Achieving Business Excellence with John Spence

Lessons from the Boat Show

As many of you know, in addition to doing work as a business consultant, speaker and executive trainer I also own a small advertising firm called Flycaster & Company, which specializes mainly in the marine/sportfishing industry.  Last week my partners and I traveled down to Miami for the boat show and I believe there are some great lessons to be learned from the turmoil now facing that troubled industry.  As you read what I have to say about the boating industry in this blog, just keep asking yourself: “How might this apply to my business and my industry?” I have a feeling you’ll likely see many strong similarities.

 

As I walked the floor of the show I met with dozens of boat manufacturers, boat dealers and numerous vendors that supply the boat building, recreational boating and sportfishing industries, and the vast majority of them look like a deer caught in the headlights.  They were dazed by the nearly 70% drop in their market over the last 18 months and kept saying that they “hoped” that things would turn around soon, they “hoped” they would sell a few boats, they “hoped” they would have a good show… and if not that maybe, just maybe they could find a way to get some of the economic stimulus package money!  Well, hope is not a strategy and if some of these folks “hope” to still be in business at next year’s boat show there are a few harsh realities they are going to have to accept.

1.  Things are not going to get better any time soon.  I am not a doomsayer, far from it; I am actually one of the most optimistic people you will ever meet.  But I’m also a realist, and it is clear to see that at least in the pleasure boating industry (and many, many other discretionary income-based industries) there is absolutely no way that they are going to see any significant improvements for the next 18 to 24 months… and probably much longer.  It is time to stop hoping for things to turn around soon… and start figuring out a way to do whatever it takes to weather this storm.

Let’s be clear: The game has changed in the boating industry. The economics have changed, the financing has changed, the distribution channels have changed, the customers have changed — and you will likely need to make some extremely big changes in the way you do business if you want to stay in business. That is not fun – but it is the truth.

Unfortunately, a lot of the people that I’m talking about have been in the marine industry for 15, 20, 25 years and simply don’t want to change.  They are comfortable. They have a set pattern and a way they like to do things — and they feel that after 20 years in the business they’ve earned the right to do it their way.  I understand that it must be very hard to be faced with a severe economic downturn and a huge shift in the industry right when they were planning to coast into the end of their careers… but ending up bankrupt is an even less appealing scenario.

Several years ago I attended a conference of bankruptcy lawyers, not exactly the most jovial crowd I’ve ever spent time with, but I did learn some extremely important ideas from them.  When I asked one of the most senior bankruptcy lawyers in attendance what he felt caused most companies to go out of business he replied that it was very simple and he saw it over and over again. He called it the four “I’s” of bankruptcy.

Ignorance: Not paying attention to the marketplace, to competitors, to what is actually happening in their industry and their own business.  This is a company that puts their head in the sand and hopes that things will be better when they finally look back up – that someone will come to save them. Not a very effective tactic to put it mildly.

Inflexibility: Even though they see that there are changes in the marketplace… the people in this sort of business (employees and leaders alike) are simply unwilling to make the changes necessary to adjust to the new reality.  They’re caught in the “we’ve always done it this way” trap and are inflexible in adapting to the shifts in their market.  They resist change and refuse to adjust… leading to their eventual demise.

Indifference: This is an organization that thinks that because they’ve been in business for 30 years; or they are the largest; or have the widest array of products; or have always been the industry leader… that they do not have to worry. They keep telling themselves that they are unique and will not be affected by the same challenges and economic problems facing other businesses.  Indifference to the reality of the situation is what almost drove a $90 billion IBM into bankruptcy in the mid-1990s and it will most assuredly claim many companies in the marine industry before this downturn is over.

Inconsistency: Due to the lack of clear vivid compelling vision and a focused plan of action for success, this sort of business is constantly changing their direction and priorities.  They waste time, money, and precious resources chasing one idea after the next.  Because they can never agree on one focused direction to move in, they never gain any traction or momentum and eventually fall by the wayside.

Far too many companies in the pleasure boating industry (and in numerous other industries, think: Ford, GM and Chrysler) suffer from one or more of these four fatal issues.  Here is the hard truth:

  • Things are bad and they likely will not get better in the foreseeable future.
  • The way you have been doing business for the last 5-10 years will not work in this economy. 
  • Stop fighting the situation and start making the tough decisions you need to make to keep your business out of bankruptcy court. 
  • And by the way, don’t take my word for it, simply look at your real numbers and study the marketplace — the answers, though extremely uncomfortable, are obvious.

 

2.  Make sure that everyone in your “value chain” is actually adding value.  From vendors to dealers to customers, it is critical that right now every business focus on only the areas that add real value and generate positive cash flow and profits.  When business was good and there were customers lined up around the corner you could afford to have a vendor that delivered things a few days late or an employee who wasn’t truly top notch and completely customer focused. Not anymore. With things as tight as they are, there is absolutely no way you can afford to carry any level of mediocrity in your organization.  Vendors must deliver the best quality, on time, at the lowest reasonable price, and be responsive and proactive in being a trusted advisor to your business.  Every single employee must give 100% of their discretionary effort and work hard every day to help the company improve, save the company money, and ensure that every customer is highly satisfied.  And as hard as it might be too to admit this, trying to make every single customer completely satisfied is one of the surest ways to drive your company out of business.  Customers that make unrealistic demands, complain and create significant additional work, are probably not the right kind of customer in the first place and do not add value to your business.  Again, in an economy like this answer is obvious: if it doesn’t add real value it should not be part of your business.

 

3.  Now, more than ever, is the time to deliver the best products you have ever created and back them up with consistently superior customer service.  The number of qualified customers, with lots of discretionary money to spend on a boat (or lots of other types of products), is getting smaller and smaller.  The only way to win these incredibly precious customers is by creating a total buying and owning experience that is so spectacular that they cannot resist making a purchase from your company!  There is no escaping the fact that “good” customers have all of the power and the only way to get and keep these valuable customers is through superb quality and extreme customer focus. 

So as I step back and look at an industry I have been involved with for nearly 25 years, it seems clear to me that the folks who sell recreational boats and boating/fishing supplies are in the midst of one of the most traumatic and difficult industry downturns that they have ever encountered.  To survive this challenge all of them must: A) take a very hard look at their business model and make the tough decisions about how they need to change the way they do business. B) make sure every single step in their value chain contributes to the revenues and profitability of their business C) and then focus all of this on delivering the best quality they have ever brought to the market while combining it with absolutely superb customer service.

My question to you: what parts of this might apply to your industry and your business?

I hope this helped — I welcome any feedback, questions or comments you might have to offer. 

Take good care — John Spence

 

Comments

  1. John-
    Sorry I missed you at the show, was up on Collins Ave with Hatteras signing posters and marketing myself. Very well written and straight to the point, your comment about people not wanting to make a change and adapt to the current market is the most common mistake a see being made in my business world, they’re already starting to fade away!

    Thanks for the blog, got my attention and I’ll read it over again to absorb all of your valid points.

    Steve

  2. Jeannette Baer says:

    John, great post! you’re absolutley right about the market for the boating industry and the steps they need to take, I will forward this to some our clients.

    PS: I love your writing! once I start reading, can’t put it down.

    Jeannette

  3. Mickey Pulcini says:

    Very very good advice…as always. Good stuff John!

    I’m forwarding this to a good friend in St. Petersburg who’s in the boat biz.

    I want to stay on your site all day and read all your stuff! But, I’d better get back to work. Tell the TEAM I said HEY!

  4. hi john, great read (lessons from the boat show)! thanks for sharing this. wishing you well. the good news here is that the down economy is giving me more time to be a photographer, which is my first love anyway. i’m busy as hell (not making as much money) but making real headway on longterm projects. life is good!
    cheers,
    john

  5. John,

    Thanks for your insights from Miami. We are trying to shift towards more brokerage sales (no inventory costs, and capture storage fees) in
    five ways:
    – Raising our professionalism through affiliating with the Yacht Brokers Assoc. of Am.
    – Expanding and improving our sales yard display to include all-night lighting
    – Positioning our sales yard visibility to over 250,000 cars a day by location
    – Advertising for brokerage listings
    – Offering discount brokerage services
    – Covering the cost of bringing these boats to our location at our own expense where we can capture monies through storage fees while the boat waits for a buyer.
    You might be pleased to note that your neighbor, Hunter Marine, has probably done the best job of assisting dealers by offering incredible terms of floor plan support on some inventory.

    As for hope, I won’t rely on it to do the job, but I also wouldn’t be able to go on without it.

    Thanks again for your email,
    Reeve

  6. John,

    Great post! As you know, I just participated in a Renaissance Weekend in Tucson, AZ with some very accomplished individuals, several of whom were economists, in the financial industry, investors. As you can imagine, the economy was a frequent topic of conversation and the opinion of the “experts” although mixed, was overwhelmingly negative, some predicting the “bottom” for the Dow would be around 5,000–scary stuff!

    Then, today I spoke with a volunteer and friend who sells “add-on” insurance policies to car dealerships that then offer them to the purchasers of new and used cars. When I asked him how business was going, he confirmed what I expected–50-70% off from last year. What I didn’t expect was his optimism and the way in which he has adapted his business plan. He lives and works in Southern California and before the economy went south, he would dress very casually as he made his rounds. Now, he said he has recognized the need to be seen more professionally and someone who can provide answers in this tough time. He dresses more formally and positions his product as one that helps instill customer loyalty and provides “peace of mind” when savings accounts are running low.

    He is also taking advantage of the fact that managers and owners aren’t as busy as they used to be and therefore more willing to meet with him. He has achieved success by signing up several new dealerships willing to carry his product. He won’t make any money until the policies are sold, however he’s positioned himself to be even BETTER off when the economy recovers and people start buying cars again (which, we all know, they will).

    I found his optimism and story of adapting very refereshing and encouraging. Between his story and your article, it has made me think about how to be creative as a fundraiser in the non-profit sector. The goal should be to use this downturn to position yourself to be even more successful when the ship begins to right itself.

    As always, thank you for sharing your wisdom!

    John

  7. Dear John,

    Your comments are sobering, especially for someone like myself who makes a living as a yacht broker. I was also at the Miami boat show (Collins Ave) and while traffic in general was down, there were a number of buyers on the docks. It seemed that some folks thought the bottom of the market might be close at hand and some fantastic deals for brokerage (and new) boats where being whispered about and taken advantage of by the more recession resistant buyers, (yes there are some).

    I recognize things in the luxury sales world will not be the same for some time and change will be necessary to survive, however sometimes change for an established business can mean changing back to what made you successful in the first place. Try returning to basics and rekindling the drive and enthusiasm, or as some refer to as “the fire in the belly”, that got you over the hump in the beginning.

    Hope may spring eternal, but hard work conquers all….

    Thanks,

    Dirk Johnson

  8. First let me thank everyone who has posted a comment — your feedback is very much appreciated.

    I wanted to make a comment on the post directly above by Dirk Johnson — I could not agree more! I am convinced that the most critical thing any business can do right now is to focus on, and make sure, that they are handling the fundamentals superbly. The video blog I posted on this sitea few weeks ago on the six keys to survival in a tough economy where my attempt to send that message.

    Things are so complex and difficult right now, and in my opinion it is foolish to spend more time than necessary trying to keep the basics of your company running well. You need to get the fundamentals nailed — clear vision of success; open, honest, robust and transparent communication; keeping only the best people; a culture of urgency combined with disciplined execution; and extreme customer focus. Once you get these things running well — then you can turn your attention to the more difficult and complex parts of your business like distribution channels, financing, competitive positioning, R&D… those things are really hard and you don’t need to be worried about something as fundamental as internal communications when you have other things that are much more challenging and complex to spend your time thinking about.

    Please keep the comments and feedbacks coming — this is a great discussion and I really appreciate everyone’s involvement — thanks so much — John

  9. Hi Brother John,
    Great Wisdom, my friend. I am doing great! Got a great position as a Correctional Chaplain for a private prison complex in Philipsburg, Pa. Good salary and benefits! Go home and visit spouse and family on my days off. Working with 1500 federal inmates who are criminal aliens facing deportation after finishing their sentence. I’m planning on now finishing my doctoral degree in correctional ministry and getting back on target with my speaking business. Thank-you for being such a great mentor and friend. I’ll appreciate you, my brother. Write soon.
    Rev.Stevie

  10. John,

    I will preface this response by jolting your memory a bit. My name is John Kichton, and we met at a dealer meeting about 8 months ago. We spoke about the Florida boating market, and touched on Cape Coral, my back yard. As I’m sure you know this area has been devastated by the housing market, as well as the current economic stresses.

    Now to my response.

    I also went to the Miami Boat Show, and was quite surprised by the lack of enthusiasm shown to me by dealer personnel. As I walked through all of the inside boat displays, I came to realize that the sales people were not showing signs of life. By this I mean no-one actually asked if they could help me, if I had any questions they could answer, etc. I was dressed casually, and was not recognized. Out of all the displays, only two people assisted me! Now, that’s not to say I didn’t hear the occasional “hi”, but no-one tried to sell me anything! I actually complimented those two sales professionals on their approach.

    I went to the booths displaying the product we sell here, and made sure the reps were told of my observations. The end of story here is staff. We all know our checks have gotten smaller. Times are going to remain tough for a while. That being said; we have two choices.

    We can remember that people still want to go boating. We can remember the oldest rules of sales: Greet, make the customer your friend, F&B, ask for the money!!! Acting like you have already done 9 rounds with Mike Tyson is not the way to approach a prospective buyer. After the show, the results were as I expected. Those that went in thinking the economy sucked, and there were no buyers: found none! Those that were “pumped up” and actually tried to sell; did!

    The second choice is not very difficult to figure out: not treating each prospect with enthusiasm and trying to fulfill their needs/ wants will not create a sale, checks will get smaller, and; sure enough, you will have the result you absolutely believed would happen, nothing.

    All around us, other dealers are crying the blues, and we are doing quite well. Of course it is not “like it used to be” but we are adapting. My sales staff treats ALL of our customers like they are part of our family, our service staff goes out of their way to make our customers happy, and we try to show that we are hoping the prospective buyer becomes a part of it all. Our CSI is among the highest in the nation, and that is not to say we don’t make mistakes, but we FIX them and don’t avoid them.

    The volume of customers has decreased. The quality of prospect has gotten better. If you don’t go after every prospect with the enthusiasm they expect, your mood will reflect and they will go somewhere they can feel good about their purchasing decision.

    Enough of my rant, can you tell I quit smoking this past weekend also?

    May the Madoff’s and Stanford’s forever stay out of your wallet

  11. John,

    Great post. I am looking forward to your new book. I always tell my audiences that they have a choice every morning. They can wake up and be bitter, frustrated, stressed and angry or they can be energized, passionate and happy. If it was truly your choice, every sane person would choose to be happy. When we choose to be stressed, it is usually because we are letting some other influence, action, or event decide for us. We have to take that choice back. We have no control over so many things, including the economy. But we always have control of our attitude and how we react to a situation.

    Thanks again for the great post. Take care and continued success.

  12. John, I thoroughly enjoyed your observations from the boat show and found many parallels to the frustration I hear from Sales Managers in the Real Estate Industry – which of course is in the same boat – figuratively. It must be the human response to change, which is to wish we didn’t have to. Your writing stlye is captivating and I’m really looking forward to getting my copy of Awesomely Simple after Labor Day. So glad you are out there helping people to think about doing business despite the recession! Bravo!