Lucrative valet services on the rise for the hot tub retailers
WHEN THE NEW ENGLAND SPAS VALET SERVICE TRUCK drives down the highway like a mobile billboard, onlookers may notice a white-gloved hand presenting a hot tub full of people on a silver platter. Norm Coburn, company president, says this butler imagery conveys the value of hot tub valet service. When New England Spas opened 30 years ago, valet service wasn’t on the radar —but over the last several years, it’s a lucrative portion of the company’s income.
“In the beginning, when someone would ask if we would come out and clean their filter, we would cringe,” Coburn says, “and now we ask how frequently they would like it done.”
DEPENDABLE INCOME IN A POSTRECESSION ECONOMY New England Spas’ valet service originated during the recession, when the company saw a devastating drop in sales volume and began looking for other opportunities. “Customers had been consistently asking for the service, so it was not difficult to put together,” Coburn says. It now has about 200 valet service customers.
California Custom Hot Tubs in Sonoma, Calif., also started offering hot tub valet services during the recession to draw more revenue. It currently has about 100 water-service accounts with biweekly or monthly valet service. Says Thomas Rosander, president and owner, “Now we get to see what sort of fixed revenues there are instead of, ‘Oh my god, what’s going to happen this month?’ It definitely helps with consistency.”
That fixed income not only helps a business with its month- to-month cash flow, it also makes it more attractive to banks for lending and buyers when it’s time to sell.
UNDERSTANDING YOUR TARGET DEMOGRAPHIC Convenience and preventative maintenance appear to be the two top reasons why customers seek out hot tub valet service. “We’re keeping an eye on their hot tub for them, so they rarely have a repair need,” Coburn says of the value this opportunity creates. “We’re able to see trouble before it happens. I think there’s definitely a benefit to the customer for having regular wellness checks, if you will.”
New England Spas’ valet service technicians also provide what they call a “minibar service.” It uses the chemicals it brings to provide the valet service for the hot tub, but it also checks the customers’ chemical supply, and if needed, replenishes them from what it has on hand. They may also perform a warranty service call at the same time, saving the customer a separate charge.
Mark Stevens, owner of Georgia Spa Company in Atlanta, which has approximately 80 valet customers a month, advises other hot tub stores to examine their markets and look at what level of hot tubs they’re selling. When Georgia Spa Company started the valet service two years ago, it was offering it to everyone, including buyers of entry-level hot tubs — but few were purchasing the service. “Don’t look at it through your eyes, but look at it through your customers’ eyes,” Stevens says. “Customers who are buying $12,000 to $16,000 hot tubs, a lot of times money is not the issue. It’s about convenience.”
Customers who come in with maintenance frustrations are also great targets for the service. “We tell them, ‘You can continue to bring in your issues, and we’ll continue to test the water and get you corrected, but we do offer this service,” Stevens says.
THE PRICE IS RIGHT Understanding the target demographic helped Georgia Spa Company profit from its valet service. Stevens and his team were apprehensive in the beginning, however: “Valet sort of scared us for awhile, because we didn’t have it sold in our minds that customers would pay the fee to have their tub checked on a weekly or biweekly basis,” he says. But once customers buying high-end hot tubs more frequently requested the service, charging the fee was easier to swallow.
Even at the outset, Stevens says Georgia Spa was never compelled to discount valet prices to make the program more attractive. “They’re not inexpensive contracts,” Stevens says. “I think our cheapest for a monthly check is $190, and we go up from there.” The price takes into account 10 minutes to check the water plus the cost of sending one employee across town — up to an hour-and-a-half drive. Stevens recommends pricing the service properly from the start and allowing it to grow from a part-time service to full-time.
CONTRACTS AND FREQUENCY OF SERVICE Generally, valet services are provided under an annual contract, a monthly service charge or both. The services offered range from weekly to biweekly or even monthly, depending on the customer’s budget and desires — as well as the company’s.
Whatever the frequency, Don Riling, vice president of Olympic Hot Tub in the Seattle area — which has about 450 customers using its valet service — says he believes the customer should sign a service agreement, which stipulates the service will be ongoing until they opt to cancel. “We give customers the option of paying per valet visit with a credit card kept on file,” Riling explains, “or a 10 percent discount on a year if they pay for annual service in advance.”
California Custom does not require customers to sign a service agreement, but services are billed monthly. “The majority of our customers have their credit card on file with us, and we give them a small discount for that,” Rosander says. “We will send a receipt from the paid invoice, and that happens pretty much automatically at the beginning of the month. If it’s February 1, we’re billing for January work.”
Alternatively, New England Spas only provides valet service through an annual contract paid once a year. “We’d rather ring in a sale once instead of 25 times,” Coburn says. “It just makes it easier. I know a lot of contracts and agreements have auto-renew features, and you have to cancel by a certain time. Whatever your terms are, make sure they’re easily understood and sensible.” New England Spas is flexible with the frequency of valet visits and sometimes alters agreements to accommodate schedule changes, even if a contract is not yet up for renewal.
SPREADING THE WORD Riling is a firm believer in the success of email marketing and incentivizing employees to get customers on recurring valet service plans. “The key to making the back end of your business successful is to market it like the front end,” he says. “Customers can’t and won’t take advantage of everything you offer on the service side if they’re not in the loop about what’s available to keep their products in great shape.”
The full-time valet service technician at Georgia Spa Company can earn commission off additional sales made while providing valet service. If he sees the customer needs a new cover, he can make that suggestion, offering to install it at his next visit — and make extra money in the process. This not only gives him incentive, but also demonstrates the attention to detail that comes with valet service.
In addition to the butler imagery on its valet service truck, New England Spas puts a valet service brochure with each customer’s new spa delivery package. While Georgia Spa Company markets the valet service in a vari- ety of ways, it has been most successful acquiring valet customers at the time of hot tub sale or upon delivery. “Putting a paragraph in our sales contract that talks about the valet service, and having the salesperson go over that, has been our biggest success,” Stevens says.
California Custom mostly uses an email marketing campaign, but recently started using a promotion to draw more valet customers. “[Customers can now] buy a hot tub and receive three months of free valet service,” Rosander explains. “We’ll come out twice a month and use our chemicals, and you can see how we do it and decide at the end of that time whether you want to hire us to do it — or try to do it yourself.” However, it’s still too early to tell whether this strategy is effective, Rosander says.
For retailers wanting to add valet services, Riling recommends good programs that cover a wide range of what customers want, using email marketing and offering employee incentives for signing up new valet customers.
Valet services at Olympic have been in such high demand, Riling says, that it is looking to hire a sixth full-time employee to service its valet customers. “It’s one of the most successful aspects of our service business,” Riling says.