Young Turks making wavesPosted on Written by Reagan Haynes
With service as a common theme, a new breed challenges the industry’s status quo
When Greg Glogow was given free rein to change the way Southern California-based Sun Country Marine did business, he dove in headfirst. In 2009, at the age of 26, Glogow became vice president of sales and marketing for Sun Country’s three dealerships.
It was about that time that Glogow offered what he called a “premium maintenance package” to a customer who was backing away from a deal. The customer was worried about whether he’d have time to take care of a yacht.
The concept has grown into what Glogow now calls “red carpet valet service.”
“Their entire ownership experience is as turnkey as possible,” says Glogow, who started as a parts clerk at Sun Country when he was 15 (www.suncountrymarine.com). “It’s not limited; it can be [tailored] to whatever clients need. From the fridge being stocked to … I have sushi chefs that come down and literally make sushi on these yachts.”
The approach has helped him move eight new Sea Ray yachts in 2010 and nine this year. Sun Country only began to sell Sea Rays in 2009. Glogow says he has sold a total of 60 boats during the 2010 and 2011 selling seasons, a figure that also includes new sport cruisers and brokerage vessels.
Glogow’s story is just one example of young people finding success by bringing new approaches to an industry that doesn’t always embrace challenges to the status quo.
In a slow-growth economy, people who are young, entrepreneurial and looking at the industry with fresh eyes might be on to something.
Doing it their way
Andrew McDonald rejoined Northern Marine, an Anacortes, Wash.-based yacht builder, in 2008. As the recession took hold, the company began to struggle. It declared bankruptcy in 2009.
Like many who find success during a downturn, McDonald saw opportunity in risk.
“There were a lot of different management processes I had envisioned for the company, but the company at that point wasn’t willing to change,” he says.
So in June 2009 McDonald, then 29, launched New World Yacht Builders “in an empty warehouse, basically, and one employee,” he says.
In 2010, Northern Marine founder Bud LeMieux reacquired Northern from bankruptcy (he had sold his share in 2006) and merged it with McDonald’s startup. The two began crafting trawler yachts between 54 and 118 feet under the Northern Marine name (www.northernmarine.com).
What followed has been “exponential growth,” McDonald says. Northern now employs 70 full-time workers and has purchased a warehouse across the street from its original site — a combined space of 56,000 square feet. The second waterfront building should be operational next year, he says.
Erik Smentek, 30, says he has effected change as general manager of Tilly’s Marine (www.tillysmarine.com) in Ventura, Calif. As at many other dealerships, Tilly’s has had to function with a limited staff, so Smentek says he handles everything from sales, warranties and registrations to marketing and public relations.
Smentek learned the ropes at Sun Country Marine, but his outlet was closed in November 2009. He says having Mike Basso Jr. as a mentor helped him figure out how to turn potential clients into customers. Having supportive owners at Tilly’s has allowed him to implement the strategies he has learned.
“Anyone can be in my position,” Smentek says. “It’s just that some people are scared to ask for stuff when the market’s down.”
Smentek says that even when times were at their worst, he was able to secure funding increases for marketing — from mailers to putting banner ads on BoatTrader.com for Tilly’s boat listings. He also bought ad space on benches and golf carts at the local course in an effort to draw new boaters.
His approach seems to be working. The owners recently bought another property in Orange County as part of an expansion plan for Tilly’s.
“No matter what industry you’re in, it’s so easy to be negative about everything that’s going on [because] there’s so much uncertainty with the economy and with the government,” Smentek says.
Smentek says that being unemployed for a year forced him to do whatever he could to keep food on the table for his 9-year-old son. That helps give him a perspective beyond his years.
“Sometimes hitting bottom gives you the motivation to take chances and go all out,” Smentek says. “It’s an assuring feeling when you have owners who trust you to do anything you want to do; whatever boats I want to bring in, or whatever I want to spend on advertising.”
Activating a brand
Travis Weisleder, a 36-year-old who is building his fourth startup, has taken a new approach with Layline, a high-performance sailing retailer he bought two years ago (www.layline.com). “We thought it would fit into our portfolio of [four] other businesses, which are largely online, Web-based businesses,” Weisleder says.
As someone who has already built and sold a large automobile business “for a pretty good sum,” Weisleder knows from experience that just putting a brand out there doesn’t work. “You can spend a ton of money to put your [dealership’s] brand on a car, but it’s a waste of time,” Weisleder says. “You have to find a way to activate that brand and turn it into revenue.
“We’ve taken a different approach than most of our competitors,” he says. “We literally have enclosed race car trailers and show up at events to support regattas and bring retail goods right there on site. It’s a little different than opening a traditional store and staying put.”
Like anyone else, sailracers have to buy products — sometimes at the last minute. So from Gill clothing to sunglasses to custom rigging, Layline tries to offer any product or service that regatta participants might need, Weisleder says.
“Our goal [at these events] is to break even, but it doesn’t always happen,” he says. “But the real question is, ‘How much does customer acquisition cost?’ It’s a whole different approach.”
Because the other four companies Weisleder runs are Web-based, he’s able to spread out the overhead by maintaining one facility. “I have one accounting office that handles five companies,” he says. “Any expense with running operations is back office. If you can have systems that can streamline that, well, that’s pure profit to the bottom line.”
For example, Weisleder ships with FedEx and he says he gets a good rate because he is shipping merchandise from five companies.
Part of Glogow’s approach to selling yachts at Sun Country Marine came from listening carefully to customers who weren’t buying. What they consistently told him was that price wasn’t the problem. It was the hassle.
“The only people that were staying in the market were used to an elevated level of service,” Glogow says. “They owned cars like Bentleys; they were used to grade A service.”
As for Sun Country’s “red carpet valet service,” what started as an idea to make one sale began to build and continues to grow by adding features, Glogow says.
“The philosophy behind it was: The construction worker making $150,000 a year or the fireman making overtime, that guy is gone,” Glogow says. “That guy’s gone, so the difference between the middle class and upper class when they’re making a purchase is how they’re taken care of — during the sale [and] more importantly, after the sale.”
Along the entire California coastline, Glogow has set up relationships with subcontractors — from engine repairmen to service personnel to people who clean and wash and maintain yachts. His challenge then became luring people who had never considered owning a boat because they thought it was too much hassle, Glogow says.
He began advertising at Costco and “putting things in front of people’s faces where it normally would not be shown,” he says. He wrote articles such as one in Orange County Living Magazine that had the big headline: “Affordable waterfront property?”
The thrust of the piece was that yacht owners enjoy an ocean view from a “mobile condo” that can take a cruise from Santa Barbara to San Francisco or anywhere else.
Sun Country also established a presence on local country radio stations and in magazines unrelated to boating — such as those that focus on high end real estate or cars. In addition to open houses and wine-and-cheese parties, Glogow began creating displays in upscale malls to demonstrate new technologies such as joystick control that “allows your 10-year-old kid to park a 50-foot yacht like a professional,” he says.
When people who had never boated before realized that the undertaking could be far simpler than they’d imagined, Glogow says, you could see things click. “I can’t keep them in stock, he says, adding that he is out of 2011 and 2012 models in his showroom.
Of the 17 2010 and 2011 sport yachts and yachts he has sold, three-quarters were bought by first-time boaters, Glogow says.
After he signs a deal, he drives to the customer’s office with the paperwork. Everything else, such as insurance, is taken care of as part of the valet service. The base yacht maintenance package, “the gold,” starts at $400 a month; platinum can run as high as $1,200 a month. That doesn’t include charges for fuel top-offs and maintenance.
Better yet, Sun Country no longer has to offer $50 gift cards to persuade customers to fill out Customer Satisfaction Index surveys for manufacturers, Glogow says.
“Now we’re charging them $400 a month and they feel obligated to fill this out because of the service they’re given,” he says. “So rather than paying customers to fill them out, they’re paying us for perfect CSIs. We’re generating revenue through warranty, service and, if we find something wrong we get to bill the customer, so it has endless revenue potential.”
Despite this level of service, Glogow has only four full-time employees in his yacht center. To ensure that the subcontractors are committed to the same level of service that he is, Glogow tells them he will pay whatever it takes for them to bump his customers to the top of their list.
“I make clear I want to be made a priority and I’m willing to pay for it, and what’s weird is they really don’t usually charge me more. They just make me a priority because they know they could if they needed to,” Glogow says.
He also brokers deals with marinas up and down the coast so he can get his customers in without a wait. He pays up front, so marinas often give him a deal. Then he can charge the customer the full rate.
He includes a provision in sales contracts that enables him to show customers’ boats for a year after purchase. Floorplan credit crunches become less of a problem, and he has access to almost anything he needs at any time along the coast. Customers appreciate it, he says, because their vessel is immaculate when they return to it, regardless of how they left it.
Glogow says his sales now account for 70 percent of Sun Country Marine’s business.
The first decision McDonald made as owner of Northern Marine was to fully customize his trawler yachts. Although many builders offer semicustom products, many have been reluctant to get into full customization, he says.
“We will build anything and everything [within] our niche of trawler yachts,” McDonald says. “If you want to move the pilothouse to the back of the boat or move it up 12 inches, we don’t care. We’ll do anything.”
To manage this, McDonald has resurrected an older building technique called bead and cove, which is similar to tongue and groove for hardwood floors, he says. That enables the company to avoid using molds.
A simple mold for one flybridge McDonald built would have cost $80,000, he says. But the cost using the bead and cove technique was less than $10,000, “so it’s a huge cost advantage and a quicker turnaround as well,” McDonald says.
The process is also more environmentally friendly because unlike foam molds, which would end up in a landfill after they’re used, the wood can be reused and smaller pieces of plywood can be recycled, McDonald says.
He implemented other smart management techniques as well. Adhering to lean manufacturing processes is easy for production boatbuilders, but it’s extremely difficult for custom and semicustom builders, McDonald says. But common-sense practices such as storing parts near the actual project or having mezzanines where tools can be stored at the exact height of the project so people aren’t spending time going up and down stairs all day make a big difference in productivity, he says.
When McDonald ran the cabinet shop for Northern Marine before its bankruptcy (he ran seven of the company’s 12 departments), he had 22 people working on the same project. He has since rehired four of those workers, and they are always working on at least four projects at a time.
Northern Marine also has expanded its scope of work to include repairs and refitting.
“If someone has a 100-foot boat they’re looking for a certain level of craftsmanship on repairs,” he says. “They’re still investing in their current boat, but they want to upgrade. It might be something as simple as new cabinetry or a new paint job, but to have all the same craftsmen who have won awards for their craft on boats upwards of $30 million, to have that level of work on your boat worth a million is nice.”
The repair and refit work helps keep Northern Marine’s employees busy during lag times and adds to work force stability, which in turn helps him keep his team intact.
McDonald says that whenever Northern makes an estimate it adheres to it, even if the real costs exceed the figure.
“We do all our work on a fixed-bid basis, and that’s totally new to the repair industry,” McDonald says. “Even if we do go over, it’s a gamble for us, but we don’t charge the difference.”
Customers like knowing the end price, McDonald says, and the fixed-bid system prevents them from having to pay for inefficiencies, such as a worker driving back and forth to fetch a forgotten tool — a time waster that usually would show up as a labor charge.
The new facility will become a separate repair arm of the company with waterfront dockage, McDonald says.
The whole approach is leaner, with not much middle management. “The best way I can explain it is, with a younger company and young management, there are a lot of fresh ideas,” McDonald says. “The boat industry is older. There are not a lot of young people coming in … and obviously the old way wasn’t working. I think anyone could’ve resurrected what was Northern and put the same production in place, with the same management, and they probably would’ve failed.”
Willing to learn
One common thread that runs through all of these young go-getters’ speech is that although they’re confident, they adamantly praise a mentor they have had and seem to welcome new ideas.
“Not only are we a younger company, it’s a younger group of people as well … so there hasn’t been a time when anyone says, ‘This is the way we’ve always done it,’ ” McDonald says.
Having his mentor, Bud LeMieux, on board creates a great dynamic, McDonald says.
Smentek says his background in sports helped groom him for business and helped give him the background necessary to learn from Basso at Sun Country.
“I’ve learned from the best and I’m not afraid to say it,” Smentek says. “Just like in sports, you have people who are as good as you, but they’re not willing to listen and learn, and they’re unable to adapt and change when coaches try to teach you. When someone better than you gives you an idea you’ve got to just be able to take it as constructive criticism.”
This article originally appeared in the November 2011 issue.