All products in a pool and spa store have a price.
The retailer’s motivation, of course, is to sell those products to the consumer. But no longer is that consumer’s buy motivated purely by the cost on the sticker. Price signals product quality. Cost analysis in customers’ heads can be along the lines of: Is this [fill in the product] worth it? Will it last? Does it increase the quality of my life in some way?
Tapping into increased customer sales means thinking like a consumer and changing the way their brains subconsciously perceive price.
Especially now, as online retailing becomes more the norm than the exception, pool and spa store owners are looking for ways to change how they connect to, and serve, customers.
It’s the expertise of the pool store employees that customers are craving when they walk through the door. Of all the information available on the Internet, pool and spa owners still need a professional when there’s an issue or question.
“To me, what’s most important in retailing today is having the ability to engage the customer, and create some kind of relationship quickly when they come in the door,” says David Ghiz.
Ghiz owns Imagine Backyard Living, a concept store he recently opened in Scottsdale, Ariz., to highlight the backyard as an extension of the home — an outdoor room. To get a sense of what a customer’s looking for, they enter the store and walk through vignettes of outdoor setups before reaching the showroom.
That technique allows that relationship to sprout and for a salesperson to be able to better direct a customer toward spas offering the features that most interest them.
Even retailers using these careful techniques are hearing about the dreaded omnipresent, always-open competitor. And the idea of how to tap into that action and sell customers the needed products that a retailer recommends is buried in the innate nature of the human mind.
Good, better, best
For decades, researchers have been studying shopper behavior. No industry capitalizes on these findings more than the grocery industry. Using similar strategies, pool professionals can create similar buying behaviors in those who come into their shops.
One grocery technique that isn’t widely capitalized on by pool retailers is bringing in more product.
It seems counterintuitive to stock more SKUs, but many pool shop owners think they’re giving customers the best value by carrying one quality, affordable product offering. Instead, what they might be doing is preventing additional sales that may have higher margins.
Offering three options meets consumer needs, explains Ted Lawrence, corporate retail category manager at Covington, La.-based PoolCorp. If you have three products, 10 percent of shoppers will always buy the cheaper product. Ten percent will always by the highest-priced, premium product.
“But 80 percent of the customers will always choose the one in the middle,” he says. “Nobody necessarily wants to be the cheap person, yet you don’t want to spend too much and be the expensive person.”
The good, better, best philosophy is one that Mike Besso employs at Central Pools & Spas. Even though the general manager at the Framingham, Mass.-based store deems the most affordable options he offers as “OK,” sales associates try to steer shoppers to one of the higher quality, longer-lasting products.
“If the best one’s $1,000, we like to give them a good one that’s $800 and a cheaper one that’s $600,” he says. “We try to appeal to all demographics.”
One of the main types of products Besso practices this approach with is cleaning and maintenance equipment. Most of his customers opt for the mid-range or top offerings because of the quality of the products.
“We used to think that we needed to have that inexpensive stuff, and I think we’re probably going to show less and less of that, and really try to focus on the good stuff,” he adds.
People like whole numbers, in general. Ending on a five or 10 or 25 feels more orderly to most people’s minds than a three or 12 or 38.
Capitalizing on this brain function is one method retailers can use to increase their margins on products and price their stores.
“Up to $100, you price within $5 increments — $4.99, $9.99, $14.99, $19.99, $24.99,” Lawrence explains. “Once you hit $100, it’s really priced within $25 increments, so it’s $124.99, $149.99, $174.99, $199.99. … Once you hit $1,000, it’s $100 increments.”
Pricing on an odd ending is seen all over the retail world. Many big-box stores — such as Target, Wal-Mart and Home Depot — end on the .99, reserving other endings to indicate sale pricing. At Central Pools & Spas, Besso ends his prices with .95. Ghiz, in his former retail life with Paddock Pools, favored the .88 ending.
The issue is when costs rise past where a store has priced the product.
“More often than not, we eat it until it gets to a point where we don’t think we can anymore, and then we raise the price,” Besso says. “I hate raising prices.”
Sometimes, that even means a price hike mid-season. Distributors’ prices don’t stay the same, and many stores, like Besso’s, reorder inventory throughout the summer instead of one massive order.
Starting a new pricing strategy, though, has to begin somewhere. And the place to start is the frequently purchased items under $50. Lawrence recommends bringing in additional products and pricing at $5 increments with no more than $10 between the lowest-priced product and the highest.
“In my opinion, where you make most of your money is the middle-priced item,” he adds. “That should be your money-making item.”
Putting a price on it
Internet sales are hurting brick-and-mortar bottom lines. What remains elusive is how to combat that.
One advantage online sales have over the pool store is that a browsing customer doesn’t question how much an item costs — the listing has it prominently displayed.
Because price is always a factor in a purchase, having that number in front of the customer takes the wonder out and keeps everyone from wasting time if that’s not in their budget.
“I firmly believe that there are a bunch of people who don’t like to ask how much a product is. If it’s not obvious to them, oftentimes they just won’t buy it,” Besso says. “I think the customer wants and needs to know how much a product is.”
And while every item at Imagine Backyard Living is tagged with the price, the strategy at the store isn’t about the numbers on the signs.
“It’s a different shopping experience for the customer, and part of that is getting their minds off of price and more on the ability to envision what we sell in their backyard,” Ghiz says. “It kind of takes price out of the equation.”
Giving customers additional value for items they could buy cheaper on the Internet helps, too.
The pricing tags Besso adds to certain equipment lists the installed price — letting the customer know what their cost will be for the equipment plus labor.
“Then it’s a little more difficult for the consumer to actually shop you because he or she knows they can actually buy it on the Internet for $800 less, but how much is it going to cost them to have it installed?” he says. “So when you look at the installed price, we’re not so far apart anymore.”
Recent warranty changes from the Big Three equipment manufacturers also are boosting that strategy. For some products, the warranty is void if not bought and/or installed by a certified professional. For other products, professional installation increases the warranty period for the customer.
To experience that longer warranty period, an Internet shopper would then have to find a certified professional in their area to install the product.
“They’re going to charge more to install an item they don’t have a margin in,” Besso says. “We’d be willing to charge a little bit less labor because we have some profit in the sale.”
Pricing Sticker Shock
One tip of cautionary advice Ted Lawrence gives to retailers is to price the shelf, not the product itself.
What’s the harm? Well, according to PoolCorp’s corporate retail category manager, ticketing individual items can tip customers off to price increases.
“Where it becomes relevant is when they buy that quart of algaecide … and they take it and put it right next to the one that they bought last year,” Lawrence says. “The price sticker says $8.99, and this year it’s $9.99. … Now we’re giving the consumer a reason to shop somewhere else.”
Retailers don’t always think about the impact of price and pricing stickers on products after the sale. Instead, they watch in-store pricing practices.
“We’re careful not to have two different prices on the same product in the store, but I never really thought about it at home,” says Mike Besso, general manager of Central Pools & Spas in Framingham, Mass.
While having an obvious trail of a price increase might not be ideal, Besso says he doesn’t think it’s too damaging because if his costs are rising and pricing changes to reflect that, it’s also probably the case at his competitor.