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Hearth & Home August 2018

Customer Retention Matters, Now More Than Ever

By Bil Kennedy

New research sheds light on how today’s consumers shop for hot tubs.

Everyone today is aware of the impact of the Internet on consumer shopping habits, especially retailers. Just ask Borders, Tower Music, or Circuit City. Well, except you can’t. They’re all out of business.

Yes, it is true that the Internet has dramatically changed the way that consumers of all stripes buy everything, from toothpaste to high-end entertainment systems.

But what about hot tubs? Surely spa buyers still purchase the same way they always have: the tried and true process of visiting hot tub retailers, asking lots of questions and getting lots of helpful guidance before they buy – right?

Not necessarily.

True, most hot tubs are still purchased from traditional hot tub retailers. After all, a new spa can be a complicated and not so inexpensive purchase. But what has changed is the way consumers actually shop for their new hot tubs.

Not Their First Rodeo

First of all, an ever-larger proportion of hot tub customers have previously owned one. That only stands to reason since the total number of existing hot tubs continues to increase every year.

Previously Owned Hot Tubs
Percentage of Hot Tub Owners

Percentage of hot tub owners who have previously owned a hot tub.

Source: Pkdata research.

Routinely Use Spa Service
Routinely Use Spa Service

Percentage of hot tub owners who routinely utilize a spa service.

Source: Pkdata research.

A 38% repurchase rate for what was once an obscure product category is pretty amazing. It’s also good news because it means that retailers have to spend less time educating their customers on the virtues of spa ownership – owners already know all that. The hard part is making sure they buy from you and not the guy down the street.

But there is good news on that front. Today’s hot tub consumers are more inclined than ever to buy from the first store that they visit. Back in 2005, when Pkdata began surveying hot tub owners, only 31% purchased from the first store they visited. Today that number is 38%.

There is a reason, of course. Our research shows that there is a very high correlation between people who purchase their hot tub from the first store they visit and their tendency to research their purchase online. So, dealers who feel that the Internet is hurting retail are somewhat misguided. The Internet is actually making hot tub shopping more efficient, which is a good thing for the consumer, and it can be a very good thing for savvy retailers. You just have to make sure that it is your store that customers visit first.

Shoppers Who Purchase From First Store Visited
Shoppers Who Purchase From First Store Visited

Increase in the proportion of hot tub shoppers who purchase from the first spa store visited.

Source: Pkdata research.

Keep Your Customer

Our studies have shown that way too few spa retailers do a good job with customer retention. Too often, a customer buys a hot tub, arranges the financing, takes delivery, and that’s it. No attempt is ever made to create a lasting relationship. That is too bad, because in the long run that customer can be worth even more after the sale than just the purchase of the hot tub itself.

For example, over the spa’s service life, the average owner will spend nearly $3,500 on sanitizers and specialty products such as pH adjusters, scale control, and fragrances. That alone could be as much as they originally spent on the hot tub itself. And if you offer spa maintenance, there is another income opportunity.

One in five hot tub owners utilize a service for periodic maintenance. Moreover, nearly half of hot tub owners say they have called a service firm for repair items such as pump replacement or to repair a leak.

Let’s not forget customer referrals. Over 24% of current owners say they were inspired to buy their hot tub after experiencing one at an acquaintance’s home.

Number of Years Owners Keep Hot Tubs
Number of Years Owners Keep Hot Tubs

Length of spa ownership.

Source: Pkdata research.

Back for More

But maybe the best reason of all to work on your customer retention plan is because that customer may just be back to buy another hot tub. Remember the 38% who said they had previously owned a hot tub and bought another? They come back sooner than you may think.

Owners now keep their hot tubs for an average of 8.4 years. A third of owners keep them for less than five years. So, if nearly four in 10 of your customers are likely to be repeat buyers, and a third of those will be back in fewer than five years, that means at least one out of every 10 people who buy a spa from you will be back very soon to do it all over again.

As we said, hot tubs – unlike books, CDs, and toys – are complicated purchases that require a lot of personal guidance from a knowledgeable salesperson. Therefore, the Internet is unlikely to become a major sales channel in this category anytime soon.

There is a significant opportunity for retailers to continue to harvest a great amount of business in a growing segment just by paying close attention to the things that matter with regard to customer service and retention. Take good care of your customers from the start and they will be back in the end. Our research proves it.

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