Whether you just decided to open your equipment rental business, or have spent years in the industry and are looking to jumpstart revenue growth, now is the time to act. As a whole, Americans, especially millennials, are placing more value on experiences and less on material wealth. As a sports or leisure equipment rental provider, this presents unique opportunities and a rapidly growing market.
According to the U.S. Travel Association, the recreational rental business reached $1 billion in revenue in 2014, with those revenues increasing by 5.7% annually for the past three years. That growth has outpaced the 3.3% annual revenue growth of the broader retail services industry, and placed recreational rentals in the top 40% of all retail industries. So, how can you ensure your business sees it’s fair share of the market growth reflected in its revenue?
The report states that the average annual revenue per recreational rentals organization was over $500,000 in 2015. However, many factors can impact this number, including location, age of equipment (depreciation), variety of equipment offerings, and competition. If your renta business is below the average revenue, there are several steps you can take to become both more competitive and more lucrative.
To Grow a Rental Business, Diversify Your Product Offerings
While this is largely location-specific, you want to ensure that your business is well stocked to support the most in-demand activities. If you haven’t invested in new merchandise for over year, you are likely missing out on key areas of growth. For example, stand-up paddleboarding, a relatively new activity that has skyrocketed in popularity, grew by 38% between 2015 and 2016, making it the fastest growing recreational sport. Most new paddleboarders get their first taste of the activity from rental shops. Other fast-growing areas include windsurfing, kayaking, climbing and sailing.
Of course, you don’t want to forget about the historical pillars of your business. Rental businesses faces ever-increasing competition as existing firms expand and new ones enter the market, and pleasing your existing customer base is crucial to stop them from trying out a competitor on their next vacation. Below we cover a few ways that your business can stand apart from the crowd.
Embrace Technology
The easier and more efficient you can make the renting process, the more likely your customers will be to recommend your business and return themselves. An online booking system means less paperwork for your staff, and more time helping customers. When you rely on taking reservations over the phone, you're limited to bookings only when your employees are available to answer the call or greet an in-store customer. Online reservation systems allow customers to make reservations around the clock -- perfect for those traveling from other time zones. Additionally, if there is a cancellation, another customer can immediately fill that spot.
Many online booking software offerings are also paired with an inventory management solution. This visibility into your stock is crucial -- having instant insight into your available offerings improves the customer experience, as well as gives you effortless reporting on the offerings that provide the most return.
Upsells and Add-Ons
Upselling customer is absolutely crucial, not only to pad your margins, but also to offer customers the best possible experience. Done improperly, this tactic can come across as aggressive and salesly. To be successful, your staff needs to offer customers equipment that will truly add value to their experience, and be up-front about the pricing. For example, have all available add-ons listed on the online booking portal, so customers are not surprised by add-ons when they pick up their equipment.
The best options here are small items that can be affordably bought in bulk for your business, and quickly begin to generate profit for your business. For example, wet bags for kayak trips or paddleboarders or better protection against the cold for winter weather rentals protect your margins and give renters a better overall experience.
