Like most dealerships that are surviving the economic downturn, Prince William Marine Sales Inc. has been adjusting its business to fit the times. But what stands out most about this Woodbridge, Va.-based Sea Ray Ambassador dealer is what hasn’t changed.
Perhaps first are the company’s employees. Prince William Marine didn’t lay off a single person in 2008. Doing so would be a “last resort,” according to CEO Carlton Phillips, because of its potential impact on customer service. In addition, rather than cutting back on its marketing budget, Prince William implemented a double-digit increase in 2008.
“Today’s customer wants excellent service,” explains Phillips, “and more so in a downturn economy. To do these things, we had to spend money to make money.”
The increase in marketing dollars was part of its push to increase the name recognition of Prince William Marine in the Washington, D.C., area. Not only did the company increase its community involvement and professional car racing sponsorships, but this one-location dealership also once again held or participated in more than 50 events and promotions over the course of 2008. In addition, Prince William added to its Internet activity, increasing its Web-based advertising and retaining a full-time Webmaster, who Phillips says has been responsible for increasing its pre-owned boat business significantly over the past few years.
A key piece of Prince William’s marketing strategy is its boat show presence, and the company has continued its commitment to an “ambitious show schedule” over the past year. In fact, when the Washington D.C. Boat show was cancelled in February, just three weeks before it was scheduled to open, Prince William jumped into action. The dealership spent about $50,000 in advertising to launch its own boat show at the Prince William facility, including those non-competitive exhibitors that accepted its invitation to participate. The “huge event” was a “huge success” as it allowed Prince William to show off all the models it had to offer, not just those it would normally take to the show, the dealership explained.
When it comes to inventory management, Prince William has also taken a different strategy than most dealerships. In 2008, when most dealerships had stopped taking boats, it continued to accept new boats.
“Inventory levels had to match the current economic conditions and still remain somewhat optimistic for a recovering climate,” says Phillips. “So far in 2009 our boat inventory has turned at the pace we projected, and the lack of national dealer inventory has given us some extra sales because we have had the stock inventory to meet the demand.”
By having new boats in stock, Prince William was able to retain most of its margin. It also preserved margin by taking a new approach to structuring deals, such as by including three-year maintenance plans in deal pricing, providing a slip guarantee for bigger boats, including boat insurance in the deal, guaranteeing NADA trade values for the next two years and increasing the salesperson’s commission on brokerage boats to maintain sales volume.
Finally, Prince William continues to offer its customers a bevy of financing options, despite the credit crisis. It works with 14 different lending institutions, from local and national banks and subprime lenders to, more recently, finance brokers. In addition, it offers refinancing to customers with no fees and even provides in-house financing under special circumstances.
“This has enabled us to sell boats to customers who have the resources to buy, but the credit financials do not demonstrate that capability,” says Phillips. “As the ability to get good clients financed has become increasingly more difficult, our in-house financing has proven invaluable.”
While the 50-year-old company has “always managed with a tight grip on expenses,” it did make a few carefully chosen adjustments in 2008 in response to the downturn. It eliminated overtime, reduced office and shop supply costs, changed uniform suppliers, increased electricity rates at its marina, began taking selective service work outside of its boat sales customer base and lowered its sales profit margins. In addition, the dealership began requiring service customers to pay a deposit up-front before work was completed, started working with yacht brokers in other states to move its large boat inventory and created a shipping and crating department to handle overseas shipping of pre-owned boats, “which has increased dramatically this last year.”
None of these changes can be described as “significant,” Phillips acknowledges. But neither can the impact of the downturn on Prince William Marine Sales. While the company joins most dealers in reporting a decline in revenues, it continues to serve as a leader in profitability and customer satisfaction while so many of its competitors struggle simply to survive.
“With the economic conditions that are present in the marketplace,” says Phillips, “Prince William Marine experienced what we consider a good year in 2008.”