and how many technicians they have at the other dealerships. We try to, in a positive way, create comparisons that build value for our dealerships.”

While Malone says his competitive advantages haven’t changed much in recent years, he does adjust which of them he emphasizes in response to market conditions.

Not only has the dealership been emphasizing salespeople’s use of the reasons to buy from Sail & Ski and the reasons to buy the brands that they present in communicating with customers in the store and through e-mail, it has begun putting particular emphasis on the stability and longevity of sales and service staff.

“In the current climate, we are seeing substantial turn-over and reductions in staff at our competitors,” Malone explains. “We insist that buying a boat from Sail & Ski is the most important factor in having a good ownership experience, regardless of price.”

Sail & Ski also promotes the long-term stability of brand representation at the dealerships — over 20 years representing Sea Ray, Correct Craft and Mercury/MerCruiser and over 12 years representing Boston Whaler. This is particularly relevant today because so many dealerships in Sail & Ski’s market routinely add and drop boat lines. The dealership points out to prospects that such activity often means either the dealer or the manufacturer is not meeting expectations, neither of which is good for the customer’s satisfaction with their boat ownership experience.

EXPERT TIP: To conduct your own competitive analysis, write down what you know about your competitors’ offerings and how they market them, as well as their strengths and weaknesses. If possible, visit them or have a staff member secret shop them to determine how they might be adjusting to fit today’s market.

But don’t just limit this investigation to marine dealers. You compete against other recreations like golfing and RVing as well. Ask yourself: “What are my competitors, inside and outside the industry, doing better than me? What are they NOT doing or offering that I am? What are they doing but not promoting?”

Emphasize your service (department)
It’s not enough to offer the right competitive advantages in today’s market. They must be effectively and consistently communicated. Many times, dealerships possess strong competitive advantages, but either don’t recognize them or make the effort to communicate them.

The service department is the perfect example of that. Most dealerships don’t advertise or promote their offerings. That’s unadvisable in any year, but particularly now, given the opportunity available and the dire need for additional profit centers.

The majority of boaters are holding onto their current boats as they wait for the economy to stabilize. That suggests the average age of boats in operation is higher than years past, making it more likely they’ll need service. In addition, boaters may be more willing to spend a few thousand dollars reconditioning their current craft than tens of thousands replacing it.

“Dealers need to be marketing the heck out of their service department,” says Yamaha Marine University instructor and dealer consultant Noel Osborne. “If their service manager is not doing a walk around on every boat [to look for additional service opportunities], now is the time they need to be doing that. It is so important. People are a lot more appreciative of that now because they know they’re going to be keeping their boat longer. They’re not going to be buying a new boat, and they want to be sure the boat is serviceable.”

By operating an efficient, high quality service department, dealers can at least partially offset the drop in new sales they may be experiencing.
“Those dealers that build a rock solid service department, they’re going to be weathering the storm,” Osborne says. “Some of these dealerships can pay their overhead by servicing. There is a big difference between 70 percent gross profit on service vs. 8 percent on a new boat sale.”

To the right are some good examples of service department initiatives that are obvious competitive advantages dealerships can use to market themselves and get a leg up on the competitor down the street who isn’t doing the same thing. Many of these ideas are not unique to these specific dealerships, others around the country offer similar programs.

But, as Yamaha Marine University has pointed in numerous symposiums, competitive advantages don’t have to be unique among dealers — or even unique among dealers in a specific market (though that helps). Dealers simply need to be the first to claim the advantage by marketing it. And it needs to be true and specific.

Go internal
External promotions and offers are only some of the competitive advantages a dealership has. Internal competitive advantages, those things that allow your business to deliver products and services in a timely manner, can also be marketed to drive business.

Marine Center of Indiana – based in Indianapolis – offers a drive-thru winterization service for three consecutive weekends each Oct. and provides refreshments and televised football while the service takes place. The dealership will also do free pick-up and delivery of boats for winterization.

Those are all external competitive advantages that are obvious to the dealership’s customers. But the company also uses a parts-tracking system that tracks minimums and maximums on more than $700,000 in inventory. The system works to ensure the dealership rarely has a situation where a boat is moved to a technician’s bay and the parts are not available to make the fix. This internal advantage helps Marine Center of Indiana do a high volume of service business, but it can also be marketed to customers as a way to assure them their boat will be fixed quickly and efficiently.

At Pride Marine Group – based in Bracebridge, Ontario – a five-tier prioritization program is used that labels customers as Bronze, Silver, Gold, Platinum and Platinum Plus. Internally, the dealership builds time each day into its service schedule to make sure its best customers can be looked after, if necessary.

For example, Platinum Plus customers – those longtime customers who have bought multiple boats from Pride – receive top priority for service work. If one has a breakdown or emergency, two hours of tech time are readily available and can be committed because the service department schedules no more than six hours of labor, per technician, each day. If no such service is needed, two hours of gold, silver or bronze work can be pulled forward from the next day’s schedule.

Not only does this system make for an efficient service department, explaining to a potential customer how it works also gives them the reassurance of knowing they will be well looked after if they buy a boat from Pride, giving the dealership a competitive advantage over those without such a system in place.

Look for other opportunities
No matter how well a dealership fights to retain margins on new boats, the vast majority are experiencing diminished profits on those sales. In today’s market, most new boats are being sold to experienced boaters who believe they can’t afford to miss the opportunity represented by such low prices.

But unlike new boats, which can be easily compared and contrasted, pre-owned boats are relatively unique, depending on condition, hours of use, accessories, reconditioning and many other attributes. Therefore, a dealership able to identify, acquire at the “right” price and fix-up boats that are in high demand can make a decent profit. And pre-owned boats are another area ripe with competitive advantages for dealers to take advantage of.

One method that provides pre-owned dealers a tremendous advantage is offering buyers some sort of warranty on the vessels. Fifty percent of the business at Lakeside Marine – based in Lakeside, Ohio – comes from brokerage boats and trade-ins, so the company has created a Gold Care Service program to take care of those customers. The program provides a 12-month warranty to all pre-owned boat buyers. Lakeside says that less than five percent of the pre-owned boats the dealership sells come back to the service shop with a major problem during the warranty period and the company makes sure to mention its Gold Care Service program in its TV commercials and other advertising.

George’s Marine & Sports says that all of its pre-owned boats undergo a complete inspection and if, for any reason, they’re not up to par with the dealership’s standards, they are immediately sold “as is” on the lot or eBay. The rest of the pre-owned boats are worked on to try and recreate “like new condition.” The dealership also seeks out trades and contacts people it finds that are selling boats privately to let them know that they receive a 13-percent sales tax credit against a new boat when a trade is involved.

Spring Brook Marina offers a program to all used boat buyers that gives the customer the option to upgrade to a bigger boat, whether new or used, within two months, and the customer receives the full purchase price of their current boat back as trade value. “You won’t believe how many people take us up on this offer,” the company says.

Marine Center of Indiana also has a pre-owned boat certification program that all watercraft it takes in must pass. If they do not, the boats do not make it to the company’s showroom floor. Once servicing and detail of the boats are completed, the sales manager then grades the boat on a scale that rates them as bronze, silver or gold. Gold boats get a one-year engine and drive warranty, silver get a 90-day warranty, bronze get slightly less.

Other ideas
Here are a few other examples of competitive advantages and a few more areas that often offer competitive advantages dealerships can use to set themselves apart from the guy down the street:

Keep the edge
In going through the process of identifying and marketing your competitive advantages, be realistic about the outcome. The difference between maximizing your competitive advantages and not today isn’t necessarily the difference between several percentage points of profit margin, but can often be the difference between gaining business or losing it (because your deal, with all the added value your dealership offers, is better than the dealer down the road offering the very same price).

“The effort for a reasonable margin MUST be undertaken, but do not lose a deal if it moves older product,” advises Chuck Guthrie, president of Lynnhaven Marine. “Owners must stay on every deal. Selling the business, service, and a quality dealership is still required to sell at the slimmer margins and at times even a loss. If you do not continue those basics, you will not get a chance to sell at a loss.”

Where the real opportunity lies is in how re-evaluating your competitive advantages and effectively communicating them to your employees, customers and prospects will impact your business down the road.

Consider writing your competitive advantages into your mission statement for each department and the company as a whole. Be specific, using concrete terminology. Don’t say: “We deliver the highest customer satisfaction.” Say: “99 percent of our customers report we exceed their expectations.”

Share your competitive advantages with your employees and create a plan for how to communicate them to customers throughout your dealership.

Reconsider the marketing messages you’re sending. Many more dealerships advertise the products and prices they offer rather than the myriad other competitive advantages they possess.

Yamaha Marine University points out in its traning program that, “To remain competitive, you must continually recognize why you are in business and why your customers continue to do business with your dealership. This requires you to address your competitive advantages every day. What works today may not work tomorrow.”