As a result of the economic downturn of 2008 and 2009, many pool/spa construction-only companies were forced to view service in a new light.
Before, many builders saw service as a necessary evil whose only purpose was to facilitate new-pool sales by offering the promise of aftermarket support.
After the sale, service usually meant warranty work at the height of the season, when schedules were tight. If a builder experienced a slower response time, clients would search for a new service provider, thus ending the relationship with the builder.
While 2008 taught our industry that every dollar mattered no matter the source, professionals remained uncertain as to just how much profit could be generated by service. What were the measurables that allowed service businesses to thrive and exceed in an economy where new-pool sales greatly diminished?
At the company where I work, Memphis Pool, we have created some processes, metrics and analytics that helped us navigate this turbulent economy.
The challenges
A great customer-service experience creates an environment where the customer wants to continue their relationship with your business.
In the service industry, we often fall short of this goal for several reasons, but over the years I’ve especially focused on three. First, what we do is highly technical and requires many years of training and education to learn. However, we often fall short when we need to convey our knowledge and message to our client. A contributing factor to this communication breakdown is that the customer often is not home while we do our work. The responsibility then falls on the business to inform the homeowner what is happening with the pool in a way they can understand, without being onsite, where we can take advantage of visual cues.
Next, in the pool/spa service industry, 65% of our revenue is generated during 12 weeks of the year. This seasonality often requires the use of temporary or seasonal employees to manage the onslaught of service requests. Before, it was common practice to hire help in the weeks or months immediately before the pool season, let the cream rise to the top, then cut from the bottom. But the labor shortage has created an environment where we send workers into action without proper training.
This leads to the third issue: The onsite professional may lack the experience or knowledge from a technical and customer-service perspective to manage the dialogue with the client.
When mixed together, unskilled laborers, absent clients and a highly technical product creates a business that can be difficult to earn a dollar. So projecting profitability often proves the first challenge in exploring and creating a service division.
Setting Parameters
At Memphis Pool, we use a few methods to quantify these issues
The first step in unraveling this plate of spaghetti, especially for the builder that wants to launch a service department, is to understand the scope of business potential that you already have. Before spending a dollar on external marketing endeavors, we want to ensure that we are getting as much business as possible from our existing base. We also want to project the potential profitability from this base.
If you have software for your business, run a report showing the pools that you have built. This number will serve as the foundation to build out your metrics for measuring the success of your new department. For the sake of this conversation, we will assume that you have built 500 pools. Of those, you would then identify and document the equipment on each pool. It is even a good idea to come up with a total number of sand filters you have in operation. How many cartridge filters do you have?
Next, find out the life cycle and maintenance needs of the equipment.
How often should sand be changed in a sand filter? How long will a new pump last a client? How often will a pressure-side cleaner need to be tuned up? These are all questions that many industry professionals have their own opinions about. Where these individual opinions become challenging is when a client speaks to several different employees within an organization and gets varying answers to such questions. The end result is the perception that the company is fragmented in its approach to the education and training of its staff.
For the sake of continuity and to establish a metric that will produce a steady revenue stream, make sure your company creates milestones for each item of equipment associated with a pool and spa. Armed with the knowledge of how many pools we have and a documented set of milestones, we now can generate work in non-traditional busy months while also giving the business owner/manager the metric they need to measure efficiencies and increase productivity.
To help with this, take a company-wide survey, asking knowledgeable employees how often pumps, filters, etc., generally need service or replacement. You can use the results to establish milestones for maintenance.
Now we’ll go back to our example. Of the 500 pools you have, let’s assume that 250 have sand filters and 250 have cartridge filters. Now, in your company-wide survey, let’s say you determined that sand in a filter needs to be changed every three summers, and cartridges need to be cleaned every four months. Take the 250 sand filters and divide it by the number of years between sand changes (three): This tells us that we have roughly 84 sand changes to perform each year.
Maximizing the Possibilities
This strategy can help any service operation to extend the work season.
If you know that you have this maintenance and replacement work, why wait until the sun comes out to perform it? In most markets, we get pockets of weather that allow us to work in January through March. At Memphis Pool, we solicit those sand changes and get that work done before the pool season kicks off on March 1. This keeps our guys busy in the offseason, and also shortens our wait time when clients call requesting service or repair calls during the pool season.
No doubt, part of the challenge in obtaining new clients is getting to them first. By taking the work you know you already have and deferring it to the offseason, you are essentially taking good care of the customers you already have, while fostering an environment that is conducive for new client acquisitions.
And there’s something else to remember: Perhaps 84 sand changes annually won’t produce profitable results, but I believe that every new client acquisition presents 27 opportunities to sell something. Imagine the possibilities of productivity, efficiencies and profitability if you can build out a metric for all 27 sales opportunities.
A similar exercise should be performed to determine the profitability of water treatment. Every major pool/spa chemical manufacturer has its own metrics for dosage recommendations. With the products we use, for example, 1 ounce of algaecide will treat 5,000 gallons of water, and 1 pound of our shock will treat 10,000 gallons.
Now remember our 500 pools from before? Let’s look at those from a different angle. What are the total gallons of water in each of those pools? Let’s say the pools average 25,000 gallons. This means your company will be treating roughly 12.5 million gallons of water on a weekly basis. Based on the dosage recommendations from the manufacturer we use at Memphis Pools, you should be selling 2,500 ounces of algaecide per week. You also should be selling 1,500 pounds of shock and selling 1,500 sanitizer tabs per week. Multiply those figures across the number of weeks in a pool season, and this will allow you to create some benchmarks for measuring the efficiencies of your service technicians. (But remember to plug in the dosage requirements of your manufacturer.)
Furthermore, this type of metric allows you to dictate to employees how much they should add to each pool on a weekly basis.
This translates into an additional benefit for your company, as well as your customers: It standardizes your procedures and makes you less dependent on the employees’ perception of what they should and should not be adding to their account for the week.
Clear Purpose
In the two metrics we built out above, we were able to mostly offset the barriers to profitability that we described — our industry’s seasonality, customers not being home and the necessity of sending untrained staff into action.
When making the decision to diversify from a construction-only business into one with a service presence, it is important to grow with a purpose. It is possible to expand the business in a way in which you do not lose focus on the core business while adding to the top and bottom lines of your profit and loss. Slow, steady and measured are the key terms when expanding into service and weekly maintenance!
