Dan Lenz looks after the service department at All Seasons Pools & Spas in Orland Park, Ill., a suburb of Chicago. The company opens about 700 to 800 pools a year and closes up to 1,400. It’s a service company first, with a retail store and construction department that builds about 15 pools each year. The key to All Seasons’ success has been its professional, customer-oriented staff, which receives compensation based on performance.
[Interview takes place on a snowy, frigid, early spring day.]
How’s the weather?
There’s a gentleman that we built a pool for, a farmer in the area, and last fall he told me, “This is going to be a rough winter. This one’s going to be pretty bad, one of the worst we’ve seen.” And I said, “Well, we’ll see,” and didn’t think any more about it at the time. I did think about it during this bitterly cold winter, as we received just about twice our normal snowfall, 75 inches as opposed to our usual 30 to 35.
He came in just yesterday to pick up some chemicals for the season — we had an early-buy sale — and he told me, “It’s going to be a hot summer.” So I’m thinking it may be a good summer for pools. We could all use a shot in the arm. A nice hot summer would be huge.
How about the service business climate, is that warming up?
I actually saw things pick up last year on the service end. We saw people loosening up their spending a bit, and this year, we’re seeing a lot more interest in fixing or upgrading, whether that’s equipment such as a salt system or a variable-speed pump or a new liner, which is a big part of our business.
Liners are big for you?
Yes. Some people consider that remodeling, but I call it service. Last year we replaced something in the neighborhood of 75 liners, which was typical, but we noticed a big liner push in the fall. Usually we get a big push in the spring for liners and then meander through the rest of the season, but last year we got a big push in the fall — I think we did about 30 liners from Labor Day until the weather stopped us.
This winter stopped us earlier than usual. Normally we’ll keep putting liners in ‘til around Christmas, but this year the snow shut us down around Thanksgiving, and left us with five liners still waiting to go in.
But coming into this spring, we’re getting strong orders for liners where people, even under all this snow are saying, “Come on out, here’s my money, let’s get it going.”
Are liners a marketing focus for All Seasons?
We’re making a big push for liners this year. We do a lot of work with Plastimayd, which is now part of the Latham family, which we’ve been with forever. We went back to them and combined some of their data with our own data to build a direct mail campaign targeting people with liners that are more than seven years old.
I was able to pull about 500 to 600 names of homeowners that we’ve done liners for in this area, and Plastimayd was able to add some more information to what I have, and we’re going after them. We’ll see what happens.
We’ll shift some of our construction crews into liners if we need to.
No problem adjusting your labor force to meet demand?
I usually have a few construction crews building and renovating through the season, and one crew that does liners year round, so if we want to we can pull people off construction and have them do liners.
And from a business perspective, there’s always a better margin in service than anything else you do.
Really?
Yes. In the Midwest, anyway. The margins for us are better for any aspect of service than they are for construction or for our retail store. No matter what you’re talking about.
Margins for our store are not that great. Even before the Internet started cutting into retail margins, our store was just kind of there to give our customers somewhere to go where they know and trust the people they’re buying from. And in the last seven to 10 years, with the Internet selling products so cheaply, the retail margins have gone way down.
On the construction end of things, margins used to be better before the housing bubble burst. At that time, a lot of construction companies where the guy was working out of the house just disappeared. Other companies had to cut their margins way down to keep going.
We have a couple of building companies that we compete with that build upwards of a hundred pools a year. They’re not going to keep their people working unless they cut their margins down to where they’re doing it for next to nothing.
We certainly love building, and we love to create entire backyards, not just the pool, and it’s really great to see what you’ve accomplished when you’re done, but when it comes to the bottom line, we see a lot more black in service than we do in construction.
Does the construction work help build your service business?
When we build a pool we certainly lock in those people for service. We’re fortunate to have a great staff and customer relations. We build the pool and those customers are with us for life. But we also gain customers on the service end for those same reasons, because when we put in a new liner for someone, that’s a big opportunity for us as well. That customer is going to spend up to $6,000 on a new liner, so in the process, we have a chance to prove to that customer what we can do as a company. From the liner business, we can pick up between 30 and 50 new service customers a year.
We only build maybe 15 new pools a year, and we may renovate 20 to 25 backyards a year, starting at about $35,000 a year, which actually brings in more profit than new construction. Some of this renovation business comes to us from previously foreclosed homes.
Foreclosed homes?
Yes, a lot of homes went into foreclosure in the housing crisis, and now those homes are starting to turn again, people are starting to buy them up. You can buy a $600,000 house in this area for a little over $400,000.
Those new homeowners are looking at a backyard that they didn’t necessarily want — it wasn’t built according to their taste — and perhaps the pool’s been stagnant for awhile and the backyard is in disarray. So this is a source of renovation work for us.
But we’re always pushing for more renovation work. Our service guys leave door hangers talking about remodeling, so even if we don’t see the customer, we’re talking to them about a new fire pit or something like that.
The No. 1 concern from the SOI survey was attracting and retaining good employees. Is that a problem at All Seasons?
We’ve got 30 year-round employees and we run 50 to 60 during the season. Service is the biggest part of our business. Construction is about 30 percent and the store is probably 20 percent. The average tenure with us is almost 13 years.
One thing that helps is we have a method of pay for service technicians that is derived from what they generate for the company. Everybody gets a base hourly rate, and then there is a tiered system of incentives based on how much revenue the employee generates, which shows up in their weekly paycheck.
It’s geared toward experience, APSP certification and technical training from manufacturers; the more knowledge you gain, the more experience you have and the more money you make for the company, the more money you bring home.
In the highest tier of that system, you get 12 percent of what you generate for the company in addition to your base rate. It’s a graduated scale where you have to generate at least $3,000 to get 3 percent back, $4,000 to get 7 percent back, and $5,000 or more to get 12 percent back. That’s the top rate; if you generate $10,000, you get 12 percent of that.
So there’s incentive for them to be good at their job. It works like this: We charge a flat rate per job for heater repair. We don’t charge by the hour, it’s $149 to come out and look at your heater. If it’s a minor part, we’ll pop that in on the spot and charge you for the part, that’s it. If it’s a major repair, maybe we have to order something, we work that charge out with the customer.
So if it takes a guy half a day to diagnose the problem, he’s only getting $149 in his bank for those four hours of work. But if he goes through the technical training, and he becomes efficient, and can figure out the problem in 30 minutes, now he’s off to the next job. So instead of doing three jobs a day, now we’re doing six or seven or nine jobs a day.
And that impresses the customer to see someone come in and quickly do some work, and the heater’s fired up and back in action, and they think, “This guy really knows what he’s doing.”
But if you’re paying $10 or $12 an hour, you’re never going to get somebody committed to this as a career. Why would they? You’ve got unionized carpenters and laborers here in Illinois that get $35 or $40 an hour. Why would somebody stay when you can’t support a family?
And that’s why our industry has such a hard time gaining the respect of the populace. Because for the majority, they’re paid low wages and expected to care about what they’re doing.
Comments or thoughts on this article? Please e-mail [email protected].
