FROM PRODUCT TO SERVICE, TO A FUNCTIONAL ECONOMY?
What need to satisfy a customer when he buys a pool? Does he just want a pond in his garden or does he buy the opportunity to swim whenever he wants? Both of you will tell me. But are you really able to meet these two expectations today? Another important question: are customers willing to pay on the one hand for the construction of their pool and on the other for maintenance? The answer is no for a large majority of them.
As indicated by the latest figures of the FPP, with 2 million pools in France in 2017, the pool market is recovering its colors and is approaching 2007, the reference year of the barometer, both in terms of volumes (+ 12, 5% of pools built in one year) than turnover.
But for a pool company, no bet on the weather or rely on the renewal of the park to replace the volume of business that alone represents the sale of a pool. Because even if it needs to be renovated from time to time, the pool is a sustainable product.
The renovation market complements and supports the construction market, which augurs well for good years, but it is essential today, for companies in the sector, to think about their future.
… BUT A “PRODUCT” BROUGHT TO EVOLVE
An evolution of the concept of product
Indeed, it is now several years since the vision of the property of the products evolves. What counts today is the satisfaction of a need coupled with the reduction of the costs of purchase, operation, and maintenance of the goods. The product exists less and less for what it is but more and more for the function it fulfills: a solution for transport, cleaning, communication … a bathing solution?
This phenomenon is gradually gaining every sector of the economy.
According to a study by The Economist Intelligence Unit, 80% of consumers today would be looking for new consumption models (subscription, sharing, leasing, etc.).
The customer becomes more and more a subscriber. Reluctant until then to subscribe a service, he has become accustomed to it and no longer hesitates to engage since he keeps the contractual possibility to change provider if it does not satisfy his needs of use.
A NECESSARY EVOLUTION IN THE FACE OF COMPETITION
You have the best product on the market but your competitors too. In the pool, the difference is less and less on the construction technique but more and more on the ability of your product to meet the needs of your customers. Indeed, how is a polyester pool really different from a modular pool or a concrete pool? For a large majority of customers this difference is really slim.
What he wants above all is a pool that allows him to swim, right?
The customer is more and more demanding and better informed. The price also becomes secondary (even if it remains important). What matters is the overall price including the direct and induced costs of the product (purchase, operation, maintenance or even recycling). The return on investment is measured over time on the degree of satisfaction provided by the use of the pool and less and less on the fact of owning it.
AN EVOLUTION FACILITATED BY TECHNOLOGIES
With the development of the Internet, connected products, mobile interfaces, the customer gets used to manage and control their equipment remotely. The house becomes the favorite territory for connected technologies (security, heating, lighting, cooking, etc.).
The connected pool also finds its all senses. The breadth of market supply is important. Better control of water quality, lower consumption of products, increased comfort of use of the pool … All the advantages that the customer starts to integrate into his purchase decision.
THE SALE OF A POOL SHOULD NO LONGER BE AN END
In this context, the pool can no longer be considered as a product or a service but as a solution to satisfy the customer’s needs. Its value is no longer in its only purchase value but in its value of use throughout its life cycle.
From Product to Solution
The concept of the Product-Service System (PPS): “A PSS is made up of tangible products and intangible services designed and combined to be able to jointly meet the specific needs of consumers” Arnold Tukker – 2004
The poolman must therefore commit to a performance of use or usability by proposing to his client a bunch of equipment and services integrating control of the effectiveness (measurement of the rate of performance) throughout the duration of the contract. The objective is no longer to provide an additional service to the pool but to maintain a permanent relationship with its customers.
To interact with them, with their equipment, to make them recommendations, recommendations, to intervene as soon as necessary at a distance or on site, to propose an evolution of the bouquet of solutions according to the history of operation and of use of their pool …
To guarantee this performance of use, the pool operator must choose manufacturers who can offer equipment with maximum reliability, a long life (completed planned obsolescence) and designed to simplify the service.
3 REASONS TO CHANGE YOUR BUSINESS MODEL
Better customer satisfaction, better economic performance of companies and better management of natural resources are objectives that seem totally antithetical to you?
In a product economy, yes, it’s true. But in a functional economy, it is quite possible to increase margins by better satisfying customers while reducing their environmental footprint!
- Develop your economic performance
- Develop the value and satisfaction of your customers
- Develop your ecological and societal commitment
To increase your margin, you have two possibilities. Either increase your prices – which seems complicated in a competitive market with little differentiated products – or reduce your costs.
The sale of a “pool solution” allows:
- reduce your trips, saving you money on your fuel consumption;
- Spend less time on the customer, which gives you more time for prospecting, customer relations, site monitoring;
- optimize the use of your vehicles which are then more available to provide other services to customers (eg home delivery).
The remote management of a swimming pool – this is even more true for a pool park – reduces your costs and charges your customers as close to reality as possible (click on an icon to launch a cycle of filtration costs much less than moving to the customer!).
An evolution toward this economic model allows you to lower your prices. We no longer talk about intervention prices (requiring travel, diagnosis, and intervention) but prices for optimal operation.
This parking management is also proactive! By regulating the pH of a customer’s pool at the right time, you avoid a lot of problems and their costs (energy savings, products, travel, time …).
Easier management of your cash flow
The sale of a “pool solution” involves a subscription-based model. And the subscription is cash every month.
This allows you to anticipate difficult times while investing in the future through better visibility.
Greater customer value
Nothing like increasing the “lifetime” of a customer to increase profitability over time.
A customer who is satisfied with the usual performance achieved during the bathing season, will not ask himself whether or not he should continue his contractual relationship with his swimming pool … provided of course that he regularly brings him evidence of its efficiency (level of performance achieved in relation to contractual commitments).
A sustainable and reinforced relationship
With this business model based on the valuation of the use, we leave the model ” I sell you, you interview, I repair ” to move to a model based on permanent exchanges allowing maximum usability of the product. Cooperation is essential between the client (his pool and his equipment) and the poolman (his interfaces and his teams). Your interests converge and must be clearly contracted to be well valued.
Selling a used performance, rather than a product and service, also helps to integrate sustainability into your business model.
For the Ministry of Ecological and Solidary Transition, “the economics of functionality consists of replacing the notion of selling a good with that of selling the use of the good, which leads to the decoupling of the added value and of energy consumption and raw materials “.
The goal is to leave the model of “purchase, obsolescence and repetition of the purchase”. The life of the pool and its equipment is lengthened and its consumption of natural resources less (energy, water, chemicals).
This is already the first step towards a circular economy process.
(Text: Sébastien Carensac)