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....