Making money with saltwater pools

by Sally Bouorm | March 1, 2012 9:19 am

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By Bob Harper

It is no secret the pool industry has been beset by declining sales and profits. The reasons seem obvious: new pool construction is down, consumer spending has slumped, the overall economy is struggling and mass merchants are carrying more and more after-market pool products. Pool owners are also turning to the Internet to purchase pool supplies, which further decreases profits.

The economy and competition, however, are not the only causes of the pool industry’s problems. Another force affecting profitability is the sweeping trend toward saltwater pools, which has decreased demand somewhat for traditional pool chemicals—one of the leading aftermarket profit centres for retail pool stores.

While retailers cannot do anything about the economy, they can take on the competition and win back the profits they have lost during the saltwater boom by recommending the right products to their customers, offering expert advice on saltwater pools and building strong customer relationships.

The problem

Industry research and surveys show the saltwater pool market is growing steadily, both in total numbers and as a percentage of the overall pool population. As these numbers increase, sales of chlorine and shock treatment products are declining in some regions.

Replacing lost sales of traditional pool chemicals with sales of pool salt is not the answer. Why? If both chlorine and salt are priced to yield equal margin percentages, margin income on commodity salt will be much lower than on chlorine, as traditionally sanitized pool owners will spend more on chlorine throughout the season than saltwater pool owners will spend on commodity salt.

In addition, salt has become a commodity in the pool industry. Mass retailers such as Wal-Mart and Canadian Tire are selling basic pool salt at rock-bottom prices to get pool owners, who are highly desirable consumers, into their stores. This sets a lower expected price point with consumers, ultimately lowering prices and profits.

For example, a specialty pool retailer will typically sell $100 worth of chlorine and $128 worth of shock products during a 16-week season for a traditionally sanitized, 80,000-L (21,134-gal.) inground pool. At 45 per cent margin, that equals $103 in profit. If that same pool is converted to salt, a pool dealer may sell five bags of commodity pool salt at $15 each, on the high end. Using the same 45 per cent margin, profit drops to $34.

Further, that same 20-kg (40-lb) bag of commodity pool salt is also available at mass retailers at a cost between $8 and $10. To stay competitive with pool salt, dealers cut prices and margin, or risk losing sales to the products sold at nearby mass retailers.

Pool stores cannot replace lost chemical sales by selling commodity pool salt, particularly since they are competing with mass retailers that are selling similar products for much less. Saltwater pools are here to stay and dealers should not ignore these customers. If they choose not to cater to them, their competition will.

The solution

There are three primary ways specialty pool retailers can profit from saltwater pools, differentiate themselves in the marketplace and provide pool owners good reasons to shop at their stores. They are:

1. Offer premium products and services for saltwater pools that restore profitability, differentiate their store and provide a better pool experience for customers.
2. Become the knowledgeable expert in saltwater pools.
3. Gear marketing toward customer relationships.

Offering premium products and services

Offering premium products and services for saltwater pools provides better profitability compared with commodity salts. For example, since basic pool salt is now so inexpensive and widely available, retailers can offer higher-quality pool salt products that are only available through professional pool dealers. These products are designed specifically for the unique needs of saltwater pools, with some even containing anti-stain and anti-scale ingredients.

For example, if a specialty pool retailer replaces commodity pool salt with a premium product priced at $39.99 per bag, a 45 per cent profit margin generates $90 per pool (assuming the same five bags of salt are sold per pool during the season).

Mark Donaldson, owner of Solar Swim in Orangeville, Ont., stopped carrying commodity pool salt and now offers only premium pool-salt products, as he finds they provide better results for saltwater pools in his area in addition to providing better profits.

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“My customers expect new, innovative products from me that deliver results, and that is what I offer,” he said. “Customers who can afford a nice inground pool can also afford premium products. They will pay more for the best products that deliver value.”

This is just one example. Other premium merchandise, which is specifically designed for saltwater pools, includes:

• Specially formulated treatment products, which prevent stain and scale;
• Powder-coated ladders, handrails and light rings, which resist corrosion;
• Deck sealants and treatments;
• Cleaners for removing scale from electrolytic chlorine generator (ECG) cells; and
• Automated controllers that monitor pH and other water balance factors.

Premium services such as simple water testing to client home visits for pool startups and routine maintenance can also be offered. These types of products and services deliver significant benefits to saltwater pool owners and are worth a premium price, generating higher profits. They also help differentiate the store from mass retailers, who typically only carry a few products in any given category.

Value in expert advice

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Pool owners shop at specialty pool retail stores for a number of reasons—from product assortment and quality to service and convenience. The primary reason, however, is for expert knowledge in solving problems and maximizing enjoyment. Therefore, if pool retailers fail to provide the level of advice expected, customers will find it elsewhere.

There are a number of ways retailers can increase their knowledge of saltwater pool care and maintenance. For instance, trade publications, trade shows and educational seminars, buying group meetings and networking events, and operating manuals offer excellent information. Many saltwater pool vendors and manufacturers also offer free training in support of their products, which is also helpful in solving problems and recommending the right products for customers.

Proper training—for both dealers and seasonal employees—is critical to defending a pool retailer’s competitive advantage, as well as generating and maintaining customer loyalty.

Gear marketing toward customer appreciation and relationships

Mass retailers focus on various marketing strategies—from national broadcast and print advertising to direct mail programs and coupons. Specialty retailers, on the other hand, are trying to develop relationships with a very specific audience—local pool owners. Therefore, personalized, targeted marketing, which focuses on customer appreciation and building relationships, is a better bet.

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For example, specialty retailers typically have information about their customers’ pools, what products they purchased last and when they will need to buy more. Having this information enables personalized product promotions to be sent to customers (i.e., marketing new saltwater pool products to saltwater pool customers or promoting new stain and scale products to customers who may have struggled with similar issues in the past).

Customer loyalty programs, appreciation days, educational sessions on products and maintenance or special offers for repeat customers can also be offered. Once a relationship has been established, additional communication methods can also be employed (e.g., e-mail, regular newsletters and educational events at the store). These methods generally deliver a higher response rate and a better return on investment (ROI). They also reinforce the personalized service specialty retailers’ offer, boosting customer satisfaction and loyalty.

Becoming a trusted source of pool information can also create loyal customers. Posting helpful information and advice on the store’s website and/or highlighting it in social media outlets are great ideas. For instance, reporting on the pH level of local rainfalls and how it will affect pools, or posting unusual source water conditions, such as high levels of metals or scale-forming minerals, are two great examples.

Conclusion

Providing value through expertise, premium product recommendations and customer-loyalty efforts not only help specialty pool retailers support higher prices but also win back profits that may have been lost in the saltwater boom.

 

 

 

Bob Harper is general manager of pool products at Pristiva, a Compass Minerals company. He has 25 years of experience in the pool and spa industry and is an expert in saltwater pool systems. He can be reached via e-mail at harperb@pristiva.net[5].

Source URL: https://www.poolspamarketing.com/trade/making-money-with-saltwater-pools/

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