Few would deny that life is different now than it was before the Great Recession. It was a devastating blow not just to our economy but to our confidence — from which we have not recovered.
No doubt we will, in time. But retailers need to sell to the world as it is today. They need to understand what has changed in the psyche of hot tub consumers, and how to use that knowledge to help create the most-advantageous commercial environment and the strongest customer relationships.
To that end, APSP commissioned the Harrison Group, a company that specializes in researching consumer behavior and helping businesses use that information to create strategies and boost revenues. Their findings were the central theme to the recent APSP Industry Summit in Chicago, Aug. 14-15.
Harrison Group surveyed 2000 households with large discretionary incomes — people who can afford pools and spas — with an eye toward understanding shifts in emotions, priorities and values in this new, tentative economy.
What they found were historic levels of doubt and insecurity, and all the behaviors and life adjustments that flow from these basic human emotions.
The first and most important of these was the Great American Line-Item Rationalization. Across the continent, in the wake of the news that Bear Stearns was going under and elements of the banking system were insolvent, consumers made a grim and thorough accounting of every household budget entry.
For years, they had spent discretionary money based on vague influences or impulses that were not entirely clear — perhaps even to themselves. They had developed habits and attitudes without careful consideration of the financial cost. A consumer might purchase expensive exercise equipment on credit, abandon it to the basement after three weeks, and then quietly shift it on to Goodwill in the spring.
That consumer mind-set was the first economic casualty of the crash. As the Great Recession took hold, in rich and poor households alike, each debit on the monthly statement was analyzed for its worthiness, and ruthlessly cut if it failed.
But why? For most of these people, income had remained unaffected by the recession. If their earning power was unchanged, why bear down hard on spending?
The answer, Harrison's research clearly shows, is uncertainty. Regardless of one's checking account balance, the world became a more threatening, less financially stable place in 2008, and the reaction of consumers was to husband resources with an eye to possible hardships ahead. Four years later, very little has changed. Confidence, that magical, mystical ingredient of greatness and bold buying habits, remains in short supply.
Eighty-one percent of those surveyed by the Harrison Group — our core customer base — said that having more confidence in the future would likely cause them to increase spending. Sixty-four percent said they were saving money because they were worried about the future.
This uncertainty, fed by everything from high unemployment, low valuations of homes and stock portfolios, static incomes and political gridlock, has become entrenched in consumers minds. More than 85 percent of respondents believe the U.S. is still in recession, and of those, more than 70 percent believe it will continue for more than a year.
With uncertainty driving a careful spending-evaluation process, the criteria behind a purchase has become crucial. Make no mistake, potential spa buyers have money and are willing to spend it, but they now need greater assurance that their purchase has value and provides higher level benefits, not just short-term gratification.
For many, such motivating benefits include providing a venue to relax and have fun with a spouse or partner, and health benefits (general health benefits like enhanced circulation and muscle relaxation, and specific health benefits that aid in the treatment of an injury). Among current hot tub owners in the Harrison survey, these two incentives — to acquire a place to connect with others and a wellness center — were at the top of the list of reasons for owning a hot tub. They remain the most powerful drivers of sales, especially for older and family-oriented consumers.
They also remain virtual secrets to the wider population.
If there was a take-home message from the Summit, it was that to put the spa industry back on track, this little-known secret of spas must somehow leak out to the general population.
According to the Harrison Group survey, more than half of hot tub prospects — these are people with the money to buy, and some interest in the product — just don't know that much about hot tubs. Seventy-two percent of prospects said there were other items they wanted to purchase first.
These people, a vast swath of our core customer base, clearly do not "get" hot tubs.
They think of hot tubs as a product made of synthetic materials meant to contain hot water. The life or death challenge for the industry is to change that concept to a mental picture of a laugh shared with a wife, an improved relationship with a teenage son, new flexibility in an arthritic knee or hip, or simply a good night's sleep. These things are what the words "hot tub" must come to mean.
This crucial transformation in the mind of the hot tub customer was the subject of a rousing presentation at the Summit by the CEO of the boating industry's association, Thom Dammrich, who is leading a parallel effort in the watercraft industry. Boat manufacturers were devastated in the Great Recession as sales fell by 55 percent and have only recently begun to slowly recover. Their product is traditionally considered a luxury item with a large footprint and major upkeep. Sound familiar?
Dammrich has made solid progress to unite his industry behind a major marketing campaign to, in his words, "sell the 'ing,' not the thing." That is, sell "boating," not the boat.
It is a unified, cohesive effort to develop the image in consumers' minds of people having fun on water. It doesn't talk about engine horsepower or cabin area, it focuses solely on the relaxation and relationship-building aspects of boating.
Dammrich used an old joke to drive home his point, as he challenged the crowd: "What are the two best days in a boat owners life?"
After the group roared the well-known response to the old saw, Dammrich shook his head. "Nope. The two best days in a boat-owner's life are Saturday and Sunday." This is the type of mental pivot required to bring in new spa customers and restore health to the hot tub market.
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