1. Stop playing the game to the enemy’s advantage
The ‘David Strategy’ has one unbendable rule—do not play into the opponent’s strengths. Big-box and Internet vendors always focus on commodities; therefore, pool and hot tub dealers must design their business to focus on products and services that are new, innovative, and unique.
The following example can help determine how exposed the business is. To perform this test, pool and hot tub dealers should visit their local business supply store and pick up some red-dot labels, then stick one to each product or technology in their store that is older than five years. Then, the dealer should examine their shelves to get a crisp understanding of the root of their declining sales, margins, or customer retention issues.
Any product with a red dot is what the big-box stores and Internet vendors focus on. Therefore, pool and hot tub dealers must commit to change this weakness in their business design if they are serious about winning this battle. The way to do this is to start letting one metric drive the business: it is called the vitality index, pioneered by Hewlett Packard (HP).
Simply put, constantly measure and try to improve what percentage of the business’ sales revenue is in products or services less than five years old, with limited market access. HP, after studying thousands of businesses, determined that focusing on driving this metric each year had a direct relationship on driving profitability and customer retention.
Action steps:
Never purchase products based solely on relationships. No products should ever be stocked on a pool and hot tub dealer’s shelves unless they complement the business’ strategy of decommoditizing. Business owners can still golf with their favourite vendor sales reps, but that is no reason to expose their business to the opposing enemy. These reps will learn quickly they must bring new and unique offerings to the table. This will drive new product development.
For example, identify the ‘preferred recommendation’ (i.e. picking a lane) for each category and place laser-like focus on promoting traditional pool, hot tub, and saltwater pool care. Make them stand out in prime space in the store, and get retail staff on board and well trained to promote and sell what the business believes is the best option/product for its customers.
Businesses should view products it stocks on shelves as ‘tenants’ in an apartment block it owns. Every one of them should pay their rent and build the value of the business’ investment. Good tenants drive revenue and customer retention. They support the business strategy and do not expose a pool and hot tub dealer to poaching from big-box and Internet vendors. If a tenant is hurting the investment or business strategy, the dealer should take action and make a plan to replace it with a better ‘tenant.’
2. Weapons: Get back to advocating limited selection access and superior systems
It is very clear many backyard leisure stores have lost their primary business focus as a specialist. In years past, their strength was promoting and selling unique systems of pool and hot tub care, not individual products. Too many have adopted a mixed bag big-box approach. The message to consumers is “products, not systems, are what professionals recommend.”
This is why consumers often believe the brand they buy does not matter and, if the price is right, and the timing convenient, picking up pool or hot tub products at a big-box store or on the Internet is okay. The result is they ‘cherry pick’ or come to the store only for their problems. Having four or five different brands for the same product is what Wal-Mart, Amazon, etc., does, and is never what specialty businesses trying to lock their customers’ focus do.
