Outlook ’06

As the marine industry launches into 2006, there’s a high level of anticipation for what could be a defining year.

There’s little to be excited about when reviewing 2005. By the end of September, traditional powerboat sales, which include inboard and outboard boats and sterndrive boats, had dropped by 4.2 percent compared to the year prior. Unit sales for all boats were down by 1 percent.

But while the results of ’05 appear to be rather ho-hum, there’s no doubt 2006 could be the beginning of an incredible era in the marine industry. The Grow Boating Initiative is set to launch its marketing campaign in the near term, and over the long-term, the boating industry at large hopes that its efforts in the build-up toward the program’s launch will pay off.

As we look toward the ’06 selling season, the most significant trend to watch is the result of the GBI. That doesn’t necessarily mean counting new customers by the dozen — although that would be nice, of course. But what it does mean is that the increased focus the industry has put on improving the quality of its products and services will begin to pay off.

Those new customers who are brought in by the ad campaign will be introduced to an industry that, in many cases, has improved.

And throughout the industry, there are a number of things to watch in 2006, like the push toward improving customer relations management systems. It’s not an official part of the GBI, but it’s a close cousin.

From the 2006 outlook on the economy to the training opportunities that have become so prevalent of late; from the software sector to the reemergence of online opportunities, there are many things to look forward to in 2006.

It’s show time for Grow Boating

In two months the curtain will go up on the Discover Boating portion of the Grow Boating Initiative, and the American public, not to mention most of the boating industry, will get its first look at a multi-million dollar media blitz designed to spark an interest in boating and draw consumers to the lifestyle.

The industry will spend between $8 million to $9 million on a simultaneous television, print and online marketing campaign that is expected to generate 1.5 billion media impressions during its 12-week run. Ads will appear everywhere from ESPN to the Weather Channel, Time to Sports Illustrated and many places in between.

But will they work?

Attempts to bring consumers to boating have been made before. None have reached the critical mass necessary to have the widespread impact on buying habits that an effort such as the RV industry’s much ballyhooed GO RVing campaign has.
However, organizers believe the integrated approach GBI is now using gives the program its greatest chance for success. Six task forces have been created — Dealer Standards and Quality; Product Standards & Quality; Timely & Accurate Sales Statistics; Marketing/Communications; Funding and Water Access — to address the impediments to growing boating on a number of fronts.

“This is not just an advertising campaign,” National Marine Manufacturers Association President Thom Dammrich said during a presentation on GBI last fall. “While the bulk of the money that’s going to be invested in this effort will go to buy advertising, it’s really an integrated program to address the issues that have challenged our industry for many, many years.”

Of course the media campaign will receive most of the attention. The goal is to reach people on an emotional level: Not to sell a boat, but to sell boating.

And organizers, who incorporated Grow Boating late last year — it had been run under the auspices of the National Marine Manufacturers Association, the Marine Retailers Association of America and the six task forces — know that when you’re spending the kind of money they are, the industry is going to want results. So they’re keeping strict track of where that money is going.

“We need to make sure that we’re being effective and, if we’re not, we need to make sure that we’re altering our plans to be effective,” Dammrich said. “We’ll have a measure for every tactic under every strategy in this plan. But, overall we’ll be looking at: Are we increasing participation? Are we increasing awareness and interest in boating? And, are we increasing sales? Those will be our three primary measures of success.”

To measure how participation numbers are being impacted, Grow Boating Director Steve Tadd says an annual boater participation study is planned. The first has been completed and will be used as a benchmark to judge the subsequent studies against. Tadd says the overall goal is to increase participation in boating by one million people a year.

There are also very specific goals for the sales funnel Grow Boating uses to illustrate the stages consumers go through before boat ownership. The funnel stages are: not interested, interested, considering and shopping. Grow Boating aims to draw more people into the top of the funnel, then direct them through it.

To do that, surveys of the typical first-time boat buyer have been conducted and a profile has been developed of who that person is. From those profiles, Grow Boating has established a “target audience” the Discover Boating campaign is geared toward.

Those in that audience are predominantly male, in their late 30s, married, have a household income of at least $55,000 and half have at least one child. They also tend to be located in suburban, rural and town areas as opposed to central, big cities.

Using those demographic and geographic criteria, Grow Boating worked with a database to determine how many people in the United States match that profile.

Dammrich said there are about 22 million households in the country that fit those parameters but, of those, almost 4.2 million already own a boat and 3.3 million are prior boat owners.

That leaves 14.5 million households that have never owned a boat.

About 70 percent of those are currently in the not interested portion of the sales funnel, 20 percent are interested, 9 percent are considering and 1 percent shopping.

With the strategic placement of the Discover Boating ads, the campaign will get its message to 75 percent of the target audience three or more times and 60 percent will see the ads six or more times.

Tadd says that by 2008, Grow Boating wants to reduce the 70 percent who are not interested to 64 percent, increase the interested from 20 percent to 23 percent, move considering from 9 percent to 11 percent and increase the number of people shopping from 1 percent to 2 percent.

“We’re very, very excited,” Tadd says. “For years we’ve been talking about these things, and now they’re starting to be unveiled. We can’t wait for the industry to really see all of what Discover Boating will offer. We can’t wait to hear their reaction.” — Jonathan Mohr

The forecast calls for …?

There is a saying some analysts refer to when asked to make predictions about the economy: “Economic forecasters exist in order to make weather forecasters look good.”

Tragically, in 2005, Mother Nature and the economy were intertwined to a much greater degree than anyone could have imagined. Floods, earthquakes and the unprecedented string of named storms in the Atlantic basin killed hundreds of thousands and caused billions of dollars in damage.

However, despite the devastation wrought by those events — and the constant presence of the unforeseen they remind us of — many view the economic damage done in 2005 as a short-term disruption that will not stop the boating industry, or the U.S. economy as a whole, from growing in 2006.

Given those recent events, a lot of people are, in fact, surprisingly bullish.

During an address at November’s Marine Retailers Association of America’s annual convention, Dr. Robert Genetski — author, economic forecaster and investment advisor — said his analysis leads him to believe the country may just be entering a period of tremendous economic growth, and could see the stock market “essentially double” in the next four years.

“There are strong reasons to suggest we are in what will be one of the strongest bull markets in history,” Genetski said in a presentation titled “U.S. Economic Outlook for ’06.”

He believes the country is moving toward “classic economic principles” — including low taxes, free markets, stable currency and protection of individual property rights — and when that happens, Genetski says good economic times follow.

He predicts short-term interest rates will rise to 5.0 percent and believes there will be a modest slowdown in spending in 2006, although that will come later in the year, when hurricane rebuilding efforts also begin to slow somewhat.

As for oil prices, Genetski thinks they are much higher than is justified, but will stay in the neighborhood of $60 per barrel for another year before economic pressures cause them to fall.

Growth on the horizon?
Yamaha Marine Group President Phil Dyskow also believes market pressures will eventually force fuel prices to come down.

“In order for [businesses in the oil industry] to function at peak efficiency, they need volume,” Dyskow says. “If the price of gasoline per unit gets too high, consumption goes down. If consumption goes down and they produce less, their efficiencies go down. It’s a downward spiral. So, it doesn’t take long for them to say ‘we can’t sustain this, we need more volume, lower the price.’”

Dyskow also cited raw materials prices — particularly for resins and aluminum — as an important factor that bears watching in 2006, noting that the rising costs of boating are not being offset by corresponding improved efficiencies, as may have happened in the past.

For example, engine price increases have been sold to customers in the past by showing them the improved mileage, sound reduction and cleaner operation that money is buying. But now costs are rising independent of any perceived benefits, and that could eventually spell trouble.

Dyskow believes the economy will grow from 3.0 to 3.5 percent and, given that, predicts the boating industry will see “modest growth” in 2006.

“Historically, if the [Gross Domestic Product] is above 2 percent, we typically see some growth,” Dyskow says. “If it’s above 3 percent, we see some pretty strong growth. Since I’m guessing it’s going to be at about 3 percent, I’m saying slow growth.”

But he doesn’t believe that growth will be distributed equally. Dyskow maintains that during times of modest growth — unlike years when GDP is over 5 percent and “the rising tide raises all ships” — companies that have invested in their businesses will do well, while those that haven’t may not.

And a recent study produced by The Freedonia Group, Inc., a Cleveland-based industrial market research firm, predicts the demand for recreational boating products — including boats and separately sold propulsion systems and accessories — will grow annually by 4.8 percent through 2009. The firm said those gains would be supported by a shift in the product mix toward larger, more expensive boats.

The study also forecast the recreational boating market will be helped by growth in the population of people 45 to 54 years of age, which contains some of the most likely purchasers of high-end boating equipment and that there will be an increased interest in boating among women, minorities and other nontraditional boat buyers.

Given the volatile state of the world today, whether any of these predictions will hit the mark is anybody’s guess. But even if they don’t, the most important lesson they teach may be to separate short-term events from long-term plans.

The unexpected will happen and you should plan on that, not because of it. — Jonathan Mohr

Preparing for the best

Assume for a moment the Grow Boating Initiative is a huge success and an industrywide surge in boat sales is the result.

Money is made, jobs are created, times are good.
Certainly that’s the outcome everyone is hoping for. Those whose job it is to train the technicians, builders, designers and everyone else who makes the industry go, are no different. But they do have a few words of warning for anyone dreaming of a boating boom: “Be careful what you wish for.”

Serious shortages of trained technicians exist almost everywhere around the country. Many businesses say, only half-jokingly, that they’ll hire anybody with a pulse who is willing to learn.

A boom in boat sales is only going to exacerbate the problem.

Workforce development and training, therefore, will be every bit as important as sales if efforts to grow boating are going to succeed.
Fortunately, training initiatives are already underway on many fronts.

Here are a few of the more prominent programs.

The Conference on Marine Industry Technical Training wrapped up its second annual meetings a few days ago. Representatives from all segments of the industry met with educators from around the country in Tampa, Fla., to connect, share information about current training programs and discuss what else needs to be done to make that training more accessible and pervasive.

Begun last year by the American Boat & Yacht Council, the National Marine Manufacturers Association and Professional Boatbuilder magazine, which co-produce the event, COMITT was hailed by the industry as an important step along the road to a better-trained workforce.

“I think the important thing we have to come to realize is that we can ensure that the Grow Boating experience also incorporates the training of those who are going to have to be at the core of the Grow Boating experience,” said ABYC president Skip Burdon.

ABYC has long been a leader in marine education
and, as a certifying body for the marine industry, offers numerous online programs and certifying courses.

The Marine Industry Technical Education Council is a product of COMITT and was created in the words of chairperson Ed Boncek, “to facilitate the creation and sustained availability of a technically skilled and proficient labor force for the marine industry through education, training and professional development.”

Mark Amaral, executive director of the American Boat Builders and Repairers Association and MITEC selection committee member, likens the council’s job to that of a registrar, to certify and/or accredit training programs.

ABBRA’s Marine Service Manager Certification program was rolled out in 2005. It works to build professionalism by teaching subjects like time management, work orders, job estimating, project planning, customer service and contract law.

But Amaral says he would prefer to see programs such as ABBRA’s and others, like the Association of Marina Industries Marina Manager Certification program, become more integrated.

“There’s good training,” Amaral says. “But not enough people know about it. As an industry, we need to do a better job of recognizing and valuing professional training and getting people in those programs.”

In addition to the classes offered by various associations, more and more manufacturers are also providing training and educational opportunities.

Yamaha Marine Group holds numerous sales and service seminars around the country each year through its Yamaha University program. Company president Phil Dyskow says Yamaha’s goal is to train over 2,000 sales people and also 2,000 technicians per year.

“We need to have at least 2,000 trained technicians per year, whether we’re upgrading existing skills or training new skills,” Dyskow said.

And the company’s Dealer Management Symposiums, designed to help its dealers make their businesses more profitable, grow more popular every year.

Mercury Marine’s training program is based on a credit system and utilizes a combination of e-skills and classroom courses for certification. At the end of the training, points are tallied and if techs pass a written test and hands-on activities they earn a Mercury certification designation.

At EMarineTraining.com, all students learn online. Courses such as Basic Composite Repair and AutoCAD for Marine Designers, are offered for people who may not be able to get that kind of training anywhere else.

Boating retailer MarineMax is also heavily involved in training, and has implemented an apprentice system for technicians. New employees are attached to a Master technician when they are first hired and bill out the hours to the master tech. After a period of six months or so, they can go out on their own.

GRPguru offers training, seminars and consulting in marine and industrial structural composites for the technician. The company is working with schools across the country to help begin marine programs.

There are also several schools around the country that specialize in marine industry training and education, including The Landing School, Westlawn Institute of Marine Technology and International Yacht Restoration School.

Efforts to train the marine industry workforce are widespread but sometimes unconnected. In 2006, another step toward may be taken to remedy that. If the industry is to grow, it better be. — Jonathan Mohr

Don’t call it a comeback: The World Wide Web strikes again.

If you didn’t jump on the information superhighway bandwagon the first time around, now’s your chance to make up for it.

Well, we can’t promise that you’ll make up the business you lost if you weren’t in the game at all, but what we can tell you is that the Internet, and everything that the world expected, is quickly becoming a reality. Despite the crash of the dotcom era, there are many today who are expecting the unimpeded rise of all those technologies that sprouted when the Web first came about; old ideas that may have been ahead of their time are making a comeback.

This, according to Business 2.0’s October article titled “Everything old is new again.” But it’s not just that magazine that’s singing the Web’s praises, and it’s not just the mainstream that will be feeling the effects. BusinessWeek claims, “It’s a whole new Web,” in its Sept. 26 issue, “and this time around it will be built by” the consumer. That includes the marine consumer.

Whereas seven years ago only a third of U.S. households were online, today almost 80 percent are using the Internet. And as almost any dealer will tell you, it’s rare to find a boat buyer who hasn’t done some research online. Savvy shoppers oftentimes know as much — if not more — about a boat as their sales rep does.

That bodes well for guys like Chris Kelly, publisher of BoatTEST.com, which bills itself as the most complete resource for new powerboat buyers on the Web today. Boat buyers can log onto Kelly’s Web site and research boats. The community allows consumers to become members, and it’s 100-percent trackable.

According to Kelly, the site hosts 2.2 million unique visitors each year, and it has nearly 70,000 opt-in subscribers — 670 of whom reportedly bought a single brand of boat. From its boat test articles to its video and its new all boat directory, BoatTEST’s mission is to provide information to consumers, but it also sends leads to dealers.

“We as an industry have got to do a better job of educating the dealer,” Kelly said. “The consumer has done a lot of work to become a lead. You better return the favor by getting back to him.”

More and more dealers, in general, are finding new successes on the Web. John Sima of Sima Marine, Eastlake, Ohio, says his Web site is its single-most important sales tool. Rob Brown of Clark Marine in Manchester, Maine, has had great success with its funonthewater.com site and the newsletter that drives consumers to it.

The dealer network’s push toward more online efforts has been a boon to companies like PowerSports Network. PSN provides dealer- and OEM-branded Web site services that are designed to act as an extension of a dealers’ showroom. Through its template, dealers can list used inventory, allow customers to compare products side-by-side, load time-sensitive promotions and even create their own newsletter in a format that the dealer controls.

While customer relations and lead management have become the hottest topics in online and software (see page 52), the Internet’s most prevalent mission has become easing the communication and business between supplier and buyer — no matter if that buyer is the end consumer or a channel for the supplier.

Companies like DNA Group are offering boat builders incredible services through the Web. In this case, the company allows its customers to configure their own switch system and submit it through the Web — a big advantage for a small boat builder who can customize their own switches through DNA’s Power Management Enclosure.

The Internet’s impact on the marine industry is being felt everywhere. Businesses are using the Web to grow closer to their customers. The Web is strengthening communications, improving customer relations and creating more efficient avenues for getting business done. E-commerce has skyrocketed, too, as nationwide online retail sales grew by more than 20 percent in 2005.

Those companies that have been on the forefront of online business are already reaping the rewards; those who are not cannot afford to be left behind this time. — Matt Gruhn

Lead The Way

A customer walks into your booth at the boat show and says he’s looking for a Ranger boat. Your sales guy talks over his needs and desires with him, gives him the pitch about the latest and greatest and finds out at the end of the discussion that his purchase won’t happen for 6 to 12 months.

The bad news is that you didn’t get the sale. The good news, of course, is you will.

If you’re managing your customer relations properly, that is.

Guys like John Trkla of Red Oak Marketing Group are in the customer relations management systems business to help you make sure you get that sale. Known by its acronym CRM, these systems aren’t a new concept, but in a day and age where product choice is plentiful and often overlapping, these three letters can help you solidify customer loyalty. And they’re becoming more and more of a hot topic every day within the boating industry.

“Everyone needs better communication with customers,” says Trkla whose Lake Forest, Ill., company has helped many marine dealers — including four in the top 20 of Boating Industry’s Top 100 — better connect with their customers. “We help dealers manage the opportunity, not the contact.”

That’s exactly how that Ranger boat gets sold. Despite the fact that the customer was possibly a year away from buying, your sales rep gathered all the pertinent information, and when your in-house Ranger Boat Sale came around four months later, well, let’s just say your customer couldn’t pass up using the personalized coupon you sent him.

Customer relations management systems come in all types — from the follow-up technology such as that run by F.U.S.S. (see page 24) and the Footsteps program run by Channel Blade Technologies to those found at manufacturers who are selling to the dealers.

Jet Dock Systems of Cleveland, Ohio, for example, was able to generate, on average, 9-percent more revenue per order because of the time reduction a new CRM system provided its sales force. The new software, created by MRH Technology Group, reduced the time needed for the sales team to generate 12 quotes for a single customer from one hour to under 10 minutes.

The primary discussion regarding lead tracking is revolving around the Marine Association for Technology Exchange Standards, or MATES. Channel Blade and Dockmaster Software worked together to launch the effort, which now has the backing of the National Marine Manufacturers Association. More than 100 people sat in on the innagural MATES meeting at last year’s Miami Boat Show. The group appointed a leadership group which was made up of members of Watch Captain Software, Tracker Marine, iboats and boats.com.

The concept for the group is to standardize the way data is exchanged throughout the marine industry. So if a consumer visits a Web site and wants information about a certain boat in their area, the information that is passed on to the dealer will be the same no matter if it’s sent by boats.com, iboats, a manufacturer or the Grow Boating Web site. It’s much like the Standards for Technology in Automotive Retail (STAR) program, but it’s based on newer technology.

Over the last few months, Integrated Dealer Systems and Channel Blade have been working together to integrate and co-develop business management solutions for dealers and manufacturers, including the integration of Footsteps with IDS’s Astra dealer management system. This idea of an integrated supply chain is something that Watch Captain is pursuing aggressively, as well. The company is working closely with a number of parties and expects to make a series of announcements in the near term.

“There’s a lot of information available from a lot of different sources in the marine industry,” says Watch Captain COO Tony Pimentel. “We believe there’s one place where all that information comes together, and that’s at the dealerships. They buy the boats. They sell the boats. They touch the customer. So we’re putting a lot of resources into linking the supply chain with the dealer network. This includes people who help dealers sell more boats as well as the suppliers and vendors they touch on a day-to-day basis.” — Matt Gruhn

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