The Marine Retailers Association of America issued a “position paper” today, outlining the biggest issues concerning and the solutions for what it considers the boating industry’s “biggest shortcoming” — consumer warranty repair.
Based on a survey that the MRAA conducted in early 2003, the association has recognized “three significant findings.” Those findings were that only 8 percent of the 650 respondents offered some sort of bow-to-stern warranty; only 16 percent of the builders pay more than dealer net on parts used in warranty service; and only one-third of the builders pay retailers their consumer labor rate.
“By comparing these findings to other large ticket purchases, made by the same consumers,” the statement said, “one can demonstrate that these poor consumer warranty philosophies are still dominating our industry.”
The solution, the MRAA says, is to invest in a “bold, new bow-to-stern warranty philosophy,” by investing “in our brands, our retailers, and our customers.” That investment, the statement says, is a four-part solution.
First, enhancing the boating experience, to the MRAA, means “builders must properly pay their retailers to correct the imperfections in the products that we deliver to consumers. That means paying the retailer’s ‘actual cost’ of warranty repair.”
Actual cost, the MRAA says, means “earning the same profit level as [retailers] do on regular customer service. That requires a profit on labor, on parts, haul out, travel time, and testing.
” There are no ties to CSI ratings. At that point warranty repairs will get scheduled very quickly. The consumers “boating experience” will improve dramatically. Sales will increase.”
The second part of the proposed solution is to regain the lost share of the recreational dollar. The MRAA suggests that giving the consumer a “fair value for the money they spend on our products” will provide them with a better boating experience, which would, in turn, “set us on a quick path to recapturing the percentage of the total recreational dollars, which we have lost.
“We must move beyond the 1970’s thinking found in the warranty philosophies,” the statement says.
The third part will “set all of us on a path of increased profitability,” according to the statement.
“One hundred percent coverage on a bow-to-stern warranty for the boater gets us to the current decade,” the release states. “It shows the professionalism that consumers expect of us. The days of ‘doing what we can get away with’ are over. Today, it must be: ‘what can we do for you?’”
The MRAA says that warranty coverage should not be thought of as an expense, but rather as an investment in future sales.
” Excellent warranty service is something we owe to the buyer,” the release explains, “as a result of the imperfections we deliver. It’s an investment; a real investment, in customer satisfaction. Ours and countless other industries are now abuzz about “CSI”. The opportunity at our doorstep! Let’s move on it.”
The fourth and final part of the solution, the MRAA hopes, will “demonstrate that profitability does cure all ills.” The warranty program, the MRAA suggests, will allow profitable dealers to pay qualified technicians year-round, raise the bar for customer service, and in the end, reverse boating’s shrinking part of the recreational dollar by “remembering that the customer is king.”
The MRAA also addressed other issue that it suggests are reasons for moving forward with this bow-to-stern warranty issue.
First, the MRAA would like to see boatbuilders increase their warranty accruals. The MRAA says that a survey of CEOs of several major builders “revealed that they accrue an average of about 1.5 percent of sales for future warranty liability. The high was 2 percent, and the low was 0.8 percent.”
By increasing the warranty accruals (the MRAA suggest tripling or even quadrupling the amount) management will see an increase in product quality and builders will “quickly recoup the increased amounts that were accrued, when better built boats reach the showrooms.”
“Why trifle with such small amounts of money for warranty coverage?” the statement asks. “This is 1960’s thinking.”
Economically, the MRAA recognizes that it would be tough, but points to a number of car builders who offer big warranty packages.
“The economic equation in the auto industry, for this reality, was very clear,” the statement says. “In the late 80s, they just raised their prices. Then they added what people asked for, customer service. Boaters simply want to be taken care of, and they will pay for it. All we have to do is ask! The average price of a new automobile is now $ 29,000, and their industry is growing nicely.
The catch just may be that “component vendors will have to be reigned in, and they must allow our builders to warranty all of the component parts on every boat (engines excluded),” according to MRAA. “The bow-to-stern warranty philosophy will become part of this new warranty investment.
“The position by builders, that by covering vendor components, they create a potential contingent liability, is a red herring. Other industries overcame that, years ago. We can, too.”
In the end, however, MRAA admits that this is a “combination retailer/builder partnering initiative” suggesting that retailers will have to “have their service teams on duty” 12 hours a day, every day of the week during the season.
“It requires a new vision and new energy to step up to profitability,” the statement says. “Professional retailers need to climb on board, and join the paradigm shift to real customer satisfaction. Those retailers, who are unwilling to rise to this new standard, will be left behind.”
“Yes, profitability does cure all ills, and with a new warranty philosophy, the industry will prosper.”
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