The digitisation of our world has been a forward march for years now. Everyday life items are being digitised one after the other, from books to ebooks, CDs to mp3s, DVDs to Netflix, road maps to GPS, snail mails to email, from outside stores to online stores, etc... But material items are not the only things that are being digitised, services and processes are too; financial transactions, currency, communication, education, entertainment, advertising and sales.
Despite this exponential and massive switch to a digital world, the boating industry seems to be quite slow when it comes to adapting.
Let's try to understand the reasons and consequences of this digitalization and help you strive in today’s digital world.
Three weeks ago at the Annapolis boat show, I had a chance to sit inside the new Tesla model S. I really liked the car. It had a very sleek design, roomy interior, tons of storage space and a StarTrek-like navigation and monitoring system. I recently decided to get more info online about the Model S and take a sneak peak on Tesla's website. As soon as I entered the website, I noticed 3 main things on the home page:
- A red Tesla logo on the top left of the page
- A beautiful photo of the Tesla Model S in the background
- A red ORDER button near the centre of the homepage
While the company logo and background picture might sound normal to you, you might be surprised to see an order button to purchase a 75k luxury product on the homepage of a car manufacturing website!
Well, not so surprising anymore, as we live in a world where everything is being digitised. So how does the boating industry adapt to this digitalization? Boating is a very mature industry. Engineering and product development have progressed significantly since the last few decades. But the way to market and sell the boats has still remained quite conservative.
Let's try to identify the main reasons for this digitalization, and understand why in the near future, boat builders will eventually be steered into the digital direction for their sales & marketing process.
In today’s fast-changing world, the consumer has access to more choices and information than ever. For instance, a child in Africa with a smartphone today has more computing power and access to information than President Clinton had fifteen years ago. This exponential growth of information is perfectly depicted in a book that I read recently. It is called "Abundance" and was written by Ray Kurzweil, the Chief of Engineering at Google. Ray explains the reasons of the current progress and digitisation in our society. He states that three metrics can help us explain this switch: Exponential growth of information, Exponential growth of technology and Exponential growth of internet speed and access.
Let’s start by having a look at the growing affordability of technology. The cost computing power for a 1 million transistors processor went from over $220.00 in 1992 to less than $0.05 today.
Let’s look now at the cost of bandwith. It went from over $1200 per GB/sec to less than $20.00 today.
And finally, the cost of data storage. This went from $569 to $0.03 during the same period.
While the cost of computing, bandwidth and storage are becoming virtually free, the growth rate of internet users is growing exponentially. The percentage of the US population connected to the web went from less than 5% in the early 90s to nearly 90% today.
And this trend is not slowing down. Kurzweil talks about the Rising Billion – the 3 billion people in developing countries who'll be connected to the Internet by 2020. This massive flow of users will inject trillions of Dollars into this new online economy through any different type of sectors.
So now that we understand the reasons for this digitisation, can we identify what the major changes in the boating industry will be?
From print media to digital media.
A few weeks ago, while at the Cannes Boat Show in France, I met the Director of a new yachting company. I knew he had a lot of experience in the industry as he used to be the CEO of one of the biggest media group in the boating industry, managing over 100 employees and distributing some of the most popular magazines in the yachting world. After spending a few minutes chatting about business and listening to his valuable advice, I asked him what types of promotion he was doing to market his yachts. He replied: "I am not doing any print at all. I am getting 10 to 100 times better results online."
I was amazed. The previous CEO of one of the biggest press companies in the boating industry was telling me that he didn't do any print advertising anymore because he was getting ridiculously higher results advertising online.
I have nothing against magazines, nor am I saying to refrain boating companies from advertising in magazines. I heard quite a few times that boat and yacht owners liked the magazines, but the questions is ‘How long will they still be using them for?’ I even encouraged clients to maximise their print advertising and put together a checklist to help clients increase ROI on print advertising. (See article:http://www.yachtsalesacademy.com/save-thousands-in-print-advertising/ ).
Another example of the significant change in consumers behaviour came from a conversation I had a couple of weeks ago with a client and CEO of a well-known yacht company. While I was interviewing him for my upcoming book: "The 30 Best Sales and Marketing Secrets to Boat Sales", he told me that he remembers the days when they had an article or an ad published in a new magazine. They could see the difference from the day the magazines hit the stands as the phones were ringing much more than any other day of the month. But today, they don’t notice a difference anymore as prospects are probably as well online, looking at their favourite boats on their clients' websites, social media or any multiple listing sites.
From attending boat shows to online boat shows.
Boat shows are a wonderful way to celebrate your passion for boating; you can step onboard new boats and learn about the industry. Boat Show attendance has declined over the past few years. While a lot of people blame the economy climate, I believe that it is not the only reason the attendance is going down.
My suspicion was confirmed last year at the Miami Boat Show. I talked to the guys at Yamaha, who are a major player in the boating industry and have a great understanding of the market and boating intelligence. They told us that they noticed attendance at boat shows had dropped over the last 5 years. We asked why that was and they said that people nowadays find enough information on the Internet. A person that used to attend boat shows every 6 months will now attend maybe once a year, even once every 2 years simply because they already received the information they were looking for online.
The interactivity, attention to details and possibility to visit products online are becoming almost unlimited. That is what our company, Prestige Vision Inc, has specialised in for the last 5 years.
6 years ago, I was a boat broker and was tired of spending tons of hours in the car from marina to marina showing boats to prospects who had absolutely no idea about the product.
So I thought, what if they could visit the boat from the comfort of their own home? I wanted to focus my energy on dealing only with pre-qualified, pre-motivated and pre-interested prospects and send hull kickers away.
After capturing over 1500 virtual tours of new boats and yachts, we thought that it was time to let the consumers enjoy all this content online and decided to launch Boat Show Avenue, the world largest online boat show.
The purpose of Boat Show Avenue is to offer the consumers exactly what they could experience at boat shows:
- Step onboard new boats
- Discover boating industry news
Again, we love boat shows, and we hope that they will be around for long. I am not saying that boat shows are not necessary or should disappear. They are a wonderful event to celebrate the love of boating and socialise with people who have the same passion & interests as you. But what we are saying is that the consumers will find ways to compensate for the boat show experience online and boat builders will need to get ready and adapt their strategies for this.
From Brick and mortar dealership to online showroom and digital dealership.
I recently read a great article from Henry Foy on www.ft.com
It describes a new showroom launched by Audi in London’s Piccadilly. The store features only one car model, usually a popular one such as an A8 or RS8. The rest of the small store is composed of giant television screens controlled by touchpads, where the carmaker’s complete range of models can be customised, viewed, repainted and accessorised. There are no mechanics in overalls, but just salespeople in suits. The dealership is located miles from the nearest warehouse, in one of London’s most visited streets, where customers can browse and interact with the premium brand’s range digitally, and buy the car without ever physically stepping into it. Audi thinks this shop marks a new future for car retailing.
According to Frost & Sullivan Consulting, Global online car sales will increase by eight times the amount between 2011 and 2025 to almost $4.5bn. In more advanced economies such as the UK and US, online sales are expected to represent over a quarter of the market by 2025.
Profits for traditional dealerships are becoming harder to maintain as a new generation of buyers look to shop for vehicles in the same way they purchase music, clothes and any other products or services online. The days where families or future car owners would spend a weekend browsing several showrooms to choose their new car are over. A few clicks on the internet can show customers the products on offer.
Just like the Tesla website, automakers are packing their websites full of details, clear prices, selling points and all other necessary information, which makes an appointment with a car salesman obsolete.
And for manufacturers, direct online sales cut out a large amount of overhead costs and boost their margins. According to a study by market researchers GfK Automotive, over 30% of British under-35 year-olds would buy a car online, while 80 percent have researched the car model they want to buy before they even set foot in a dealership.
Manufacturers are taking the hint. Nissan, Jaguar Land-Rover, Mini and Mercedes-Benz have all opened digital stores similar to Audi’s across Europe, while Ford, Peugeot, Citroen, Fiat and Renault have launched websites for customers to buy cars from them directly.
According to Foy’s article, Renault itself closed down a third of its UK dealership network in 2012. Other brands such as Ford and Peugeot have reduced the number of dealerships too.
It doesn’t mean that the typical dealership model will need to disappear. They will have to adapt to this new change from consumer behaviour and focus more on repairs, parts and services, which are typically higher-earning business operations than new sales. Dealership facilities could be moved into less costly areas, while the major digital store can be situated in more expensive city centres with higher traffic.
According to Audi, their digital showroom has been a real success. In its first 10 months, they reported a 60 percent increase in new car sales, and a higher average sales price than the company’s UK dealership average. Fifty percent of their customers are even buying cars without a test drive. They become educated about the product and already know what they want before they even get there.
It is simple to explain why everything is being digitised today. It is cheaper, faster, easier, and more convenient. So how are you planning on adapting your business model to this new era? We would love to help you make your transition to a more digitised sales and marketing approach. Contact me today and let’s discuss how we can assist you in leveraging today's technology to your advantage.