Q&A With Paul Porter

photo of Paul PorterPaul PorterCEOPremier Pools Management CorporationRancho Cordova, Calif.

Paul Porter runs Premier Pools Management Corporation, a company based in Rancho Cordova, Calif. He's been in the pool business for 23 years, recently shifting his focus from building pools and selling retail items in the Southwest to marketing his methods to potential licensees across the nation.

Tell me about Premier's early days.

It was founded as a pool building company by me and Keith Harbeck in 1988. We started very inauspiciously β€” in our first year we built about seven pools. But we had a very simple philosophy that's helped us: Do what you say you are going to do, build a product with impeccable value, exceed customer expectations and let them grow your business. At that time we had no grandiose vision, and like most startups we were undercapitalized with no reputation. But with that business model, and in our relentless pursuit to build the best product for the best value and to create unparalleled customer satisfaction, we really prospered. When we started there were over 100 builders in the Sacramento region, and three major, large builders. Now, two of those big ones are out of business and the other is not a significant player anymore.

So we grew and grew and grew to the point where, in 2006, we had 10 offices, three retail locations and were doing $100 million in business with 500 employees.

What made you decide to get into retail?

We always thought building and retail were complementary. In some areas, weather mandates having a business model where you build in a certain season, then you need to sell spas and other things in another season, and then you support both of those things year-round with chemicals and accessories. So, when we put together our national growth plan, we said, "That's a model we're really going to have to look at."

We have about 60 percent market share in Sacramento, and about 20,000 customers, and we knew we really needed to provide support for them, so we started opening retail stores. Then, in 2006, we hired a guy who'd been president of a large retail operation on the East Coast, and he came over with immense retail experience. He's now the owner/licensee in the Phoenix market, where he's opened up three retail stores. As a matter of fact, he opened one just three months ago in Chandler and that store is doing just unbelievably. He's 300 percent over his forecast already. We used to have just a pool-building facility there, and he incorporated portable spas, chemicals, toys, the whole thing. They've executed things very well.

Our spa sales are robust. In our Rancho store we're up 220 percent year to date. We budgeted, for example, for 24 spa sales for the year in Phoenix. As of yesterday we'd sold 42, so we've already doubled our forecast.

What are you doing differently?

I think it's an attitude more than anything. There's a lot of fear out there, there's very little proactiveness out there. Everybody's sitting around waiting for somebody else to make a move, waiting for the economy to get better. But if you do that, you're going to wait yourself into bankruptcy. We're going out after the market. Now, we understand financing is tight, the housing market is tight, but there are still discretionary dollars out there and we're going out enthusiastically and aggressively with home shows and other campaigns. Too many people are sticking their heads in the sand expecting that things will just get better. But that's not what happens. If you're going to compete in the marketplace, you can't really look at what you've done in the past. Right now, there are only so many dollars people are going to spend, so you have to ask, "Is there a market for my product, and, if so, how do I reach those consumers?" So we're running email blasts, doing social networking, doing traditional marketing with vendor support. We just did a show in Phoenix and ended up selling 12 spas over the weekend while a competitor sold two. How'd we do that? We went in with a booth three times the size they had and really showed that we're in business. The customers can tell if you're timid about your business. You've got to go out there with a robust approach. Take a hint from other successful retailers out there. That's how they're doing it.

How do you take advantage of Facebook and other social media?

Facebook is 500 million strong. It's the way people are communicating today; the way young people are learning to communicate. What you need to do is provide information that people are interested in. For instance, we're not going to go on Facebook and say, "Come and buy a pool for $25,000!" We'll say, "Premier Pools is having a vacation picture contest." So they'll take pictures on vacation and we'll line up some judges and prizes. If it's springtime, we'll talk about openings. So you want to position yourself as an expert in the industry and to start a conversation. Facebook isn't passive; you've got to post. It's just one element, but if you're behind the curve on it, you can be left in the dust.

Let's face it, though. Most people in our industry are in small operations β€” they're doing the bookkeeping, the marketing, the advertising, the sales, paying the bills, HR. Then you say, "Oh, by the way, you have to focus on your Web site and on Facebook." It's hard.

You're adding new retail locations through licensing agreements. How is that different than franchising?

A franchise has to be registered with the government. It does give you more authority to dictate the day-to-day operation: "You're going to open at 8:00, you're going to wear a blue suit." What we do is license our brand and our business methods. The owner has the right to use the license, but he also has responsibilities. What I'm doing is protecting the brand. Now, if I open up with a guy in Atlanta who's doing $10 million in business, but he's getting consumer complaints left and right, I would go and pull that license from that guy. We're protecting the name of the business and what we stand for. The licensing agreement has more teeth in it than franchising. If a franchisee is following the rules, hitting the quotas, they get to stick around. But I can't dictate things like hours.

And these licensees benefit from your ability to buy in scale.

I buy services in scale, like liability insurance; I buy product in scale; I offer marketing services, which are included in the licensing fee; we do all their bookkeeping and accounting. If a one-man operator had to hire a marketing firm or a bookkeeping firm, it would cost him way more than what we charge.

What's your geographic range? Is it pretty much Sacramento south and over to Dallas?

Those places, yes, but next week I'm signing up three dealers: one in Maine, one in Connecticut and one in Boston. I'm talking to people in Tampa Bay right now, Milwaukee, Indianapolis. We're continuing to grow and open up new branches. But primarily right now our greatest concentrations are in Texas, Arizona and California.

Are you changing existing retail locations or mainly opening new stores?

It depends on the market, but primarily we're working with small businesses that are stuck in the mud. We give them a national brand, and instantly they've got all this horsepower behind them. I just printed a 16-page brochure they can use, I've got Website-optimization ideas. In those cases, their existing brands weren't strong enough to grow their businesses.

You just can't be Joe's Hardware Store anymore. You've got to be Joe's Ace Hardware.

Do you think this industry is going in that direction?

It has to. We don't have enough accumulated resources to go out and compete for discretionary dollars today. There are so many people going out of business that are under-capitalized, and if you don't have the horsepower to be a big player... If these small guys want to stay viable they're going to have to be involved with something like we're doing.

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