Interview with Kris Thayer, Marine Dealer Trader

This interview with Kris Thayer was conducted in late December 2007. The article pertaining to this interview appeared in the February 2008 issue of Boating Industry magazine.

Boating Industry: First of all, you say in your press releases that you were a dealer yourself for 21 years.

Kris Thayer: Yeah, we still are. We own a dealership in Michigan. We’ve owned the dealership for 21 years, my brothers and I. So we currently are a dealer: Thayer Marine, Incorporated.

Boating Industry: And where are you located.

Kris Thayer: We’re in Jackson, Mich.

Boating Industry: What brands do you sell?

Kris Thayer: We sell Bayliner, all of Bennington’s brands — Southwinds, Azure and Sedona — and Crestliner. And we’re a Yamaha and Mercury dealer. You know, we were one of the founding dealers with Bennington. I was No. 3 to sign with them. So, it’s been a fun ride with them.

Boating Industry: How long ago did you come up with the concept for Marine Dealer Trader.

Kris Thayer: I’ve developed it in last 12 months. The idea was prior to that. The actual, physical development was designed and developed throughout this year, and we released it at the end of July, made it public. And of course, we’ve made some changes since then with additions and subtractions, and I’m still adding to it.

Boating Industry: You said that it has been in the works for a while. How long?

Kris Thayer: About a year and a half total. But we just released the public version of it on July 30th. So, it has been not quite six months.

Boating Industry: Can you give me an idea of the genesis of this … where it came from, why you developed it and how you developed it?

Kris Thayer: Well, my background prior to the boating industry was automotive related. As an automotive dealer, being in a new franchise, we have the access to trade inventory with other dealers of a like product. In our industry, that doesn’t exist. We currently do it physically, where you pick up the phone and dial four or five other dealers to see what inventory they have and if they have the model that you’re looking for. The basic idea was derived out of the car industry.

The rest of the tools that we have involved in it are from my experience of being in the boat business, mine and my brothers’ … with the parts module where we can locate hard-to-find parts, the used boats because the used boat market has become very large, and we wholesale a lot of used boats. So we developed that part of the system, along with the new and are brand-specific with the new searches. The used is open to the entire network; so is the parts. So there could be 2,000 dealers on there with no restriction for searching used and parts. That’s part of the internal workings of it.

The main idea was originally with new boats. We could have a dealer group on there, for instance, where their dealer base could be part of this program, and we could all share our current on-the-ground inventory. But somebody outside of our network, the system will not allow them view my inventory or somebody else’s of a competitive nature. And that’s what we use the brand-specific term for. I’ve patented that function of this system. That part doesn’t exist, so we filed for a patent on it. So that makes it unique in that feature where there’s no crossover between brands. Also, within this system, we’ve developed what we call a boat locator link that can utilize our database and put a link on a manufacturer’s site so that manufacturer’s retail customer has access to retail product in the field. It’s a zip code search so it’s regionalized.

So if somebody types in, for instance a Bennington 2050GL, it will tell them the dealers within their zip code region that have that product. And it will show a couple things. It will show the results of that search with all of the product available. It will show a detail page of that specific boat with stock photos of that unit, equipment levels, dealer contact, a direct link to that dealer, and a direct link to their Web site. So we’ve kind of taken the lead management sources right out of the picture. And this makes it more direct because we’ve had some failures in lead management companies. And we’re still working on that with several lead management companies. So we just decided to go direct. We’ll do it with an unpublished e-mail address so there are no spammers getting that address. It’s a form format, and it makes it a little safer that way. That’s unique. It’s not new to the world but it’s unique in its function.

Boating Industry: What do you think it is about the business that necessitates something like this?

Kris Thayer: In today’s market, and this is how I feel, the competitive product is very similar. Like with our product Bennington. When you compare it to Godfrey product, which is our main competitor, the product is so similar now in appearance and in layout and function that if you don’t particularly have that one model that someone is looking for — say it’s a boat with a fishing seat on the front of it vs. the standard interior that would have a bench on the front of it — and you say to the customer, ‘give me your name and number and I’ll call you back,’ you know the chances of you catching that guy … we have the old 72 hour rule that if you sell this guy and don’t capture that sale within 72 hours, the percentages are down around 20 percent that you’re ever going to talk to him again. So here is a product that we can go out and search for that specific model, trade for it from another dealer if we don’t have it in stock, and chances are that in a different market that that dealer is going to have that or some dealer is going to have that. So we can capture a sale at the time that the person is in front of us. That’s the philosophy behind the program. It’s capture the sale. Be a little more innovative.

It goes back to the car industry. This is what they do. You go to the dealership. They don’t have exactly what you want. The sales person will locate it for you. And they can do it while you’re sitting there at the desk. Same basic principles apply, but we’ve applied it to the boating industry.

And granted, not everyone packages the same boats and motors together. But most of us can cross sell between all of them whether you’re full line or not. So it just gives you the opportunity to close that deal at the time the person is in your hands rather than letting him walk and saying, ‘hey, let me call you.’ It’s a selling tool.

Boating Industry: How has the reception been to this product?

Kris Thayer: Throughout the dealer base, reception has been very good. I’ve met with 5 or 6 manufacturers physically. I’ve shown the product several times at the dealer meetings. The dealers like the idea. A progressive dealer is going to really love the idea, where virtually every model is in stock and gives him an open door. The guy who has closed doors, and there’s a few of them out there, the old style guy who doesn’t even own a computer, is going to kind of snub his nose at it and say, ‘you know what, that doesn’t make sense. Why would I want my competitor to know what I have?’

Well in this industry, you have to be a little forward thinking. In a market that’s not growing, in a market that’s receding, we need to look at every possible option that we have for access of inventory because face it, not every dealer can inventory every boat. And not every customer is willing to order every boat. So it becomes a catch 22 for a lot of guys. In order to capture the sale at the point that the person is in your showroom, we need a tool that we can utilize that for, so that’s why we came up with this program.

The thought pattern has been there, and I’ve worked on this and worked on this and worked on this. I think I’ve got it nailed down pretty good.

You know the advantage for a manufacturer to utilize this program is one thing at the moment. And that is a big issue: Online warranty registration. It’s a big deal. Most manufacturers now, whether it’s a Brunswick company or it’s an independent have a warranty card that you physically write it out and send it in. Whether they actually get that or not, nine times out of 10 they do, but there’s always that one time that they don’t get it. Or it’s not filled out. And then what happens when the dealer files a warranty claim and the manufacturer goes, ‘well, who’s this? I thought you guys owned this boat.’ The reception with that part of this program has been phenomenal.

Boating Industry: So what’s the difference between that and what you product offers?

Kris Thayer: This is all online. What we’ve done with this program is if the dealer’s complete inventory is online and we have a participating manufacturer, we can dedicate this form to go right to the e-mail address of a manufacturer. It does two things. It will warranty register the boat to the manufacturer showing all the pertinent information, purchase name, address, and what have you, along with the motor serial numbers and everything that’s pertinent to the boat. It goes directly to that manufacturer, and it will automatically delete that unit from our inventory system, too, so it becomes a little bit automated on the backside. And that online warranty registration has really caught the eye of several manufacturers because they don’t utilize that on their Web sites now.

We are currently working on a couple other things, as well. We’re working on an online warranty claim form that we’re going to have as part of this system, too, so any participating manufacturer will have access to that form. It will be a generic format. Instead of handwriting that form in, you can do it online, send it right to the dedicated e-mail address. That person can process that paperwork. Do it all online. It’s a time-saving issue for manufacturers. So that’s another tool that we’re going to do with this.

Eventually I’m going to open up a retail link to this where it’s a full realm retail site. So all the inventory that’s associated with Marine Dealer Trader will be out there for the retail site also. So that will be accessible to them. We’re working on that also, and we’ll have one system that controls two.

We’re going to offer the two systems that are going to be there with a complete inventory transfer, so when something is input in one place, it will go not only here but it will be posted on a retail site also. And then thirdly, and we’re just starting to develop this now, for a dealer who has a Web site that can’t host their own, we can host their inventory data for them and link it to their site.

So there are three things going on right now, and we keep making changes and additions to it.

Boating Industry: When do you expect to have the online warranty claim?

Kris Thayer: The warranty registration is up and functioning now. The online warranty claim, I’m working with a couple manufacturers for the design, and that’s probably 2-3 months away at my best guess. We hope to have it functioning properly by spring.

And I think that’s a key tool, too. We’re part of MATES, which is part of the National Marine Manufacturers Association. We’re working with John Warnik on that. He thinks that’s a good idea, and that’s one thing MATES is striving for — an online warranty claim form. They were looking at the online warranty registration. They were looking at XML language. They’re looking at all kinds of different possibilities. And of course, there are about 18 members in the MATES group. Several of them are technology members; several of them are manufacturers. So, it’s unique. It doesn’t exist. It’s there in the motor lines. We have it with Yamaha, Mercury and all of the above. They have an online warranty format. But we don’t have it for the marine industry, so to speak. It’s all hand-written claim forms that you mail in. So it’s a little bit of a change.

Boating Industry: So you said you’re working with a handful of manufacturers. Can you share who they are?

Kris Thayer: Right now, no. We’re in contract negotiations with several of them. I’d rather not at this point until I have their permission to release that information. I do have a contract with Apex Marine out of Northern Michigan. They’re a compact boat company. We had it up and functioning with them, and we ran into a little bit of resistance, so we’re on hold with them until we reorganize with it.

Boating Industry: So what kind of resistance did they have?

Kris Thayer: Well, it’s new information. The problem we ran into with Apex, they said that they dedicated all of their dealers to be part of the group. We turned everything loose, probably prematurely, with the boat locator on their site. They had four dealers online, and I think the resistance came from the dealers that were not involved because if you did a search, they didn’t appear. So there was the resistance, and I knew that would happen because we did it prematurely. We’ve taken it off their site now, and we’re regrouping so there’s no confusion on it. And that should be up and running in the next month or so.

But I do have two other manufacturers that have verbally committed to me on the program. Now, with the holidays, it’s just tough to get back and get everything completed. And their good size … in the top 5 … manufacturers.

Boating Industry: One of the dealers on our list of the Top 100 Dealers list this year presented an inventory sharing concept in his application. He wrote up a document that sounds like it’s identical to what you’re already doing, and pitched it to his boat builder. That boat builder said, ‘no, we’re not interested. We’re going to do our own online boat ordering system.’ Which, obviously is not the same thing that we’re talking about here. And he is basically trying to get this concept out to the industry. Regal is already doing something similar to this. And you’re already doing something similar to this…

Kris Thayer: Yeah, it’s already functioning. It’s an operational system. You know, we have it. The product is developed. The product is operational. It’s all there and in place. And it all makes perfect sense.

I look at it from a couple standpoints, and I’ve had some input from different manufacturers — and Bennington was one of them that said, ‘here, maybe you should do this, maybe you should look at this, maybe you should do that.’ And another company has given me some insight on this. So I’m really trying to look at the program from both sides: from a retail, what I want it to do for me, as a dealer and how I think it should function, and then how I think a manufacturer would look at it and what tools they would like out of the unit.

And one thing we’ve implemented for manufacturers, is if they do have yard inventory, they can post it on the system for their dealer base only to view. And that comes in with the brand-specifics, the patent mode, where it restricts all other dealers from viewing what they have sitting on the ground. It’s what makes it, again, a unique function of the tool. And I think that’s a key to the success of this.

I’ve run into some dealers and we’ve showed it a couple times and they say, ‘this is a great idea but what happens when everybody else knows what inventory you have?’ And I say, ‘Wait a minute. Back up the wagon here. This is brand specific. If you sell Bennington, that Godfrey dealer cannot view what you have in inventory. It is not accessible. The system will not allow it, and there is no way that they can hack into it. That just doesn’t work.’ And that’s the function that I’ve put a patent on. This function is not new. It’s new, of course, to its restriction, the restriction of it.

The steel industry has a similar program to this where it allows their distribution points to go in from different manufacturers and see what inventory there is, but it doesn’t restrict them to, ‘OK you can only get this product from this company because that’s what you sell.’ So the function of the system is not new out there; the restriction of the function is new. We’ve patented the brand-specific function of this module, the brand-specific, new-inventory search, would be the patent.

Boating Industry: What would it cost for a manufacturer or dealer to get on board with something like this?

Kris Thayer: Well, we’ve based it on ‘per dealer, per month.’ And it really depends on the manufacturer and what we can negotiate. The fees would vary according to the size of the manufacturer. We have a set up fee and then monthly fees, but I don’t want to get into that. I don’t want to disclose that information there. The set up fees and per dealer fees can be spoken about if somebody wants to contact me. But I don’t think that’s something I want published.

Boating Industry: What types of hurdles have you run into from the boat builder side?

Kris Thayer: I think the biggest hurdle that we’ve come across with the manufacturer side is the actual total cost to function the system because there’s a cost per dealer, and we run into an overall cost. If you do the math on it, and say you have 200 dealers online and say it costs X amount, that’s the biggest hold up on it. But if you put it in perspective, a lot of these dealers are spending $300-$600 per month to have a Web site, and all that Web site does is show their local customers what inventory they have. We’re not anywhere near that as far as cost. And our retail costs are posted right on the site, but that’s retail and cost is substantially less than that. We feel that it’s just a tool that dictates very little expense to the dealer. And looking at it individually and what it could potentially produce for you with a sale. That’s basically the only resistance we’ve had from the manufacturers. They’re worried about whether their dealers can afford it, and they don’t really want to pass on another cost to a dealer per month because their afraid they may lose dealers.

Boating Industry: And hurdles from the dealers?

Kris Thayer: Well, it’s the same scenario with dealers. You know, they don’t feel like they should have to pay for it. They feel the manufacturer should have to pay for it. And why do they need this added tool? Well, when you show them what it does for them, then it makes sense. When you put it in perspective and say they’re spending — and I’ll give you a ballpark number, $50 a month to be part of this network, in retrospect, if you trade for one boat, it pays for several years. If you retail one boat, it pays for several years of use on this system. So, it’s not very expensive at all.

I have some data costs and some development costs, and that’s what we’re looking at. We’ve kept the fees relatively low, just to break even, so to speak. I’m not looking to get rich here. I’m looking to put a tool in place and make it function so we can all be more effective in what we do in our day-to-day business.

The biggest resistance I’ve found with dealers is most dealers look at me and say that I have a competitive dealer, so to speak, and that dealer sells the same brand as I do within 50 miles. And we have several within that distance. They feel, and this is the old way of thinking, that I am their competition, that I compete with them with the same brand, which is true to a certain extent. But we’re both there to help each other. And in Michigan, what we’ve done is we have open communication with several dealers of like brands and we help each other. If they need a certain boat, I’d be more than happy to sell it to them so they could retail the product. And they, in turn, do the same thing for me. So we have a ground line there, and it’s up and down the I-94 corridor with us, that we trade product physically right now. We just don’t do it electronically. Electronically would be a lot easier so … you know, I’m not calling the 10 guys I trade with and saying, ‘hey, do you have one of these, do you have one of those?’ It’s all right there online. And it would be current if the manufacturers participate because with the automation on the backside, with the online warranty registration, it deletes it automatically from the system so there’s only one input.

Boating Industry: One of the things that I’ve heard is that the manufacturers are kind of weary of creating a product like this to help dealers buy and trade inventory with each other because it will cause those dealers to stop ordering new product from the manufacturer. Have you run into that?

Kris Thayer: Well, I have not heard that as part of the resistance. That thought did come to mind when we developed this and that was part of the conversation that I had with my brother Michael: “OK, what are these manufacturers going to say?” OK, now that these dealers have an internal system that they can use and go out and trade for product, what’s going to keep them from ordering or are they just not going to order from us?

Well, the way that I look at it, as a dealer, is this thing is three-fold. The guy that’s trading the boat to another dealer generates a retail sale. And that guy who traded is down one unit, so he is more than likely going to reorder that boat. So it becomes a full cycle. And that’s the way that I explain it and show this in detail to a manufacturer, and they understand it. We’re not going to nitpick each other’s dealers. Because that product has to come from somewhere.

The beginning result is the manufacturer, the producer of the product. The end result is the retail customer. With more retail customers out there, because we have a tool to put in place to capture more retail, then we’re moving market share. In our industry, being lagging like it is, there’s not a lot of growth there, so again, you’re going to have to get it from your competitor. So being aggressive and going out and finding that unit that that customer wants, capturing it, somebody’s going to reorder that product and fill that void for it. Because they know, even if they order it a little bit different, because they know that some place in that region that somebody is going to need that boat — and that’s the retail buyer — whether it’s out of their own store or another store.

So it loosens everybody up in my opinion so we can inventory some different stuff because we know we can move it through the network. So instead of a dealer being afraid of initial orders then you have one company, for instance, that will go, “your initial order is 50 units.” So you order what you sell and then you say … well, for instance, in our store, we don’t sell a lot of fishing pontoons. So we order riding pontoons with full seats in them. We just order one or two fishing boats because there’s not a big demand for them. All of the sudden, I have people looking for them, and where do I go get it. I either call my dealer buddies and see if they’ll trade for me, go into my system, see who’s got it and trade for it instantly or order it from the factory. There are markets outside of my market, miles from here, they sell fishing boats more so than they do the riding boats. So they would be looking at us and saying, “hey I can get this boat over here.” I can still run through what I’ve got, but I know I can get this one over here and trade for it.

So it becomes a full circle where everybody is going to win in that network, in that group, and the end winner is really the manufacturer because we have an innovative tool that is going to enhance retail, hopefully to capture that sale from your competitor so the customer doesn’t walk off of the showroom floor and go next door and buy something similar but not the same brand name. You know, brand loyalty is not always there. In the retail industry, some people come in and now, with a reference to our store, we’re Bennington and our pontoon business has been huge for us. It’s the only division of our industry that is growing for us. With Bennington now being No. 1, the leader in the industry, but I have a Godfrey dealer that’s four miles from me that was the world’s largest Godfrey dealer for years and years and years. Now a customer comes in and doesn’t see exactly what he wants in a Bennington, they’re going to buy a Godfrey if they find the layout that they want. Because it’s comparable product and it’s what they want in a layout. That’s my competitor. How am I going to keep him from buying from this guy? I’ve got to be a little more aggressive and have a little more accessibility in inventory. When most dealers don’t have the accessibility to stock every model — 55 models that Bennington makes. You know, you just can’t do it.

So back to the mainline of development of the product, how do we create this unlimited database of inventory? Well, here’s an idea. Let’s do it this way: Get everybody to work together in the like brands, communicate with its dealers, help each other and the end results, on the back side the manufacturer is going to sell more boats. Because we’re more aggressive. Get everyone in the network, whether it’s one manufacturer or all of them, have them using this database so their dealer group can have access to virtually every model. Whether it’s from the factory, in their yard inventory, or from their dealer base, which in turn will generate another order for the manufacturer on the flip side. You know, a retail sale is going to generate an order on the backside. It’s a rule of thumb.

Boating Industry: OK, just to clarify, you’re president of Marine Dealer Trader, or are you president of your dealership, as well?

Kris Thayer: I’m president of Marine Dealer Trader, and my brother Michael is president of Thayer Marine. And they’re both run as two separate entities. And we decided to do that just to keep it separate but use the philosophy of “I’m a dealer, and this is what we’ve developed from 21 years of doing this.” This is a tool that can be very successful not only for the dealer group, but for the manufacturer group, as well. You know, that’s the philosophy that we have behind this. And I think that’s something that’s helped us so far because I understand the retail business, and I understand the manufacturing business. It’s all about numbers. OK, so how do we all, as a group, generate these numbers?

And I feel strongly about the competition is not — NOT — the like brand dealers that we have in the market, you know a 50-mile dealer that has the same product line. He’s not my competition. That guy’s my help. I use him to my advantage for inventory or what have you … and we have dinner together with a lot of these guys. We’ve become good friends. Really, that philosophy is automotive based. A lot of car dealers, they compete but we all buy at the same levels. We all do things with the same structure. Let’s service our market area and do a better job than what we do. Occasionally, you still get these dealers that are out there running around and they’ll want to sell one into Ohio if they’re in Michigan. Well, that’s great, but all it does is create an enemy. So let’s give our dealers more access to everything and let them do a better job in their territory. That’s how I feel about it.