Boating Industry Intelligence You Can Profit From
The temptation when times get tough is to slash prices to try to get rid of inventory as quickly as possible. But while this approach might work in the short term, the risk is that it becomes a dealership’s long-term reality. Once a business starts down the low-price path, it can quickly turn into a dead-end street.
Seattle Boat Co. recognized that danger when advertising one of its boats a few months ago, offering a $30,000 discount on a twin-engine, 30-foot vessel. “We literally had people calling, wanting to know about the $30,000 selling price on this $200,000 boat, says Alan Bohling, president and CEO of the Seattle-based company. “From that experience, we realized that promoting a low price was only going to be driven lower and that no discount would be satisfactory to the customer.”
So, instead of deep discounts, the dealership refocused its sales approach with its customers to concentrate on relationship, quality and value. The company now makes sure its boats are presented perfectly. Salespeople work to make customers comfortable by suggesting the practical over the luxurious and to eliminate the guilt of buying something expensive by stressing the benefits to family and emotional health.
Top dealers find ways to adapt without weakening the foundation their success is built on. And Seattle Boat Co. is one of the best.
For example, the company has been able to diversify its profit centers so that it is not quite as dependent on boat sales for revenue as it has been in the past. Boat sales accounted for just over half of the company’s revenue last year, down from more than two thirds of the total the year before that.
As the percentage of boat sales has gone down, Seattle Boat Co. has been able to offset some of that loss by increasing the percentage of its service work, which is up 6 percent, and which the company makes a 100 percent gross profit margin on.
Like everything else the dealership does, Seattle Boat Co.’s success in its service operations is based upon an innovative system that maximizes the company’s strengths and uses them in concert with one another. The dealership’s Super Tech program – which pairs junior technicians with Seattle’s most experienced “Super Techs” in a partnership that helps the dealership achieve 98 percent service efficiency – is one of the company’s competitive advantages. Another is its storage business. Seattle Boat Co. joins the two by requiring full annual services for every boat that goes into its premium winter storage facilities. The company has captive service customers in its nearly 600 marina rack slips, and it intends to expand that operation to 1,200 year-round and winter storage slips.
Yet another of the dealership’s successful initiatives is called the “Great Exchange.” Unless otherwise abused, the dealership will provide a guaranteed trade-in value based on a percentage of the original selling price of the customer’s boat. The company says the program is a great way to keep its customers in newer models with the latest technologies and styles, made evident by the 38 percent of its patrons who are return customers.
That initiative, along with others, like the “Summer Sales Event” (buyers receive $1,000 off when they finance in house) and the “Free Fuel Program” (free fuel for the summer with any new boat purchase), provide Seattle Boat Co. with additional and distinct competitive advantages.
Ultimately, however, it’s the way Seattle Boat Co. is run that truly sets it apart. The company is managed so closely and so well because it has a system in place to measure each aspect of its operations.
The way the dealership’s managers stay on top of their company’s day-to-day performance has long been an example for the rest of the boating industry. But these days, hands-on tools like Seattle Boat Co.’s Daily Health Reports — which monitor productivity, efficiency, work orders billed, cash received and special parts ordered — its Vital Factors Reports and its Over/Under Sales Reports can make the difference between success and failure as dealers look for ways to squeeze every last ounce of profit out of their businesses.
And it’s times like these that dealerships like Seattle Boat Co. are built to overcome.