Money, Money, Money

MoneyMoneyMoneyThe inside track on selling through finance…

Choosing the right hot tub or spa can be a confusing process for customers, especially with so many different brands and models now available. But the huge range of financing options on offer makes buying a hot tub much less of a luxury purchase than in the past. For retailers and dealers, finance is an important offering and most now provide some kind of finance option, from 0% finance over short periods to higher rates over longer timeframes. While the proportion of financed sales varies dramatically, what is abundantly clear is that financing is an important part of the mix for hot tub and spa retailers aiming to maximise their sales “For us, financing is very important,” says Julia Kendrick, Hot Tub Specialist Sales Consultant at Midlands-based Award Leisure. “We promote our finance offers across multiple channels, including our website, social media, on pop-up banners in-store, in brochures and over the phone. “We have a finance calculator on our website that customers can fill in themselves in their own time.” Continues Julia. “It definitely generates new leads and sales. Not everyone has disposable income, so they appreciate the opportunity to spread the cost.”

About 25% of Award Leisure’s customers take out finance. The percentage was significantly higher for North Spas in Newcastle-upon-Tyne, with as many as 44% of its customers using finance in 2015. The company expected this to increase in 2016 due to an increase in pricing, but in actual fact the opposite happened, with 37% of spas financed in 2016. By 2017 this had fallen to 24% and, according to their Marketing & Sales Specialist Samantha Murphy, this decline seems to be continuing in 2018.“Even though we anticipate a further decline in customers using 0% finance for their purchase, it is still critical to promote it,” says Samantha. “Having the ability to facilitate 0% finance is one of our unique selling points over other hot tub companies in the North East. Finance can make hot tubs accessible to a larger market, especially when a showroom visitor has a budget only fitting online retailers. ”One region where the number of customers taking out finance appears to be lower is Exeter in Devon. This is certainly the experience of Dan Johnson, the founder of HydroVue which is based 19in the county. “Less than 10% of our sales are financed – probably because in Exeter we have a disproportionately amount of high net earners,” explains Dan. “Here, if we offer finance, it’s usually as a lever to upsell. That said, those that bought on finance have tended to have a much greater buy-in to hot tub ownership. ”Launched by Dan late last year, HydroVue’s role, he explains, is to provide specialist retailing experience and selling knowledge to hot tub and pool retailers, many of whom may be highly technical but don’t always understand sales, marketing or recruitment. “My aim to help them bridge this gap. I carry out a range of roles, from helping them find staff to managing their web presence.”

MoneyMoneyMoney2The dealers Dan works with use varying promotional tactics for financing deals, from subtle adverts in-store to bold, payment-driven online ads. Many use social media, but more to promote the fact they offer finance rather than to quote rates.One retailer offering more finance, not less, is Aqua Warehouse in Essex. They have been offering finance via Hitachi for a number of years but have seen a significant growth in sales utilising finance over the last two years – both in their own retail showroom and through their dealer network. “Over the last 12 months around 20% of sales were via a finance option and I can only see this trend growing,” says the company’s Graham Message. “We’re seeing more and more Vita Spa & American Whirlpool dealers embracing finance and promoting it to help increase their footfall and overall sales. We even know a few dealers that assume every customer will buy on finance, unless the customer says otherwise, so their percentage of finance sales is a lot higher. This is a major change that I don’t think we would have seen a few years back.”

Does finance help encourage ‘bigger ticket’ purchases? As already mentioned, in wealthier areas like Exeter, it can certainly be used as leverage to upsell. HydroVue’s Dan Johnson again: “Finance helps ‘lift’ people to a tub that suits them and that they really want, rather than settling for second choice. It removes a big objection to buying a hot tub in the first instance – the ‘I can’t afford it’ syndrome. ”But it’s not just in the wealthy parts of the country that finance encourages upselling. Award Leisure’s Julia Kendrick: “Not everyone has a large amount of disposable income, so having the option to spread the costs means customers can sometimes spend a little bit more and upgrade to higher spec spa.”For Northern Spas the picture is slightly different. The company often offers hot tub installations surrounded by Trex or Millboard composite decking. “This decking can sometimes cost nearly as much as the spa,” explains Samantha Murphy. “We’re unable to offer finance on decking, so there’s often a scenario where a customer has the budget for a hot tub but really wants decking too – in this case we may recommend financing the spa. As our finance is totally interest free and the cost can be spread over three years we have great success with this.” HydroPool’s Vice President of International Sales, Lloyd Burden, however, sees very little upselling through finance. The picture is therefore clearly mixed across the country.

While there may be less reputable companies out there, the vast majority of retailers and dealers are responsible and will never offer finance if they feel it will over-stretch their customers. Samantha Murphy again: “We always work out finance repayments with our customers either in our showroom or at point of order. If we don’t get the opportunity to do so in the showroom, the customer is directed to the finance calculator on our website where they can adjust the deposit amount and term at their leisure. “Out of all our customers who opted to use finance to fund their hot tub in 2017, over 52% paid the minimum deposit amount of £250. Many of them chose this term because they did not have a larger deposit saved. “We promote 0% finance on our website through a purpose-built calculator which lets users slide between deposit amount and finance term to find an affordable option,” says Samantha. This feature is promoted on our Facebook page and from our showroom where our point of sales display finance options. “In our showroom, our aim is to educate potential customers on hot tub jargon, brands and the importance of after-sales. Sometimes we do have price-concerned buyers who have a budget of around £3,000. We always recommend that they use their £3,000 budget as a deposit against a much higher quality hot tub,” added Samantha. With the retailers and brands Dan Johnson from HydroVue works with, it’s a very mixed bag. “Some are very timid to offer finance, while others are boldly offering it the moment clients arrive on site.” He has not heard of any dealers pushing finance ‘too hard’, though. Award Leisure is another company that feels comfortable offering financing without over-stretching their customers. The company’s finance terms are very flexible, so customers can over-pay if they want to, which will reduce the term they take the finance out over. “At the end of the day, you have to be ethical in what you offer and make the terms very clear,” says HydroPool’s Lloyd Burden. In terms of how retailers and dealers should manage their finance offers, Dan Johnson believes they should act on their own. This allows them to provide independent offerings to their clients, across their brands. He believes this enables them to accurately follow and 21control the process from start to finish. Lloyd Burden has a different approach though, tending to negotiate a finance rate on behalf of his entire global network. There are the inevitable ‘banana skins’ to avoid, Samantha Murphy recommends that dealers only ever deliver the hot tub to the address on the finance application. “We performed a site visit to a customer and after setting up finance, we realised the finance address was different to the delivery address,” Samantha recalls. “Suspicious that something wasn’t quite right, we cancelled the finance agreement and called the customer asking for a call back urgently. We never heard from him and reported the incident to the police.”