Tuesday, October 14, 2008

Dual Citizens, Part 2

I left off Part One with these questions:
So, some boaters have actually, voluntarily ponied-up double what the networks are charging. Can you imagine how many more might be sold on that price, if only someone would put some effort into marketing a membership product at that price?

Obviously, there are far more boaters who are shopping price on every purchase, and the marketing guys have to keep that in mind. But there is a nuance here that I fear has been lost. If you sell a product, and you that some of your customers are willing to pay double your price tag, what have you missed?

And now, to continue my thoughts: let me begin by affirming that a large majority of the boaters who are buying memberships are very price conscious and consider (indeed, even obsess over) the price of every single boat related purchase. Price, however, is not the only consideration for a final decision; perceived quality and brand name recognition also play a part in buying decisions. I have never, ever, seen a Boat/US Insurance ad that claims they are the cheapest insurance. And for good reason – you don’t want to be selling the cheapest insurance; you want to be selling the best insurance.

When your sales department focuses on price, Price, PRICE, they do so at the expense of things like brand name and quality. Please notice I said sales department, not marketing department. The two national brands do market brand and quality, but their marketing people don’t set the price, they just sell the product at the price they are given. This is the point I was trying to make when I said, “if only someone would put some effort into marketing a membership product at that price [of two memberships]…” No one has given the go-ahead to market the $300 card, so the Dual Citizens have invented their own.

For years the major brands have grudgingly proceeded with tiny membership increases, always afraid of losing customers to the other team. Why do I care? Because requests for increases in contract towing rates are generally deflected as beyond the capasity of the gross memerbship revenue.

The legacy of holding membership prices down has finally backfired, and now prices are so low (see part one for a discussion about adjusting for inflation) that boaters are actually buying BOTH, rather than choosing one over the other -- if only because they find the annual fee is so ridiculously cheap when compared to costs of non-member service.

I am not advocating we return to the multitude of "level/limit" cards like the old $150/$350/$500 days. No sir, what we need is the super, super-duper and Nuclear cards. The Nuclear card would come pre-authorized for the boater to use any tower he wants up to $5000 per incident. It's cost? $300/yr.

As long as we’re on the subject of marketing - I wish they would stop publishing ridiculously low non-member rates in the sales literature, as Boat/US has been guilty of. Phrases like “These charges average between $150 and $200 per hour!” are quoting the very lowest rates, not the national average. Towers in New England are all getting over $200/hr, some as high as $350/hr. Quoting unrealistic non-member rates makes it harder to sell the membership concept, not easier. The networks wouldn't have an agenda to hold the non-member rates down, would they? Nah....

Friday, October 3, 2008

Derelict Boat Issue Hits the Big Time

....as in Time Magazine, which printed an article titled America's Underwater Junkyard this week. Here is a snippet from that article:

Legislation is slowly beginning to change. Since 2003, Washington State's vessel removal program has led a crackdown on derelict boats, using ramped-up boat-registration fees as funding for the program, which has so far cleared 188 boats. "It gave us financial capability plus the legal hammer if we needed to use it," says Doug Sutherland, the state's commissioner of public lands. Other state officials have expressed interest in Washington's model. In September, the California legislature passed a bill to increase fines to owners of derelict vessels. And last year, the U.S. House of Representatives passed an act that
gives NOAA funds and authorization to remove abandoned vessels damaging coral reefs.
I've been harping about this issue since the second blog I ever put up way back in February of 2007: Derelict Boats create income opportunity.

So, two thoughts from me today:
A) I hope that C-PORT keeps abreast of this issue, as I predict that federal money earmarked for this kind of work will probably flow through the USCG, and we should ask that the funds be spent through competitive bidding to private industry, rather than just federal grants passed down to local and state authorities. If a few million dollars for derelict vessel removal ends up in the hands of places like Orange County, CA, you can bet our industry will never see a nickle of it.

B) I predict that in the next 10 years, derelict vessel retrieval and disposal will become a multi-million dollar industry, fueled almost entirely with public funds. A large portion of abandoned vessels are under 60' in length, and our industry has the resources to retrieve a bunch of those.

However, getting this kind of work will require determination and active particpation on your part, rather than just waiting around for the phones and radios to announce a job opportunity.

All indications are that next year will be a slow one for recreational boating, and that will mean less towing. If you have boats and pumps and divers and lift bags and manpower, you should begin planning to find alternative ways to keep those resources busy.

Here is one idea that I might try if I knew where there were derelicts in my AOR. I would go out and find these boats, take pictures, record the LAT/LON and the physical particulars like length, construction and condition. I would put all that into a database. Then, I would create a document that summarizes all this information and get that document into the hands of every single agency I could find.

Two things might happen. Someone might actually want the details, and I would offer to sell my data for a fee. Even better, decision makers at the agencies will probably view my company as one of the experts in this field, and that increases my chances of getting some of the work.