Alice Cunningham
By any definition, Alice Cunningham is a one of the hot-tub industry's true pioneers. For nearly 40 years, she has led the company she and her husband founded, Olympic Hot Tubs, based in Seattle, to become one of the industry's vanguard retailers.
In July, I visited her office in Seattle where we sat down for a lengthy discussion about her plans for semi-retirement this fall and her perspectives on the industry's past, present and future. Bristling with characteristic enthusiasm, insight and gratitude, she surprised me by immediately pointing to an unusual artwork on her wall titled "The Age of Pharmaceuticals" by Pacific Northwest artist Jamey Baumgardt.
The work consists of a series of 48 canvas panels, each depicting a faux Rx package with health-related terms displayed in place of product names, words such as "comfort," "respite," "pleasure" and "joy." Although not created specifically for the hot tub industry, to Cunningham the work stands as a sort of summation of the benefits the industry's products provide consumers.
"With a hot tub, you get the same benefits, but there are no pills involved," she explains. "There used to be a saying, 'He who dies with the most toys wins.' Now I think that's changed to 'he who dies with the least number of pills on the bathroom counter wins."
Without missing a beat, she immediately connected the abstract with the tangible: "When we think about hot tubs/spas, the health benefits and wellness aspects are huge," she says. "Each year people spend literally billions on alternative medicine seeking the benefits you can find in a hot tub. It's not surprising many people are looking for something besides a pill. You can buy all this stuff and clog up your body, or you can get a hot tub."
BUILDING A LEGACY
Cunningham's work in the industry began as a second career, following a long tenure with the U.S. Department of Labor where she administered funding for job training programs for the disadvantaged and other social programs. In that role, she "gave away" tens of millions of dollars benefiting countless people, traveled the country and even testified before Congress on one of her experimental programs.
In June of 1975 while attending a meeting of the World Future Society, she was introduced to her future husband, Blair Osborn, an engineer and professor at the University of Washington. "We walked around talking all night and decided we wanted three things," she recalls. "We wanted to leave our respective bureaucracies, find something we could do together and never be apart."
Wanting to work in a field that focused on a tangible product, rather than consulting or some other purely intellectual business, the couple lit on the idea of selling wooden barrel hot tubs, which would in turn lead to their steady climb as one of the country's most awarded-winning hot tub retailers and the very first serving the Pacific Northwest.
The rest, to borrow the cliché, is hot water history.
Why did you and Blair choose hot tubs?
Some friends of ours who were both professors at U.C. Santa Cruz had one. When we visited them and sat in it for the first time, Blair and I just thought, 'These are so cool, everyone should have one.'
That must've been quite an idealistic time.
It was incredibly idealistic and probably a little naive. "Oh sure, building a hot tub business, how hard could that be?" As it turned out, it was harder than we could imagine. We had no experience and no way of knowing what we were getting into. In fact, the only thing that I knew about business at the time came from a man I once dated, an author named Michael Phillips who wrote book called "Marketing Without Advertising" and another called "The Seven Laws of Money."
He makes the case that when you advertise, you attract customers who are not as loyal and most of the time are looking for the cheapest price. Whereas if you work by referral and reputation, you find a whole list of social benefits and ultimately, you'll develop more satisfied and long-lasting customers. So, over the years, that was the approach and philosophy that Blair and I stayed with, and it worked.
It's easy to imagine that kind of progressive thinking must've been unusual, or even out of step, with the overall pool and spa industry.
There was nothing like it for small businesses in general and certainly unheard of in this industry. But then along came Peter Brown, who was organizing the AQUA conferences. He was the first in the industry to present nationally known speakers and business leaders.
One year, Peter brought in Michael Gerber, who is the author of "The E-Myth" and a renowned authority on business skills development. There's a lot to it, but he basically talked about not working "in" your business, but working "ON" your business. In other words, don't just "buy yourself a job," create a sustainable business. That philosophy was a revelation and we started applying his ideas.
One of the main things we learned from him was to write job descriptions so both you and the people you hire understand what they're expected to do. The other part of that is all about hiring people who are better than you are in their part of the business. I've probably personally sold thousands of hot tubs, but the people we have on the floor now are far better than I ever was or could ever be.
You have to have the right people in positions best suited for their talents, performing the key aspects of your business. Figuring that out, establishing structure but at the same time allowing enough flexibility that your employees can succeed is tricky, but over time we learned how to do all that and it's worked out really well.
How would you describe product evolution that was taking place in those early days?
It was kind of amazing how it all came together. We knew the wooden hot tubs were declining in popularity, but some of the early acrylic spas we were seeing just didn't measure up to our ideas about quality, serviceability, durability, etc.
We heard from a man named O.T. Neal who was involved with John and Jeff Watkins. [John and Jeff] were both Vietnam vets, both were the kind of guys who liked to tinker with cars, plus their dad had a pool service route in Redlands, Calif.
As the story goes, when they were in Vietnam, they decided that if they made it out alive, they were going to build a new type of portable spa. Working with their dad, they noticed that most people with pools and attached spas mostly used the hot water part. Their idea was to build a portable unit that had a huge "garage door" for service and was affordable and reliable. They started out in Jeff's garage and made three a week. Their thought was if we build it, they will come, but "they" weren't really showing up, at least not at first.
They met O.T. Neal, who was an ultimate salesman and loved their product. They partnered and started signing up dealers. After O.T. contacted us, Blair and I went and visited them and were impressed with the product. The problem was, at the time U.L. refused to approve any cord-connected spa — simply would not do it. John and Jeff worked with U.L. for three years and long story short, finally got the sticker.
It was at that point that Blair and I went down to their factory, which was really just this crude garage-like structure. Blair spent all day looking at every aspect of the product and at the end he said there was "nothing wrong with it." That's engineer speak for "it couldn't be better."
Was that when you decided to transition to acrylic spas and away from wooden ones?
That was the beginning. Then Watkins made one model, the Classic, which looked like a giant dog dish made not of acrylic but Rovel, which was a complete departure from anything we'd seen before. In a wooden hot tub, you're sitting upright on a bench; in theirs you were reclining with your legs out. We tried it and it was very different, but we could see how it might appeal to some customers, especially those we might refer to as "early adopters."
We went back to our office with the brochure and as luck would have it that Monday a lovely elderly woman came into our office and said she had heard there was something called a portable spa. Her husband was retiring and they thought that if they had one of these things, their grandchildren might want to come over more. We showed her the brochure and said were considering carrying these. She said that because we'd been in business a long time and had a good reputation, she'd take one. Wow! It was that easy!
For us, that was the time we sold what became known as the "portable spa." If I had to point to one moment as a major turning point that would probably be it. You had to buy three to be a dealer. We had just sold number one and by the time the truck arrived, we'd sold number two. What a great choice Hot Spring turned out to be! Their spas have stood the test of time. They stand behind every one they make. It turned out we picked the brand that would help us grow and was loved by customers enough to come back and buy a second, third, fourth and now their fifth one.
What was it about portable spas that worked so well for consumers?
Around that same time O.T. took one back east to show it to people. When he explained it was for outdoor use, people didn't understand because when winter comes no one wanted to bathe outdoors. So, they started selling it as an indoor/outdoor product. The idea was that when winter comes you move it inside because it's portable.
The funny thing was people would buy it thinking they would move it under a covered patio or into a garage, but very few moved it as far as we know. But they started selling because homeowners had the option. Sounds strange to think of it in those terms now, but it was the "portable" aspect of portable spas that made the big difference in terms of satisfying what consumers thought they needed.
Fast forwarding to the 21st century, what are some of the more important recent developments in the product and overall industry?
Back in 2006 we started saying it was all about health. Prior to that, the product was still about girls in bikinis, decadence, luxury, indulgence and all that, which, don't get me wrong, had strong appeal. But we were getting more and more people coming in saying that they had arthritis or were in a car accident or had some type of health concern they thought would benefit from hydrotherapy.
It was around that same time Dr. Bruce Becker from the University of Washington was doing important research about the benefits of aquatic exercise and therapy and we decided that this was how we were going to grow our business, based on wellness.
Let's face it, when people get a certain age, whether it's 50, 60 or whenever, they start thinking about the fact they won't live forever and the quality of their life in terms of their own health and it becomes much more important than when you think you'll live forever. That's when they decide they should go out and buy one of these fountain-of-youth tubs.
The other thing that's changed is we started telling our vendors you have all these wonderful websites and marketing programs that are aimed at selling to us, the dealers. What you need to do is start selling to the consumer to help us. I've already bought from them and don't need a website, but we certainly need to take the message to the consumer and that's where our focus should be. So we've been able to get some of our manufacturer vendors on that bandwagon.
What would you say about changes in consumer expectations?
It's interesting how that's worked. There was a time when we were selling energy efficiency, but then that message stopped working because people assume the product is energy efficient. At one point we were selling our warranty, now they assume there's a strong warranty on every spa. We were selling total satisfaction, now they assume that, too.
There's an irony I think that today as there's more and more to know about through the internet and all the different ways we get our information, many people actually know less about each one. As a result, we've been constantly shifting what we think is most important in the sales process. It doesn't work to say we have this many jets, or these kinds of lights or this type of energy efficient pump, those issues are assumed and that kind of message doesn't resonate the way it used to.
Again, that leads back to wellness. That's the one thing I believe will last forever as the best message. As our population ages and people live longer, health is the one thing we all want the most because not only do we want to live a long life we also want a high quality of life.
You made that shift 10 years ago, how's it working?
Back in 2008, we did a major survey of our customers and asked them a number of questions; one of them was what surprised you most about owning a hot tub? The answers in turn wound up surprising us. It was completely unexpected even mind-blowing. Time and time again, they kept talking about nature.
They're outside in their backyards in their hot tubs, in many cases spending extended periods outside on their properties for the first time and nature is unfolding around them. One woman said she saw an owl and it was in her words transcendent. Another said she heard this loud crashing sound coming from the ocean and she looked out and it was a pod of Orcas. Those kinds of experiences become important revelations for many of our customers.
Now, that's obviously going to be tough to sell to people who haven't had those experiences yet, but on a certain level it does fit perfectly with the health and wellness concept. So, we started talking about meditation, contemplation and quiet. What we've learned is that for all the technology that we live with every day, what most people want most is a chance to unplug and just be still. A spa gives them that place.
How do you think the industry should express those ideas?
I've been talking about changing how you feel without drugs, without alcohol, without doing so many of the things we do to alter the way we feel. Using your hot tub is like a walk in nature in the way it changes your mood and sometimes your entire outlook.
Yet, let's face it, trying to sell an $8- to $20,000 product because it'll get you closer to nature really isn't going anywhere.
So, the way you connect those dots is by selling the concept that this product will make you healthier.
How would you like people to consider your legacy?
I'd like people to know how I felt about the product and what it did – what it does for people's lives, how it makes their lives better. I don't know of a product that does so much for people. Knowing that gives me a great sense of pride and personal satisfaction and it makes me extremely optimistic about the future. I'm grateful to have been part of this industry!
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