When it comes to good business ideas, can a boat dealership learn from a motorcycle dealer? Meanwhile, Ohio boating is fighting proposed budget cuts.
Like boat dealers, many motorcycle dealerships were hit hard last year. The Western regional market dropped 21% in major unit sales, according to reports by Max Materne published in Powersports Business magazine. Materne is co-founder of Ownex.io, a platform that aims to empower dealers with tools that enhance the customer experience and promote growth.
The slow sales last year meant many motorcycle dealers, like many boat dealers, were scrambling to stay afloat. However, in San Jose, Calif., Spirit Motorcycles opted not to go along.
Despite a $1.8 million revenue decline (15% YOY), the dealership increased net income by $20,000 (3% YOY). Spirit was actually getting healthier, more efficient and more profitable by shifting the focus away from just selling more and zeroing in on the customer ownership experience.
Spirit worked with Ownex to undergo a DELV (dealership enthusiast lifecycle value) analysis — a data-driven approach to uncovering inefficiencies, optimizing operations and re-engaging the customer base.
The DELV analysis uncovered that customer retention was the real profit driver.
1. Loyal customers serviced their bikes more frequently — two-and-a-half times more frequently than the average — thereby spending more money, more often.
2. Making small changes had a big financial impact. A 1% increase in enthusiast lifecycle value led to a 9% increase in gross profit margin
3. Service efficiency was key to profitability. By optimizing service work flows, technician proficiency jumped from 42% to 68% in the first three months and are now operating consistently above 75%.
It triggered Spirit to make some bold moves:
1. Reorganized the service department: Cut underperforming techs, optimized scheduling and switched to a flat-rate pay plan that led to a 91% increase in tech efficiency within the first month.
2. Reduced inventory exposure: Cut unit inventory 30% and lowered flooring costs by more than $330,000 while prioritizing service retention by shifting focus to proactively keeping customers engaged in post-sale service, improving the customer satisfaction index.
3. Reworked staff compensation: Moved from a revenue-based to a profit-driven commission model, aligning incentives with dealership success.
“I’ve never seen a store fix things this fast,” says Materne. “They took the recommendations and ran with them. A year later, they have lower revenue but higher profit. That’s what a healthy dealership looks like. It’s proof that focusing on ownership experience, rather than chasing short-term sales, is the future of dealership profitability.”
The actions Spirit has taken may be worth more exploration by marine dealers.
H2Ohio in Trouble
The Ohio House passed its proposed state budget calling for a whopping 45% cut in the H2Ohio program, which aims to improve water quality across the Buckeye State. The House budget, which now must go to the Senate, would cut current funding from $270 million to $150 million. H2Ohio was started by Gov. Mike DeWine in 2019.
Michelle Burke, president of the Ohio Marine Trades Association, told a group of lawmakers at last week’s Catawba Island Boat Show that the proposed reduction should not be allowed to stand.
“Clean waters are the key to great boating, fishing and tourism in Ohio,” she said. “It’s imperative we keep our waterways clean if we want to thrive as a live-work-play destination.”
Burke is scheduled to testify at upcoming Senate budget hearings and will call for the H2Ohio funds to be fully restored. Ohio needs an approved budget by July 1.
In his budget proposal, DeWine asked lawmakers for $270 million over the next two years: about $135 million for the new fiscal year that starts July 1, and another $135 million for fiscal year 2027. Notably, the request wasn’t an increase and would have kept funding at the current levels, says Pete Lupiba, spokesman for the Ohio Office of Budget and Management.
The work undertaken by H2Ohio has not been without controversy. It was originally supposed to support farmer efforts to reduce runoff of phosphorus and nitrogen into creeks and rivers that flow into Lake Erie and other waterways, triggering algae blooms. However, it’s been expanded to also address lead remediation, dam removal and waterline repair. A review of these recent changes against the primary intent of H2Ohio is in order.
Moreover, the success of H2Ohio has been less than hoped for in reducing the algae blooms experienced every summer, particularly in western Lake Erie. Environmental groups and others have filed lawsuits claiming the EPA has failed to act on the problem in accordance with the requirements of the Clean Water Act of 1972. Still, many contend cutting an existing program like H2Ohio sends a message of surrender.
It makes no sense to reduce H2Ohio’s budget for the next two years, sending a loud message that clean water and ending algae blooms in Ohio are not priorities. All interests need to let the Ohio legislature know that any such action is unacceptable.
