2013 Bold Moves
While we only named four Movers & Shakers for 2013, the Boating Industry team was once again blown away by the quality of submissions for this year’s awards.
It’s a clear sign that the marine industry is one filled with innovation.
These eight individuals have all implemented major changes in their companies to improve operations, maximize efficiency and lift the entire industry.
Product Strategy Director
Dominion Marine Media
The marine industry has been slow to embrace mobile technology, but that needs to change as the move from desktop to mobile continues to speed up.
That change has the potential to be as significant as earlier technology changes, said Tim Claxton, products strategy director at Dominion Marine Media.
“We’re seeing the same shifts that we saw years ago from print to Internet,” Claxton said. “We think the next generation of the Internet – mobile, social, etc. – requires some of the same changes in thinking as to how we connect.”
As the owner of Boat Trader, boats.com and YachtWorld, Dominion runs some of the world’s most popular consumer boating sites. Combine that with the company’s role as one of the largest Web service providers in the marine industry, and it’s clear Dominion is well-positioned to shape where the industry goes with mobile.
Depending which expert you listen to, mobile Web traffic is expected to surpass desktop Web traffic sometime this year or next. The Dominion network of sites already garners 30 percent of its traffic from smartphones or tablets, Claxton said.
Claxton is leading the company’s “Mobile First” approach to product development, which includes several new mobile initiatives:
• A new responsive design for BoatTrader.com to optimize the site across multiple device types and sizes, along with upgraded iPhone and iPad apps for the site
• A new YachtWorld iPad app designed to take advantage of full-screen photos for listings
• The BoatWizard iPhone app that provides brokers with real-time access to their inventory, MLS search and leads from their phone
• QR code boat specs that brokers and dealers can use in advertising to direct boat shoppers to listing information on their phones
Dominion is also developing new mobile marketing solutions to help its dealer clients redesign their websites or launch mobile sites. Besides that, Dominion has created a number of social media tools and services to help dealers manage their online reputations.
Claxton is also taking a lead role in educating dealers and others in the industry on the importance of mobile through webinars, in-person seminars articles and more.
Join the club
Freedom Boat Club
While boat sales struggled during the recession, participation in boating remained relatively strong, surging to record levels in 2012.
Even if people weren’t willing to take the purchase plunge or couldn’t get the financing to buy a new boat, they were still interested in the sport. Boat clubs and rental operations have continued to grow in popularity. With 69 locations across the United States, one of the biggest beneficiaries of that trend has been Freedom Boat Club.
“When the economy took a dive, that’s when our business skyrocketed,” said President/CEO John Giglio. “People enjoy being out on the water, they just couldn’t afford it.”
Although around since 1989, Freedom Boat Club has seen the most growth over the last few years. Freedom Boat Club had a 29 percent increase in revenue in 2012, following a 25 percent increase in 2011. The company has increased the size of its boat fleet by 54 percent since 2010.
While many view boat clubs as a competitor to marine dealers, Giglio doesn’t see it that way. As far as he is concerned, the competition is all of the other options a consumer can choose to spend their recreational dollar on from golf to RVs.
“Keeping that money in the industry is a tremendous benefit,” he said. “They can join a club like ours, try it out, determine if they like [boating]. Many of our members go out and purchase a boat after a year or two.”
It can also mean more revenue for the marinas that host Freedom Boat Club, with club members spending money on fuel, service, restaurants and supplies on the property.
The goal for Freedom Boat Club is to continue to grow, spreading the brand to other locations, with two more scheduled to open this fall and more next year. The demand for boat clubs should continue to be strong as an alternative to ownership, Giglio said.
As for the peer-to-peer rental strategy that has garnered so much buzz this year as companies such as Boatbound and Fun2Rent enter the marine market, Giglio said he doesn’t see that as a threat to the boat club strategy. The one-off customer, like boat rental operations, is a different one than Freedom Boat Club targets with its membership program, he said.
Keeping R&D flowing
Executive Vice President
Viking Yacht Co.
New Gretna, N.J.
Cutting the research and development budget is an all-too-common response when the economy heads south.
But that can be fatal in the yacht category, where new is what sells. It’s crucial to keep innovating in the 42- to 92-foot market that Viking Yachts competes in, said Patrick Healey.
It’s a lesson the company learned during the luxury tax days of the early 1990s. Even as others cut back, the company kept investing in research and development, confident the tax would eventually be repealed.
“By keeping our group moving with R&D, we were able to introduce two new models when the tax went away in 1993,” Healey said. “When things went sour in 2008, we followed the same principle.”
The company’s current flagship model, the 82 Convertible, was launched right after Thanksgiving 2008. Hull No. 25 was delivered this fall.
The company dedicates at least $3.5 million to research and development and is introducing two new models for 2014 – a 52 Convertible and a 42 Sport Coupe. Viking has committed $7 million to develop two new models for 2015.
Despite working in a high-end market, Viking still needs to control overhead and that, along with creating a turnkey experience, has been a constant focus of the last several years. To that end, the company created subsidiary companies to make the experience easier for the buyer: Atlantic Marine Electronics, focused on marine electronics, communications and entertainment, and Palm Beach Towers, a tuna tower company.
Viking has even built its own wastewater treatment plan on site and added solar panels to some of its larger buildings in order to reduce utility costs. In December 2012, Viking flipped the switch on its own tri-generation plant.
“Five to 10 years ago, the boats we built would have 100 onboard systems. These days it’s more like 400 to 450 systems,” Healey said. “When you add these new systems to each boat, the costs spiral upward tremendously and we have been seeing this upward climb for the past five to seven years. We try everywhere we can to control costs.”
CEO, Lehr Inc.
Whenever it’s possible, Bernardo Herzer believes it’s the responsibility of manufacturers to look for environmentally friendly technologies.
That is what prompted the Lehr CEO to focus his company on creating propane-powered small engines, first in the lawn and garden market and, since 2012, the marine industry.
Since then, Lehr has launched three outboard motors – 2.5 hp and 5.0 hp in 2012 and the 9.9 hp in 2013 – with more powerful ones in development.
So far, Lehr motors are being used in applications such as small shore dinghies and as auxiliary motors for sailboats, but Herzer said he sees even more potential for the technology.
“Any person looking for an ease-of-use, price-point competitive, more reliable engine is our customer,” he said.
Boating has been a passion of Herzer’s since a very young age, so the transition to the marine industry for Lehr products was a natural one. He first started converting marine engines to propane when he was 14 and since then has owned several vessels.
In its first year in the marine industry, Lehr generated $3 million in revenue from the 2.5 and 5.0 hp models. The company now has more than 50 employees.
The company has been recognized with a Clean Air Excellence Award by the Environmental Protection Agency, but the benefits are not just environmental.
Because propane is not a solvent like gasoline, the motors avoid many of the problems that plague occasional use products like outboard engines.
“Ninety percent of problems with small engines are fuel related – stale fuel, contaminated field, ethanol issues, fouled carbs, etc.,” Herzer said.
Many vessels are already using propane for heating and cooking, so there is a convenience factor as well, Herzer added.
He also points out the benefits for marinas, noting it is much easier to work with a local distributor to get a propane tank on site than it is to install gasoline pumps.
A new-look boat show
Sales Manager, American Boat Center
Plenty of dealers complain about stagnant boat shows with declining attendance and fewer sales.
Ryan Jones of American Boat Center decided to do something about it.
With the local boat show in Knoxville, Tenn., facing most of the same challenges as others across the country, Jones and several other dealers thought it was time for a change.
“I wanted to see an updated modern show that was not just a routine ‘boat show’ but a boat buying experience that was fun for the whole family and the Knoxville community,’ Jones said. “This is a boating town. So many large manufactures are here in Knoxville with Mastercraft, Sea Ray, Yamaha Jet Boats, Skier’s Choice, and tons more. The Knoxville boaters and dealers deserve the best boat show possible.”
The existing show was housed in an older facility in desperate need of renovation and the organizers were resisting efforts to move it to Knoxville’s new convention center where many dealers wanted to locate it. Still, dealers were reluctant to launch a new show in the challenging economic climate.
“To try and throw a boat show production on top of that was not in the cards for most people around Knoxville,” he said. “I had spoken with several people about starting a new show with me and didn’t get much response. I had the business plan ready to roll and just needed the participants.”
When Jones heard in the fall of 2010 that four dealers were not going to return to the event, he knew it was time to act. He contacted the four other dealers and got them to agree to display at a new show in March 2011.
From that start, there are now 17 dealers exhibiting for 2014. About 8,000 people attended the show this year, with a goal of 10,000 for 2014. The 125,000-square-foot exhibit space at the Knoxville Convention Center is sold out, with a waiting list for more.
“In years past we have seen shows around that size, but it has been a long time,” Jones said.
The key to the show’s success has been getting the buy-in and support of the dealers, who are excited about the show and improved sales opportunities.
“When the customers come into the show booths they see excited dealers and vendors that are happy to be there,” Jones said. “It just has taken the overall event to a true enjoyable experience for the people that are coming to buy boats.”
The economy has certainly presented more than its share of challenges the last several years for boat dealers, but it can be easy for that to become an excuse for poor sales.
That was the realization that Warren Kelly had as he looked at his 40-year-old company. From the top down, a defeatist attitude had infected the team, he said.
Kelly is also a land developer and he saw the return in sales for high-end condos by buyers who should be the same target as Baert Marine’s Grady White boats.
Working with sales manager James Milne and the rest of the sales team, Kelly held a series of meetings to analyze the entire sales process. “It made people believe,” Kelly said, “It’s not Obama’s fault, it’s not the economy, it’s us. We’re creating this recession.”
Kelly, asked the sales team to commit to one year to following his program. With a back-to-basics approach, Kelly brought Grady White product experts to Baert to re-educate the sales force on the boats. In weekly meetings, the sales team analyzed every lead and how it was handled. Every phone call was recorded so Kelly and the rest of the team could listen to it, looking for ways to improve.
“Let’s look at what we’re doing and quit looking at what the outside influences are,” Kelly said. “You can tell a lot when you listen how you talk to people.”
Baert Marine invested in a new website and social media strategy working with Boat Trader. One of the key tenets of the new process was not pre-judging prospects based on where they were calling from, or to give online leads less attention.
The results were stunning, even better than Kelly had hoped for. Baert went from being $500,000 behind in sales in March to being completely sold out of boats by July 1, an unheard of occurrence for the company. In June, the company celebrated its first million-dollar month in nine years – its biggest month in a decade.
All of that success was without making changes to the sales team – something Kelly wanted to avoid.
“What I’m proud of is that my sales staff did it, they followed the lead and they proved to themselves what they can do,” he said.
NorCross Marine Products
Combine declining sales with an increase in costs and you can quickly find a recipe for disaster.
That was the situation in which NorCross President Gregory Lentine found his company as the recession hit the marine industry. With NorCross’s cost of goods sold rising due to global supply issues, the best way to tamp down costs was to find ways to reduce general and administrative (G&A) costs.
NorCross embarked on a strategy of eliminating all excess waste across the company. Utilizing new software helped reduce order processing and shipping time. A shift from in-house servers to cloud storage reduced costs and maintenance.
NorCross reduced quality issues by creating standardized processes that streamlined production and offered incentives for quality assurance.
A new online customer support system reduced consumer response time from 8.2 hours to 83 minutes.
“The second an email, web form, or phone call comes in, it is automatically tracked from start to finish using a ticket system,” Lentine said. “By implementing a bonus structure for support team members that revolves around average response time and consumer support ratings, we have been able to achieve an average consumer response time of under two hours and a ticket satisfaction rating of 98 percent.”
There are two experiences that inspired the strategies, Lentine said.
The first was the book “The 4+2 Formula for Sustained Business Success,” which inspired many of NorCross’s proprietary strategies, revolving around the company’s mission. Second was Lentine’s experience as a private pilot. As a pilot, he utilizes checklists to make sure critical flight steps are not missed and catastrophe is avoided. The same idea can be applied to a company.
“We use checklists from the minute a product is conceived, through development and into deliverables,” he said. “My fear when developing these checklists was I’d create a bureaucracy within the company that did as much harm as it did good. So I designed each checklist to be simple yet concise, and geared them toward delivering products that exceed our mission.”
The changes reduced G&A costs by 28 percent. Even as the market improves, that allows NorCross to position its products at attractive price points and still maintain margins and quality, Lentine said.
The inspiration for YachtCloser came to Brad Parker a few years ago after a phone call interrupted a trip to the movies with his family.
The then-yacht broker was waiting in line to buy tickets when a potential buyer called with a good offer on a listing. The buyer was ready to hop on a plane the next day to come conduct a sea trial and survey of the vessel.
“I knew the offer was realistic and knew my seller would probably accept it,” Parker said. “Then you start to become held hostage because of the lack tools in the industry to get that deal done. I was 50 miles away from my office, I wasn’t at my house, I wasn’t at a fax machine.”
While he eventually completed the transaction (with some frustration to his family), that’s when Parker realized there had to be a better way to get a deal done. He knew the tools existed to create and send documents, but nobody had created a solution for the yacht brokerage industry.
YachtCloser delivers that solution, allowing brokers to create, send and sign contracts from anywhere they have Internet access. The Web-based software provides a total contract management solution including documents, electronic signatures and even state registration paperwork and Coast Guard documentation.
“It frees these guys from their offices,” Parker said. “They can finish the deal using an iPhone.”
Since launching in January 2012, YachtCloser has gone from $275,000 in boat transactions that month to more than $26 million in May of this year. In total, there has been about $2 billion in active contracts (pending and signed) using the system.
As of August, 77 brokerage houses, representing almost 800 users, had adopted the system.
“The biggest challenge has been educating the brokers on the simplicity of it,” Parker said. “Once somebody looks at it and actually tries it, they’re hooked. ‘I should have done this sooner’ is the thing I hear the most.”