The trailer manufacturer has signed an independent rep to broaden its reach
Trying economic times have delivered many deleterious effects across a wide swath of market sectors in the marine industry, but occasionally some good can come from the struggle.
Take the case of Load Rite Trailers, a boat trailer manufacturer based in Fairless Hills, Pa. In a marked departure from the way trailer manufacturers usually do business - typically relying solely on inside sales departments to generate revenue - Load Rite in January began actively working with a commission-based, independent marine manufacturer representative company. The move is meant to augment Load Rite's direct sales efforts and allow it to reach more dealers.
"When I looked at how we went to the market, it was obvious we couldn't provide the amount of service I felt was necessary for our dealers, because there were too many of them," says George Branca, Load Rite president and CEO. "We looked at how to better serve and reach the dealer network, and working with manufacturer reps just made good sense."
Load Rite is a regional company that serves dealers from Maine to South Carolina and as far west as Ohio. Its inside sales team has active relationships with about half of the 3,000 dealers in the region, but Branca envisioned a deeper grab and turned to Atlantic Marketing Company, one of the oldest and largest manufacturer representative firms in the marine accessory market on the East Coast.
As Branca puts it, "You have to get more than market share. You have to get unfair market share." That's his way of saying scoop the competition for a bigger slice of what today is a shrinking pie in the boat trailer business. Trailer sales are directly linked to new- and used-boat sales, which have dropped off a figurative cliff.
The number of units Load Rite shipped in 2008 declined by 22 percent compared to 2007, forcing some major changes at the company. Laying off 70 people, which reduced the work force by 50 percent, trimming approximately $2.5 million in operating expenses, and a reorganization of the company was necessary, though painful, Branca says. Bringing Atlantic Marketing Company aboard as independent sales representatives was part of the larger picture, he says.
"From a financial standpoint, we knew we'd have a variable expense, which would generate incremental sales," Branca says. "We'd reach more of our customer base and improve our services to dealers."
Branca is a relative newcomer to the trailer industry. He began serving as Load Rite's president around three years ago, when the former president retired. Prior to that, he worked in private equity companies on start-up ventures or takeovers of industrial manufacturing companies in need of reorganization.
"I think of myself as a change-maker," he says. "I institute change in companies. That's my job."
Branca had plenty of experience working with independent manufacturer reps in previous positions, and he believed they could sell trailers, even if few - if any - had tried it before. "Taking this route was a natural progression in terms of what I've always done with the companies I ran, harnessing the power of an indirect sales force to expand sales potential," he says.
Load Rite began exploring the possibility of adding independent reps a year ago, when Branca approached eight potential marine manufacturer representative companies. He says there was much interest in the idea of representing Load Rite. "Their market was starting to shrink, and they were looking for another product to put in their baskets," he says.
Branca also says he met with some resistance from his inside sales staff. "No one likes change, but now everyone is on board," he says, adding that making such a change would have been more difficult in good times because the status quo is easier to maintain when there's no pressure to improve.
Ultimately, Atlantic Marketing Company seemed to be the best fit. Founded in 1965, it represents a number of key market segments, including mooring and docking, engine and maintenance, galley and plumbing, electrical systems, marine hardware, inflatables, and many others. It has contacts with about 1,000 dealers from Maine to Virginia, though its top-producing active accounts number about 200 and generate 80 percent of the company's sales.
"As far as I know, no other trailer manufacturer is using independent reps to sell its products," says Brandon Flack, president of Atlantic Marketing Company in Stonington, Conn. "When Load Rite approached us, I thought the idea was unique and innovative. I saw quick opportunities for success."
Atlantic's OEM business has dropped by 60 percent in the last year, a sign of the times as boatbuilders continue to suffer. However, dealers with new-boat sales, service departments, and accessory stores are faring better than those with more narrowly focused profit streams, Flack says, and these are the prime prospects for Load Rite trailers.
Atlantic's aftermarket sales were up 5 percent last year, which constitute the lion's share of Atlantic's business, Flack says. The increase of 5 percent has made up for the shortfall in OEM revenue. In the last three years, the company has averaged $25 million in product sales. "We're expecting to sustain current sales levels, even in these difficult times," Flack says.
Flack says he anticipates Load Rite trailers will account for about 5 percent of Atlantic's overall sales volume in 2009 and as much as 10 percent in 2010, roughly $1 million to $2 million in product, respectively. Atlantic is using its commission-based sales methods, which have proven effective in selling marine accessories, to sell Load Rite trailers, and Flack says his sales force is "already getting traction" in the marketplace.
About six years ago, Atlantic enhanced its sales efforts to focus more on dealers to build relationships and raise awareness of the products it represents, which in turn would boost orders placed with distributors. It launched what Flack calls its "winter blitz" during the slow period of the year, when dealers are most receptive to sales calls. Flack says the six members of Atlantic's sales team blanket a specific area within the territory, "driving down dirt roads to guys who are servicing boats in a barn" and visiting bigger operations as well.
"We found increasing the exposure of the products we represent to the dealers was an effective way to boost overall sales, as opposed to concentrating only on selling the products we represent to distributors," Flack says.
Atlantic's active, disciplined approach to managing relationships with large numbers of dealers was a big plus in deciding to go with the company, Branca says. "You can have the best product in the world, but if you can't get it out to the customer, then you might as well have no product at all," he says.
This article originally appeared in the July 2009 issue.