The marine industry is under pressure; when industry leading brands are reducing their workforce by the hundreds or even thousands, it’s a clear sign that the tide has turned.
So what happened and what can you do about it?
During the pandemic, the Boating industry experienced an incredible lift. During my employment with one of the marine industry's largest companies, Brunswick Corporation, we experienced record performance - which is really meaningful considering the company is more than 150 years old.
Why might you ask? Consumers had the opportunity to distance safely, on a boat. The industry experienced a spike in demand, which paired with historically low interest rates made it very affordable to get into boating. As a result of the unprecedented demand, manufacturers ramped up manufacturing as quickly as possible to recover from the financial challenges at the start of the pandemic.
You may recall that at the start of the pandemic, many or most manufacturing facilities, globally, were shut down. This resulted in a delay of new boats being shipped in the market. Dealers were able to sell boats at full price and even in some cases above MSRP. Consumers were flooding dealerships and buying whatever was available to purchase. I distinctly remember one conversation with the Chief Revenue Officer of one of the largest dealership groups, in North America, that it was unlike anything he had seen or experienced in his 30-years in the industry.
I don’t have a statistical reference, but for those in the industry, it felt as though boating became America's favorite pastime. So what are the repercussions of something so great?
As Sir Issac Newton says, “every action has an equal and opposite reaction.”
So where are we now?
We're past the pandemic. We have an audience of first-time boaters who purchased a new boat when boats were selling for more than MSRP. For those that financed, taking advantage of historically low interest rates, they’re now likely upside down in the value of their boat(s). Interest rates have increased - not at historic highs - but they have increased, making it more difficult to buy, sell and trade.
So what’s the reaction in the market? We’re in what some would call a “market correction.” For those companies who successfully came out of the mid-2000’s recession, many are pulling a play out of that playbook. If you’re new to the industry and are missing a play from “that playbook,” here are some things to consider as you ride-out this market correction:
Take a hard look at expenses - this is business 101, but seriously - take a closer look. Your sourcing team and/or someone on your lean six-sigma team can and should be challenging recurring expenses. You should also assess where fixed costs can be made variable; this may include outsourcing some work at a higher cost-per-hour, but annually, reduces your fixed financial responsibilities.
Be smart with your marketing. Don’t stop, but make sure you’re making wise investments and that you’re measuring the effectiveness of your marketing. I’ve seen brands stop marketing, in the past, and the ramp-up period is long; particularly if a competitor leverages the decreased competitive investment to leapfrog your brand.
The world loves a good subscription - TV, food, boating, cars - you name it. You’re likely paying for more than you need to, so do yourself a favor and take a look. Or enter the subscription business - it’s a great one to be in - I’ll reference a couple of names to watch, in this space, later.
Make sure your staffing levels are aligned with your strategic priorities. During some recessionary periods, you’ll see disruptor brands accelerate towards growth. That may not be in your best interest, depending on where you fit in the supply-chain. No one wants to make a hard call on staffing, but as one of my early business presidents once said, “never waste a down-cycle.” It’s a good time to package a series of changes, when disruption is happening within your business; which may include reducing your workforce.
Now before anyone accuses me of being a cold and heartless b*tch, please know that I take people very seriously and I believe that every business, regardless of product or service, is in the “people business.” Simply put, you are obliged or obligated to make sure you’ve got the right people, in the right seat and set free those who are not so that they can find something better. Please make sure you’re consulting with an HR Expert on any planned reductions.
Are your operations streamlined? When times are good and money is coming in as it did during the later phase of the pandemic; it’s easy to say “yes” to new hire requests. This is a good opportunity to make sure you’re not overburdening your headcount.
I recently spoke to a friend who works for a national insurance brand that serves different audiences. Imagine a team dedicated to healthcare insurance and an entirely separate team focused on auto and home. Picture two separate floors in the same building and completely separate teams; doing the same type of work, for the same national brand name. Don’t be this company- it’s not good for your finances or for the customers that are being called by the same brand, but by multiple teams.
I’m passionate about optimizing a marketing organizational structure, perhaps because I had the opportunity to be a part of this type of transformation with my last employer. My brain instantly started calculating the opportunity costs of not only not cross marketing to the same consumers, but also the inefficient resource investment. Cringe.
Re-recruit your MVPs. It may sound silly, but typically, companies are typically so focused on the conquest for something new (new recruit, new customer) that they underserve those who are loyal and delivering on the company goals. I have worked at companies good and bad at this and those who are good unlock so much. Happy employees = happy customers. I’ve found that the most loyal employees have a real, trusting relationship with their leadership. Why is it so hard for some people to just be real people? I have no idea. Transparency and authenticity build trust - if you need help here, call me.
Pull your leadership team together for an Innovation Think Tank exercise; super creative and completely customer focused. I recommend a retreat-style meeting, out of the normal office environment. This can be done in a cost effective manner - leverage meeting space at a local library or co-working location. Get together, change your scenery and add some energy.
Next? Answer these questions: How can you serve your customer better? AND What would you have to do differently to double the price of your product or service? It will force you to stretch your minds to think at a different level. Will you end up with market disruption? Maybe. Minimally, you’ll start thinking of ways to serve your customer better and generate more money from those well-served customers.
Dream big and plan your disruption strategy. The marine industry is ripe for disruption. If you aren’t driving the future, someone else will. I think of brands like Freedom Boat Club, a brand I had the opportunity to work with during my time at Brunswick and wow. What an incredible business- extremely successful on multiple fronts and disruptive in the industry. I also think about BoatBot, a client of mine. It was started by two retired technology leaders who struggled with yacht service. They decided not to accept the status quo that “all yacht service is this hard” and as a result have developed a new solution to change the way service is managed in the industry.
I would love to be part of your extended leadership team; let me know how I can help.
Shelby Kirby
Kirby Consulting
Navigate Change & Experience Success - Inspired Marketing & Authentic Leadership
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