What are your plans for this offseason? Will you be focused on a few strategic initiatives? Tinkering here and there with little things that got away from you this busy season? Or maybe resting from an outstanding selling season? (Many of my coaching clients have reported enormous years)
Well, if you are interested in actually working to grow your boat business, let me share with you a few ideas on how you can add an extra $50,000 or more to your bottom line this off season.
First, how can I make such a bold claim?
Well, let’s look at a little math …
Let’s assume you sell 100 boats a year and have an average gross margin of $5,000. Feel free to follow along with your own math here for your boat business.
Do you think there is opportunity to increase your final selling price by $500 on average? Or, avoid discounting by $500 on average?
If you were able to do this, how would that impact your bottom line? Well, if you deliver 100 boats a year, there’s $50,000 of profit you are currently losing. It’s slipping through your “spaghetti strainer” as one of my clients calls it.
But, you already do a great job and rarely discount?
OK, let’s say that your sales staff does an excellent job of building value, presenting price and avoiding discounts. Let’s say that you can only increase by $250 per deal on average. If it’s just $250 x 100 deals, that’s $25,000 of lost profit.
Go ahead and do your math based on units and how much you feel you can increase your final sales price on average.
Lost Profit from Unnecessary Discounting
# of Units Delivered in 2015 ___________ 100 (units sold in 2015)
Avg Unnecessary Discounting/Unit ___________ $250 (avg unnecessary discounts)
Lost Profits ___________ $25,000 (Lost Profit)
What did your math look like? Is it substantial? Is it worth focusing on this offseason?
So, where can you pick up the other $25,000? Well, do you think you missed any sales last year?
- Sales lost to your competition?
- Sales lost to the RV dealer?
- Sales lost to a pool or family vacation?
- Sales lost to someone selling a boat out of their driveway?
- Sales that you never even knew existed because they bought a boat from 500 miles away?
Let’s say that number of lost transaction is just 10 boats that you should have sold.
With a gross margin of $5,000, there is an additional $50,000 ($5,000 x 10 additional sales). But, we didn’t lose that many sales you say.OK, let’s cut it in half to just five boats at $5,000 gross margin. That’s still $25,000 in lost gross margin. Again, do your math to see what your opportunity is in your boat business.
Lost Gross Margin from Lost Sales
# of Lost Sales in 2015 ____________ 5 (lost sales)
Avg Gross Margin per Deal ____________ $5,000 (avg gross margin)
Lost Gross Margin _____________ $25,000 (Lost Gross Margin)
Amazing how quickly those numbers add up… $50K, $100K, even $200K come pretty quick. Then consider how many more years you’ll own your dealership.
Want to really feel like I kicked you in the gut?
Take the $50,000 and multiply times the number of years you plan on staying in the boat business: five, 10, maybe 20 or more?
__________________ X _________________ = $___________________
Lost GM/Year More Years in Business Money You’re Losing
That number climbs pretty high, pretty fast … unless you address the core reasons why you are discounting too much. Unless you address the reasons why you are missing or losing sales.
So, what can you do about it? How can you boost value in your sales process to stop all that discounting? How about getting prospects to buy a boat at the price you want to sell them?
Yeah, it’s possible, even in today’s environment.
Even at a boat show.
Even during the offseason.
Even with the Internet.
Even with all the information at our prospects’ fingertips.
Have you truly focused on these areas in your boat business within the past five years?
- Developing a social proof strategy?
- Developing a value based communication strategy?
- Developing a long term relationship building strategy for prospects and past clients?
- Developing a strategy for presenting price in the most effective manner possible? (and yes, there is a BEST way based on psychology and science)
- Developing systems to make this easy to maintain even during the busy season?
If you answered no to any or all of those questions, guess what? By focusing on those areas, that’s how you improve your margins. And, $250 or $500 or $1,000 or $5,000 depending on your products are possible… if you’re willing to put in the effort.
What’s that you ask … what about lost sales?
This opportunity can go so many different ways depending on your strengths and weaknesses. The problem could be one of these…
- Not enough quality prospects to sell
- Poor lead capturing focus
- Poor sales skills
- Poor closing skills (or lack of asking for the sale)
- Poor follow-up skills
- A sales prevention department
- Poor reputation in the market
- Poor value proposition to the marketplace (AKA you don’t deserve to sell more boats)
Depending on your particular dealership and honest evaluation of your strengths and weaknesses you can clearly define a path to plugging the hole in your spaghetti strainer.
Next time, I’ll jump into each of these opportunities in more details. In the meantime, if you’d like to learn more about “How to Add $50K (or more) to Your Bottom Line This Off-Season” you may want to check out this free webinar at www.SuccessfulBoatDealer.com/50K
Matt Sellhorst is the author of the book “Marine Marketing Strategies” and Head Profits Coach at Boat Dealer Profits. Sellhorst was also the winner of the MDCE Best Ideas Contest, Boating Industry’s Movers and Shakers Bold Moves award, a top producing boat salesman, and a speaker and presenter at the Marine Dealer Conference & Expo. He now helps dealers, brokers and manufacturers sell more boats with proven sales and marketing systems.
To receive a free copy of his book, visit www.HowToSellMoreBoats.com to receive instant access (and your special bonus training). For manufacturers interested in working with Matt to improve their marketing strategy, you can request more info at www.SuccessfulBoatDealer.com/Special-Project.