Upsell, make money and great margins on accessories sales
When you go to buy a car, do you ask if the tires are included? Likely not, because you expect them to come standard on the car, along with automatic windows, locks and a stereo system. But that isn’t really the mind-set when it comes to hot tub accessories. Customers still ask dealers if a cover is necessary, or don’t think to buy steps.
Through a series of approaches, dealers can educate, change the customer’s expectations, and make a reasonable margin on hot tub accessories. “Some dealers say they don’t like to sell accessories because their staff throws them in without them knowing — so it costs money, and you have others that say it’s a great profit stream,” says Mike Genova, president of Leisure Concepts in Spokane, Washington. “The first step is to recognize there is money to be made by selling additional products with the sale of a spa. Believe it and be committed to it.”
PACKAGE DEAL One option is packaging some accessories with new hot tub purchases. Helena Kasten, general manager and owner of Arizona Hot Tub Company (formerly Prescott Spas) in Prescott Valley, Arizona, says dealers need to get in the car-sales mind-set. “Like with what comes standard on a car, they should package what should come standard with the hot tub,” she says. “We build these kits that include the hot tub, steps, water care, cover lifters and local delivery. You just build it into the price point.”
Genova says packaging your products is necessary for the market, especially if your competitors do the same. “The packaging has to have the key components that make it complete,” he says. Typically that would include the cover lifter, cover, chemical kit and steps.
Kasten includes the Sure Step from Byron Originals as part of Arizona Hot Tub Company’s hot tub packages, but customers can upgrade to a different set of stairs if they want. “They’re going to need that step, and I really find a great value there,” she says. “I still make my margin while providing a quality step.”
UPSETTING ADD-ONS Some items, such as handrails or umbrellas, don’t really work to package because they’re not a necessity. “On almost every hot tub, we display items our sales history shows customers would benefit from and purchase,” Kasten says. “When you buy a hot tub, we’ll discount that handrail 10 percent.”
The discount often seals the deal, but it’s important to establish your accessories’ value before attempting to upsell. Displaying all accessories in the showroom is the first step. “Ensure that it’s merchandised properly,” says David Carleton, owner of Spa Pool Marketing Success. “If you want people to buy enhancements, merchandise it that way in the store. People can’t envision what a hot tub by itself is going to look like in the backyard, and if they can’t do that, they’re not going to be able to envision items that will enhance their hot tub experience.” He recommends displaying accessories on and near the hot tub displays, and in wet-test areas so customers can touch it and see how it adds to the experience of hot tub ownership.
Ken Leonard, owner of Carefree Spas, Inc. in Indianapolis, takes a slightly different approach to accessory sales because of Internet competition. “We sell steps, stools and tables made by local people,” he says. “I’ve had unique things made, which I can get for a decent price and that look good, wear well — and that I can sell along with the spa. Customers see that it’s really nice, made of cedar and stained to the color they want. If they can’t get it anywhere else…then it’s a winner.”
Carefree Spas does not do packages with its hot tub sales, instead separating out essentials like the cover in order to show value. Leonard says that, once you include it with the spa, the value is lost. Carleton agrees establishing a value for the products is essential to making the sale. He’s seen dealers take several of the accessories (such as a cover, lifter, stereo, steps, etc.) and display them with a sign pricing the combination at $1,500.
“Then they can point to that display and tell the customers it’s $1,500, but if they add it to their hot tub purchase today, it’s only $500,” Carleton says. “Once they establish a value, then it becomes something they can discount or add at a discount, where the customer can see they’re actually getting a deal on it.”
IN YOUR SERVICE TEAM’S HANDS Offering accessories at the point-of-sale is an obvious route, but you can’t rely solely on those encounters to make the margin on accessories. Leonard gives his service techs a commission on any additional sales they make while doing hot tub check-ups. “It’s selling accessories after the hot tub is purchased,” he says. “They’re not just service techs, they’re ambassadors.”
Leonard’s techs carry coupons for a percentage off or a free item. “We’re giving customers carrots to come back in the store while we’re doing the service,” he says. “We’ll give them free stuff, but they have to go into the store to get it. Everything is geared to getting them back into the store.” Genova says the owner should incentivize his sales and service teams. “The salesperson is trying to augment his income through the commission structure,” Genova says. “It starts with the manager creating an incentive to motivated the sales guys. The other part is to measure and monitor that to hold the sales team accountable.”
THE IDEAL MARGIN Dealers like to make 40 to 60 percent profit on accessories, Carleton says. “They can’t always do that on more commodity-type items — a chemical is a chemical is a chemical — but if they have more proprietary items, and those have minimum advertised pricing (MAP), they’ll be able to make the margins they want.” Carleton says that margin may decrease if a retailer is packaging its accessories with a hot tub and bundling for a discount, but they’ll make more on the hot tub if they throw them in to close the deal.
Whether packaging accessories with the sale or upselling, failing to try is leaving money on the table, Genova says. “When the consumer is in the store buying, if you sell them $500 to $1,000 in spa accessories and make $300 just by asking, that’s just pure money, because there is no cost to your organization to do that,” he says. “The consumer’s in there and buying something already. It’s no different from someone buying a hamburger at the drive-thru. It would be silly not to ask if they want fries or a soda, and when they say yes, it augments everything.”
Genova also advises that, while selling accessories to customers later can happen, the most success will happen the day of the initial sale. “After the newness has worn off for most people, the last thing they want is to…spend more money on it,” he says. “The best time to get them to spend more on accessories is when the newness and emotion [of owning a hot tub] is there.”