You may have heard the expression that
“service sells.” According to
several boating industry sources, the lack of service may also be sinking sales
of cruiser style boats. More than
30% of boat owners found their last service experience unsatisfactory, according
to surveys conducted by the National Marine Manufacturers Association (NMMA). Automobile owners typically rate their service experiences as
satisfactory in more than 95% of the cases.
The NMMA says that poor service to boat owners has reached critical
levels and calls for a cultural change to keep current and future boat owners in
the boating market. Several smaller
boat manufacturers now offer “charm school” for dealer service and customer
service personnel in an effort to address this growing problem.
The boat manufacturers see the problem as a dealer problem and the
dealers see it as a manufacturer and profit problem.
Some industry insiders suggest that the
boating industry follow the automotive marketplace for an example of appropriate
service provision. This is a good
suggestion – we need to look at the automotive service industry in some detail
to see how well it might work for boats.
Most people, when they think of warranty
service on their car, think of taking the car to a dealer for that brand of car.
In general, if you buy a Ford product, you can take the car to any Ford
or Lincoln-Mercury dealer for warranty service.
If a dealer refuses to service your car under warranty (for example if
you did not buy the car from the dealer you are asking to provide warranty
service) you can call the manufacturer. The
manufacturer can bring some pressure on the balky dealer or arrange for another,
nearby service center to do the repair. It
is fairly common for smaller dealers to outsource warranty repairs to nearby
specialists, such as body shops or transmission repair.
A rule of thumb is that the smaller the market, the more difficult it is
to get satisfactory warranty service unless you bought that car from the
servicing dealer. This pretty much
defines the much smaller boating industry.
There are roughly 10 million cars and small trucks sold each year.
The automotive service industry
certifies its mechanics through a program called Automotive Service Excellence
(ASE) http://www.natef.org.
Certified mechanics must pass a comprehensive examination in at least one
of about forty different areas of specialization and have a minimum of two years
of experience in that area of expertise. Then,
a mechanic is certified for the next five years in that area of specialization,
such as 12-volt electrical systems. The
automotive certification program is administered by a non-profit organization
that is funded by automotive manufacturers and suppliers.
In most cases, an ASE certified mechanic can perform warranty service and
be reimbursed by the manufacturer for the repair.
The reimbursement is based on a set rate for that repair.
In the old days, mechanics used the Chilton manual to establish the time
required to make a repair. For
instance, the Chilton manual used to pay a flat rate of 1.5 hours to replace the
starter on a full-size Chevrolet. If
a mechanic could do it in 45 minutes, he or she made more money. If it took 2 hours, he made less. If the repair had to be redone, he received NOTHING.
That kept the mechanic honest. If
he did slipshod repairs, he was never paid by the manufacturer and, eventually,
could not receive referrals for warranty work. The Chilton manual flat rates are
set by an independent organization based on the actual time taken by its
technicians to do a repair. The
flat rate times changed based on the age of the vehicle, since older cars tend
to be more difficult to fix. Anyone
who has tried to loosen a rusted nut understands this challenge.
The boating marketplace is extremely
small. US boat manufacturers
sold less than 9300 cruiser style boats in 2003.
It seems extremely unlikely that most new boat dealers could adequately
staff a good service department for all of the boat’s systems. Boat manufacturers and suppliers could follow the mechanic
certification model for the various systems used on a boat.
For example, Volvo could certify a mechanic to provide service to Volvo
diesel engines. Then, this mechanic
can develop an expertise while servicing Volvo engines regardless of the brand
of fiberglass surrounding it. Certified
mechanics perform warranty service for the boat manufacturers rather than having
the owner take the boat back to the selling dealer.
The boat manufacturer would not pay a mechanic who made the repairs until
a reasonable time period elapses. This
is called a holdback and is common in the automotive industry. An independent organization could also be used to set the
flat rates for the certified boat mechanics, controlling the charges for a
service.
Certified boat mechanics would draw
non-warranty service by emphasizing their expertise.
Estimates for repairs are clear cut, not based on some shade-tree guess
of how long it would take. Some
dealers would love to get rid of the service department.
Other dealers could expand their profitable service offerings.
This suggestion has a major problem.
Who would determine when a repair had been satisfactorily made?
Owner satisfaction is not an acceptable criteria for determining adequate
repairs. Automotive industry
payments are based on performance to manufacturing standards.
That is, if you take a repair facility or manufacturer to court under the
lemon law, the court determines if your car has been repaired to manufacturing
standards. If the court finds that
the repairs do meet manufacturing standards, you lose.
Let me try to give another boating example.
Fixing a vibration means that the systems associated with causing a
vibration are up to manufacturing standards, not the satisfaction of the owners.
Owner satisfaction has to be handled separately, maybe through an
arbitration process.
Who would lose from this approach? The new boat dealers would lose unless they provided
certified service. In other words,
if the new boat dealer did not have its mechanics certified, they could not
perform warranty service. Further,
they couldn’t pad the repair bill to the manufacturer. The boat manufacturer would lose because it couldn’t stiff
the dealer by saying that a repair should take an unreasonably short period of
time. Manufacturers would also have
to state what its manufacturing standards are BEFORE the prospect bought the
boat. These published standards
would be used when owners sued the manufacturers for not making repairs to
standards.
The boat owner would be the big winner.
Not only would warranty service improve, there would be an objective way
to determine knowledgeable and less skilled mechanics.
Owners who did not like one mechanic could go to another, certified
mechanic in the same area. Mechanics
would also win in this scenario. They
could explain the reasons for the costs of a given repair with an independent
resource. Mechanics could continue
to expand their expertise by gaining certification in more areas.
One thing that will not change with this approach is poor manufacturing quality. Boat manufacturers that use substandard parts or improper designs will continue to cause owner dissatisfaction. Rudders that crack, electronic shifters that are improperly set up, or someone on an assembly line using standard steel screws rather than stainless will continue to cause major satisfaction problems. For that, we need a federal lemon law.
The suggestions outlined in the article
aren’t new. Several boating
industry analysts have suggested this for years.
The manufacturers and dealers resist changing, even as they watch their
market share drop along with owner satisfaction.
Profitability has not dropped, either for the dealers or the
manufacturers. However, industry
analysts see a major downturn coming in the boating market within the next two
years. This again is similar to
what happened in the automotive industry in the mid-70’s. Several major auto manufacturers failed (remember American
Motors and Chrysler). Imported cars
began to make major inroads in the auto industry during that time because of
better quality, service, and support. Now,
a Japanese car is the best-made car in the world, the Lexus.
Kids today don’t understand why someone would say that a brand is the
Cadillac of the industry.