Site Search
We're Social
Search by Year
Site Search
We're Social

Entries in 2013 (5)

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.

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.

Monday
Jan052015

HOW TO ASK FOR A RENT CONCESSION

This article, by Dennis Kissman, was published in Marina Dock Age –  May/June 2013

 

Is your marina governed by a lease or concessionaire agreement from a governmental or quasi-governmental agency or possibly a private entity? If so, be sure you know the financial condition of your own business before you start complaining you cannot make your lease or concessionaire rental payments. Recently, we have been involved in two situations where the marinas had land leases with governmental agencies. Both marina owners used the current economic conditions as the reason why they needed a rent concession on their leases. One of the leases has been resolved with a reduction in rent, while the other is still pending. In our opinion, both clients have justifiable reasons to request rent reductions because of the impact of current economic conditions on their businesses. But how they justify their reasons for the reduction can make the difference in the outcome to their request.

Lowering Your Rent

If you are in a similar situation and considering approaching your “landlord” for a rent concession, whether it is a governmental agency or private sector owner, here are a few tips you may want to consider:

Relying on media hype about the economy, high unemployment or the weather, as a basis for your request, sounds like an excuse and weakens your argument. These are all factors that may contribute to your situation, but if you do decide to use any of them in your argument you must make them specific to your operation and customer base.

Statements or specific claims must be supported with facts. For example, lake levels are down and 30 of my previously occupied slips, which represent 20 percent of my total slips, cannot be occupied because of the low lake levels. Statements based on your opinion or hearsay are only going to weaken your argument.

When you make a broad statement, such as, my business is down because of the economy, be prepared to answer the next question; how specifically has the economy impacted your business? For example, you could address the situation like this: the Fourth of July holiday period represents about 30 percent of the marina’s fuel and store sales for the entire season. For the last two years with the sluggish economy customers have not use their boats, despite the good boating weather. As a result, store and fuel sales, which normally represent 10 percent of the marina’s total profits, have reduced the marina’s annual Net Operating Income (NOI) by $25,000. Making a statement like that gives the landlord or government agency the confidence that you understand what impacts your business.

Records

Make sure that your financial records properly reflect what is happening in your business. Most importantly, maintain consistent records. The quickest way to lose creditability is to have continually changed how you record specific revenues or expenses. For example: one time you code a utility hookup fee as revenue and then another time it is offset against utility expenses. This does not impact your bottom line. If you are making an argument that your utility costs are up, it is difficult to justify, when part of the time you code the reimbursement as revenue and other times as a reduction of expenses.

Where important trends can be established, accurate historical records relating to finances, occupancy, weather information, will help you justify your request. For example, if you can show that there was not a revenue problem before the current issue arose, whether it is the economy, water levels, weather or any number of other issues that are impacting your profitability,  it will increase your creditability. The longer that you can go back, the more creditable your argument will be. It has been my experience that trends are cyclical and we can learn from the past to shorten any downturns that impact your business, Make sure the adjustment you are requesting is the reason for your financial problems. I mentioned earlier that we were involved in two requests for rent adjustments and one was granted and the second is pending. The problem with the pending request is that the record keeping is not the most diligent. Also, a quick review of  the marina’s records showed that if it did not have to pay anything for the lease agreement with the agency, it still would have lost more than $50,000 last year. Granted, the lease terms are a problem and need to be addressed, but before you ask for some concession in your payment terms, make sure that you have a viable business plan that can be supported with facts and data.

Be Prepared

If you expect a rental concession, know the details and history of your business before you ask. The people that will make a decision on your request may not know your marina, but they probably know how businesses are run in general. Whether you are talking about marinas or carpet cleaning, business logic applies universally, in many cases. Show them you understand your business, and they’ll have confidence that you know what it needs to improve.

Tuesday
Mar042014

NEW APPROACH TO CUSTOMER SERVICE

This article, by Dennis Kissman, was published in Marina Dock Age – November 2013 I have often asked marinas why boaters keep their boats at that facility. Typically, the answers are general and superficial. For example; they may say, it is their location, the amenities offered or their new docks. Rarely do they say it is because of the quality of their staff.

Click to read more ...

Monday
Jul082013

How to Conduct an Operational Assessment of Your Marina

This article, by Dennis Kissman, was published in Marina Dock Age – June 2013. The article outlines a 6 step process to conducting an operational assessment of an existing marina.

Click to read more ...