The Hinckley Company, based in Trenton, Maine, has been making semi-customized yachts since 1928. Their sailboats and powerboats are known for their classic aesthetic and craftsmanship, superior performance, and Hinckley’s customer service. Hinckley is an iconic luxury brand with an intensely loyal (and wealthy) following. An illustration of that loyalty: After Hinckley lost a significant amount of business during the financial crisis, 94-year old David Rockefeller Sr. ordered a $3 million, 55-foot powerboat, just to keep them afloat. To put that into perspective, a typical powerboat can take up to two years to complete.
The Business Model
A boat can be both an emotional purchase for someone who truly loves boating, but also a purchase that is meant to show off someone’s wealth and status. Hinckley hits all the right notes when it comes to this significant acquisition:
- Every one of their boats is designed with a historical reference. Although boaters know a Hinckley when they see one, they have a classic, non-ostentatious aesthetic that is highly valued in high net worth boating communities.
- They have a well-deserved reputation for power and safety. A pioneer of the fiberglass hull, Hinckley stands out for its technological innovation. They were the first semi-custom yacht company to use jet-propulsion engines, which they developed in a partnership with former Navy engineers. When it comes to the open ocean, the safest boat for your family is the most powerful one.
- Your boat won’t look like anyone else’s. No two Hinckleys look exactly alike, since the interior of each boat is designed to its customer’s specifications.
- Once you’re a Hinckley customer, you’re in for life. Hinckley creates the most value though its dedication to customer service. It also helps that its 8 service yards account for 65% of the company’s revenue. When your “accessibly-priced” T34 Picnic Boat costs upwards of $500,000, you certainly want to maintain it in perfect condition. Ensuring customer satisfaction in that regard is paramount for Hinckley. Tellingly, most Hinckley buyers are repeat customers who are upgrading or just want another boat.
The Operating Model
A Rebound and Refocus on Customer Service
Hinckley suffered during the economic downturn and accumulated significant debt – and lost half of its 635 employees. In 2011, it was acquired by the private equity firm Scout Partners. And, thanks to its strong name and customers, it was able to rebound and rehire almost its entire workforce by 2012.
Unlike many other yacht companies, Hinckley maintains its tight link to its customers by only doing built-to-order, rather than working with dealers – an important coup for their brand equity. At any given time, there are only ~30 boats in production, and almost all of them have been purchased by an individual. Rather than focusing on volume, Hinckley focuses on the quality of each stage of a customer’s ownership experience.
Hinckley maintains a very close working relationship with a customer as her boat is built. Typically, a customer (or her representative) works directly with a sales director on the boat design. Everything is customizable, down to the alignment of the screws. After the boat’s completion, the customer picks it up at one of Hinckley’s eight eastern seaboard service yards, where she is introduced to her dedicated service manager, as well as an app that helps her track the condition and status of her boat should it ever go into storage. As one manager put it, his job is to make sure that “Customers feel taken care of, that this is their boatyard of choice, and that they wouldn’t consider going anywhere else.”
Each yard feeds off of each other. Boats can travel north during the summer and south during the winter, allowing for a consistent, quality customer service experience.
And to close the loop, when a Hinckley owner wants to trade in her boat after a good run of several years, she can resell it to a Hinckley brokerage.
The production yard is the biggest employer in Trenton, ME, and the workers take ownership in the success of the company as well as each boat that they build. The factory operates as a classic job shop. Most of the hardware is made by Hinckley, with the exception of the hydraulics, electrical, and electronics. Hinckley works closely with its OEMs to train its production team in state-of-the-art mechanics.
Many of the production crew employees are akin to artisans, and they can spend years working on a single boat. A $2 million boat upgrade project could occupy a team of 25 for two years, customizing every aspect of the boat.
In this market segment, it is impractical and prohibitively expensive to build prototypes. Hinckley depends on Computer Aided Design software for the hull design, and then does a full sized mockup of the deck and interior layouts. This allows the designers to get a sense of how to get the space of the boat just right for their discerning customers.
Hinckley’s product, customer base, business strategy, and marketing are all perfectly aligned to create timeless, beautiful boats for decades to come.