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.”