Pools by Ben sold close to 100 variable-speed pumps in 2008, but the company still felt a significant portion of its market remained untapped. So in January, the Santa Clarita, Calif.-based firm tried a new approach — pump rentals.
“The economy has changed, and if we’re going to get people into these pumps to save electricity, we have to find a way to make it so they’re not afraid to do it,” says co-owner Tim Honadel.
Coupled with the purchase of a controller, buying a variable-speed pump can cost the consumer up to $2,000. By offering the pumps at a rental price of $19.99 a month, Pools by Ben plans to mitigate the energy bills of its customers and set up future earnings for years to come.
Rental equipment isn’t a new concept. Some pool technicians have been leasing out automatic cleaners for years. But with a challenging economy, it may well become a more popular option.
The most important aspect to a successful rental program is identifying a need among your customers. Then, a contract should be drawn up to outline terms of the agreement and what the customer can expect. Finally, know what your company is giving up to facilitate the rentals.
As long as you keep good relationships with the customer, rental programs can potentially fill up both your wallet and your route.
The most obvious reason customers rent equipment is financial. In this economy, a new pump or automatic cleaner can be a difficult sell.
However, most homeowners can handle a small rental fee attached to their monthly service bills.
“People don’t mind paying $20 a month,” says Peter Hooper, owner of CCC Pool Service in San Marcos, Calif.
In addition, there are others who may not believe in the efficacy of the product. Service companies may need to cycle through several models of cleaners to find the best fit.
“It’s a testing process the first few months,” said Mark Montegani, owner of Pool Heaven in Huntington Beach, Calif.
Customers may even be more skeptical of a variable-speed pump. With promised savings of $70 a month — depending on the pool, of course — variable-speed pumps offer huge discounts on the electric bill. Yet even in California, where most motor replacements require an upgrade to multi- or variable-speed technology, some customers remain dubious.
“I would say without the rental program, they’d be buying the 2-speed or nothing at all, and leaning strongly toward [the latter],” Honadel notes. “So we either sit around and do nothing or we rent the pumps.”
Honadel uses a wattmeter to show customers exactly how much they’re saving with the new pumps. If they’re still not convinced, Pools by Ben will keep the customer’s old pump on-hand just in case they want to switch back. So far, no one has requested their old pump back.
Identifying the customer for each product helps as well.
“For older retired people who aren’t swimming a lot and just want their pool maintained, [the cleaner] works perfect for them,” Montegani says.
This system allows Montegani to scale back to every-other-week service, providing a cheaper rate — and quite possibly a cleaner pool — for his clients. He is also adamant about recommending the rental program for pools that may collect excess debris.
The customer base for variable-speed pumps is much broader, though savings to homeowners using solar heating will be significantly less because of flow requirements.
Contracts and policies
Anytime you’re loaning expensive equipment, you need some legal recourse in case something happens. However, being able to provide the customer with flexibility will go a long way toward establishing a good working relationship.
Most companies offer a simple contract that details terms of the rental as well as a maintenance policy. However, unlike traditional service contracts, rental agreements are usually best month-to-month. Service companies should create contracts to set consumer expectations and protect the product they are renting out.
Most companies offer free maintenance as an added perk. With pumps, the maintenance isn’t much more than a new o-ring here and there. With automatic cleaners, it’s a bit more of a commitment. High-wear parts such as ball bearings and connecting hoses should be covered by the service company.
What isn’t generally covered, however, is damage from negligence and theft. Homeowners are expected to keep their equipment secured in the backyard and make sure the cover is on the control pad.
However, training homeowners is no piece of cake.
“It’s kind of a can of worms…with dogs biting [the cleaner], or even just general abuse as far as people getting it out and throwing it in the corner,” Montegani notes. “And it may not even be the homeowner — they may have family over.”
Techs must spend time educating the homeowner to ensure their property doesn’t suffer undue wear and tear. Putting language in the contract will protect your investment, but talking to the client will ensure their continued business.
In the case of theft, though, sometimes the homeowner deserves a break.
“It’s hard to pass that expense onto a customer,” Hooper says. “Hopefully we’ve rented it out for enough months that it’s paid for itself. Keeping the customer is more important.”
While there is money to be made in rentals, you must have enough capital and trained staff to make it work. And with any rental program, you will have to spend money upfront.
“From a service perspective, I don’t think most pool guys could afford to structure their business this way because you have to buy the cleaners and have them in stock,” Montegani says. “Then it takes a year or two to get paid back.”
Though cleaners cost less than pumps, techs should have several demo models available to give the customer options. This can set a tech back a few thousand dollars. Furthermore, the service company is expected to cover the repairs. Wear and tear is why many companies are choosy about which kind of models they enroll in a rental program. With free labor and parts, you’re bound to push the return on investment back a bit.
The capital also will need to be there down the road, when the rental units have to actually be replaced. However, at $20 a month, a good cleaner can generate income well beyond the few years it takes to recover its purchase price.
Of course, to ensure the cleaners’ continued operation, you need people who can fix them.
“My guys have to get very good at seeing issues with the cleaners and fixing them,” Montegani notes.
For pumps, technicians have to be both familiar with the equipment, and in a number of states, licensed for installation. But better filtering in pools with variable-speed pumps will inevitably endear service techs to the idea. Ditto for the cleaners:
“For employee-run companies, I love the idea because my guy can keep a very clean pool and we get less calls regarding those [issues],” Montegani says.
Even if the money doesn’t come in as quickly as anticipated, offering the rental option has allowed business to grow, he adds. A cleaner pool also means lower labor costs.
At worst, the customer always has the option to buy the equipment. With pumps, however, customers may not be so inclined.
“They go back and do the numbers and say, ‘Well I got it for free now, why would I go back and buy it?’” Honadel says.
- Cost Recovery
Don’t get burned by customers who can’t pay the bills.
- Under Contract
Check out a sample rental contract provided by Pools by Ben.