Leading Through Turbulent Times
Maximum repeat business and referrals lead to survival and prosperity, which is why marine dealers need to be very concerned with the level of customer service they provide. That was one of the lessons Rob Morton of the Disney Institute delivered during his MDCE keynote address
“There is a lot that has happened and continues to happen that is beyond our control,” Morton said. “The spirit of our approach, and I hope the spirit of your approach, is ‘But what can we do?’”
Morton said a successful business starts with satisfied employees, who in turn provide good service, creating happy and loyal customers.
Disney’s reputation for excellent customer service, he said, is based on having a friendly and knowledgeable staff that treats customers like individuals. Those customers come back, recommend their product and become advocates for their brand.
Creating those satisfied employees starts with good leadership. Leaders have to decide what is important to them and communicate that through their actions.
“We judge ourselves by our intentions,” Morton said. “Others judge us by our actions.”
Disney also works hard to eliminate barriers to doing business. For example, it provides free delivery of items bought in its parks so customers don’t have to carry bags around, and it goes out of its way to help customers who can’t find their parked cars.
Morton noted that those situations might not be Disney’s fault, but they are its problem, a key concept attendees took away from this session. — By Mike Davin
The Dealership of Tomorrow
Marine dealers need to get used to doing more with less because the old marine industry models will no longer work, according to dealership principal-turned industry consultant Noel Osborne.
Osborne foresees low sales levels and small margins for the next several years, meaning a business plan based solely on selling a lot of boats isn’t likely to succeed. The dealers who will be around tomorrow, he told the MDCE audience, need to develop a solid business plan that takes into account today’s realities.
“I’ve been preaching business plans to dealers for 10 years,” Osborne said. “Some listened, some didn’t. By the way, most of those that listened are still around.”
Going forward, he said dealers must move from 85 percent sales, 5 percent service, 5 percent parts & accessories and 5 percent F&I to a model that allocates 20 percent to service with 70 percent gross profit in that division.
To do that, he suggests dealers take a hard look at service department efficiency, saying that even a 20 percent improvement in efficiency can translate into $150,000 in extra revenue in a shop with three technicians.
He also called for greater efficiency through increased inventory turns, pointing out that a dealership with a 1:1 turn ratio is losing significant revenue annually to interest. He called inventory control the key issue for a return to profitability and said dealerships must return to 2:1 turn ratios with 3:1 as their ultimate goal. — By Mike Davin
The Link: Efficiency & Profitability
Nine times out of ten, those dealerships that are surviving, and even thriving, during the industry’s downturn, have service departments that are performing well. And to maximize the potential and profitability of service, it’s important to thoroughly track how the department functions.
Those were a couple of the key points John Spader, president of Spader Business Management, used to frame his MDCE presentation, which focused on helping dealers more closely track their service operations to understand how they need to be structured in order to work most efficiently, and therefore profitably.
Spader took audience members line-by-line through a spreadsheet designed to drill down into a service department’s metrics and, among other things, calculate the department’s total expenses and help determine an accurate percentage for its collectable efficiency.
Spader defined collectable efficiency as only those hours that generate cash. They are: customer paid, warranty and unit prep (which includes reconditioning). So, for example, if a tech is paid for 10 hours and has a 55 percent collectable efficiency, then 5.5 of those hours were spent working in one of those three areas.
“In service, if you want good profit, there’s three parts to this: your expenses, your collectable efficiency and your labor rate,” Spader said. “You can be hitting on two out of the three, but you’re still in trouble.”
Once the expenses were tallied and a truly accurate collectable efficiency was arrived at, Spader showed the audience how to make the link to profitability by using that information to set the proper labor rate, which is necessary to achieve the desired profit.
He described the process like this: Add the total expenses in the service department to the amount of service profit desired ($50,000 for example). That total is the amount of cash the service department needs to generate in labor. Then divide that number by the total number of paid service department hours, which gives the labor rate necessary to achieve the desired profit.
However, that labor rate is correct only for a shop that has a 100 percent collectable efficiency. If a dealership’s collectable efficiency is less than that, say 75 percent for example, (Spader says 70 to 75 percent efficiency puts a dealership in the top 20 percent of the dealer body) the dealer would divide the labor rate by .75 and that will give the labor rate needed to make the desired profit.
Spader told the audience that most dealerships set their labor rates too low and that most dealers (70 to 80 percent) need a labor rate of between $110 and $150 an hour, even at a good efficiency of 60 to 70 percent, to pay their employees decently and make a reasonable net profit. But dealers set rates too low either because they don’t know the numbers and don’t realize where they should be, or they’re afraid they will lose business if they raise them.
However, Spader said customers are really only concerned with two things: When the boat will be fixed and how much it will cost? He said that by using flat-rate billing and job pricing, and by adopting four specific practices – charging less than quoted, delivering the boat right the first time, delivering it when promised and delivering it clean – the question of labor rate should not even come up.
“One of the most powerful things you can do to is to know the numbers,” Spader said. “What do too many of us do? We don’t do the math. In hot markets that will cover a lot of these sins, but right now service is something that can put stability in the business, it can gain us customers [and] give us good cash flow if we’re doing it at the right labor rates.” — By Jonathan Mohr
Recovery & Growth in Today’s Market
By adopting the right strategies, dealers can recover from the downturn and grow regardless of economic conditions. That was the underlying message sent by dealer consultant Joe Verde when he took the stage during the Marine Dealer Conference & Expo.
He told the dealers in the audience that you can’t recover if you don’t have the right people. Your people have to come to work to work, not to wait for things to happen, he said. They have to be willing to learn on their own or when you teach them. If they can’t sell and you keep them in sales, you can’t grow. Verde said there are a lot of bright, intelligent people who have been laid off and advised dealers to hire some of them.
He also suggested dealers treat everyone that comes onto their lot like a buyer. People aren’t playing around looking at boats in this economy. If they’re on the lot, they’re interested. And you need to figure out how to make the sale happen, he said.
Everything you as a salesperson do or say either moves you closer to the sale or further away, according to Verde. When you use traditional language – such as “Can I help you?” – consumers typically give a conditioned response. “I’m just looking.” That’s why sales training is so important. Selling is 93 percent process and 7 percent product, he added.
If you develop better skills, you control your future, your growth, your success, Verde concluded. Those skills include basics like warming up the customer, building rapport, investigating, value-building and closing. — By Liz Walz
Best Practices in Service Dept. Efficiency
The average dealer’s service department has grown as a percentage of total company revenue since the economic downturn began, and with that increased performance has come increased pressure for the service department to deliver better productivity and better customer satisfaction.
With those words of introduction from Jeff Strong, president of Strong’s Marine – a Top 100 Dealership – three of Strong’s fellow Top 100 Dealers and Bob Schwartz, a senior group facilitator at Performance Inc., began a panel discussion covering the plans they use to compensate technicians and the systems and procedures they rely on to increase the efficiency of their service departments and make them more profitable.
Carlton Phillips, CEO of Prince William Marine Sales, spoke first and described his dealership’s system for compensating its technicians. At Prince William, techs are paid on a system Phillips discovered during the time he spent working in the auto industry. They are salaried from between $250 to $600 per week and must turn in double that amount before they start getting a commission. Once they do, technicians get between 20 to 35 percent in commission on what they turn in from that point on. Phillips said he treats the service department as a separate profit center from the rest of the business.
All of Prince William’s service technicians have efficiencies well over 100 percent and make from $75,000 to $150,000 per year. Phillips said he expects his dealership, as a whole, to make between $370,000 and $400,000 profit from the service department in 2009. In 2008 Prince William Marine made a little over $500,000 in service.
Doug Malone, vice president of fixed operations for Sail & Ski Centers – Boating Industry’s No. 1 Dealership in the 2009 Top 100 – said the technician pay plan at his dealership is set up a bit differently. Most of the techs at Sail & Ski are on a 100 percent commission-based system and receive a fixed amount for every hour they bill. A few are still on a split system, receiving an hourly wage along with a portion of their pay that is at a flag rate.
Malone said its “incredibly important” for everybody in the service department, including the parts and service managers, to have at least some of their pay based on commissions, which incentivizes everyone.
Although the dealership pays commissions to its technicians, Malone said flat-rate billing must also be used to make the most of the system and that the tech must be involved in the diagnostic process. This lets techs know the hours the customer will be billed, which then lets them know the time they’re trying to beat. To guard against the temptation to rush jobs, Sail & Ski also has a process in place for comebacks, which works to ensure problems are fixed, not repeated.
The dealership also asks technicians to set billing goals for every two-week pay period. If they exceed those goals by 10 percent in a given quarter, they receive a bonus.
The third dealer on the panel – Ed Alf III, president, Sea Ray of Cincinnati and Sea Ray of Louisville – told the audience that his company was also a bit different in how it handled technician compensation. Although the two-location business has the same owner, each location uses a different pay plan, though both are commission based.
At the Cincinnati store, the techs make an hourly wage and then get from $5 to $10 on top of that for every external hour, warranty hour and rigging hour billed. They may also earn quarterly bonuses for exceeding a certain number of hours billed, and a yearly bonus as well.
But at the Louisville store, Alf said the switch was made from an hourly system about three years ago because it wasn’t working there. The store now uses a flat-rate billing system. “I tell you, our efficiency doubled within the first month,” Alf said. The change required some trust on the part of the technicians, but now both the shop and the individual techs are making more money.
“The stores are different in the way the techs are paid, but the bottom line is that they’re both incentive based,” Alf said. “And that makes it work.” — By Jonathan Mohr
The Art & Science of Inventory Management
If your dealership is to succeed in the coming year, you must master a balanced approach to inventory management, said Patrick Kennedy of Spader Business Management during his MDCE presentation. That includes using the proper calculations to measure your inventory success and combining those results with information gathered from your network of human resources to make the best decisions for the future.
For 2010, you need to consciously plan your turn ratios, he said. Plan starting from where you want to end up. If you need three turns, ask yourself where you need to go with your inventory in order to get there. That’s what the lender is looking at because inventory turns are the most important determinant of profitability. Include your existing inventory in your calculations for turnover and sales margins, he added.
Inventory planning needs to happen by type, by brand, by month and by you, Kennedy said. It’s going to be the key to your net profit or net loss this year. As principal, you cannot delegate it outside your office. Kennedy acknowledged that it can be painful. “Only do it in the years you want to make money,” he said.
Total average inventory turn by year (new and used) has drifted from 2.5 in 2000 to 1.4 right now within the Spader 20 Groups, according to Kennedy. Higher turns aren’t an option. They’re a necessity, he said. In recent years, interest costs allowed our industry to get a little loose on inventory. But what’s been happening in the interest rate environment over the past decade is the exception, not the rule.
Inventory is like beer. Don’t get drunk on flooring, Kennedy advised. Just because you can doesn’t mean you should. Buy rationally, sell emotionally. Unfortunately, Kennedy said he often sees the opposite.
Tighten your margin of error in tough times. Play it safe. Ask yourself: “What are the known sellers? In what markets do you compete well?” Be very exact about things like equipment and colors, he suggested. Stock deep, not wide. This is not the time to have one of everything.
And whatever you do, don’t let the math run your business. Talk to and listen to other people about inventory decisions, such as your sales rep, 20 Group members, the truck drivers that deliver your boats, your salespeople and your customers, Kennedy advised.
Watch your plan. Don’t hold on when the facts are clearly against you. Establish jumping off points in advance so you’re not making an emotional decision, he suggested.
Get out and get in your inventory yourself once a week. The oldest piece of inventory should be between your receptionist and the front door, according to Kennedy.
“The trick for 2010 is to make good margin on hot products at the same time that you sell off old inventory,” he said. “You’d better set the margins on new purchases at 20 percent and draw a line in the sand on that. It’s time to go on the offense. We’ve been playing defense for the past 18 months or so. Now, you must bring the highest level of energy and enthusiasm to your business. Your success will revolve around you.” — By Liz Walz
29 Tips for a Stronger Service Department
Before becoming a dealership consultant, manager of several 20 Groups and president of Parker Business Planning, David Parker wrenched his way through high school and college in the 60s as a marine technician and then a service department manager. Parker used his decades of experience to present 29 tips that he said were ideas, systems and philosophies being used by peak performing dealers across the country. Here are a five of them:
Don’t schedule more than 5 or 6 hours of work per day, per tech: In order to handle the problems that will inevitably arise, Parker said he strongly encourages dealers to pre-schedule no more than 5 to 6 hours of work per technician in an 8-hour day. “This gives you time to get those emergencies done and if you get [a job] done early your customer is not going to be upset with you if you deliver it in less time than you promised,” Parker said. “If you schedule 8 hours per day, per tech, then when the inevitable, unexpected delay comes, everyone is upset because now everyone is past their promised work completion time.”
Use menu pricing or flat-rate billing: This is basically pre-determined pricing for most of the labor items in your shop. Parker says that all peak performing shops that he knows of do this. The jobs are timed for how long it takes an average tech with an average proficiency and average tools. If a more skilled tech can do the job faster, “all the better.”
The difference between menu pricing and flat rate is that menu pricing has a dollar amount for the job while flat-rate billing is the hours, times the labor rate, equaling an amount. “They both end up being about the same,” Parker said. But the difference with flat rate is that the hours may be visible to the customer.
Parker said Sears was part of a class-action lawsuit due to flat-rate billing several years ago because some customers, who would sit and wait for their cars to be fixed, sometimes saw the repair done sooner than the amount of time they were paying to have it worked on. Parker recommends that, if dealers use flat rate, the hours should be discussed internally but should not appear on the repair order.
Pick the parts for the techs ahead of time: Plastic bins with pre-picked parts and a copy of the work order, should be delivered to the service bay before the job is started. “You can’t turn wrenches from the service counter,” Parker said.
Diagnostic time: Set aside the first two hours of each day to diagnose the most recent work orders, usually from the night before. This allows the estimate to be done and approved and parts to be ordered immediately, if necessary, rather than waiting two weeks to figure out what’s wrong and finding out then that parts must be ordered. Parker worked with a dealer who implemented this idea and “it was amazing how much it improved the efficiency.”
Monitor billable efficiency: This is the hours produced multiplied by the hours paid and includes retail, warranty and rigging work. Parker said that posting the billable efficiency for each technician and allowing the entire service department to see it, typically produces a 10-percent increase in billed labor.
“I’ve found that the service departments that I’ve gone into and consulted with over the years, when I go in, if they’re not doing anything else, the actual, real billable efficiency in most shops today is 30 to 40 percent,” Parker said. “If you could just monitor the billable efficiency, not even counting incentives or anything else, which I heartily recommend you do, just monitor and have your techs be able to see it, the competitive spirit amongst them will bring it up about 10 percent.” — By Jonathan Mohr
Dealer Panel: Best Ideas
Created to support and reward dealer-to-dealer learning, the MDCE Best Ideas program invited conference registrants to submit the single best idea implemented in their dealerships over the past year.
A panel of judges read and scored all 30 of the ideas submitted, which resulted in a field of six finalists, each of whom presented their idea during the MDCE panel discussion.
The finalists included Lauren Woodard-Splatt, general manager, Woodard Marine, Lake Bomoseen, Vt.; Gary Poole, owner of Buckeye Marine in Bobcaygeon, Ontario; Roy Parker, president of Parker Boats in Orlando, Fla.; Barry Bensz, president of B&E Marine Inc. in Michigan City, Ind.; Jeff Wilcox, president of George’s Marine & Sports in Ottawa, Ontario; and Mark Watts, owner and president of Liquid Sports Marine in Orlando.
Here is a summary of each of their ideas:
Trade-In Coupon (Woodard Marine): A sales promotion in which the dealership sent its boat storage, service and mooring customers a coupon that looked like a check made out to them in the amount of the trade value of their current boat. Through the promotion, the customer was pre-authorized to use that amount toward the purchase of a new boat package, should they decide to trade-in their current boat.
Team-Focused Approach to Expense Cutting (Buckeye Marine): In February, the dealership held a meeting in which all its employees were shown a detailed list of the company’s expenses, the largest of which was wages. Management told the assembled group that it wanted to keep as many staff as possible, and to do so it would need to make cuts in other areas. Management then collected ideas from the staff on where to cut, which ultimately resulted in a 50-percent decrease in expenses and no staff reductions.
Winter Work Process (B&E Marine): A process implemented to encourage service technicians and the service office to track work and repairs needed on customer boats during the winterization and storage period. By determining how much work it would need to accumulate to keep the service department busy and setting goals to hit that number, the dealership was able to increase service work and refrain from laying off technicians during the winter months.
ABCs of Inventory Management (Parker Boats): A system by which the dealership classified its inventory so as to make more educated decisions about what to buy and when to buy it.
F&I Outsourcing to Car Dealership (George’s Marine & Sports): A strategy this dealership used to refrain from hiring a business manager during the off-season. By working with the F&I department of a local auto dealer, this company was able to increase its approvals, increase its sales of aftermarket products and avoid the cost of paying a business manager during a slow time of the year.
Approved For Trade Stamp (Liquid Sports Marine): A strategy used to increase the number of pre-owned boats the dealership could offer for sale. The dealership created a red “Approved for Trade” stamp, which it used on service customers’ repair orders. It allowed the dealership to acquire more than 15 boats for trade-in or consignment, which has resulted in 11 pre-owned boat sales at an average profit of 21 percent.
Once the best idea presentations were complete, members of the audience voted on their favorite idea. The winner, Lauren Woodard-Splatt of Woodard Marine, was presented with the Grand Prize, a brand new Acer Aspire One 10.1″ Netbook computer. — By Liz Walz
Panel: Secrets to service success
Making money, improving efficiency and forging stronger customer relationships were a few of the lessons learned as three of Boating Industry’s 2009 Top 100 Dealers shared their ideas during an MDCE panel discussion, moderated by Five Star Solutions President Bob Williams, on successful service department initiatives.
Tom and Nancy Smith, owners of Colorado Boat Center – a single-location dealership in Loveland, Co. – spoke to the audience first and described several different programs that have worked for them.
One of the most successful is the two-year pre-paid maintenance plan customers can buy when they purchase a new boat. For a single price, which customers can include in the financing package, Colorado Boat Center will do two years of winterizations, summerizations, the 20-hour service, the 100-hour service, etc. The dealership builds a profit margin into the package so that even if a customer takes full advantage of all the services, it still makes money. Most of the time, however, customers will skip a service here or there, making the dealership’s profit margin that much greater. Some will even sell their boats or move away before the two-year timeframe is up.
“This has really turned out to be a big profit center for us,” Tom Smith said.
Even more important, however, is the sense of loyalty the program builds for the dealership, by getting customers in the habit of returning there for all their service needs. (And bringing customers onsite to spend time in the dealership’s “good sized” pro shop, doesn’t hurt sales either.)
“[Customers] build the relationships with the service department and they build that trust,” Nancy Smith said. “So it’s easy then to get them into the extended service policy for another two years.”
Another initiative that has helped build customer loyalty is the VIP Platinum Program the dealership started for customers who had purchased more than one boat from them. Without telling them anything ahead of time, Colorado Boat Center enrolled those customers in the program, then sent a letter telling them they would receive a 10-percent discount on parts and accessories, priority service from the service department and special sales discounts for as long as they are customers at the dealership.
“It was amazing the response we got from it,” Nancy Smith said. “They just were so pleased to be recognized. Just building that little extra to say ‘thank you.’ And then they turn around and they market for us.”
Chuck Thompson, CFO of South Shore Marine, spoke next and touched on several programs his dealership has done well with. One of the most successful is its “Daily Huddle” which came about because the company’s CSI surveys indicated problems that were then identified as communication breakdowns. In response, the department managers began coming together to “huddle” each morning at 6:15 (a time they chose) to make sure everyone was aware of the “play” for the coming day.
“The great thing here is that with anything like a CSI issue, within 24 hours, it’s coming out in the huddle,” Thompson said. “And everyone, every manager is going to know what it is, how it happened and how it’s not going to happen again.”
Mike Hoffman, president of Marine Center of Indiana, was the final panelist to speak. In preparation for the MDCE discussion, the dealership’s staff had gathered and come up with 30 ideas to share, which were then pared down to the Top 10, which Hoffman said any dealership would be able to do. A couple of the highlights:
Construct an in-house waste-oil recovery system: The dealership invested $150 in a used stainless steel sink and two old 250-gallon oil drums. The sink was mounted to the wall behind where the techs work and a hole was drilled through the wall to the oil drums, which collect the waste oil. “We stopped all the spillage, we stopped everybody from having to go outside, it’s just really cut down on all the work,” Hoffman said. Every two weeks a company comes to pick the oil up and pays the dealership for it.
Organize the lot: Marine Center’s lot is paved, striped and the parking spaces are numbered. But any dealership can do this. Before its lot was paved, Marine Center ran wire from one end of the lot to the other and attached plastic tags as means of numbering the spaces. Each boat has its own spot and that number is on the service ticket and displayed on monitors in the dealership for everyone to see. “From the time a boat comes onto the lot until it leaves the lot it’s in the same space,” Hoffman said. “We save all the guys driving around the lot looking for the boat, or looking for the tag that fell off, or trying to read somebody’s writing. It’s a great time saver.”
In by Monday, out by Friday: Hoffman said this might seem harder to accomplish, but by organizing operations properly it can be done. He said bringing boats in and out, uncovering them, diagnosing the problem, then taking them back out and putting them in a different spot as the parts are ordered, then looking for them again and repeating the process over and over, takes much longer than fixing the actual boat. If you can streamline that process so that techs spend their time fixing boats, this policy is possible. — By Jonathan Mohr
Ignoring Sales Opportunities
Bob McCann, Channel Blade/ARI director of education, says dealers can’t afford to squander the opportunities the Internet provides by ignoring leads generated on their Web sites.
McCann cited a study that suggests leads that receive immediate responses have a 20-percent conversion rate, while those that are in limbo for more than four hours have a 2-percent conversion rate.
“Respond to a lead immediately and improve your chances to make a sale ten-fold,” he said.
The quality of a lead response is also key, according to McCann, who suggests dealers use pre-written e-mail templates branded with the dealer logo, use consistent and professional language, minimize sales rep key strokes and encourage process adherence.
E-mail leads should be followed up with a phone call in order to make an in-store appointment, he said, and appointments that are confirmed in advance are 30 percent more likely to be kept.
Finally, McCann urged the audience to be patient. Research shows most customers buy after seven customer touches by the dealership. — By Mike Davin
Marketing Your Service Department
In a year in which sales of big ticket items are not producing enough revenue or profit to support many dealerships’ operations, an increase in service business could make the difference between operating in the red or in the black, suggested dealer consultant Noel Osborne in his MDCE presentation.
Gross profits for service have remained high despite the troubled times. There are still as many boats in customers’ hands as there were before the recession hit, and many boaters are upgrading their current boats rather than purchasing new models, he said.
How can we achieve high levels of profit in service? By changing our culture to embrace the fact that service is our most important product, by treating it as a separate company with its own profit plan, by measuring and managing every aspect of service on a daily basis, by organizing our service department employees into a highly effective, profit-generating team and compensating them accordingly, and by marketing service as intensively as we market our boats and motors, Osborne said.
Marketing service is completely different than marketing boats, he said. Service marketing focuses on marketing yourself, your reliability and your commitment to excellence. Here are his tips for marketing success.
1. Your greatest service-marketing tool is your team. Give all your service employees business cards, encourage them to give them out at every opportunity and brand their cards in association with your service operation.
2. Co-market with area boat storage facilities and marinas. Storage sales are down, and they need help too. Put your service marketing materials at their facility and allow them to put their marketing materials at your facility. Conduct joint marketing events.
3. Hang out at boat ramps. Encourage your salespeople to spend time there promoting your service business. Financially reward your employees for every new service customer they attract at the ramp. If you have a service truck, park it near the ramp and use it as a marketing tool.
4. Conduct free service events that you advertise like you would a boat sale. Inspect boats and give owners a free inspection report. Include a no-cost, no-obligation quote to repair any problems you find and provide a financial incentive if they sign up that day for their service.
5. Conduct walk-arounds before boats leave the service department to increase the dollar value of a service ticket by 20 to 50 percent.
6. Market your service on your Web site. Create an entire section of your Web site for service. Add service specials and service tips such as preventative maintenance advice.
7. Use social networking to connect with your customers concerning their boat ownership needs and interests.
8. Get involved with other community businesses. Ask to put your service marketing materials in tire centers, automotive repair shops, medical offices, community centers, auto & truck dealerships and shopping centers. — By Liz Walz
The Future of Selling: Don Cooper
“Who here sells high-quality boats? Who here provides the best service?” Don Cooper, The Sales Heretic, asked the MDCE audience. Every single dealer raised their hands to these questions and others. “Avoid clichés! You cannot use clichés and prosper in this economy. You must explain what quality means. What can you say about your boats that no one else can say? What can you say about your dealership that no one else can say? It has be objective, legally defensible, measurable, concrete. If you can’t do one thing differently or better than your competition, there’s no reason for you to be in business.”
Cooper challenged the audience throughout his talk with basic selling practices. He gave straightforward tips to increase unit sales as well as 10 things marine salespeople do that buyers hate most.
One of the top things consumers hate most is someone who smells like smoke.
“If you smell like smoke, you’re alienating 80 percent of your potential buyers before you even say a word,” Cooper said. “If you smoke, now is the time to quit.”
Besides discussing what consumers don’t like, Cooper talked about what they are interested in. Talking about the features of a boat rather than its benefits can be detrimental to a sales pitch.
“No one cares about the features,” he said. “Focus on benefits because that’s all people are interested in. For instance, if I get a brand new sports car, I brag about the feature, the engine, but all I care about is the benefit, that it goes fast. All buying is emotional – benefits. We use logic to backup our decision, features, but all purchases are benefits. As you’re doing your walk-around, mention features, but stress benefits. Benefits are personal, individual. Features are about the boat. Benefits are about the buyer. It’s harder, but you need to know your buyer first.” — By Karin Gelschus
Moving On: Survivor’s Edition
During his second presentation at MDCE, John Spader advised dealers to “get real, get a plan and get going.”
Spader asked the crowd if they had a good handle on the number of unit sales in their market and if they had a good budget based on a reasonable market share.
After giving that advice recently, Spader said a dealer told him that if sales are flat next year, his budget required him to have a 60 percent share in his market, even though the dealer traditionally had only 15 to 18 percent of the market and none of the other players had gone out of business.
“We can play the game on paper and make it look real easy, but do we have a real plan?” Spader asked.
Spader also said dealers need to keep close tabs on their debt to equity ratio, or what is owed versus what is owned. — By Mike Davin
Partners For a Better Tomorrow
At the first of two panel discussions featuring both dealers and manufacturers at MDCE, panelists suggested that passion for boating hasn’t wavered during the recession, but the industry needs to start paying more attention to value.
Bill McGill, CEO of MarineMax, said his company’s Getaways program has actually expanded because “people need it more.”
Nevertheless, Jerry Brouwer – general manager of Michigan dealership Action Water Sports – noted that because of lost blue-collar jobs, dealers are faced with a smaller, more affluent base of potential customers. For that reason, Bob Apple, senior vice president of Volvo Penta of the Americas, suggested the industry should focus on boating as a family activity and provide good value.
Randy Kelly, owner of Kelly’s Port – a two-location dealership based in Osage Beach, Mo. – said that while dealers can’t cut rates below profitability, they can focus on better service. He compared boat dealers to fine dining, saying people are willing to pay for the experience, but only if the service is good. McGill added that boats have become overstuffed thanks to a manufacturing arms race, saying no family needs four TVs on a boat.
Looking forward, most of the panel predicted a flat 2010 at retail, with small gains for manufacturers. The panel ended with both groups in agreement that communication is key to dealer/manufacturer relationships, and the continued success of the industry.
“Everyone needs to work together,” Brouwer said. “In the past, we haven’t worked together as we should. Now everyone needs to win.” — By Mike Davin
Partners for a Better tomorrow (2nd session)
Inventory management was a hot topic among marine industry officials throughout much of this year.
To address the issue head on were panelists Dusty McCoy, CEO, Brunswick Corp.; Duane Kuck, CEO of Regal Marine; Phil Smoker, Smoker Craft/Starcraft; Alan Bohling, Seattle Boat Co.; and Rod Malone, Sail & Ski Centers.
They all shared their ideas of what the future of inventory management looks like as well as what needs to be done on both the manufacturers’ and dealers’ parts to be more successful in that area.
Kuck says more boats need to be sold before they are
“We need to have pre-sold strategies,” he said. “Dealers aren’t going to be able to stock as many boats as in the past, but we still have to find a way to sell those boats.”
Reaching and maintaining that balance is tricky thing as McCoy wondered out loud how to determine how long a customer would wait for a boat after they purchased it.
That issue along with various others were discussed by the panelists, including the dialogue between boat builders and dealers, what needs to happen now to make inventory healthy in the future and how long it will take to reach healthy levels. — By Karin Gelschus