You can be forgiven if you entered the last dealer-meeting season expecting good fortunes to continue for the foreseeable future. You also can be forgiven if, as we enter this dealer-meeting season, you’re surprised to find yourself in a softer market than you expected, with a little too much inventory on your floorplan and, as one dealer recently told me, conditions getting worse by the day.
It’s now time to realign your expectations. Your inventory likely is higher than it’s been in nearly four years, the rates for buying inventory are higher than you’ve paid in more than a decade, and the anxiety around taking more deliveries might be climbing to a level of discomfort. This is the time to remember a few key things.
First, there are winners and losers in every marketplace. Your goal is to be a winner. Second, even during the Great Recession, dealers found a path to success. You can find one now, too. Third, the ability to achieve success is, and always has been, completely within your control. You need to own that. And finally, key fundamentals — if you’re good at them — will ensure that you set yourself up for success.
Tactics that I witnessed dealers execute during previous slowdowns started with monitoring and adapting to market trends. It’s crucial that you stay out in front of the competition. You can do this by consuming industry reports, economic forecasts and the like, and by relentlessly tracking your own metrics, such as online leads, door swings and seasonal performance compared with previous years. Matching what you’re learning externally with what you’re experiencing internally can help you remain agile and responsive so you can maintain a competitive edge.
It’s also a good idea to enhance marketing and lead- generation efforts. Given the scarcity of leads right now, it’s vital to optimize. Every dollar spent should be measured against a return, and funds should be allocated to targeted marketing strategies with the most effective platforms. Couple that plan with the most compelling content, and you’ll win customers by demonstrating your market leadership and subject-matter expertise.
You can also embrace a customer-centric approach. In all market conditions, but particularly when faced with a challenging economic environment, it is essential to focus on customer needs and desires. Pay attention to consumer trends, preferences and demands. Analyze your market’s registration reports, and ask like-brand dealers what models are selling the best in their markets. The more personalized and exceptional your customer experience, from initial contact to post-sale support, the better your business will perform.
Next, optimize inventory management. With rising inventory levels and the need to reduce costs, this strategy is paramount. Once you have a deep understanding of your target market, tailor your inventory accordingly. From there, identify slow-moving or non-performing models, and figure out how to move them before loan payments compromise your ability to have the latest product on your floor. As one industry insider noted in May, if you’re not running promotions or discounting product, you’re behind the curve.
It’s also a good idea to cultivate strong relationships with lenders. These relationships become vital with tougher economic conditions and rising interest rates. Maintain and share accurate financial data with your partners, and demonstrate your commitment to sound business practices. A clear plan for managing inventory levels, reducing costs and increasing profitability will build trust at a time when you may need support.
Create partnerships and collaborations, too. Consider creating partnerships with complementary businesses, such as marinas or yacht clubs, to expand your reach and enhance your visibility. During previous downturns, dealerships collaborated on marketing initiatives and cross- promotions with businesses targeting similar customer profiles. Combining resources and expertise, and creating exclusive offers, can help you leverage one another’s customer base and generate more leads.
You’ll also need to embrace technology and innovation. During downturns, these tools can help streamline your operations, improve customer interactions or enhance efficiency. If you’re staying on top of emerging trends, you can position your business for success before the competition follows suit. In today’s marketplace, technological developments also come in the form of the product lines you can offer, with the growing focus on electric boats and motors. Early adopters could get a good jump on the competition.
Now is also the time to invest in staff training and development. The best team wins, and wins faster and more convincingly in a down market. Invest in training and education that will empower your team to excel in specific areas, such as customer service, product knowledge, lead generation, and sales and marketing. A well-trained and motivated team can significantly improve sales.
Look at strengthening profit margins. The goal is to fortify your profit margins to help you endure tougher conditions, provide for your family and keep your team members employed. While cutting margins may seem like the only solution, it is not. You can turn to other profit centers. Many dealers have found that their high-margin service departments can help drive sustainability in downturns. If you focus on value-added services and upselling opportunities, and couple them with cost-saving measures, you will set yourself up to dominate your marketplace.
These tactics have helped dealerships succeed during tough times for decades, and they can help you, as well. I urge you to attend the MRAA’s Dealer Week conference and expo (register at dealerweek.com) this December in Tampa, Fla. The investment in your own training and development will not only expose you to strategies and best practices that are working, but will also give you access to data and analytics to make informed decisions. You’ll meet partners and lenders with whom you can collaborate, learn about marketing and lead generation tactics that work, review technology options that can power your business forward, and encounter many more ideas that can help you maximize your margins.
I hope to see you there.
Matt Gruhn is president of the Marine Retailers Association of the Americas.
This article was originally published in the August 2023 issue.
