Now more than ever, dealers must adopt a survival strategy

Posted on Written by Wanda Kenton Smith
Wanda Kenton Smith

I regularly call clients and colleagues just to take the pulse of the industry. On one of those calls last week to get a reading on sales, a major dealer said something that so stunned me I asked him to repeat it to be sure I hadn’t misunderstood.

“We’re projecting that up to 25 to 40 percent of all the boat dealers in the U.S. won’t survive this economic downturn,” he said.

The “we” he referred to is a 20 Group of top-performing dealers. Granted, this is an unscientific projection, but these are among the savviest dealers around, and their conclusion is based on their own market observations.

I’m deeply troubled by that forecast. If they’re right, that means more than a quarter of U.S. boat dealers may not survive the winter.

This, to me, is an SOS — a warning that our retail colleagues need help. Dealers are the critical link that holds us all together. It doesn’t matter if you’re the greatest manufacturer with the most innovative products; unless you’re selling direct, your livelihood depends on the performance of your dealers. The rest of us are impacted likewise.

So what should we be doing now to fortify our dealers?

I have my own ideas, but I also bounced some concepts off others who understand the dealership dynamic. I talked at length with David Parker, a dealership consultant who also operates “20 Groups” for some of the major brands, including Monterey, Cobalt, MasterCraft and Regal, among others. Thirty of his clients are currently ranked in the top 100 dealerships nationwide.

I also spoke with John Peterson, vice president of Hunter Marine, a sailboat manufacturer whose sales are up by double digits this year. Peterson attributes this slump-defying performance not only to new product offerings, but to strong dealer relationships.

With rare exceptions, we know boat sales have dried up. Many affluent prospects are victims of Wall Street. Others are locked in the home mortgage chaos that has frozen their borrowing capability. Others who have the ability to buy are hunkered down in a wait-and-see mode. If we have any hope of turning sales, we must give our prospects a compelling reason to buy now.

Think about it. How many of us are going out and buying big-ticket items such as luxury autos or second homes or expensive jewelry? We need to understand how our customers think. Why would we consider making a major discretionary purchase when the economy is the worst in recent history? What would motivate us?

Manufacturers and dealers need to brainstorm and develop some solid arguments as to why this is the absolute best time to buy their products. I’d recommend as many value-added service and support enticements possible. Then I’d communicate this sales message through as many marketing channels as possible.

Avoid the quick and easy “panic pricing” that signals desperation. People generally won’t buy from organizations that appear to be faltering and may not be there to support service after the sale. The only time to turn to aggressive, ‘blowout’ pricing is when dealing with non-current inventory. If you have non-currents in stock, do whatever is required to move them, pronto.  With each passing day, this product becomes less desirable and more costly. Sell it, even at a short-term loss. The longer you hold on to it, the worse the eventual bite will be.

I spoke with another colleague who is a vice president with a major boat manufacturer. One of his better dealers had two strong sales working on current-inventory boats. In his anxiety to sell, the dealer cut right to his lowest margin in the early phases of negotiations. Both deals went south in a hurry because the customers feared they hadn’t reached bottom. The dealer had left himself no wiggle room. Parker recommends maintaining at least a 5 to 10 percent margin, and reducing the price by hundreds, not thousands, of dollars.

Once you’ve developed your selling strategy, it’s time to draw your prospects into the dealership. Communicate a call to action in everything from your print and Web-based marketing to no-cost one-on-one telephone calls to your entire customer and prospect list. I’ve been preaching for years that dealers need to work the phones on a regular basis. Parker agrees, and added some real substance to this powerful, yet often ignored, touch-point sales strategy.

Joe Verdi, a sales trainer with whom he works, claims that when you schedule appointments in advance, 50 percent who show up will close. Another sales organization has suggested that figure may be as high as 80 percent. Need I say more? Every dealer should initiate a calling campaign to set up appointments immediately.

What will it take to entice a prospect to come to the dealership if he doesn’t have the mindset to buy? How about a one-on-one introduction of the new 2009 models? Or a small VIP presentation for select clients, coupled with some good food and beverages? A demo ride on the model of the prospective buyer’s choosing? Invite the manufacturer and its top engineers to talk shop. Offer a VIP winterization package or preventive maintenance special, and give people a reason to either bring their boat in or have the work done there at the marina. Not only does this last concept get you an appointment, but it provides a new stream of revenue during the off season when dealers need it most. One dealership, I’m told, does more business in December than in July, thanks to pre-scheduled service work.

Parker quotes the sales manager at a large marine dealership: “If you think your salespeople are doing their phone followups like they should without management accountability, you’re an idiot!” Dust off that sales log and get going.  And be sure to initiate a weekly reporting mechanism for sales staff.

Hunter VP Peterson understands the value of phone contact from the manufacturer’s perspective. His sales team is constantly in communication with its retail network. The reps spend time at dealerships supporting sales and marketing initiatives. Ongoing sales training, retail promotions and dealer incentives are an integral part of Hunter’s proven dealer support arsenal.

Another smart manufacturer-sponsored program invites dealers to bring qualified prospects to the plant on specified dates. The company rolls out the red carpet, takes the customers on a VIP tour, provides boats for testing, and gives dealers an opportunity with incentives to take orders right there on site. A terrific idea!

It’s no longer business as usual in the marine industry. It’s past time for a paradigm shift, and nowhere is it more apparent than at retail. What used to work is history. We must all rally around our dealers and do everything in our power to promote and drive retail sales activity in order to help ensure their survival – and ours as well.

Wanda Kenton Smith has 28 years marine industry marketing experience. She is president of Kenton Smith Advertising & Public Relations and president of Marine Marketers of America. For comments on this column, e-mail

This article originally appeared in the November 2008 issue.

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