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Florida dealer drives margin with add-on package

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Jeff Hemmel, Contributing Writer
January 16, 2013
Filed under Features, Top Stories

Head into an automotive dealership, and it’s rare to see an inventory of base-model offerings. Instead, the majority of cars include accessory packages, some of which are factory installations, others of which may be of the dealer’s own creation. One reason is obvious. Customers want different features on their cars — or at least they will when they become aware of the possibility.

Another reason, however, should perk up the ears of any dealer — parts and accessories typically carry far higher margins than those made on the vehicle sale itself.

Dealer packages are a way to offer the customer more, and in the process put more money in the dealer’s pocket. So why is the concept such a rarity in the personal watercraft market?

One dealer’s inspiration
For one Florida-based dealer, it’s not a unique idea at all. It was a December 2011 Yamaha tech bulletin (WCA2011-003) that prompted Cycle Springs’ Noel Hughes to create his dealer-installed Salt Series package.

In the bulletin in question, Yamaha recommended the use of protective fogging oil to coat internal engine components not just before periods of storage, but throughout the season for craft operated in saltwater. Other manufacturers have suggested likewise.

“They basically tell you to pull the intake track off the unit,” Hughes said. “It stops the valves from rusting.”

A small port that installs in the intake tract makes fogging a 10-second task.

From Hughes’ viewpoint, however, it’s a complicated task, one that may prompt consumers to skip this suggested maintenance. So he came up with a solution — a small port that installs in the intake tract that would make fogging a simple, 10-second task.

“It’s part of our sales approach,” explains Hughes. “We pull out all the service bulletins — we have them laminated — and we throw them up there, say ‘Hey, every manufacturer recommends you do it, and we’re going to take care of it. Instead of making it a 15-minute process, ours is a 10-second process.”

While he was at it, Hughes addressed what he perceived as two other shortcomings. He added storage by fabricating a deeper storage bucket to replace the small under-seat storage found on many models, and made it from gel-coated fiberglass, rather than plastic, to handle the abuse of an anchor.

Part of the Salt Series includes custom logo installation into the pop-up cleat.

The other addition was four pop-up cleats, similar to those found on Yamaha’s FX Cruiser SHO. Owners of any craft could easily tie it up to a dock, and avoid damage. To customize the cleats, a Cycle Springs logo was added. A die-cut Salt Series logo is also affixed to each package-equipped boat.

Though contents can vary slightly on different models (some craft don’t have the rear storage bucket), the basic fogging port, cleats and bucket package retails for $499.

Hughes estimates 85-90 percent of all units leave with the kit. A similar, but more extensive package is offered on jet boats.

“As soon as you show the customer the ease of using the fogging port, paint a picture of taking your $10,000 watercraft to the dock and beating it up without the cleats, they want the extras the package provides,” Hughes said. “All those little things are just adding to the whole experience. It’s been a big sales success for us. It’s really, really helped us sell units.”

Manufacturer concerns
It’s an example that should pique the interest of dealers, but one that few others seem to be following. Perhaps part of the reason is that a dealer adding something on to a stock unit could have potential warranty implications. While the bucket and cleats raise little concern, the fogging apparatus changes — if only ever so slightly — the configuration of the stock engine setup. When contacted by Powersports Business to gauge the company’s reaction, Yamaha communications manager Andrew Cullen offered these words of caution.

As part of its customized Salt Series, Cycle Springs offers a deeper fiberglass storage bucket to replace the under-seat storage found on many models.

“We don’t encourage or discourage add-ons. However, the customer should be made aware that these packages were developed independently of Yamaha and depending on the package, it may void their warranty,” he said.

LOOK Marketing’s Tim McKercher, however, feels the idea has tremendous potential.

“I haven’t heard of anyone doing anything to that extent,” said McKercher, whose company has long done promotions and marketing duties for Sea-Doo. “Some dealers will outfit units with certain accessories — speed ties or a ski pylon on a unit that didn’t come standard with it — but not a kit like that. Anything that’s done outside of OEM specs could potentially cause warranty claims to be denied. But as long as it’s fogging where the engine is supposed to be fogged, and whatever nipple they’re installing has a cap on it so it doesn’t get water in it, I don’t see it as a negative. I think what he’s doing is a great concept. The reality of it is in 99.99 percent of the cases it would help reliability and durability.”

Opportunity splashes
While that 0.01 percent may cause hesitation, dealers can still profit from accessory packages that don’t impact the engine. According to McKercher, dealers frequently miss out on the opportunity to upsell an accessory by not installing any on showroom units.

“There’s tons of upside on that,” he noted. “There’s a 40 percent margin on parts compared to, at maximum, 20 percent on retail on a watercraft off the floor. So there’s tons of potential from that kind of marketing.”

Most tempting — and most obvious — is a first-time owner’s package. Unlike most other powersports segments, the personal watercraft industry still attracts roughly a 50-percent ratio of first-time buyers. These are consumers who would benefit from not only the obvious necessities like PFDs, fire extinguishers and riding apparel, but also anchors, dock lines, or cleats. Nearly all could be pulled from existing manufacturer accessory catalogs.

“It’s certainly an opportunity, and it’s not hard to do,” claims McKercher. “That was always Steve Laham’s philosophy at Butch’s [a former dealership in Grand Rapids, Mich.] — put all the accessories on it, because when the consumer sees it on there they’re not going to say ‘Take it off, I don’t want it.’”

McKercher recommends that dealers set up a fishing unit once a year on a PWC.

“Maybe you’ve got a sportsman walking in the door to look at ATVs for hunting, and then he sees a watercraft with fishing poles on it. It might turn his head,” McKercher said. “Whereas otherwise, he might have never even looked at that side of the store.”

 

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