How Swimming Pool Retailers Can Thrive In The Internet Age

by Larry Bloom January 27, 2012 10:40 AM

Larry BloomMore and more consumers are using the Internet to research and make pool-related purchases. What does this mean for traditional pool retailers? And how can they stop losing market-share and customer loyalty while improving their business?

The effect of the Internet on sales 

Online purchases of pool aftermarket products have increased from 1 percent to 9 percent of all in-ground residential swimming pool products sold in six years (2004 to 2010). That’s a whopping nine-fold increase in five years (Source P.K. Data).

Here’s another way to look at the picture: In a year, the Internet accounted for $288 million in sales that used to be purchased in brick-and-mortar locations. Given that 68 percent of pool owners have traditionally purchased from specialty pool retailers, this rapid shift in market share likely threatens specialty pool retailers disproportionately (Source P.K. Data). 

If the rate of change of retail spending continues, and retailers continue to do things the same way, specialty pool retailers could potentially lose 25 percent to 50 percent of their business over the next 5 to 10 years. To counter this trend, traditional pool retailers must deliver value that Internet retailers can’t match.  

The impact of the Internet as a source of knowledge

Traditionally, pool knowledge has been the pool retailer’s unquestioned advantage.  Unfortunately, consumer research by P.K. Data in 2010 suggests that the Internet is the new knowledge resource of choice for pool owners. Seventy-one percent of pool owners view knowledgeable staff as the leading virtue of specialty stores, yet 72 percent of pool owners now use the Internet as their leading source of information on pool products. And, 85 percent of pool owners who use the Internet recommend one or more online pool retail sites to their fellow pool owners. So in order to thrive, a retailer must both regain the knowledge advantage from the Internet and do much more than the traditional approaches to pool retail store success. 

Focus on building relationships

Expert advice, face-to-face relationships, personalized sales assistance, and no-headache service are critically important, but many take this for granted. We must ensure that customer-facing employees are focused on doing an excellent job helping each customer.  Every employee should be trained sufficiently to “speak pool” and help customers with problems.  

An attitude of outstanding customer service should be a hallmark, and making customers happy should be part of a mission that every employee follows. But how does a retailer differentiate itself from the Internet and achieve organic growth? Two words—customer relationships.

Customer relationship strength = success

It is intuitive that customer loyalty impacts revenues and profit. Relationship strength is when customer loyalty can resist any damaging forces that might destroy it. And it goes even further. Studies show  that of all the business outcomes examined, changes in relationship strength had the greatest impact upon referral, retention, and increased shopping. Stronger relationships translate into greater revenue and profit for the pool retailer. The irony is that retailers vary widely in their ability to build and maintain authentic and productive relationships with their customers, and yet the strength of those relationships is the most critical element to their business success.

The starting point – keeping it simple

If you had to pick one variable to predict the likelihood of a customer to continue to buy from you, recency, or the number of days since a customer was in your store, is the most powerful predictor of the customer coming back. The more days go by after a customer visits your store, the less likely the customer is to come back. Recency is why you receive another catalog from a company shortly after you make your first purchase. The company knows you are most likely to order again soon after your first order.  Recency is the most powerful predictor of future behavior.

Get started – an example

Create a spreadsheet of your customers and the date of their last purchase. Calculate how many days it has been since they purchased and rank the customers from the most recent to the least.  Organize them into three categories: 1) new customers, 2) regular shoppers and 3) former customers. (Develop more categories if you find it helpful.) Build or strengthen your relationship with each category. 

For example, send the new customers a “welcome kit,” create a loyalty program for the regular shoppers, and send an emailed “we miss you” discount to former customers, seeking to get feedback as to why they stopped buying from you. Learn about their change in behavior – it will give you something to address.

Stay tuned for information about combining recency with frequency of customer purchases and the lifetime value of your customer to get a good indicator of your customer relationship strength.  



Larry Bloom is a co-founder of Xmente Swimming Pool Retail Academy and former CEO of BioLab, Inc. His company provides consulting and online education tools for the pool industry, such as the “Basic Training - How Pools Operate” course which provides critical education for new employees. Larry can be reached at larry@swimmingpoolacademy.com.

Blogs:

Permalink | Comments (6)

Comments (6) -

1/31/2012 3:13:11 PM #

Very good article Larry.  I especially like the fact that you took a positive approach regarding brick and mortar stores vs. internet sales.  There has been a lot of "demonizing of the internet" recently, and it is refreshing to see someone suggest positive ideas for increasing store traffic rather than trash internet retailers.  Having operated online companies as well as brick and mortar pool & spa stores, a pool installation company and various hot tubs stores over the last 30 years, I can tell you that they can all co-exist quite comfortably, each fulfilling a different niche.

As wonderful as the internet is, online retailers cannot do a water test, cannot build an inground pool or do a custom hot tub installation, cannot get in the customer's backyard to do any sort of up-selling, cannot do pool or spa service calls, and most importantly cannot have that valuable face to face connection that brick & mortar stores can provide.

I would recommend that everyone check out Larry's web site, http://www.swimmingpoolacademy.com, as it is very well done and contains a lot of great information for brick & mortar pool and spa stores.

Daniel Harrison - Poolandspa.com

2/2/2012 10:24:33 AM #

Internet Sales are just another example of free enterprise.

My only gripe is that a consumer can go online and purchase a shipped product for LESS than we trade people can get it from distribution.  
We do take advantage of that if a consumer calls and asks if we will install their new internet purchase, we give them a price for installation and have them sign an invoice that ALL warranty claims are to be made through the manufacturer.  
We offer to do it if we are an authorized rep for a manufacturer, but labor is always collectable.
If it turns out to be our customer, we will diagnose the call as a courtesy, but any and all repairs are to be confirmed by the manufacturer before we take any action after the initial diagnose of unit.

Again it is the price issue.  We trade people should by from the internet, but we support our distribution.  If distribution is selling via the internet, they really need to adjust their prices to internet company so we trade people can offer a competative price also.

Have a good season everyone.

Rich Lubowiecki

2/6/2012 12:48:26 PM #

A question to the manufacturers - who is going to install and service your products once you have
driven all of the service guys out of business?

Like Rich, I wouldn't have a problem with online sales if it were a level playing field.  Yes, it's nice to say well you have a relationship with the customer and should be able to leverage that.  However,  when my customer can purchase for far less than I can, the relationship only goes so far.

How is it a sustainable business model for me to consistently sell an item at my cost just to get the sale?  Big deal - I make the install money but make nothing off of the product....

Matt

2/7/2012 3:50:56 PM #

Well written article.  The PK data findings are tough to put a positive spin for brick and motor.  There used to be 4000 Travel Agents in the US doing 80% of the travel bookings, now over 80% of booking are done online.

With that said, there are retailers still doing very well.  Delivering a buying experience that e-tail can not compete with.   Great Escape of Chicago, Olympic in Seattle, Cal Home in Long Beach,.....  There are retailers growing through methods like Larry described.

Lastly, I believe most professional e-tailers would like to see MAP pricing for all branded product.  It's just up to the manufacturers and distributors to get serious about.   The pricing issue can be fixed.



Hot Tub Covers

2/7/2012 5:32:38 PM #

More internet talk... Again I say,  This is free trade.  MAP pricing FOOEY!
The swimming pool season is very short.  This generation of internet users is getting more and more comfortable buying online.  Products are also getting cheaper in all areas.  Seen a Circuit City lately ?  Best Buy is losing share as we speak.  Look at the handwriting on the wall.      

Peter

2/9/2012 3:30:39 PM #

Psst... pool seasons are not short in all parts of the country, here in AZ it is all year round with simply busier seasons than the others.  The challenge we face is not competing with the online market but out selling them.  Providing education and service that exceeds what an online retailer can provide is the only way we can all stay afloat.  We need to demonstrate the value we deliver that justifies the prices we have and not get into a price war.  We will not win when we compete on price alone. Someone, somewhere will be cheaper.

After all if price really was all that mattered, no one would own a color TV or cell phone, because you can still "watch TV" on a black and white TV and you can "talk" with a hard wired phone.  We are a country of wants, not needs.  No one needs a swimming pool in their backyard, they want one.  We as a community need to get better at teaching consumers the value of shopping with us and not e-tailers.  Until they understand the benefit, price will always win.

And, here in AZ, Best Buy sucks at serving the customer... Circuit City greets me at the door and later asks if I need help while I stare dumbfounded at a display.  Hmmm... might not be all about price after all...  or maybe that's just here in AZ!

Nicole

Comments are closed
Latest
Featured Suppliers

   Browse entire Buyers' Guide

 

 

 

 

© AQUA Magazine 2013 All Rights Reserved