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Monday
May232016

RATE STRUCTURING: SO THE MARINA AND CUSTOMER CAN PART ON GOOD TERMS

This article, by Dennis Kissman, was published in Marina Dock Age –  December 2013

If you are going to create the proper rate structure for keeping boats at your marina there are two things to keep in mind about a marina.  First you have a fixed amount of physical space from which you can generate revenue and second you are in an industry that is highly seasonal.  With both these constraints you have very little flexibility or control over changing your business model.  We often talk about all the profit centers to generate additional income from at a marina but do not lose site of the fact that your core business and principle income generator still comes from storing boats.

In our twenty five years of consulting with clients about marina operations I believe it is fair to say that as no two marinas are exactly alike, neither is there a single approach to setting up a rate structure to charge customers.  With that said, there is one thing that should be common regardless of how you decide to structure your dockage and storage rates.  Owning a boat is an option and not a necessity to living therefore as circumstances changes in a person’s life their reason why they wanted to own a boat may change.  When this happens suddenly like a job transfer or lost of a job maybe an illness in the family boating may be out of the picture.  Even though a person may have made a long term commitment with the marina in order to receive a lower dockage or storage rate they cannot keep their commitment.  When this happens the customer often times creates a reason why the marina is not good in an effort to break the agreement.  The end result is the marina is out the revenue it would have received on a shorter term agreement with that customer as well the customer spreading negative comments about the marina that are not true to justify reasons for breaking his agreement.  When this happens the marina is the loser.

Now the question becomes, how do you eliminate this problem.  Your goal should be if a customer has to break his agreement with the marina for any reason you want that customer to be welcome back in the marina when his circumstances change.  The way that you accomplish this is by making the monetary reward for offering a lower rate at the end of the agreement if the customer fulfills his obligation.  There are a number of ways this can be done and it will depend upon how your rates are structured.

Here is one scenario that you can use as a guide when looking at your particular situation.  Let’s say your marina is located in an area where boating is year round but there is a peak season.  The peak season could be either the summer or winter months depending upon your location.  In your rate structure you have a monthly, seasonal (six months) and annual rate with the longer you commitment to stay the less per foot per month the rate.  For this example we will say the monthly per foot rate is $15.00, the seasonal per foot rate is $14.00 and the annual per foot rate is $13.00 per month.  A customer comes in with a thirty foot boat and says he plans to stay for the year.  You offer him the annual rate of $13.00 per foot and his monthly charge is $390.00.  Four months into his agreement circumstances change and he takes his boat out of the marina.  On a monthly agreement the marina would have received $450.00 per month not the $390.00 per month annual rate.  The marina is out $240.00 for the four months from what they should have received on a shorter term agreement.  Because he has an annual agreement at a reduced rate excuses are made as why the marina is no good and that is why he is taking his boat out of the marina.

A better policy would be for the marina to charge everybody the monthly rate and then at the end of the term he has free months.  Working through the mechanics on how this would work:  If the customer had honored his commitment he would have paid a total of $4,680 for twelve months at the annual rate.  Paying at the monthly rate $450.00 he will reach paying the total annual rate in the eleventh month of his annual agreement.  This breaks down as fellows; the first ten months adds up to $4.500, in the eleventh month he pays the balance of the annual agreement of $168.00 and the twelfth month he pays nothing.  Bottom line, customer leaves after four months, no bad feelings or lies to break an agreement and the marina is fully compensated for the time the customer is in the marina.

Here is another scenario that applies sometimes.  Rather than rates based on length of stay you may have rates based on time of year.  This is particularly true in areas subject to hurricanes or where special events are held annually that attract boaters.  Using hurricanes as an example the season is typically designated from June 1 through October 31, five months.  Some marinas are considered safer locations than others during this season and as a result will have a higher rate for boats coming into the marina during these months.  Sometimes these rates are two to three times higher than the normal published rates.

Now comes the boater to your marina in July and wants to sign up for your annual rate which is lower than the hurricane season rates.  The question is do you give him your published annual rate or the hurricane rate.  The answer is the higher hurricane rate.  Here is how you work this so if plans change and the boater leaves earlier than the stated time when the hurricane ends you begin giving him credit towards his annual slip fees until such time the difference is used up.  Here is the example; remember we said boat arrived at the marina on July 1 and let’s assume the hurricane season rate is twice that of the non hurricane season rate.  From July through October he would have paid four additional months dockage fee based on the annual dockage rate.  We will also assume he was not just trying to negotiate a lower rate then leave at the end of hurricane season but really intends to stay longer.  Your program should state that for every month after hurricane season that the boat is in the marina 50% of the annual per month fee would be credited towards his dockage until excess is used up.  Let’s say that the annual rate for the customer’s boat is $800 per month and the hurricane rate was twice that amount for the months of July through October.  Since he was there for four months of hurricane season for the next eight months starting November 1 he would only pay only half of the normal monthly dockage or $400.  Let’s also assume he really intended to leave at the end of December but did not want to tell you but does leave.  The marina would have only credited him for one month dockage over the months of November and December.  The marina is not out any extra money that they would have been if they offered this customer the annual rate when he first came into the marina.  He did not live up to what he committed but there is no reason to leave on a bad note and the boater is welcome back any time.

There are more examples that could be given but always keep in mind that you want the burden put on the boater to fulfill his obligation if he wants the reward.  This is an easy concept to sell to your customers because it is fair.

Wednesday
Apr202016

Capitalizing on Branding for Your Marina

This article, by Dennis Kissman, was published in Marina Dock Age –  January/February 2016

At the recent University of Wisconsin Docks and Marinas Conference held in Fort Lauderdale, Florida I had the opportunity to give a presentation on branding, what it means and how to achieve it.  I chose that topic because it can have either a positive or negative impact on your business.  Let me explain; a brand is simply an identifying label directed towards the public for how you conduct your business.  The purpose for creating a brand is to Increase the public's awareness of your marina’s name and its logo.  How that brand is perceived by the public can change over time and once identified as negative it is difficult and sometimes impossible to change.  To make your business successful, you need to build a strong company "essence" that inspires loyalty and trust in your current customers and provides a level of familiarity and comfort to draw in potential customers.

Your brand is something intangible and is often referred to as the "good will" portion of your business.  Because your brand is nothing physical that you can see or touch we often lose sight of its value but in reality it is the most valuable asset you have when it comes to putting a value on your business especially when it comes to selling your marina or just getting a loan on the business.  Your brand refers to the reputation behind your company's name and logo.  To build that reputation you need more than a logo keeping in mind you operate as part of the service industry.  You need customer service. You should only employ people who can get on board with your brand, and make sure that each person understands his or her part in building it. Once a customer is ignored or treated poorly either in person or over the phone, you've lost not only that person but everyone else that hears about the unfortunate experience. Remember that word-of-mouth can help, but it can also hurt.  This may sound harsh but get rid of employees who won't cooperate--even if they're related to you.

With that said let’s look at some well recognized brands and their logos and how they are perceived by the public keeping in mind a logo is nothing more than the subtle recognition of a symbol, slogan or combination of both identifying your business.

There are a number of brands where a symbol alone identifies who it is.  When you see one of the symbols for Apple or Nike, you know immediately what the corporate names are and their reputation.  All I have to do is show my two year old great grandson the golden arches of McDonald’s and he knows exactly what it represents.  To me these are some of the most well recognized logos out there used to market their products and services.

You may be thinking to yourself these are major corporations with lots of resources and you have very limited resources and need to spend your money wisely.  That is exactly my point.  You are not competing for a global market.  You have a defined target market and using a logo to brand your marina is no different from what these global corporations are attempting to capture.

The question is; how can you go about creating a recognizable logo for your business and get it out to the public when you have limited resources?  There a number of steps to take into consideration when developing a logo for promoting your business, including:

-The most recognizable logos are simple and that can be easily recognized without having to think about who it represents.

-When first introducing a logo to increase awareness of your business it needs to be in conjunction with your name recognition.  McDonald’s is a prime example of using this concept.  The McDonald’s logo was first introduced as the “M” in McDonalds. Now the logo stands on its own.

-A logo should be a single shape, although the size and color may vary based on the application.

-The more a logo is used the more recognizable it becomes.  It should be used on every piece and form of collateral material.

-When designing a logo for your marina, do not be afraid to ask for input from others familiar with your business model.  Often times the best logo designs comes from a blending of ideas as how others perceive you marina.

The most important form of promoting your business today is having a presence on the web. Even if you're target market is local right now, your customers are on the web, and they'll want to see you there.  Having a consistent look and theme will make your logo more recognizable in all other forms of media advertising as well.

You must be vigilant at all times to protect the reputation of your marina. Every contact with the public will either serve to build your brand or dismantle it, and administering damage control can seem like herding cats when something happens to threaten the public's perception of your marina.  Remember what happened to BP after the oil spill in the Gulf of Mexico or the recent Takata air bag recall.  Don’t let something like this happen to your brand.


Friday
Apr012016

COMPETITION HAS ITS BENEFITS

This article, by Dennis Kissman, was published in Marina Dock Age –  September/October 2013

Many of my clients without fail refer to the marina down the road or across the lake, as their competition. When asked what they are competing with, the answer inevitably is the rate they charge for their services, which are less than what my client charges.  To accept that as a reason for a decline in my client’s profitability is a copout for not understanding their business.  Instead they should be asking the question: Why can’t I provide the same service for less? 

A smart business person is not going to enter into a competitive position unless they see a flaw or weakness in the way you provide the service or product and they can improve upon it and sell that service or product for less.  There is a tendency to fall into the syndrome; this is the way we always did it.  The way business is conducted today is not the same as it was just a few years ago and to live in the past will only result in a further decline in your business.  You should continually be looking for better and less expensive ways to provide the services you offer even if there is no immediate threat of competition.

When we speak of less expensive ways of providing the services you provide that does not mean your profit margin should be less.  Customers recognize that you are entitled to a fair profit but when you begin passing along operating inefficiencies on to your customer that is when you become venerable for competition to enter into your market.

Up to this point we speak of competition as something that you can control to a great extent but when it comes to the marina industry competition takes on additional meanings that are not as clearly defined as a similar service or product which means the marina owner has to be more intuitive to understand just what their competition is and how to cope with it.  Marinas are part of the overall recreation industry and besides competing with other marinas in your area you are really competing for a person’s leisure time and discretionary dollars.  If you look at your competition from this prospective and consider your marina more than just a storage place for boats there are a multitude of other leisure time activities that you compete with.  For example, let’s say your customer has a son or daughter playing in a soccer tournament this weekend most likely that customer will not be at the marina using their boat.  That family’s allocation of leisure time has just been used and since boating is highly seasonal and weather dependent chances are you will not be able to make up that loss revenue.

A person’s discretionary dollars is another issue.  In poor economic times a person may have more leisure time on their hands than what they had planned for but typically what comes with that is a reduction of discretionary dollars to spend.  When a person buys a boat they may look at it as an investment but in order to enjoy that boat it takes discretionary dollars.

You may be thinking as long as the dockage or storage is paid your business will be okay.  The problem with that thinking is you’re not looking at it from the boater’s perspective.  A person owns a boat to enjoy their favorite on the water activity.  The other services you provide all contribute to a boater’s enjoyment of being out on the water.  When a marina owner starts cutting back on all the other services that marina provides its customers it will have a negative impact on how that boater perceives your marina and boating in general.

Put this in the context of one’s leisure time and discretionary dollars.  Let’s look at the following scenario from the boater’s perspective: the boater has family in from out of town the weather is great and he decides to take the whole family out on the boat to land on their favorite beach for a picnic.  Everybody arrives at the marina with great expectations of a day on the water and the engine on the boat will not start.  Kids getting anxious, wife gets upset and family guest milling around with nothing to do.  The boat owner comes to the marina office and asks if your mechanic could come to the boat and have a look to see what is wrong.  The only problem is you decided to cut back your staff so where you use to schedule your maintenance staff to have someone on seven days a week now there are two days a week when no mechanic is working and today happens to be one of those days.  The boat owner leaves unhappy family and guests leave the marina and the boater is going rethink where he is going to keep his boat and worst of all it diminishes just a little his interest in boating.  The question is, “Who is the ultimate loser in this scenario?”

Competition whether it is something you have full control over or outside influences that you must react to look at it as a challenge.  Anticipate who and what your competition is then formulate a strategy to minimize its impact on your business recognizing you will never eliminate all competition nor do you want to.  The best way to keep competition at bay is to regularly shop your marina as though you are the customer.  Come up with different scenarios from your customer’s perspective and how you as a marina owner would satisfy those needs.  By doing this you will always have the competitive edge over your competition.

Wednesday
Mar162016

Discounts and Deals: Hurting the True Value of your Marina 

This article, by Carl Wolf, was published in Marina Dock Age –  November 2015

Have you ever thought about what the true value of your marina is?  Do your short term plans include possibly selling or refinancing the marina?  Are you doing everything possible to enhance the value of the operational value of the marina business?

 There’s no question that marinas and boatyards are a niche industry.  It’s their uniqueness that charms owners into believing the value of their marina is higher than what is actually is.  But at the end of the day, the marinas are still a business and need to be managed and operated as such.

 During the normal course of operating a marina, many owners and/or operators are tempted and some succeed in going forward with transactions which may not be recognized as a true business transaction.  These transactions, which may seem like a deal at the time, can have an effect on the value of your marina.  Although many of these issues have been addressed in earlier articles in Marina Dock Age, it never hurts to be reminded of how your decisions will impact your marina’s value.

 Under the Table - Money that is paid “under the table” is paid secretly, such as paying cash  to someone for services provided, which you believe will help keep the marinas cost down, such as paying cash to a neighbor for cutting the lawn.   On the opposite side, you have a customer who comes in late in the season and is willing to paying cash for a vacant slip.  Instead of the cash being deposited with the daily receipts, you decide to put it into an unrecorded slush fund.

 Bartering or Contra Deal - To trade by exchange of goods/services rather than by the use of money or to exchange in trade, as one commodity for another.  Your marina has some work needed on a dock and you have a contractor who can do the work.  That contractor needs a slip for their boat.  A deal is struck, your dock is fixed and the contractor has a slip for his boat.

 Comp Deal - Goods or services provided free of charge to specially chosen recipients.  An example of a “comp deal” could be the marina gives away an unoccupied slip for a specified period of time to the winner of a contest being held.

 Deals for Friends - Providing dockage, storage or services to friends at an unpublished reduced rate.  Not only will this have a negative effect on the marina’s bottom line, it sends the wrong message to other employees of the marina.

 Most deals or special transactions may not be in the best interest of the marina.  The value of the service/product/money received may be less than the value of the service being provided by the marina in exchange.  Is the transaction a one-time only transaction or is it repetitive in nature and happens every year?

 How do these transactions hurt the value of the marina?  You’ve put your marina on the market and you have a potential buyer.  When the buyer starts to look for a loan, the financial institutions the buyer is working with, will want to be able to verify past financial income of the marina.  This verification could include two (2) to three (3) years of company financial records supported by the appropriate income tax returns for the same period of time.  If the previous deals or special transactions are not reported in the marina’s financial statements, the buyer will have less borrowing power. 

 What impact would $1,000 of unreported income have on the value of your marina?  You’ve put your marina up for sale.  You have a potential buyer interested in purchasing your marina and is expecting a 10% return on their investment.  If that $1,000 had been reported as income in your financial statements and the corresponding annual tax returns, the buyer would have been able to use the unreported income of a $1,000 for payments on interest for monies which are to be borrowed to purchase the marina.  If the buyer was able to borrow money to purchase the marina at a 10% interest rate, you could divide the $1,000 (unreported income) by 10% (the interest rate at which the buyer would borrow the money for), giving the buyer an additional borrowing power of $10,000.   

 While these “deals” and “special transactions” may seem attractive at the time, they negatively impact the true value of your marina.  A prudent marina owner should always have a reasonable understanding of what their marina is worth.  By doing so, whether you are planning to sell or not, it will help you make the right business decisions. 

 

 

Tuesday
Mar082016

ANOTHER TAKE ON CUSTOMER SERVICE AND EMPLOYEE TRAINING

This article, by Dennis Kissman, was published in Marina Dock Age –  January/February 2013

 

Over the years, I and a host of other people that write articles for this publication have written on customer service and employee training. However, from my experience in consulting with a number of marinas over the past 24 years, how well facilities address these two topics and implement them in actual practice seems to be another matter. If you expect to have a competitive edge over your competition, employee training must go beyond the basic job skills and knowledge required for the daily function of an individual’s position.

Before any meaningful job training can begin, employees must understand their own job duties and carry out those duties to the very best of their ability. Whether they are pumping fuel at the fuel dock, assisting customers docking their boats, or providing correct customer billing, if the basic job functions are not mastered, then attempting to improve employee customer service skills may be a waste of time.

Serving the Customer

Employees should be trained to give each and every customer the feeling that he or she the most important person in your marina. The training begins with the basic tenets learned from an early age; simply saying “please” and “thank you,” looking a person in the eye when talking, and smiling. The basic training continues with courtesy and respect to your customers. Employees must not be belligerent with your customers, but to listen, smile and hold friendly conversations where appropriate. Employees at this level understand that when a customer visits a marina, he is visiting the place where he should feel at home, as a special guest.

Urge employees to be honest, frank and sincere and show a positive attitude, not only dealing with your customers, but also with each other. This is an ideal way to build one’s self-confidence and help build long-term relationships with your customers and fellow staff members. Bad attitudes chase customers away.

Sometimes, the employee just has to temporarily “grin and bear it,” when faced with an angry or upset customer. It is precisely at these times when customer service is at its most useful. Let’s take for example, at the end of a long July 4th holiday, with the temperature and humidity soaring, the boaters all at their moorings or safely nestled in their slips, you take a well-earned breather waiting for fireworks. However, the real fireworks are in the marina office, as two irate customers bound in to complain about the other. Here is a chance for your employee to excel at customer service. A well trained employee will diffuse the situation, acknowledge the problem if one exists, and most importantly he should be empowered to deal with the situation at hand.

It is this last item where most customer service programs fall short. Smiles are great and polite words are fine but if the employee facing the situation at hand is not empowered to solve the situation it is not resolved. I am not saying that the employee has “Carte Blanche” to give away the marina but he should know who to go to resolve the situation and not let it get out of his control.

Exceptional Employees

Here are four attributes that will make your employees stand out in your customer’s eyes:

Employee Recognition

Remember, employees need to get constant feedback for their service performance from a pat on the back for a job well done to awards and other formal types of recognition. Each manager or supervisor should set the example for the employee and be the motivating force for providing excellent customer service.

Here are nine statements that define what a customer is and what he means to the success of your business. This should be the foundation of your employee training program:

1)    The customer is the most important person in our business.

2)    The customer is not obligated to us; we are obligated to him.

3)    The customer is not an intruder on our work; he is the reason for it.

4)    The customer does us a favor when he arrives; our service is not a favor to him, but our purpose!

5)    The customer is not a slip number or statistic; he is a human being with the same feelings and emotions as us.

6)    The customer is not someone with whom you argue or match wits!

7)    The customer brings us his desires; it is our job to fulfill those desires.

8)    The customer is deserving of the most courteous and attentive service we can provide!

9)    The customer is the person who makes it possible for us to pay our bills, provide salaries and maintain our marina.

There is no substitute for a well designed employee training program with a strong customer service component but it is only as good as the dedication of management to implement that program. Employee training is an ongoing endeavor that will keep your marina ahead of your competition for the years to come and develop a loyal and dedicated staff.