The marine industry gets a bad rap – often from those who belong to it.
Comparisons are made to industries that are more advanced, like automotive, or are gaining more market share, like RV. And the industry’s attention is often too focused on its shortcomings to celebrate its successes.
When that focus is changed, however, a wealth of best practices emerge from among the strategies and policies of a wide range of boating companies. There is much the industry can learn from studying the individual successes of its members, from dealers and distributors to boat builders, suppliers and associations.
When Boating Industry magazine started to seek out these success stories, it was overwhelmed with responses. As a result, the editors have decided to make coverage of industry best practices part of every issue.
If your organization has adopted a policy or strategy that you believe other marine companies could learn from, please submit information to firstname.lastname@example.org.
New kids on the block
Orca Gear Inc. began as a class project, but the start-up company may end up schooling the boating industry.
Its innovative approach to product design and marketing may catch boaters’ eyes and awaken the marine marketplace to new possibilities.
It all began in 2001 when the company’s three top executives were assigned to work together on an MBA class project. They had to find a need in a market and create a product to meet it. And that’s exactly what they did.
The product they created was a prototype of what now is the Float Tech Jacket, an inflatable personal floatation device housed in comfortable, stylish, water-resistant outerwear.
Inflatable PFDs are nothing new, but market research suggested that 80 percent of people on the water were not wearing lifejackets. Most people found them bulky, uncomfortable, lacking style and restrictive.
With its new product, Troy, N.Y.-based Orca Gear is looking to overcome those stereotypes. And it seems to be making a splash. The company has sold out of product from its test production run and recently signed with “a major retailer.” The executives now believe they may be profitable by year end.
“Everyone in our company is under the age of 35,” says Cecilia Domingos, owner and CEO. “I think because we bring a new set of eyes and some fresh blood, we’re more open to ways in which to capture the market’s attention.”
Domingos explains that in the marine industry’s “good old boy network,” her company sticks out like a sore thumb. But it’s exactly that new way of thinking that may allow Orca Gear to shake up the market and by doing so, make boating safer and more appealing.
Making boating stick
It’s no secret that the industry has a hard time attracting and then hanging on to new boaters. With its Bayliner 175, US Marine has been trying to turn that around.
When the Knoxville, Tenn.-based company first began brainstorming about new models, the market for runabouts was down 14 percent, the fiberglass market was down 15 percent and Bayliner’s volume was down even more, explains Dave Taylor, senior vice president of sales and marketing for US Marine.
“We wanted to figure out how to turn that around and get families back into boating,” he says.
The size of the entry-level market US Marine wanted to target was only 4,000 units, not nearly large enough to justify an investment. That didn’t stop the company from pursuing its plan, though. Instead, the project team did some “out-of-the-box” thinking.
It found that more than 465,000 used boats in the 16- to 20-foot category were sold between 1998 and 2000 at an average price of $10,000. Now that, the company believed, was an opportunity.
US Marine also went beyond the demographics to conduct customer research. The company discovered that its target customers were price sensitive with a desire for ease of use, space, versatility, reliability, performance and little else. Despite a trend toward more amenities and luxury items, US Marine found its target customers for the Bayliner 175 didn’t want to pay for them.
With the needs of those target customers in mind, US Marine launched the Bayliner 175 in the spring of 2002, with a recommended price for the boat, engine and trailer package of $9,995.
The product hit its mark.
By the end of 2003, Statistical Surveys Inc. reported that Bayliner sold 4,642 boats in the 18-foot category for the year. The next closest player in that category had less than a third of the volume, says Taylor.
The company found that about 49 percent of its Bayliner 175 customers were new to boating, while 51 percent had watercraft ownership experience. Ninety-four percent of owners report the boat meets or exceeds their expectations, Taylor states.
“When we started this project, we thought that we could do some good volumes, grow boating and increase our market share,” he explains. “All of those things have happened.”
The best of both worlds
Post 9/11, the boating industry has been working harder than ever to demonstrate that boating brings families together.
By designing its boats to appeal to both kids and adults, Tigé Boats has done just that and is reaping the rewards.
As wakeboarding’s popularity has grown, so have sales within the ski/wakeboard boat market. Info-Link Technologies reports that while retail sales of all powerboats were up about 8 percent for the first half of 2004, ski boat sales were up about 11 percent, compared to 2003.
Abilene, Texas-based Tigé has ridden this wave. Not only has it seen sales increases, its market share grew 3 percent in 2003 and continued to rise in 2004. This share has come from both the inboard and sterndrive sectors of the market, according to Kip Davis, Tigé director of marketing.
Active families typically purchase inboard ski and wakeboard boats for the look and performance they deliver. However, families that use their boats for more than just watersports often buy sterndrives for their comfortable ride, space and ability to respond to water conditions by adjusting the trim.
With Tigé’s variable hull and TAPS system, boaters can have the best of both worlds. The parents get the safety and comfort they desire without losing the watersports performance and look the kids want.
“We want to give our customers the optimum watersports conditions,” he explains. “In addition to that, we want them to be safe and comfortable. It makes everybody even happier about their time on the lake.”
No hassles ...Guaranteed
Doing the right thing can boost your profits. Just ask West Marine.
The boating supplies retailer stands behind the products it sells, inspiring customers to buy more and contributing to its bottom line, according to Randy Repass, West Marine founder and chairman.
The marine retailer first adopted its No Hassle Guarantee of Satisfaction in 1977, well before it became the popular policy of many mass retailers. When a customer buys a product that doesn’t work – whether it’s because of a poorly written manual, a defect or a purchasing mistake – it’s generally not the customer’s fault, Repass says.
Standing behind its products is “the right thing to do,” he explains. And that does build loyalty. “But in addition to that, it builds sales. If we can’t stay in business and make a profit, we’re not going to be around. Everything has to feed the bottom line.”
In the marine industry, a product fails more often than it should, and the customer is left with how to solve the problem, he says.
He should know. An avid boater, Repass recently cruised to the South Pacific with his family for three and a half months on a new custom sailboat. He spent quite a bit of that time fixing products that didn’t work or that were installed improperly, which took away from everyone’s enjoyment of the trip. It didn’t help that many of the manuals provided were incomplete or difficult to follow.
Repass suggests more manufacturers should “build a quality product, and if there is a problem, make it seamless for the customer to fix it.”
When West Marine first adopted its No Hassle policy, critics predicted that consumers would take advantage of it, but Repass claims that’s the exception to the rule.
“Many more people end up buying more product and are more satisfied,” states Repass. “If a customer knows they can bring it back, they are more likely to buy it right now.”
Dressed for success
Ocean Outboard has invested millions in its three Long Island facilities.
But it isn’t necessarily the money spent that makes the New York-based boat dealership and marina stand out from the crowd.
“I instill in my personnel that people don’t need boats,” owner Tony Caligure explains. “You have to portray a positive image.”
Caligure says he has always been driven to provide his customers with a clean, neat and organized facility, even back when Ocean Outboard was a two- or three-person business.
Now, with 45 employees, Caligure sets the example, and his employees know how high his standards are.
“It has to come from the top down,” he says. “If I throw cigarette butts on the ground, everyone else will do it.”
It goes further than just an attractive showroom and grounds. At Ocean Outboard, it extends to personnel, trucks and machinery. Caligure comments that customers and competitors often mistake his vehicles and machinery for new, when they simply are kept clean and in good repair.
For Caligure, this kind of dedication comes down to the passion you bring to your business. He says he had the option to join his family’s business as a young man. Instead, he pursued his dream of starting a boat dealership from the ground up.
“For too many people in the industry, "he says," it’s their job, not their hobby.”
Starting small, growing big
It’s easy to say the industry needs to grow boating. In fact, the industry has been saying it for the last decade.
Doing it is another thing altogether.
The Northwest Marine Trades Association launched its own multi-pronged Grow Boating effort in mid-2003, funded through a surcharge on boat show space.
NMTA had traditionally put on boat shows as a way to help its members be more successful. But, as association President Michael Campbell points out, you can’t hold a boat show every day. Most markets can only support two per year.
After settling into his position as president, which he’s held for the past five years, Campbell asked himself what the association could do to help its members during the other 10 months of the year.
“Boat shows have a value, but we also know 75 percent of people who come in the door already own a boat,” he explains. “You get a relatively small amount of new boaters.”
NMTA raised $150,000 in the first year of its campaign, split between two new Web sites, DiscoverNorthwestBo-ating.com and DiscoverNorthwestFishing.com, its Boatstock test drive event, the Northwest Salmon Fishing Derby and a TV spot that ran this past June. In its upcoming fiscal year, the association plans to spend $200,000.
Campbell headed up the effort with the support of his board of trustees, but he doesn’t take credit for the concept.
In fact, he explains that his ideas came largely from the efforts of the Southern California Marine Association and the New York Marine Trades Association. And like these two MTAs, Campbell is sharing his experience with the industry – most recently, by participating in some of the national Grow Boating meetings.
NMTA doesn’t have data to demonstrate to what extent its efforts have been successful in bringing new boaters into its members’ businesses, but for Campbell, it comes down to one statement.
“If you don’t know what to do, do something,” he says.
If everyone in the industry thought this way, chances are we’d be a much larger industry today.
Investing skin in the game
The effort to bring the industry together to fund a national grow boating campaign has centered around getting the boat builders on board.
But the National Marine Manufacturers Association is hoping companies in other sectors of the industry will contribute to the tune of $2.5 million.
3M will be one such company.
It has committed 0.5 percent of its marine industry sales toward the Grow Boating campaign, according to Joe Parks, national sales and marketing manager for the 3M Marine Trades Department.
Parks explains that while 3M has a relatively small footprint in the marine industry, a brighter future for boating could mean a larger role in the industry for 3M, something which is close to his heart.
“I get pretty passionate about this stuff because I’m concerned we don’t do as good a job at promoting boating as we could,” he says. “I can’t think of too many products that can have the kind of impact on peoples’ lives that this industry can offer.”
Parks hopes other suppliers – those with a larger role in the marine industry – will also step up to support the campaign. He says suppliers have a responsibility to their customers. Growing the industry shouldn’t be left up to their customers to figure out.
“With a good PR campaign, just the visuals and messages you could send …,” muses Parks. “If they can do it with RVs, good grief. Not to diminish RVs, but boating involves much more emotional bonding and interaction.”
Exporting isn’t easy.
Those U.S. marine companies that do it well often find success on a relatively small scale. Not so with Sea-Fire Marine.
After first launching an export strategy in 1997, exporting now makes up 45 percent of the marine fire extinguisher maker’s revenues and Sea-Fire President Ernie Ellis Jr. says there is room for further growth ahead.
A large part of the Baltimore, Md.-based company’s success is tied to its efforts to cater to customers on a local level. When it first decided to enter the UK market, Sea-Fire hired a local distributor with a connection to the marine market and let it take the product to the OEMs. The company then received input from the distributors on what it needed to do to be successful in its new market. Sea-Fire now has a network of 20 distributors in Europe.
The fire extinguisher manufacturer also opened an assembly facility in Europe. Foreign boat builders want to deal with businesses in local time zones that can offer next day deliveries, according to Ellis. The assembly facility also allows Sea-Fire to custom build to its customers’ orders.
In addition, Sea-Fire found a UK organization similar to the manufacturers’ rep firms in the US market. It serves as the company’s inside sales force in Europe, working trade shows, calling on distributors and going along when distributors visit foreign boat builders. As a result, Sea-Fire only has to have one sales manager based in Europe.
Since its entrance into Europe, Sea-Fire has expanded its export business to Australia, New Zealand, Southeast Asia (including Taiwan, Singapore and Hong Kong) and South America, having found local distributors in each of those markets.
Ellis says the company’s success comes down to a combination of having the right product and promoting it at the local level to gain name recognition.
“We didn’t go into it half way,” he explains. “You really have to look at it as a big customer and really go after it.”
The intimidation factor
Interested but intimidated.
That’s how Steve Rosenberg, Boating World magazine’s publisher, describes the typical family that attends the Boating World Test Drive series.
“We’re reaching people who wouldn’t go to a boat dealership, who are intimidated by it,” Rosenberg explains. “They don’t know what questions to ask. They’re embarrassed.”
However, through the test drive series, dealers are able to reach this unique set of consumers. And they’ve found that under the right circumstances, that intimidation and embarrassment fades quickly.
At the first test drive event that Atlanta, Ga.-based Boating World held, about $800,000 worth of boats were sold. Rosenberg expects total sales for last year’s six-event series to hit $2 million easily.
The key to transforming these types of consumers into boat buyers is a combination of a no-pressure sales environment, a wide selection of boats and hands-on education, he explains. Before they feel ready to consider a purchase, they need to learn about the kinds of boats available in the marketplace, how each type matches their needs and gain real-life boating experience, something most boat dealerships don’t, and often can’t, offer on their own.
“If you were ready to bring your family into the boating experience and you lived close to a dealership that carried Glastron, an aluminum fishing line and Yamaha Wave Runners, you wouldn’t be exposed to pontoons, which is a great choice for many families,” says Rosenberg.
With Boating World planning to expand the number of test drive events it offers to about 20 next year, many more dealers will have the opportunity to reach these consumers.
The language of loyalty
Mastry Engine Center is dedicated to its employees. And, in return, its employees are loyal.
While this may sound simplistic, during a time in which the marine industry often struggles to find and retain good employees, Mastry stands out.
The Yanmar distributor, which was founded in 1962, currently employs 56 people. Of its management team, the average time at Mastry is 14.5 years, with the longest period of service at 33 years.
The key to its employee retention effort is hiring young, ambitious people, training them well and treating them right, explains Tino Mastry, company CEO.
“We believe our customer service policies are the best,” he says. “That’s why we like to bring young employees in. They have no bad habits. It’s much harder to train away bad habits.”
Tino admits that it’s now harder to find employable applicants than in the past. However, by offering its employees respect and honesty, Mastry is able to retain the majority of the employees it brings onboard.
Among the benefits Mastry offers its workers are reimbursement for furthering their education, a bonus program, profit sharing and a policy of promoting from within.
The profit sharing program came about when the industry encountered a string of tough years. Tino and his two brothers addressed the employees, informing them that they had two choices: to lay off some employees but provide annual increases for the others or to forgo raises as a company until industry conditions improved, at which time the company would make it up to them. The employees chose the second option, and Mastry’s profit sharing program was born.
Tino believes honesty with employees is another important feature of Mastry. He says the three brothers hold nothing back in the company’s weekly managers’ meeting, and ask managers to share that information with the employees.
If a matter is particularly serious, a company-wide meeting is held and Tino addresses them himself.
“There’s nothing worse, "he says," than a rumor mill in business.”
Propelling dealers forward
What company doesn’t want its dealers to be successful?
Yet, despite this desire, many manufacturers don’t make helping dealers sell their product a priority.
Turning Point Propellers is an exception.
The Elk Grove Village, Ill.-based propeller manufacturer introduced its Fundraiser merchandising program last year to help boost marine dealers’ bottom line. And, as it turns out, coming up with the idea didn’t take much thinking at all.
Company president Dixon Kendall entered the marine industry with experience from the hardware and grocery industries, where merchandising is accepted as a key part of a business’ success. From its beginning seven years ago, Turning Point packaged its products a little differently. Propellers were sold in a four-color box, emblazoned with photos of boaters.
The idea for Fundraiser came naturally out of this focus on merchandising, and it grabbed dealers’ attention right away. The 4-, 6- and 8-foot displays showcase a wide variety of propeller housings and hub kits in a minimal amount of space. Each Fundraiser includes a three-sided flag pole sign, catalog/selection chart holder, header sign, shelf stickers, Propeller Month promotion kit, consumer brochures and a free aluminum prop and hub with a display stand.
So far, Turning Point has sold 500 Fundraisers and plans to push the program even harder in 2005. The company claims that with three inventory turns, the displays can yield over $450 in profit per square foot. And not only have they helped the dealers be more profitable, they’ve driven an increase in business for Turning Point.
As an added bonus, the displays have enabled the manufacturer to do business with some of the biggest industry retailers – many for the first time.
Change happens. And success can be the difference between embracing it and resisting it.
“A lot of little guys don’t want to change,” explains Hunt Leavitt, president of Fairmont, N.C.-based McKee Craft Boats. “Over time, you almost can’t stay still. Within 10 years, the smaller guys are going to have a harder time. Either they will change and grow or stay the same and experience a decline.”
The McKee family wanted to see its boat building company grow, so two years ago it accepted an offer from Leavitt, a self-proclaimed change agent. Leavitt had no experience in boat building, but he had spent most of his career in Fortune 500 companies. And he had always dreamed of owning his own company.
Through an agreement with Lanness McKee in 2002, Leavitt bought a 50-percent stake in McKee Craft, and the company hasn’t been the same since. For one, its sales have almost doubled.
Leavitt’s first priority on the job was to gain his employees’ trust, to let them know he was serious about the company’s future and not just interested in promoting his own agenda.
Leavitt says his philosophy is that “if we’re going to be successful, we’ll all be successful,” not just the owners. For that reason, he simultaneously increased their pay and raised their level of responsibility. He also created a bonus program through which employees receive cash rewards for meeting production goals.
Then he created an employee manual, complete with vacation schedule, something the company had never had. Next, he tackled the company’s reputation for strong, unsinkable boats, adding to it through a higher focus on fit and finish, catered toward “the performance fisherman.”
He changed ad agencies and replaced the company’s entire line-up of independent sales reps. He assembled an owner’s club of almost 800 members and signed up for the National Marine Manufacturers Association’s CSI program.
On the horizon are plans to get NMMA Certified and expectations for further growth. In fact, Leavitt predicts that the company will have tripled its 2002 sales by 2007.
It’s not necessarily about building a better boat, he explains. Most small boat company’s have that down pat. It’s about running a better company. – Liz Walz