This transcript was generated with the help of AI and may contain some errors.

Cecil Cohn (00:00):

There is all sorts of opportunity moving forward relative to what our mobile app will do tomorrow versus the really strong but core functionality we’re vining today. Then I think the other is really doubling down on what these remarkable member experiences look like tomorrow,

 

John Gough (00:17):

Whether you’re going to market through dealers, distributors, or some other partner channel, the mediated sale is complex. We call it B two, B two X, but the leaders in the industry are the ones who are making it look simple. I’m John Goff and I’m Kyler Mason, and this is why you win. Presented by Element three.

 

(00:35):

Our guest today is Cecil Cohn. He’s the president of Freedom Boat Club and Freedom Boat Club is a slightly different business than some of the OES and dealers that we’ve had on in the past. They’re actually a subscription model where customers get access to boats around the world. One of the really interesting parts of this conversation was how the Brunswick Leadership saw an opportunity based on some research that they saw and they have entered this adjacent market, and so Cecil describes these strategies that are getting access to these new customers who wouldn’t really be boat owners, but want to be out on the water and they’re having these excellent experiences and they’re telling their friends about it, and it’s really a value add both to the Brunswick portfolio but also to franchisees, to the customers and to Freedom Boat Club as a whole. It’s a great conversation. I hope you enjoy it. Cecil, it’s great to have you today. Thanks for joining us.

 

Cecil Cohn (01:29):

Yeah, thanks for having me. I’m super excited to be here.

 

John Gough (01:31):

You’re a unique guest on this podcast because we talked to a lot of dealers and we talked to a lot of OEMs and Freedom Boat Club is part of the Brunswick portfolio, but you are neither dealer nor OEM. You sort of exist outside of that ecosystem. Can you explain how you fit into that?

 

Cecil Cohn (01:48):

Yeah, absolutely. Freedom Boat Club is a subscription boating model where members can join paying a one-time initiation fee and ongoing monthly dues, much like other subscription models, and in exchange for that they get unlimited access to a diverse fleet of boats and so rather than buying physical product typically from a dealer like you’re alluding to in this case, members are joining the club and having unlimited access and really subscribing to the experience rather than the ownership of the boat

 

John Gough (02:19):

And it makes a ton of sense, especially I imagine you’ve got a big traveler audience, maybe some audience that is local but they aren’t ready for ownership or they’re trying out different models. Am I getting that right?

 

Cecil Cohn (02:32):

Yes. One of the things that was really attractive about the boat club segment in particular for Brunswick is there was a lot of consumer research that started in, I would say like the mid 20 teens. Brunswick acquired Freedom in 2019, but there was even research surfacing and we were doing our own research internally as well. That was signaling that the consumer joining the boat club was a different consumer than that which joined or that bought boats and so NMMA and Discover boating hired, et cetera, that were showing that over 90% of the people that joined a boat club had no intention of buying a boat when they joined the club. The value to Brunswick and really to the whole industry is this was truly growing the pie and making it up such that we could expand boating participation and diversify it moving forward.

 

Kyler Mason (03:21):

Have those stats held true the 90% that did not intend to own a boat? Tell me about that.

 

Cecil Cohn (03:27):

Yeah, absolutely. We specifically ask if they were interested in buying a new boat. We do see some overlap between specs that are interested in potentially entering boating participation via used boat ownership and they’re choosing that versus boat club, but new boat specs are typically a very different sumer set. Then the other thing that’s really nice is on the tail end of the club, we have over about an 88 to 90 plus percent retention rate of our members on an annual basis, which when we benchmark ourselves against other kind of higher ticket subscription models, we see that we’re doing very well on that front. When we compare ourselves to private aviation like a Net Jets or a Wheels Up or folks like that that are at a higher price point than Freedom but don’t represent subscribing to Peacock or Netflix or something like that, which is a much lower price point than Freedom.

 

(04:18):

When we see these higher ticket items, typically what’s publicly available, we see retention rates in the seventies and eighties percent ranges, and so for Freedom to be approaching 90% is truly a world-class in that regard, but of the people that leave each year about one in five to one in 10 of them are leaving because they’re so sold on boating that they want to own their own boat. It’s like this perfect story that you couldn’t concocted any better than what the research tells you where you’re attracting a totally new consumer into the space on the front end, but a small portion of the members are graduating into boat ownership, which is great for the industry.

 

Kyler Mason (04:53):

That’s crazy high. I would’ve never have guessed that. What do you attribute to that being where it is? I

 

Cecil Cohn (05:00):

Think really you’re talking about the retention rate of the membership?

 

Kyler Mason (05:02):

Yeah, the retention. Yeah.

 

Cecil Cohn (05:03):

Yeah, absolutely. I think it really comes down to we’re in the experience business and so we work tirelessly every day. If you were to ask me what is our strategy here, what has been our strategy and what isn’t moving forward related to Freedom, I always say for years we’ve been boating made simple has been our tagline, and I always say our strategy needs to be made simple too, and so how I depicted is we want to be everywhere that people want to go boating and we refer to that as our path to unrivaled scale and we want to make sure that every day, every time with every member or prospect, we’re delivering a remarkable experience and it’s that latter piece where we’ve really invested a lot of time, energy, and resources in order to make sure with now over 400 locations that we’re delivering that remarkable experience in a really consistent manner.

 

John Gough (05:50):

Cecil, the way that you are framing that as a hospitality take makes a ton of sense to me and on this podcast we’ve talked to a bunch of power sports people who are very much in the throes of figuring out how to grow the industry, not just their piece of the pie, but the pie as a whole and this take on looking at that research and people who would never be boat owners and opening up that segment and it sounds like in some cases changing their mind is awesome, just remarkable.

 

Cecil Cohn (06:21):

Yeah, thank you. It’s something we’re really, really excited about and although we don’t have great data, we know that we have roughly a little over 60,000 memberships. Oftentimes two partners will join or sometimes it’s a parent, then a child will join on one membership, and so that means that of the 62,000 paid memberships, there’s a little over a hundred thousand people worldwide that call themselves Freedom Boat Club members, and we know they go on 600,000 boat trips per year, but what’s really exciting is one of the things Freedom members love the most is they want to understand what the capacity tag is on the boat because they want to bring all of their guests and friends, and so when you think about the multiplier effect associated with not only the 600,000 plus boat trips, but all of the friends that they’re bringing on the boat each season, it becomes really powerful as to what the reach is to Freedom’s role as well as other boat clubs in helping propel the marine industry forward and continue to remain and even enhance the relevance of boating to the general consumer set.

 

John Gough (07:23):

Yeah. Before we started the recording, you were talking about extending into international opportunities, but this comment about unrivaled scale has me interested about North America. What does unrivaled scale look like?

 

Cecil Cohn (07:39):

Yeah, absolutely. We have about, and we’re actually, it’s an interesting topic as well. We’re kind of two businesses within a business on the backend. We have about in North America, 17 clubs that represent over 130 locations, so when you join as a member, when you join, call it Freedom Boat Club of Southwest Florida, you have unlimited access to about 20 or 25 locations that’s banned from Sarasota and Bradenton down to Naples and Marco Island, but then you have reciprocal access to all other Freedom clubs in North America and worldwide, and you can use each location outside of your home club of locations. You can use each one of those up to four times. So in theory, if you were southwest Florida and there’s another 400 locations, you could go boating 1600 times outside of your home club per year, which would be a mathematical feat, but nonetheless fun to think about Challenge

 

John Gough (08:34):

Accepted.

 

Cecil Cohn (08:35):

Yeah, exactly, and so those clubs are a combination of being run by Freedom Boat Club corporate as well as in North America, about 60 franchisees, owner operators, and then overseas we have another, roughly speaking about 40 locations in the AMEA region with particular focus, the United Kingdom, France and Spain, and then we a couple years ago launched the Asia Pacific region with particular focus in Australia and New Zealand, so you could imagine we have, when we talk to our members in annual surveys, they’ll come back and I think it was something like 40% of our membership we’ll take a look at where there are Freedom colocations worldwide and plan their annual vacations or whatever the case may be, speaking to the travel aspect. So that’s one of the advantages associated with Freedom is the scale that we’re generating provides a huge benefit to the membership relative to all of the places you can go, and then also even at the location level, the larger we get, the more boats we can offer at that location and the more diversity within the fleet we can offer as well.

 

Kyler Mason (09:41):

How do you prioritize or balance member growth versus marketplace growth? Is one leading the other for you in the way you’re thinking about this?

 

Cecil Cohn (09:51):

Yeah, we do a lot of work. We recognized we’ve grown really rapidly, so when we take a look at where, when Brunswick acquired Freedom in 2019, the club was network wide, 170 locations and almost all of them were in North America, we’re now 430 something locations. We were at 20,000 memberships, we’re now 62,000. We were 2000 boats in the fleet. We’re now between five and 6,000 boats in the fleet, so we’ve grown at a really accelerated pace. COVID in North America specifically created a big tailwind in the business, and so one of the things we recognized as we were coming out of the COVID boom was we need a more systematic way to track the satisfaction level and ultimately the loyalty and retention of our membership, and so we implemented Qualtrics one of the leading reputation management platforms, and it provides us with the ability to survey our members at various points in their consumer journey and be able to share that data across all of our corporate and franchise club owner and operators to be able to share best practices around which clubs are generating the highest net promoter scores. After every trip, we’re getting a csat, a customer satisfaction score, and we have benchmarks that we’ve established, and it’s amazing when you get 60 franchisees in North America together and you start sharing some leaderboards and scoreboards how some creative juices and some competitive energies come out, but we’re all pushing for the same thing, so it’s a very collaborative or constructive level of competition.

 

Kyler Mason (11:21):

How are you balancing franchise growth versus Freedom owned growth?

 

Cecil Cohn (11:27):

Yeah, absolutely. When we acquired Freedom in 2019, it was about 20% of the network was corporate and 80% was franchise. The number now is closer to a 50 50 split, and what that’s born out of is we believe that our franchisees are really well equipped and very talented at scaling clubs from scratch, but then in parallel with that, we find that the corporate clubs, which tend to skew now toward larger kind of tier one and larger clubs that we have resources we can bring to bear to run clubs at scale. The other ingredient there is I believe, and this is completely subjective on my part, I believe our franchisees are the best in the business and they’re one of the main reasons why Freedom’s been so successful, but any entrepreneur, I can’t tell you how many times I’ve interacted with our franchisees individually where they come back and tell us, I’m really interested in scaling a business, I’m not interested in managing it once it’s at scale, the entrepreneurial juices are flowing and things of that nature, and so it becomes a situation where once the club kind of gets up on plane to borrow a voting analogy and it kind of managed in steady state, that tends to be a better opportunity for corporate.

 

(12:37):

So we don’t really want to extend too far past this 50 50 split because we don’t ever want to get to the point where the franchise business becomes marginalized in our approach. It’s an absolutely critical piece of our growth strategy moving forward, but this 50 50 split seems to be generating a great outcome.

 

Kyler Mason (12:55):

So is it like an exit strategy for them to sell to corporate or

 

Cecil Cohn (12:59):

It can be among others? We have examples where franchisees will sell to corporate, so corporate used to just be Freedom of Southwest Florida and we now have 16 or 17 clubs, some of which we’ve organically entered in whitespace and created ourselves, but most of which I think there are about a dozen acquisitions over the past four or five years. But then in parallel with that, we also have franchisees that will sell to each other, so there’s various folks that have done really well and then they want to sell one club and go buy a new open territory or want to buy an existing one that’s relatively small that they can scale, and so folks are kind of doubling down, taking some chips off the table, putting some money in the bank relative to retirement and then rinsing and repeating, which is really exciting.

 

Kyler Mason (13:40):

Wow, good for them. That’s cool. That’s an awesome opportunity that you guys have just created for so many people

 

Cecil Cohn (13:46):

Too. We also, maybe a third category there that I forgot to mention is we also have members that are small business entrepreneurs themselves and they get so sold on the experience themselves. They say, well, I not only want to be a member, I also want to become a franchise owner, and there’s a number of examples

 

John Gough (14:01):

Throughout the network that way. The strategy perspective that I’m hearing is this really cool network economy thing that I don’t think happens in most franchise businesses. If I’m going to go out and own a Chick-fil-A, that’s money in the bank, those things of just print cash, and that’s cool because people recognize Chick-fil-A and there’s brand power there, but adding more locations makes the business itself more valuable and it makes me want to be a franchise owner because it’s easier to sell and easier to get people from all over the place to come buy from me directly and this very virtuous cycle in the way that you’re describing, and I think I’m just having a hard time thinking of other examples in a franchise model where that happens.

 

Cecil Cohn (14:49):

Yeah, I think that’s right. Parallel would be a network effect would be perhaps how airlines or hotel industries work, where as they add new airports, it makes their whole network more valuable. They get more people from different point A to different point Bs, so to speak. It’s a very similar concept, but in a bit of that’s more of a consumer facing, which this also benefits less so about the airline and it being run differently that way. The unrivaled scale, the delivering remarkable member experiences are clearly the two main elements of our strategy. I think it’s one of the emerging themes that’s going on within Freedom right now is the power of digital as a differentiator, and that’s not like some sort of tagline, I just thought of that in the moment, but the whole, yeah, exactly. But when we acquired Freedom in 2019, the tech stack that we inherited was outdated and the former owner of signaled all of this to us as we navigate moving forward.

 

(15:46):

The first place we started was the reservation system, which is really the nucleus of the business and what connects all of these clubs run by different franchisees together, so members have a seamless experience when they go to reserve a boat, they can do so at their home club and locations or any reciprocal club and it should be a seamless experience. Then what we said was, okay, well, now that we have a more contemporary reservation system that’s built on a Salesforce platform, we said, okay, well, most folks don’t want to go on their laptop on a web-based reservation system. They really want to use their phone on a mobile app, and so that’s where the launch of the mobile app recently first on iOS devices and then just in the past few weeks on Android is just a game changer where it’s fascinating to use that as a strategy.

 

(16:30):

The team that developed the mobile app, instead of just saying We need a mobile app, they said, well, what business problem are we ultimately trying to solve? And they said, well, we know that if our members go boating more frequently, they’re much more likely to be retained and be satisfied in the club, so we want the mobile app to make it easier to book more trips, and that’s where I think two elements of the strategy that are still unfolding moving forward is if we have 600,000 or 610,000 trips across 60,000 memberships, that means each membership’s going voting about 10 times per year, and so the question is how do we get them to take that 11th trip? What’s really exciting and interesting is what’s the 11th, 12th, or 13th experience that is a little bit different than what you’re experiencing? And so that’s where, and it brings back the power of the franchise network.

 

(17:19):

That’s where starting to experiment with boats that the typical fleet is about 19 to 25 feet, but that’s where experimenting with 25 to 30 footers come in play on an many boat members, the opportunity to upgrade into a larger fleet or Brunswick acquired flight, the e foiling boards where you have ring right above the water, and we launched a series of events last summer where we did the take flight tour and we had flight instructors come with boards to locations across North America and provide members the ability to sign up in a pop-up event style for a long weekend and be able to sign up, and it was something exclusive to your Freedom membership. You had access to this event where you could bring a few friends and go and learn how to flight board. So it’s those sorts of experiences where if we can continue to get people on the water but do it in new and different ways, it just brings more and more value to the membership and enables them to stay more satisfied to tell their friends about it and to stay in the club longterm.

 

(18:17):

Yeah, exactly. But when we acquired Freedom in 2019, the tech stack that we inherited was outdated and the former owner of the business signaled all of this to us. He was a tremendous part and one that we keep in touch with to this day, but as we navigate moving forward, the first place we started was the reservation system, which is really the nucleus of the business and what connects all of these clubs run by different franchisees together, so members have a seamless experience when they go to reserve a boat, they can do so at their home club and locations or any reciprocal club and it should be a seamless experience. Then what we said was, okay, well, now that we have a more contemporary reservation system that’s built on a Salesforce platform, we said, okay, well, most folks don’t want to go on their laptop on a web-based reservation system.

 

(19:02):

They really want to use their phone on a mobile app. And so that’s where the launch of the mobile app recently first on iOS devices and then just in the past few weeks on Android is just a game changer where it’s fascinating to use that as a strategy. The team that developed the mobile app, instead of just saying We need a mobile app, they said, well, what business problem are we ultimately trying to solve? And they said, well, we know that if our members go boating more frequently, they’re much more likely to be retained and be satisfied in the club. So we want the mobile app to make it easier to book more trips, and that’s where I think two elements of the strategy that are still unfolding moving forward is if we have 600,000 or 610,000 trips across 60,000 memberships, that means each membership’s going boating about 10 times per year, and so the question is how do we get them to take that 11th trip, that 12th trip, that 13th trip, and that’s just, that could just be boating the same time, the same nation where you’re boating that 11th, 12th, 13th time.

 

(20:02):

I think what’s really exciting and interesting is what’s the 11th, 12th, or 13th experience that is a little bit different than what you’re experiencing, and so that’s where, and it brings back the power of the franchise network. That’s where starting to experiment with boats that the typical fleet is about 19 to 25 feet, but that’s where experimenting with 25 to 30 footers come in play on an many boat members, the opportunity to upgrade into a larger fleet or Brunswick acquired flight, the e foiling boards where you have ring right above the water and we launched a series of events last summer where we did the take flight tour and we had flight instructors come with boards to locations across North America and provide members the ability to sign up in a pop-up event style for a long weekend and be able to sign up and it was something exclusive to your Freedom membership. You had access to this event where you could bring a few friends and go and learn how to flight board. So it’s those sorts of experiences where if we can continue to get people on the water but do it in new and different ways, it just brings more and more value to the membership and enables them to stay more satisfied to tell their friends about it and to stay in the club long term.

 

Kyler Mason (21:12):

I think OEMs have something they can learn from you. You’re solving this problem because you have to retain customers and it’s your business model. OEMs are often wondering, how can I get the first time buyer to use my boat more or my RV more? Are there things that you think are important for even OEMs to learn from what you’ve solved in the experience or in the way are you gamifying it? What are you doing to encourage more usage?

 

Cecil Cohn (21:47):

I mean, the best place to start is the beauty of boating is that it sells itself. Once you’re out on the water, there’s not many experiences that are much better. I don’t have as much hair as I did when I was a younger individual, but that wind blowing through your hair when you’re at the helm or up in the bow while someone else is driving is really second to none. So I think the experience sells itself there, but then I think in addition to that, it’s a healthy balance that I would suspect that you hear no matter which kind of recreational industry you all are speaking with, whether it be power sport or even RV or boating, it’s the healthy balance of from a commercial strategy, meeting the consumer where they are and providing them with alternatives that meet their needs specifically without paralyzing the consumer, whether physical or virtual closing desk and giving them too many options to choose from.

 

(22:39):

So it’s where Freedom and other clubs are starting to dabble with trial memberships or sunset cruises like a taste of Freedom, if you will, before you decide to join. And I’m sure there’s all sorts of analogs that a dealers could be employing relative to getting people out on the water and a taste of what it would be like to own a boat. That’s where I believe there was a stat, the NMMA released a few years ago that’s really telling, which is I think it was 83% of first time boat buyers enter the ownership space through a used boat versus a new, so most first time boat buyers are coming in through used product and dealers figuring out ways to participate in that, which is there are dealers out there that focus on used boats and that’s their primary gig, but when most people close their eyes and think of the typical boat dealer in North America, it’s predominantly new boats sales. They might sell their trade-ins and things of that nature, but it’s not as core of a focus area more often than not, and it could be a huge growth opportunity.

 

John Gough (23:39):

You were talking about the digital transformation piece of that. What I’m hearing is a franchise enablement, how you are making the channel work more effectively for you ultimately by serving the customer, but you’re really providing infrastructure to those franchise owners to make the business work better for them. Are there other things that you’re doing in the business that you’re looking at and you’re saying, this is so the franchisees can do the work better for us, is that bottom up thing happening for you all?

 

Cecil Cohn (24:14):

We are. It really starts with culture and an important point when this kind of guides everything that we do in the business. When we acquired Freedom in 20 19, 1 of the things that was most attractive to us about the business was the management team and the capability that they already had in place. And so one of the conscious decisions we made early on was the worst thing we could do is have Brunswick come in and tell Freedom how to operate a boat club successfully because that was part of what we were acquiring, and so we had probably a much higher level of respect maybe is the best way to depict it for what the current management team had in place and we really did our best to listen for the first year or two and not upset the apple cart and not change too many things.

 

(25:01):

Now, this was May of 2019 when we acquired the business. So when March of 2020 hit and the pandemic started to unfold, that kind of threw a monkey wrench in that plan, but we still did a really good job of listening to our franchise partners and to our management team because they ultimately have been the most successful boat club operators. Most of them joined in the two thousands or the 20 teens Freedom’s as old as 1989, but there’s a number of successful operators where they held a commanding from a boat club standpoint, a commanding market share position in their local market. And so oftentimes culturally speaking, the corporate clubs would then tell the franchise clubs how best to operate and that sometimes happens. But we also find oftentimes franchisees are out every day being entrepreneurial and solving real problems. And it doesn’t matter whether it’s company under franchise operated who whoever’s solving the problem, it’s our job to then deploy that across the rest of the network and share those best practices.

 

John Gough (26:00):

The consumer’s happy, the franchisees are happy that they’re not worried about the boats and they don’t have to have hard conversations with the people when they’re bringing ’em back. Yeah, I love all parts of that and it just reinforces the other bits of the strategy that you’re describing. You also mentioned earlier how people are coming from Freedom Boat Club and then going on to boat ownership. And so I’m curious, how does Brunswick look at your data, look at your members, want to hear these reports, want to know are you filing the ground for new membership in other parts of the portfolio? Is that how they’re interacting with you all?

 

Cecil Cohn (26:37):

Absolutely. So most members when they join the club, especially if they’re new to boating, go through what we call new member orientation, which is a combination of classroom training where they’re learning how to read the rules of the waterways and things of that nature with on water training from a US Coast Guard certified captain. So once they start booking reservations, that’s actually solving a huge pain point in the industry of getting more people to be comfortable at the helm and behind the wheel, and then they go through the life of their membership. Well, sometimes survey members, would you be interested in being offered discounts on Brunswick product? We’d love to keep you in the club, but if you ever decide to graduate and some members will write back and be like in all capital letters in the annual member survey, the verbatims will come back, no, I’m offended.

 

(27:21):

You would offer me a discount on Brunswick product. That’s the whole reason I joined the club. And so then we’re like, I’m sorry, we were so tone deaf, we were just trying to do a good thing, it’s a value add, et cetera. So we have a really strong membership base that has no intention of leaving the club. For those that do consider that, we do find often that the members will sometimes buy boats that are similar to what they experienced in the fleet, and so that’s one kind of informal mechanism we can use. But across corporate and franchise, one of the myths would be we’d assume that it’s all Brunswick product, and we typically want to power the boats with mercury engines. We’d like that to be uniform and consistent over time, but relative to the boats, so one of the key ingredients on the backend in the business model is the ability to maximize the resale value of the boat after it’s been in the fleet for two to three years. So we’re cycling thousands of boats in and out of the fleet every year because boats typically are not more than two to three years old in the fleets. And so having diversity of brands and model types and product in theory creates a better resale value. And we don’t get any sort of concentrations of certain brands and models. It’s still a small fraction of how many use both transactions occur every year, but in local markets you can start to get diss synergies or whatever the opposite of economies of scale would be associated with that.

 

Kyler Mason (28:44):

Do you have any, it’s proprietary advantage in product development or demand that you are able to share back with Brunswick to say, here’s what we’re seeing, surveys are telling us this about features and benefits, the reservations are showing these make models, whatever. Is that a part of your ecosystem and value to Brunswick too?

 

Cecil Cohn (29:05):

It is to an extent. We share the information back. It creates opportunities for the Brunswick Bands brands to consider launching new product in white spaces where they don’t currently offer, but they know there would be volume, especially through the company owned and operated clubs to try that out. And they know that our boats are going to get used a lot more in the first year or two. So oftentimes they can use us as an incubator for new product ideas or new offerings that they want to test out in the fleet before they launch it even to the retail public. That happens pretty infrequently, but in theory, it’s an opportunity that’s always available.

 

Kyler Mason (29:44):

So many strategic advantages just to everything we’re talking about. What sucks about this,

 

Cecil Cohn (29:56):

I don’t know. I’ve worked for Brunswick for 20 years, my first 10 years were in the boat group side where all the boat brands are manufactured, and then I went through and started working in the services of Brunswick, led the acquisition of Freedom and have resided in this division for the past five or 10 years. And when I described Freedom Boat Club just to friends and family members and whatnot on the weekend that know nothing about the marine industry, the response I get every time I tell people what I do is that makes a lot of sense. And so it’s really exciting to work in a business that resonates so much with so many different types of consumers, whether they be interested in boating and kind of boating veterans. Oftentimes we see former boat owners is starting to age out of the typical 45 to 60-year-old boat ownership range, but they don’t want to exit boating entirely, so we get them in their seventies and then their sixties.

 

(30:47):

We also see people joining Freedom that are on average a few years younger where we’re starting to tap into the 30 and 40 somethings. So it really has very wide appeal. I think the biggest caution or the biggest thing that we watch out for is we want to make sure that there’s huge first mover advantage to getting to every market, getting into the best marinas, treating that marina partnership. It’s a very symbiotic and critical element of the whole business model. And so the watch out there is to make sure that we’re never growing so fast that we start to sacrifice the experience at the local level. That’s why the strategy we’ve been talking about for years is not only unrivaled scale, but also equally as important as delivering that remarkable experience.

 

Kyler Mason (31:30):

Got it. So you’re saying Alma three needs to wait in line, can’t grow that

 

John Gough (31:37):

Fast. One of the big themes that I keep picking up from you, Cecil, is this idea of data and research birth this thing, data and research informs the thing and it continues to power it. As you get this feedback and your Qualtrics partnership and you trust it, you rely on it and you take it very seriously and it has proven its value to you, which I think some people in these situations and in these leadership positions, they want research and they want to know what’s going to happen, and sometimes they feel like it’s a crystal ball. What they’re really asking is, what should I do next and how much confidence can I have and can you remove all the risk from me? But that hasn’t been part of your conversation. Can you land the plane for us on how you’re still taking bets and taking risks and also staying informed?

 

Cecil Cohn (32:30):

Yeah, absolutely. Maybe there’s a couple examples that come to mind. I mentioned that we rolled out Qualtrics as part of our tech stack or our digital infrastructure, and one of the benefits of partnering with a third party that does this for a living is they’re doing it for, I think it’s over a thousand consumer facing brands. And every year in our annual member survey, which is about to go out in a few weeks, we will ask the members, how likely are you to recommend Freedom Bulk Club to your friends and family members? And the answer to that then informs our overall net promoter scores. I believe every consumer brand that works with Qualtrics does this, and Qualtrics can then share out everybody’s net promoter score across their entire client base. We’re not comparing ourselves to other brands within the marine industry. We’re comparing ourselves to other brands, especially those that represent other recreational experiences that our consumers are likely debating whether or not they want to join Freedom this year or whether they want do the Disney vacation or whether they want to go to Europe or whether they’re choosing from their recreational experiences.

 

(33:33):

And we’re really proud of the fact we two years ago at work wide generated a 43 NPS, which is a very strong NPS score, but then this past year leveraging the data associated with Qualtrics, it’s providing a daily drumbeat of where you’re doing well at the location level and where you can improve. And it provides opportunities to reengage with members at the individual level for the local operator to do, and it’s all these opportunities to enhance their satisfaction and ultimately deliver a better experience. The members are the ones telling us if a boat has an issue on it that needs to be fixed before any sort of diagnostic is showing up. We get the feedback in real time, and so we’re really proud. We went from a 43 to a 57, a 14 point lift in net promoter score is off. We will not do that again this year.

 

(34:20):

I don’t want to set the expectation the best you could do is a hundred, but we’re now, I think it’s the excellent level and worldclass one ahead of us, but we’re rivaling brands like Marriott and Trader Joe’s and these really well-known consumer brands that people have a really strong positive impression of and a strong following. And in that upper echelon, our brands like Ritz Carlton and Costco, that’s what we have our sites set on. And so we’re oftentimes benchmarking how we deliver those experiences against those brands that we’re aspiring to be in the same caliber or class.

 

John Gough (34:58):

And I think the research shows over and over again that net promoter score and the share of voice that you have in the marketplace is the best leading indicator of the enterprise growth. So if you guys are already in the fifties, and this is obviously a thing that people are talking about and sharing in the backyard barbecue kind setting, you guys look like you’re out on boats all the time everywhere in the world. What’s happening there? I mean, that’s what you need. That’s the tailwind, right?

 

Cecil Cohn (35:25):

Absolutely. It also, there’s so much power in understanding who your consumer is. And so part of the benefits of leveraging this survey information and really understanding the member, we can understand their behaviors like attitudinal dimensions, et cetera, and we can start to type each one of our members into a customer segmentation, kind of a classic marketing approach in that regard. And then that enables us to better understand, well, how can we tailor the experience moving forward to our avid anglers as an example, who are joining the club as a way to go fishing a lot more than 10 times a year that are probably a very demanding member and are using the boats a lot versus our casual cruiser retiree type that’s probably reserving pontoons more often than not, and interested more in Inland Lakes or Intercoastal waterways as opposed to going offshore. So it also enables you to personalize the experience based on not all of our 62,000 members or memberships are the same, obviously. And so it only enables us to provide personalization at scale as we describe it.

 

John Gough (36:30):

And in ways that you’re individual franchisees or even if you were just a small regional club, could never do, would never have access to those data or insights, but is driving real value for your customers.

 

Cecil Cohn (36:40):

Yeah, they could do it anecdotally because we’ve been on this journey and the franchisees would tell you talk to them numerous times about this individually and collectively and anecdotally they sense some of these things. But it’s really powerful when you have data that’s not only for your club and your market, but also across the entire network to see sometimes there’s these what we call islands of excellence where some club emerges and they’re like off the charts on customer satisfaction or off the charts on net promoter score or whatever the case may be. And it enables us to start to study what are they doing differently than the rest of us and how we can port that across. And similarly, we can take a look at folks that are behind the curve and better understand, well, what are those drivers? What is it that they’re doing differently and where could they get a quick pop and kind of get back on track?

 

John Gough (37:29):

So if I’m listening to this podcast and I’m getting all hyped up on Cecil’s approach, but my organization isn’t data first in the way that you’re describing, what’s the one tip you can give me for how to take a step in the right direction here? I

 

Cecil Cohn (37:46):

Think the data-driven approach is a choice that the leadership of the organization has to make. You have to buy into it where it takes effort, it takes investment, it takes resources to collect data. And in order to use that data moving forward, it has to be, you get out of it what you put into it, so to speak. So I guess the tip would be oftentimes when you’re trying to generate momentum in organization, it’s important to put quick wins on the board. So if you started to generate data in an area that you thought had a lot of opportunity, identifying those quick wins and finding ways in which to generate insights and action that ultimately drives improvement in whatever problem you’re trying to solve, oftentimes then creates a momentum thereafter.

 

Kyler Mason (38:32):

In other words, say you want to do it, just do it. Yes, that’s a great way to say it. Oh, I’m just messing. How do you go from 60,000 to a hundred thousand members?

 

Cecil Cohn (38:46):

I think there’s probably a few elements. One is to expand geographically. And so that’s where we didn’t have, we had a few locations in AMEA in 2019. We’re now up to 40 in a whole series of franchises, and it’s our job right now to build out the entire infrastructure that we have in North America, some of which we have for the franchisees, but to really give them the tools, like a key element as an example, would be the ability to finance the fleet. And so that requires local banking partnerships, which in EMEA are country specific and there’s some challenges associated with getting it up and running. But once we do that, that’s a major ability for the franchisee to cashflow their business and to be able to reinvest the proceeds and scale the club even faster. And the faster they get up to that first seventy five hundred, a hundred fifty memberships and really get the flywheel of the subscription model spinning, the better off they’re going to be from a profitability standpoint.

 

(39:43):

So one area is to invest in the infrastructure in order to enable our franchisees, especially those outside of North America, to get up on plane faster to get up the club up and running. And then I think another is to think about adjacent consumers that maybe we’re starting to see join the club about ways to double down in that area. And so that’s where figuring out ways to attract consumers into trial memberships or evening cruises or things of that nature to get them to experience that taste of Freedom is another way to expand the pie of what’s accessible and who we’re targeting.

 

John Gough (40:21):

Is there a way to make that Brunswick dealer relationship more reciprocal there where you could take a person who is maybe likely to not buy right now, like you’re seeing the signals and the data on the dealer side that they’re just not going to do it? Can you send them to Freedom Boat Club for a couple of years and then bring ’em back later?

 

Cecil Cohn (40:43):

One of the things that we find is the best way for our local corporate and franchise owner and operators to partner with their local dealer is to do it at the local level rather than kind of mandating anything top down. And so when new franchises are starting out, they oftentimes, the brand standard is if you’re going to launch your first location, you have to have a minimum of four boats because we want you to be able to show in most markets a pontoon, a sport boat, a saltwater fishing boat, and then whatever second of those you want, or some fourth craft type, et cetera. So you’re kind of providing the Freedom experience from the get-go and training the members on all of the benefits of what they’re subscribing to. And so you could imagine that oftentimes you can’t justify economically to hire your own technician to have your own fleet maintenance center.

 

(41:33):

Those things come over time as you scale your local operation. And so we oftentimes see franchisees partnering with local dealers in order to service the fleet. So there’s the ability to work with one another. Then they’ll provide sometimes the dealers with the opportunity to sell the boats out of the fleet at the end of the two to three year life cycle. And then over time, often where that starts where it’s more of an operational lead need, then that will actually translate into more of the sales and marketing elements of what you’re describing about where there will be people that express interest in Freedom that are really a boat owner, they a boat buyer that they just don’t realize yet. And similarly, there could be folks to visit the local dealer where they’re not ready to own their own boat, but they would really benefit from a Freedom membership at least for a period of time. So there are examples where that happens, but oftentimes it’s best for that to be forged at the local level because then both parties are kind of bought into it locally and they make it happen.

 

Kyler Mason (42:31):

Yeah, just four boats, that’s it. Four boats in a partnership

 

John Gough (42:35):

With just add water boats. It’s like down the road. I mean, I think we’re there. I think I know where we’re going to spend our lunch hour. This is turning out

 

Cecil Cohn (42:42):

To be a very productive podcast showing me, I had no idea that’s going to be able to sell a franchise in central Indiana. This is really exciting. You guys are going to love it.

 

John Gough (42:52):

Yeah,

 

John Gough (42:52):

Yeah.

 

Cecil Cohn (42:53):

We’ll teach you how to do that in landlocked states. I mean, ironically, we’ll be your pilot, ironically, every year we have a franchise conference in February and we award a franchise of the year in North America, and then we have one for me and one for apac. And in North America, Freedom Ball Club of Tennessee has been awarded our franchise of the year two out of the past three years. And they predominantly, they’ve done incredibly well, but they predominantly focus in the Nashville and Knoxville markets. So they’re strictly Inland Lake now. The power part of what they sell is the ability, a lot of folks that live in Eastern and central Tennessee as well as in Georgia will head down to the Florida panhandle or to the Carolina coast, that sort of thing. And so then they’ll use the reciprocity where their home club is Tennessee, but then they’ll go down in the winter or on World Day Labor Day vacations, that sort of thing in order to use the boats. So it works really well, but some of our strongest operators are operating on Inland Lakes.

 

John Gough (43:54):

Tesla, this has been incredible. I mean, you guys have a great model, really insightful, awesome network economies and reciprocal relationships. It sounds like you’re thinking about so many cool things as we wrap it up, give us a look onto the horizon. What’s the thing that you are most excited about?

 

Cecil Cohn (44:14):

Absolutely. I think we’re just scratching the surface of what digital can do for the business. So I see the mobile app right now provides the ability to reserve boats, but that’s just the beginning of everything that you could imagine. Eventually we’re going to be offering restaurant recommendations and discounts, exclusive to Freedom members. We’re going to be offering opportunities to choose where you want to go on your next vacation and to make that easier for you relative to not only your reciprocal bookings, but we could perhaps provide member generated recommendations on hotels to stay in the area and that sort of thing, just to make the whole experience a lot easier. Where are the fish biting today? What are the water conditions? That sort of thing. So there is all sorts of opportunity moving forward relative to what our mobile app will do tomorrow versus kind of the really strong but core functionality we’re vining today.

 

(45:05):

And then I think the other is really doubling down on what these remarkable member experiences look like tomorrow. What are the new and exciting ways that we can get people onto the water above and beyond just the ability to reserve boats? I mentioned the amenity boats. I mentioned the various membership plans that you can join under that meet your need. We pride ourselves on not being a rental organization, that club, we always say rent is a four letter word, jokingly. Our members really pride themselves on being part of a community. And so we do social events and member events where they come together and it’s other ways you can imagine as a retiree, joining Freedom Boat Club in your market is a great way if you’re new to the area to meet other like-minded people. So there’s all sorts of opportunity to do social events and various member events in that regard as well that just continue to foster that sense of community and make them feel part of something more than just a place to go reserve and take boats out, so to speak. So it’s a huge opportunity. It’s really exciting to be a part of it.

 

Kyler Mason (46:07):

That’s awesome. Thanks so much for coming on, man. This has been a great convo.

 

John Gough (46:11):

Yeah, fantastic. And we’ll look forward to reading more in the new franchisee guide. Sounds good. The emails already have drafted.

 

Kyler Mason (46:20):

There we

 

John Gough (46:20):

Go. Alright,

 

Kyler Mason (46:22):

With that, that’s a wrap.

 

John Gough (46:25):

Why you Win is presented by Element three, a marketing firm focused on modernizing go-to-market strategies for manufacturers that sell through complex distribution channels. We help leaders solve problems across demand generation, sales channel support, and brand development.

 

John Gough (46:41):

If you’d like more from myself or John, connect with us on LinkedIn and for more from Element Three, visit elementthree.com. That’s Element T-H-R-E-E.com.