The 2010 state of the pool and spa service industry

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Aaa 510 AqIn the service industry, we find a financially strong, growing enterprise, currently the most vibrant sector of the residential pool and spa industry.

While many builders and retailers have struggled to stay afloat in the recession, the 144 service professionals surveyed for this story reported increased earnings overall - along with the increased competition that usually accompanies pockets of prosperity in a down economy.

They expect further expansion next year, as new products along with greater productivity continue to provide better margins.

Although every emerging product requires an investment in education and may have some adverse effects on the total system, the big recent product trends - energy-efficient pumps, salt chlorine generators and automatic pool cleaners - have helped make money for service pros.

"Variable-speed pumps are a great story that makes them easy to sell," said one respondent, and while that may be a bit exuberant for the general sector, these products are providing enormous energy savings, and that message has filtered down to homeowners. They have been increasingly prepared to pay for retrofits. At the same time, many areas offer incentive checks directly to the installer.

Salt chlorine generators are more controversial, but most service pros still regard them as revenue producers despite their problems. One respondent summed it thus: "Positive sales growth, with a few headaches."

Another claimed good margins on related products, which he carries with him and sells at opportunity.

A third service tech described the situation this way: "We have seen a positive effect. More customers are purchasing them, and it has not affected our chemical sales. Salt needs to be added periodically, as well as a sequestriant."

The automatic pool cleaner has proved to be another friend to the pool care professional, perhaps to the surprise of some ("We used to think it would be the death of the pool man!" one respondent said).

As for how the product helps him, one serviceman says he tosses one of these units into a pool and stops by to pick it up later, letting it clean the vessel while he works on the next one. He says it's become a "second pair of hands."

Faster Companies

Technical advancement has not been limited to products for sale or use at the client's pool. New tools of business have made operators more productive, and therefore more profitable.

Software that helps manage billing, inventory and routing has made a huge difference at the bottom lines of service companies, as owners are now spending less time hassling with paperwork and plotting truck circuits and more time satisfying customers.

GPS tracking equipment was another clear winner with service companies that own fleets of vehicles, as it tends to keep employees on task and more productive during the work day. There's a bit of tension between management and employees when such equipment is installed, as employees feel their workday is under scrutiny, but the survey results indicate a belief that such measures boost productivity.

These developments and the continued economic strength of the service sector, along with the fact that a pool care business is a relatively easy start-up, have drawn more people into the business and increased competition for a limited number of clients.

This inevitably puts some downward pressure on fees, as the best way for a new business to break into a market is to try to undercut existing providers and thereby take their clients.

A good number of the respondents in the survey felt that many of these new startups offer poor service, which ends up hurting the industry as a whole. References to "fly-by-night operators" and "one-truck wonders" were common.

Competing with cut-rate providers is a challenge for any established company. One respondent spoke for many when he said, "Many customers don't understand why the educated and well-developed service companies charge a premium rate."

Other industry hurdles include competition from the Internet and wholesalers, as customers try to avoid the serviceperson's markup by doing either water treatment or equipment replacement themselves. As one respondent put it, "Wal-Mart people think that I should be able to sell chemicals at the same price and provide my level of service. They just don't get it. Go to Wal-Mart and see if they can tell you how to take care of your water problems!"

There's no doubt that for a small service company, price competition with large-volume sellers is impossible, but as respondents made clear, success in this game means keeping the customer focused on the service tech's strength - expertise and quality, dependable service.

And finally, there's the economy - addressed last because it has been so thoroughly covered over the last two years. The nation as a whole has abandoned its free-spending ways, at least for the moment, and this has had a strong effect on pool care businesses.

There is less money coming from the customer base than before. Invoices are now scrutinized more carefully, and more clients are inclined to save money by doing maintenance themselves.

At the same time, while many customers have lost their homes and pools to foreclosure, a great many of these customers have been replaced by banks and realty companies as pool owners still in need of service.

A number of respondents noted that servicing foreclosed pools has become a sturdy new market.

Nevertheless, new pools are the best source of new customers in service, and building is down dramatically nationwide, especially in big pool states like California, Arizona and Florida. The housing market will have to bottom out and begin to climb again - as it surely will - before these numbers get better.

Looking Forward

After a period of considerable change in the service sector, expect a good deal more of the same. Keeping up with new technology will remain a priority, as it always is in businesses that care for equipment and service installations.

Many states are planning to impose new regulations, mandating the selection of energy-efficient products for new pools and retrofits. This will mean more effort in education for service techs in order to be able to troubleshoot and install these products.

VGB has had little impact on residential service so far, but it is quite probable that VGB's rigorous guidelines for public pools will become the standard for backyard pools beginning with changes in local pool codes in 2010. This remains to be seen, but if strictly implemented, it will make new demands on service personnel to become conversant on the new guidelines and able to support the new products they require.

At the same time, slow-growing but green shoots of an economic recovery seem to be emerging from the wreckage of the last two-plus years. Tiny, tentative shoots to be sure, at this point, but full recovery is inevitable, eventually. And this will bring more sanguine customers, more pools and spas to care for, and more lucrative opportunities for service providers.

Looking to the distant future, the Internet combined with advanced pool controls promises to become a major force in the service industry one day.

Software has been created that allows remote monitoring and control of client pools. In pools equipped with the necessary equipment, chlorine output (for chlorine generators), temperature, scheduled programs and system programming can now be changed with the click of a mouse from a remote location, instead of requiring a service call.

Of course, some aspects of pool care require the physical presence of a service person, but if development continues along this line, others aspects such as water maintenance could one day be accomplished via the Web, which would profoundly change the service industry.

Service companies could conceivably handle fantastically large client bases - thousands of pools - with minimal personnel, because many service tasks would be performed at a keystroke over the Internet, instead of taking the time to communicate with clients, drive to each residence, access the pool, find the controls and perform the necessary task.

Comments or thoughts on this article? Please e-mail [email protected].

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