Dave Cole was looking to buy a used boat so his family could get on the water while staying safe during the Covid-19 pandemic, but the demand from other would-be boaters made finding a ride challenging.
“I must have called 30 different people, but I was always the second guy,” Cole says.
The 37-year-old Massachusetts native had never owned a boat, but wanted an escape for himself, his wife, their 3-year-old son and their two Labrador retrievers.
“We’ve always been into the boating idea,” Cole says. “I’ve loved fishing for so long, and getting out there. I’ve had friends forever with boats. This summer, it just felt right to go ahead and make the move. The silver lining of this Covid was, alright, let’s try something new.”
Cole was among thousands of Americans this summer who, with leisure options stymied by the pandemic, bought boats for the first time, according to Info-Link Technologies Inc., a Florida firm that tracks new and used boat registration data. The surge reversed a decade-long pattern of new entrants shrinking, a trend that industry experts have long called alarming.
The industry hopes to convert these new buyers into longtime boaters, but problems remain: A surge of new buyers have snapped up inventory already strained by manufacturing shutdowns; dealers and manufacturers can’t find the workers to help meet demand for boats and service, and the persisting pandemic could make an unpredictable economy even less so.
Demand is still strong
The demand for boats during the pandemic blindsided the marine industry, which was already struggling to hire enough technicians to service boats and enough manufacturing workers to build them. Mandatory lockdowns in the spring compounded those problems by adding supply-chain disruptions and inventory shortages.
By August, new boat retail sales were up 8 percent from 2019, marking the highest sales volume in 13 years, according to Vicky Yu, senior business intelligence director for the National Marine Manufacturers Association.
“These record sales through the summer have already offset any pandemic-related losses, and the forecast for total new boat sales in 2020 is expected to be up 5 to 8 percent, surpassing even pre-pandemic expectations,” Yu says.
Pre-pandemic, the segments leading in new-boat sales were personal watercraft and towboats. Today, new boat sales are up across all segments compared to 2019, with double-digit growth in six of nine segments, Yu says. Those six segments include runabouts, a category that had dwindled from its pre-recession heyday to become smaller than the ski and wake segment.
The high consumer demand continued well past summer and carried over to the Fort Lauderdale International Boat Show, one of the industry’s few annual events that was held in person, says Jared Zimlin, business development director at Florida-based Elite Recreational Finance.
“This isn’t going to slow down quite yet,” Zimlin says, adding that his firm is busy doing soft credit pulls and giving soft quotes to customers because their boats aren’t coming in until 2021. “We’re making sure they qualify, but some of these boats are not going to come in until March or April, and obviously someone’s credit can change in that amount of time.”
The only challenge Zimlin sees in continued sales is the persistent lack of inventory. Brunswick Corp., for instance, announced during its third-quarter earnings release in October that it doesn’t expect to get pipelines fully replenished in 2021.
First-time buyers continue to surge
A hands-on guy with experienced friends who could help guide him, Cole preferred buying preowned, but began looking at other options when he saw a competitive market.
“This being our first boat, I thought about buying a new entry-level boat, but then I thought, wait a minute, let’s buy one used — a strong-running boat with a new enough engine that’s not going to give us too many problems,” he says.
After missing out on boating during May and June during the search, the family ultimately wound up with a 1995 Sea Ray powered by a 115-hp Mercury.
“I think I lucked out,” Cole says. “It was great during the pandemic. We used it a lot this summer. We got out probably a good 30 to 50 hours, really in just about two months. We were kind of going every day.”
The first-time buyer surge began in the summer months and gained momentum through the fall, says Info-Link Technologies managing director Jack Ellis.
“The percentage of first-time buyers so far this year is up across almost every segment, especially runabouts, small cruisers and pontoon boats — in other words, boats that are particularly appealing for family recreation,” Ellis says.
First-time boat buyers accounted for 31 percent of new boat sales through September, a figure that represents about 90 percent of 2020’s increase in sales, Ellis says. The percentage of first-time buyers was up from 26 percent the year prior. Put another way, so far, 2020 is tracking to see roughly 25,000 more new boat purchases compared to last year — and more than 24,000 of those can be attributed to first-time buyers.
“As of June, we’d already seen that reading go up to 29 percent — which, I thought, wow, that’s phenomenal when you consider the fact that it had declined year after year,” Ellis says. “My expectation was it was going to be similar to what we saw over the summer, but the number actually increased more.”
Matt Gruhn, president of the Marine Retailers Association of the Americas, says there also were countless customers who did private deals instead of going through dealerships. “Those are the ones that I think are where boating has the biggest opportunity,” he says. “That’s business we’re not capturing, customers we’re not servicing.”
Historically, 42 percent of first-time buyers sell their boat within five years and opt not to replace it, Ellis says, adding, “We’ve got this influx of first-time buyers, now what do we do to keep them?”
New challenges to overcome
As sales have exploded, CSI numbers that rate customer service have had an inverse relationship, Gruhn says. Customer satisfaction indexes dropped.
“The net promoter scores are plummeting right now,” Gruhn says. “The net promoter score is a measure of loyalty, and it’s based on the question, Would you recommend this product or service or, in this case, dealership to friends and family? What we hope to happen through all of this is that all these new customers say, ‘I love this, I’ve got to get my friends to buy boats, and I’ve got to buy a boat next year.’ These net promoter scores say they’re not likely to do that. So what’s the net loss on that?”
Dealers are overwhelmed, Gruhn says. Some dealers laid off workers at the start of the pandemic, and when business shot up, the workers didn’t return. They either didn’t feel safe or were earning more on unemployment. At the same time, CSI numbers declined first in sales, and later in service. “All those boat buyers need service,” he says, “and service is where dealerships were overwhelmed and understaffed already.”
Dealers hope for a net promoter score of 90 or 100 percent, which means customers promote the business. A score of 70 to 80 percent means consumers are neutral. Below that, the customers are detractors.
The third quarter net promoter score dropped to around 70 percent, and that was just among the dealers who paid for the service because they deemed it important, Gruhn says. He suspects that the percentage would drop 10 points if 50 additional dealers were added into the data.
Becky Thompson, president of Customer Service Intelligence Inc., which tracks CSI for 50 to 60 marine dealers, says customers understand that there’s a pandemic, “but that doesn’t mean they don’t expect feedback or communication from the dealership. They’re patient to a point, but they’re really unwavering with their expectations.”
Communication is key
Setting the consumer’s expectations at a realistic level is critical when facing challenges getting new boats, keeping on top of service backlogs, and getting the parts needed to complete service, Thompson says.
“Maybe that part is on back order, or due to Covid there’s a delay,” Thompson says. “Rather than calling that customer back and saying that, they’re just not calling. One, they don’t have time, but two, it’s never fun to call someone to say, ‘I can’t do that’ or ‘I don’t have that.’”
The newest boaters are the ones who need the most help adjusting their expectations.
“There’s a huge misconception that taking their boat in for service is just like taking a car in for service,” Thompson says. “They think they bring it in, the dealer will do the work, and they’ll go home in a few hours. That’s not how it works.”
Those unrealistic expectations are in part what’s fueling the decline in net promoter scores, Thompson adds.
“If your customers are not referring others to your dealership, then somewhere in the process you’re falling down,” Thompson says. “Dealers need to identify where in that process they’re falling down. It costs a lot more money to go and get a new customer than it does to keep an existing one.”
One possible solution to communications problems: Hire a college student to handle basic customer questions.
“At least the customer knows they haven’t forgotten and that someone is working on it, and they appreciate you telling them straight up what the situation is,” Thompson says.
During the off-season, dealers should encourage boaters to get work done so they don’t get jammed up in the spring and lose valuable boating time, Thompson adds.
“What we don’t want to see happening is the boating industry come out of here with a bad rap and a bad reputation,” Thompson says. “That will steer people away from the boating industry. We don’t want that after we worked so hard to get these new boaters.”
And if 2020’s consumer trends are any indication, more new boaters will arrive next year. Cole, for one, is happy with his experience.
“It was epic to have the boat as kind of an out,” Cole says. “We could get out and release the stress of dealing with Covid and all the predicaments it put us all in. It has been really enjoyable.”