CSI or die

Sixteenth-century philosopher Francis Bacon certainly wasn’t referring to the boating industry when he said, “Knowledge is power.”

But the nearly 90 manufacturers that participate in the National Marine Manufacturers Association’s Customer Service Index program have powerful data at their fingertips in the form of customer opinions on everything from overall product quality to the sales and service experience of the local dealer.

Since the program’s inception in February 2001, participation has grown to represent about 45 percent of the powerboat market, based on unit sales, says Terry Leitz, NMMA’s director of CSI programs.

“In the last two years, we have gone from fewer than 50 participants to almost 90, … but I think we’re at the point now where we’re getting a good baseline,” Leitz says. “We’re at a very good level to start following quality.”

Simply collecting that data is not enough, however. Manufacturers can use this information to help create product loyalty and brand loyalty by monitoring incoming data carefully and quickly reacting to any potential problems, says Kip Dillard of The Avala Marketing Group, the third-party provider that collects and aggregates CSI data for NMMA. The partnership allows even small manufacturers the opportunity to access valuable customer data at a reasonable group rate.

A St. Louis-based marketing firm, Avala has been in business since 1997, helping customers in the powersports, RV and marine industries understand their customers better through their data, says Dillard, who runs Avala with partner Steve Pizzolato.

Manufacturers receive their own CSI data and learn where they rank among manufacturers of similar products. But no one knows anyone else’s quality scores.

“Part of managing the ownership cycle is to understand whether your customer is dissatisfied, because dissatisfaction creates defection,” says Dillard. “The marine industry is coming around to the concept that it’s easier to keep the customers you have than to find new ones. The old mantra was, ‘Hey, there are plenty of buyers out there.’”

About one-third of those who defect do so for personal reasons that are beyond the control of the manufacturer or the dealer. However, the remainder of those who defect do so because of a poor service experience, ownership experience or problem resolution.

Loyalty is an important consideration because, in many cases, the first boat is sold at a loss when all cost factors are considered, Dillard says. But if a boat owner has a great experience both with the product and the dealer, chances are greater that he’ll purchase a second (or third or fourth) boat, with each sale becoming easier than the previous one because a relationship has been forged.

Although the marine industry hasn’t reached the sophistication of the automotive industry in the way it collects, analyzes and acts upon CSI data, it has made great strides in the three years Avala has been working with NMMA, Dillard says.

“In general, the marine industry is showing tremendous improvement,” adds Pizzolato. “Of the three industries we cover, RV is probably a little better because of the type of product, but a boat is much more complex than an RV, snowmobile or ATV. The pattern of increasing CSI scores in the marine industry is greater.”

The CSI program is one step in a three-prong process by industry stakeholders to grow the boating industry and the professionalism of its manufacturers and dealers through the Grow Boating Initiative.

CSI in action
Regulator Marine Inc.’s customer satisfaction rating of more than 90 indicates that it’s doing a good job already, but the data also show places where improvements can be made, says Cheryl Williams, who works in customer service for the Edenton, N.C.-based boat builder and monitors its CSI program.

Before joining the NMMA program, the manufacturer had been doing periodic customer surveys, but did not have the manpower to do them consistently or the resources to extract meaningful data from the information it received. Williams jumped at the chance to represent Regulator Marine on the NMMA steering committee that adopted the CSI program.

Although Regulator’s response rate of 35 percent is considered good, the company is encouraging its dealers to send in warranty cards in a timely fashion to increase the number of responses.

After receiving the card from the dealer, Regulator sends the new boat owner two T-shirts and a letter that welcomes them to the Regulator family, lets them know that a survey is on its way and urges them to return it.

Inputting that information triggers Avala to send the initial quality survey to the buyer, followed by a second survey 10 months later.

“We’ve looked at design issues based on customer comments,” Williams says. “We take them seriously.” In addition to gaining insight into demographic information about its buyers, Regulator Marine has begun focusing on its dealer network.

“We already knew who our top dealers were in terms of sales, but now we’re seeing how certain dealers are more successful based on their rankings,” Williams says. Current efforts include more training at its dealer meetings and a future requirement that all dealers obtain certification.

A typical CSI survey will contain as many as 100 questions, but Dillard says most manufacturers focus on the answers to three questions: Is the buyer satisfied with the particular experience (ownership, sales, service), would he recommend this product to a friend and would he recommend this dealer to a friend.

“The product is not as important a measure as the dealer,” says Dillard, adding that how the dealer addresses any problems weighs heavily in a buyer’s decision to repurchase. Avala offers a service that alerts the dealer to a “completely dissatisfied” response on a CSI survey based on a boat purchase or a service call.

While 60 percent of respondents in the “completely dissatisfied” category will later defect from the brand regardless of the action taken, the remainder will remain loyal and will become bigger advocates of the brand, based on the ability of a dealer or manufacturer to solve the problem, Dillard says. But without that heads-up, all of those future sales likely would be lost.

“It’s not enough to try to resolve the problem. It needs to be resolved to their satisfaction,” Dillard says. “In some cases, it may not be feasible financially, but those are decisions that the dealer and manufacturer have to make.”

CSI at Sea Ray
Many larger marine manufacturers, such as Sea Ray Boats Inc., conduct their own CSI programs but collect the basic data required by NMMA to comply with its program. Those data are audited by a third party to assure accuracy, Leitz says. The association’s CSI program is loosely modeled on the Sea Ray template used at that time.

“We all understand that we’re all closely connected,” says Ed Boncek, director of management systems at Knoxville, Tenn.-based Sea Ray. That’s why Sea Ray and other companies that conduct their own programs share their data with NMMA.

“Customers who have a bad experience with one brand may leave the marketplace,” Boncek says. “Increasing the industry performance of customer service, customer satisfaction and quality products benefits us all. We’ll get our fair share of customers.”

Boncek is responsible for the company’s certification and dealer improvement programs, which are recognized as among the best in the industry. Sea Ray acknowledges the vital role dealers play in the ownership experience, which begins with the boat delivery process.

“We pay a lot of attention to that metric,” Boncek says of delivery, “understanding what the individual dealer does and making suggestions to make it even better.”

Crunching the satisfaction numbers from owners and continually working to improve products and the ownership experience have resulted in constant improvement in Sea Ray’s CSI scores.

“We want our customers to use our product and have a good experience — it’s a very experiential product,” Boncek says. “Sea Ray is very much into measuring customer perception of their experience, because experience is reality.”

He estimates the company spends $75,000 to collect and process CSI data on the 15,000 units Sea Ray sells each year.

“NMMA does a great service to the industry to have such a high-quality program, with online reporting and the ability to drill down to individual dealers,” Boncek says. “The cost of the program should not be a barrier to any manufacturer. Having that knowledge to increase sales, customer referrals and satisfaction far outweighs the cost.”

Worth the price
Regulator Marine spends about $3,500 a year for the NMMA program, which includes a yearly maintenance fee and two mailings to the nearly 400 people who bought a Regulator boat in 2005. And when you consider the company’s best-selling boat retails for $117,500, Regulator could pay for the program for three decades off the full price of a single boat.

“The commonality is a program that’s both meaningful and cost-effective to manufacturers of all sizes,” says Leitz, who worked for Sea Ray before joining NMMA in 2003. “The manufacturers who build (fewer) than 100 boats a year, they’ve looked at it and said, ‘Yeah, it’s cost-effective,’ and the manufacturers with thousands of boats have also said that it’s cost-effective.”

What would Regulator Marine do without its CSI data?

“Oh my gosh, that’s scary,” says Williams. “I guess it’d go back to your opinion of yourself and not knowing what the customer thinks. Honestly, (a CSI program) just makes good business sense.”

Although J.D. Power and Associates has a great reputation for its quality studies, Leitz and Pizzolato from Avala Marketing agree that the company’s sampling survey can’t compete with NMMA’s census survey, which goes out to every boat buyer purchasing a product from a participating manufacturer. That means collecting vital dealer information that J.D. Power can’t track.

Pizzolato notes that the Grow Boating and certification initiatives work together with CSI to not only grow the industry, but also to increase product quality and dealer professionalism.

“If we can get 10 people to try boating, that’s great, but not if seven leave the next year because their expectations of buying an expensive item weren’t met,” Pizzolato says. “This is the place where the market intersects with customers so they stay with the category or brand as long as possible.”

Leitz adds that “dealers are at the sharp end of the stick, where the customer interface occurs,” which makes that dealer data so vital to participating manufacturers.

NMMA is aggressively signing up new manufacturers and helping participating companies understand the data and react to it.

“We can’t tell our members what to do with the data,” Leitz says. “The ultimate responsibility lies with the manufacturer, but we support them through education and seminars.”

And what Francis Bacon said 400 years ago still rings true today: “Knowledge is power.”