Letting Go of Habits that Kill

by: Martin Onken

Surviving and thriving this recession seems to be on everyone’s mind. Rental dealers across the US are certainly feeling the pinch, which for many feels like a choke hold. However, rental dealers have a unique set of challenges that effect their survival. Many rental dealers must become better at managing their diminishing cash flow. Others must learn to develop and use key indicators that will predict what their future will bring. And there’s a few of us who need to let go of the old way of doing things and adjust to the changing demands of today’s rental customers.

Here are a few practical, inexpensive ideas any rental dealer can use to create new opportunities for growth and profit:

1. Don’t try to do everything yourself.
Use your best “secret weapon,” your staff. Their experience and knowledge are another “pair of eyes” to see problems and offer solutions. Their morale will skyrocket as you allow them to implement the plans you’ve worked out together. Not confident they can help? Then replace them with employees who can! Jim Collins, in his book Good To Great says it best: “Get the right people on the bus, get the wrong people off the bus, then get the right people in the right seats!”

2. Hire a coach.
This is an investment, not an expense! You may need to fine tune critical skills, like cash flow management, that you don’t have or are not very good at. Mistakes in these critical areas are often more costly than the investment in a coach. I recommend joining a peer group, like a 20 group. You get 20 coaches for the price of one! Other great inexpensive business coaches can be found through SCORE, and your local SBA small business development centers. Don’t forget your insurance agent or local banker. Their broad experience and customer base is a great resource for practices others have used that worked, or didn’t.

3. Clean house.
A dealership that shows its age makes customers think that the dealership is falling on hard times.Wash it. Paint it. Repair it. Organize it. Dump old or useless stuff. Same for your paperwork and procedures. Simplify and streamline. Be more customer friendly, make working with you simple, and fun.

4. Update and improve your website.
Add features that invite people to stay there. Expand your site from an information based site, to a sales based site. This is your only selling tool to the rest of the globe and while your closed. It’s not expensive, but it is an investment. Some of the features I consider essential are: real-time online reservations (about $40/month), vacation planners, and simple videos to replace many of your photographs. Live chat is also very effective. Add exciting testimonials, videos are the best.

5. Don’t take the off-season off!
Use this time to implement, test, and refine your secret weapon and the ideas in this article. Increase your presence with your key customers to two to three times per month. Your job is not only to keep your name on their mind, but also to educate them of the essential value in spending quality recreation time with their family. Help them understand it is a priority, not a convenience, to vacation even for a few days, with their loved ones. The best tool is an e-mail newsletter. They cost about $0.07 each, and a simple, professional newsletter takes about 10 minutes to create. Use last year’s rental history to call your customers and thank them for their past business, and invite them to rent again. Be creative and come with a list of other great places for them to try.

6. Target just the “killer” expenses.
The 80/20 rule applies to almost everything in life, and also in our dealerships. The top 20 percent of expenses can kill the top 20 percent of revenue, which includes your profit. Without profit you might as well close your doors. Identify the top three to five expenses (not investments) that are costing you profit, and implement a plan to turn them around. My top four losers are contract labor (mostly cleaners), fuel, propane, and laundry. I assembled our secret weapon and in just a few weekly strategy meetings developed and implemented plans using everyone’s skills to not only eliminate the loss, but actually make profit in these areas.

7. Increase your price strategy where possible.
GetRV.com recently sent me some great suggestions, and I’d like to share a couple of them with you, “Start by looking at all sold out dates for 2008. Look at the rate listed for those dates, and start by raising those high demand dates in 2009 by at least 10-15 percent. Remember, a sold out date means your rates were not quite high enough. Look at all the dates where your RVs sat idle.What was the daily rate charged on those dates? I would start by lowering those daily rates by at least 10-15 percent.”

8. Work your cash flow.
Cash flow is still king in the RV rental business. Your coaches will be your best advisors in working a plan. Negotiate extended payment terms with all your vendors. Offer low cost incentives for renters to pay you quicker. Lay away buying is back. Be careful to not abuse credit cards. If you already are, you may be in trouble. Get your coaches onboard right away.

9. Fire your customers!
Get rid of the bottom 20 percent of your customers. You know who they are. They suck your company’s time, profit, and demoralize your employees. Fire them by raising prices, security deposits, and renting them only your hard-to-rent units. Replace them by strengthening your relationships with your top 25 percent, developing relationships with your middle 50 percent, and selecting “golden” customers to replace those 20 percent you fired.

10. Develop a generous customer gratitude gift plan.
In hard times, customers want to get a great value for their money, and they want to know they are appreciated. Make it formal. Be generous. Make it meaningful for each renter. For the renter who hates to dump, do it for him. For the husband who wants a bigger toilet area, upgrade him. For the wife who wants a softer bed, give her the mattress upgrade. A side benefit is that you can probably hold your normal prices without negotiating if you give them what’s meaningful to them as a gift of gratitude.

Tough times are only tough if you keep doing what you used to do. Let go! Try something new and meaningful. These 10 ideas are a good place to start. Improvements are exciting. It’s fun to have your employees contribute and succeed. It’s profitable and gratifying as you work your plan.

Martin Onken is the owner/operator of Expedition Motor Homes in the Los Angeles, CA area. Martin is a member of an RV rental 20 group, and frequent speaker on various topics at the RVDA conventions. In addition to managing the rental company, Martin often coaches new and existing rental companies to higher profits and improved customer relationships. Martin can be reached at (818) 225-8239, or e-mail mronken@pacbell.net.