In-Depth – Controversy arises over Dealer Certification funding

MEDFORD, Mass. – As a large and fragmented group, it’s not too often that the boating industry reaches consensus. That would make the Grow Boating Initiative historic, though it has yet to get underway.

Before we pat ourselves on the back, however, many details remain to be worked out. One detail in particular will likely have a major impact on the success of the initiative as a whole, according to Larry Russo, chairman of the Dealer Quality and Standards Task Force.

That detail is the funding of the Dealer Certification program. While most industry leaders agree that the program is an essential part of the Grow Boating Initiative, there is wide disagreement over how much should be spent on it, how and when the money should be raised and who should pay for it.

“Let’s fix what’s broken in the business – retail presentation,” suggests Russo. “How do you fix what’s broken? You invest some serious money in it.”

He would like to see that money come from the funding mechanism to be established for the marketing campaign. In fact, he’d like the dealer certification program to receive half of those funds. That’s why Russo believes the industry needs to raise $50 million.

The task force is considering five candidates to administer the Dealer Certification program: Sandy Corp., J.D. Power & Associates, Five Star Solutions, Avala and Maritz, all of which have expertise in helping dealers improve customer satisfaction.

“The dealer portion of this will not come cheap,” he says. “It’s going to cost thousands of dollars per retailer experience.”

While it has been suggested that funding for the Grow Boating marketing campaign be raised through a levy of $0.20 per horsepower of marine engines sold, Russo’s $50-million program would require $1.00 per horsepower.

If the industry fails to get on board with this higher amount, he’s afraid Grow Boating will be underfunded.

“MarineMax spends more in one year on advertising and promotion than the Grow Boating Initiative is proposing to raise,” he points out. “That comparison alone should tell you how underfunded the project would be if we raised $0.20 [per horsepower].”

And the clock is ticking. The Grow Boating Coalition plans to unveil the marketing campaign during an all-industry meeting on Wednesday, February 16 at the Miami Beach Convention Center. During this meeting, not only will the coalition share the amount of money it intends to raise through a per-horsepower funding model, it will reveal how the funds raised through the model will be spent.

Providing an incentive

Russo believes a certification program should be multi-tiered with built-in rewards at each level. As a Boston Whaler Master Dealer, he has experience with such a program and believes it to be very effective.

The challenge, though, is that it can be expensive for both the dealer and the manufacturer, at least by marine industry standards. Russo, for example, says that when his dealership entered the Boston Whaler Master Dealer program five years ago, it was asked to invest $3,500, which would be the equivalent of about $5,000 today. That $3,500 didn’t pay for the entire cost of its participation. Boston Whaler also pays a substantial sum per dealer to Sandy Corp., which administers the Master Dealer program for Brunswick Corp.

“I couldn’t have afforded to hire Sandy Corp. to come into my business one-on-one,” admits Russo. “But because they were engaged by Brunswick, it became affordable.”

That begs the question of whether, under such a dealer certification model, manufacturers would have to chip in or dealers would have to pay even more.

Russo believes that while dealers should make an initial investment to become certified, that investment should be refunded upon achieving certification. And the cost of the program should ultimately be paid for by an industry-wide fundraising effort, not by individual manufacturers.

With hundreds of boat builders in our industry, getting them all to agree to fund the program out of their own pockets would be difficult at best.

“I don’t want manufacturers to write checks,” says Russo. “I don’t want to be looking for benefactors in the industry.”

Meanwhile, the 5 Star Dealer Program, a dealer certification model adopted by Chrysler Corp. eight years ago, is relatively inexpensive for both the dealers and the manufacturer, according to the automaker. Compared to Sandy Corp.’s process, it seems simple and thus more likely to appeal to a wide range of dealers.

“The challenge of the task force is to develop a program that is simple and sets realistic standards that can be obtained and measured without a large amount of time or money via a third party consultant,” states Ed Boncek, director of dealer management systems for Sea Ray. “I don’t think the industry can afford a program that has the depth of dealer support and measurement that the Master Dealer program has.”

The catch with the 5 Star program is that dealers pay for most of it themselves, including training and facility improvements. Russo believes that won’t work in the marine industry, which many acknowledge is at least 20 years behind the automotive industry. The marine industry will have to offer dealers a larger incentive, which will cost money, he says.

Other industry leaders have a different perspective on funding the program, leaving much to be resolved before the Grow Boating Coalition comes together to update the industry in mid-February.
-Liz Walz

Editor’s Note: To learn about other industry leaders’ perspectives on Dealer Certification funding and to see the results of Boating Industry’s Dealer Certification Survey, see future issues of our newly redesigned e-newsletter. For more information on dealer certification and what it will mean for the industry, read the March issue of Boating Industry magazine.