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The virtuous cycle: the more boats they buy, the longer they stay in

Here’s a question worth drilling deep down into the boat registration numbers in order to ferret out an answer: How many boat owners are actually leaving our sport every year? What is the so-called defection rate?

We have the numbers for 2010, along with some insights, thanks to work done by Jack Ellis and his crew at Info-Link Technologies.

The bottom line: About 825,000 of the people who either sold their boat or let their registration lapse in 2010 had not returned to the ranks as of this spring. Poof! Vanished from the registration rolls — at least for now.

They may not be gone forever, says Ellis, managing director of the Miami-based market research and analytics firm. “Some may buy another boat in the future,” he says. “Others will pull their boats out of the garage at some point and re-register them.” And others may still be on the water aboard other people’s boats.

“Still, no matter how you cut it, we are losing thousands of people every year, even if it’s not forever,” he says.

I wrote about Info-Link’s analysis in my column in the June issue of Trade Only. Click here to read the full story.

Here is the most interesting detail that Ellis found in the data: When it came to retention, the researchers found a strong correlation between one-time boat owners and those who had owned multiple boats.

People who had owned more than one boat were more than twice as likely to stay in the sport as first-time owners. In 2010 a whopping 70 percent of these so-called one-boat owners vanished after selling their boat.

But look what happens to the defection rate among those who have owned more than one boat. It decreases to about 50 percent for two-boat owners, 32 percent for three-boat owners, and so on. By the time someone has purchased their fifth boat, “We pretty much have to kill them to get them out,” Ellis jokes.

This is the core, the serial boat owners who are in through thick and thin.

Since I wrote that column, Info-Link went back and tried to determine how long the people who left boating had owned their boat, but that didn’t produce a smoking gun.

On average, these people owned their boat for about eight years (a partial estimate). “What I can tell you for sure is that roughly one-half of the people who sold a boat in 2010 owned their boats for five years or less,” which is the overall average, Ellis says. “The turnover rate varies, depending on boat type, age and whether the owner bought their boat new or used.”

And, Ellis points out, the turnover is higher during the first several years of ownership, then tapers off. “This is why the median is three years less than the average,” he says.

Info-Link also compared one-boat owners who left boating with one-boat owners who remained. “There was no significant difference in the amount of time these two groups owned their boats,” Ellis says. “This is arguably good news.”

I think most anyone in the industry would agree that a better understanding of what is taking place could help stem the tide of defectors.

“We can all speculate about the causes, but if we can determine what the barriers truly are, perhaps there are some things we can do to reduce or eliminate some of them,” Ellis says. “If we can increase first-time-boat-buyer retention by only 10 percent, it translates to thousands of people who will stay with the sport.”

The good news is that the industry is working to increase participation and retention through a number of initiatives, including those from the recent Growth Summit.

“For years we have been saying we have to improve the customer experience,” NMMA president Thom Dammrich says in an email. It’s the impetus behind dealer certification and the reason the NMMA requires member boat and trailer builders to be certified, Dammrich points out.

“I think it goes back to education and on-the-water training,” he says. “Somehow we have to reach these new boaters and help them more than we do now.”

And, Dammrich notes, “Service after the sale is also crucial, and I think the industry still has a long way to go on this. Some dealers are terrific at this and recognize the value in providing superior service, but many do not. Is our problem poor dealer service, or is it people buying driveway to driveway with no dealer support and no education who are dropping out?”

All good, pertinent questions.

Any way you look it, keeping boat ownership rates stable and eventually growing them again is a challenge, given the economic times we are living through.

“We either have to find 825,000 boat buyers — and lapsed boat registrants — to replace them each year or figure out a way to keep more of these people in the sport,” Ellis says. “Ideally, we can do both — attract new boaters and entice them to stay.”

Dammrich describes our virtuous cycle: “The longer they stay in, the more boats they buy, and the more boats they buy, they longer they stay in.”

Comments

8 comments on “The virtuous cycle: the more boats they buy, the longer they stay in

  1. Capt. Dan

    I run a small sailing school here in Oxnard California as well as a yacht charter operation. I once remarked that around here 98% of the boats are tied up 98% of the time.

    The guy I was talking to is a broker and he looked at me with a bitter grin and said, “You’re an optimist.”

    I don’t have statistics to back this up, but it’s my analysis, based on anecdotal evidence, that the sequence of events goes something like this: guy falls in love with a boat, convinces wife that they’ll use it every weekend, wife is concerned that neither she nor husband is boat-savvy, broker convinces them that it’s just like driving a car, guy buys boat and screws up first landing. Or scares himself in the process of getting underway, or gets in a following sea and scares himself …. but most often, it’s some close call at or near the dock.

    So this comes back to your comment about the experience that new owners have. If it’s scary, they’ll be out of our sport damned soon.

    Every year a couple of new boat owners call me for docking lessons. Everyone of those guys is still boating. I see them on the water all of the time.

    If the sales organization included lessons in the package — not just the phone number for the Power Squadron, but actual hands-on classes — we’d see more folks continuing to enjoy their boats. They’d be happy; they’d talk up the sport and you’d sell more boats.

    My experience is with ocean-going vessels, but I bet something similar applies to trailered boats … probably the trailering part, specifically launch and recovery. Who of us hasn’t found good sport listening to husbands and wives rail at each other as they try to get their boat in or out of the water. If I were a divorce attorney, I’d hang out at the ramp.

  2. Dan

    A little like golf, there is often little tolerance at the dock or launch (like a tee off) for those new people just figuring it all out. People need to be a little more willing to assist each other, rather than just steamrolling the newcomers.

  3. john ennis

    When everything financial and crashing occured the boating industry fought long and hard in Washington to be exempt from having to tell customers the total truth about financing. In doing so it crawled under the sheets with pawn shops and payday lenders..You are who you sleep with.

  4. CaptainA

    I think Captain Dan is 100% correct. If you want new boaters to stay in the sport/lifestyle then you need to get them properly trained. Dealerships do a very poor job in getting boaters trained. They seem to tell the new owners electronics will do everything for them.

  5. Ltime dealer

    In my opinion the #1 problem in boating is the boats themselves. The hulls and powerplants we have been selling the public don’t hold up, especially in salt water. An I/O is like a fire breathing dragon of money eating repairs and downtime. Outboards have a troubled past of blown powerheads. Hulls are going soft from using improperly sealed wood. I’ve seen too many boats flunk surveys because of failings in design and construction. It’s a joke. Why is it that they build cars that last but not boats ? Then you wonder why when you get a newbie into boating and he see’s firsthand the bottomless pit he backs away and stays away.

  6. steve

    In my opinion, (and thats all its good for) some people are looking at boats as a short term investment like a car. Now this doesn’t apply to all boats, but I have talked to many of our customers, and they seem to think this way unless they’ve owned one before. One guy even said that he was only keeping it for 2 years as it won’t be worth as much after that, so he could get his money back and “invest” in another for 2 more years. He wants to use the “New” out of it and let others have the headache. He currently doesn’t have a boat because of the economy, but that is my point. I think some people got into it to try to turn a buck if they can. In the mean time, they get to use the boat and not have the expense. He found out the hard way that it is more complicated than that.

    I also think that ALL new boat owners should be shown the in’s and out’s of what they just bought. I also think that dealers should be required to do that after the sale no matter how experienced a boater the buyer is. A lot of car dealers are doing that now as the vehicles are becoming more and more complex. Boats are getting to be the same way. I think they should be taken to the water and shown how to handle the boat the proper way, explain what is normal, not just grab the cash and kick them out the door. I know that most don’t just take the cash and run, but all it takes is a couple to give everyone a bad name.

  7. PGIC

    Thank you and thanks to Info-Link for shedding some light on boat owner defection. I did some work on the whole span (deciding to buy a boat to the end of the ownership/defection) back in the mid 1990′s resulting in the Funnel Chart.
    http://www.strengthtech.com/misc/funnel/funnel.pdf

    I thought about the Funnel Chart when you mentioned efforts to “plug the funnel” at the end of your previous article in reference to trying to prevent defections of existing boaters.

    While you have done some great work here, obviously more work needs to be done to gain additional insight into why people are leaving boating. We have had a least a little success at encouraging college students to select research projects in the field of boat propeller safety. I suggest the industry try the same approach and encourage college students to select research topics in the area of why and when boaters defect.

    We previously captured a 1998 student paper on the defection of martial arts students that lays some great groundwork in this area. The researcher, Hayden Patrick Breese at Massey University, surveyed 72 individuals from 5 clubs in New Zealand to identify what motivates people to participate and to withdraw in relation to different belt levels and the overall time they have been involved in the sport. He found there were different participation motives at different belt levels and different levels of overall time involved (like you suggest with the more boats owned). The study, while small and in another field, lays out a great framework to begin thinking from.

    Participation Motivation in ITFNZ Taekwon-Do: A Study of the Central Districts Region.
    Hayden Patrick Breese.
    Massey University
    1998

    http://www.itkd.co.nz/reference/essays/8-participation.pdf

    We also have a study on Participation Motivation in Marine Sports in Taiwan that may be of use as well.
    A Study of Participants Motivation and Constraint Factors Concerning Marine Recreational Sports Involvement at the South Bay Beach of Kenting Scenic National Park, Taiwan. Phd Dissertation by Wen-Chin Tsai. United States Sports Academy. March 2008. While a little more focused on the sport side, it also covers recreational and leisure boating to some extent.

    gary polson
    Propeller Guard Information Center

  8. Rod

    I find that the emphasis on the “monthly payment” rather than “purchase price” when boats are displayed may (more often than not?) lead buyers to buy a bigger boat than they are ready for. Too many newbies start out too big, get frusterated and leave boating. The huge appetite that most of today’s boats have for fuel is another turn-off. When it costs hundreds of dollars each weekend to “play”……the fun doesn’t last long!
    Others have mentioned that new boaters who are given lessons tend to stick around longer, I agree! In the good old days boating was passed on from parents to children, the parents had learned proper boat handling from their parents and passed that knowledge down. As boating’s popularity exploded i nhte late 1960′s and 1970′s many new boaters bought boats, people that knew nothing except what the dealer told them….., some dealers may have done better at training newbies, but many just turned the customers loose on hte lakes and ocean. The point is that far too many newbies made big mistakes due to not understanding basic seamanship…… they got frusterated, their families got frusterated…… the boat got sold. These people never knew that they were making mistakes, so they never learned how to avoid them……frustration and tempers flared! A requirement to license boaters won’t really help, it may save a few lives…..and that is good, but we need on-the-water-training and more emphasis on startign small, learning the ropes in a boat that is small enough to allow those mistakes to be relatively painless, then after a year or so….moving up to a larger vessel. Dealers could work together with the USCGAUX and the USPS to get new owners into a Safe Boating class, maybe sponsor a course at the dealership. The course offered should be the 13-week course ,not a 1-day and done class! The dealer could then bring in (or have one on staff?) USCG licensed Captain for on-water training on the cutomer’s boat. Yes, there is a cost, but if it means more sales (especially or that next BIGGER boat…..it may pay for itself?).
    Finally, I don’t really agree that people wh ohave owned multiple boats are more likely to stay in boating, I presently am on boat #3 (a sailboat) registered in my name, I’ve owned her for 12 years and I’ve been a boater since I was born 47 years ago (previous boat 2 years, boat #1, a sailboat, 8 years). My dad just sold his #2 boat in 2008 after 38 years of ownership, he has had boat #3 for 12 years (there was an overlap, his # was my #2, a small powerboat). We have no plans to leave boating……but my finances have been hurting for the last 11 years and so it will be a while before boat #4, but I’m staying in boating! I am one of those 3rd generation boatowners that I mentioned earlier. I have also taken many safe boating courses over the years……I learn from my mistakes because I see them and am embarassed by those mistakes.

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