In an industry besieged with backorders and several month-long lags between sales and delivery, generating cash flow can be critical—especially for spa retailers who have built their business requiring full payment on delivery. With all the attendant carrying costs of running a business, waiting six months to complete a sale can be crippling, if not fatal.  


That’s why prioritizing cash flow and developing new cash flow sources is of vital importance in the current spa retail climate. Here’s a look at four channels to maximize a word all spa dealers know something about: Liquidity.  


Make Deposits King 

Times have changed with COVID19business practices that worked a year or two ago may not be sustainable in today’s environment. Full payment on delivery is one of those practices. Taking an upfront deposit with every spa order should be the new standard. This step alone could be key to addressing cash flow shortages for your dealership, especially with the high consumer demand the industry is experiencing right now.  


To put this into practice, it would involve training your sales team to explain the situation and help customers understand the why behind it. The why of course has to do with current demandproduction schedules, and your carrying costs. As a retailer, you need to pay for the spa once the order is placed with the manufacturer and requiring the deposit helps cover that upfront costPlus, with limited access to production slots, requiring the deposit helps you ensure you’re investing wisely for the sake of a committed buyer. 


Incentivizing larger deposits can be an effective approach here. One way to go about this is offering discounts on certain deposit amounts—e.g., 1% savings on 25% down and 2% savings on 50% down. Discounts amounts of course can vary from one location to the next, but these can easily be worked into a comprehensive pricing plan that all team members work off of for alignment and consistency. 


If you have inventory on order, another way to offer a tiered incentive would be through availability dates. For larger deposits, customers could get an earlier deliverye.g., “Our current lead times for new orders is 6 months, but we could reserve one of our inventory spas due to go into production in 4 months with another 25% down.” This would still empower the customer with choice while also providing them some control over the process.  


Some customers will want to know if the deposit is refundable. The answer, ideally, should always be yes. But you may want to consider adding “a cancelation fee” of some form for refunds made after a certain date. Another alternative is explaining that you’ve made a change to your standard refund policy due to high demand and current production lead times and are only allowing for a partial refundIf you opt for this, be upfront and clear. Surprising or alienating a customer with hidden costs can hurt your reputation and future sales.  


Deep Dive on Financing 

It may also be time to explore floor planning financing options. Oftentimes, your manufacturing partner offers the best financing plans with an exclusive program just for their spa line. With floor planning financing, the bank covers your upfront payment upon ordering with repayment set according to special program terms typically based on quantity purchased. This allows you to hold on to your cash on hand while still getting production slots reserved to ensure future showroom inventory. 


Using floor planning financing in conjunction with consumer financing can eliminate the cashflow crunch altogether. Consumer financing can have several pay per month options with little or zero down. Then the dealer can order, ship, install and be paid for the spa with very little cash requirement. A deposit is still recommended when selling with financing which you can then return to the customer when the loan is funded. This ends up being a win-win for both dealer and customer. 


Sell Service Plans 

There are silver linings to the cloudy inventory forecast when it comes to generating additional sources of revenue. Market realities often provide new marketing opportunities for retailers, and the shortage of new spas is no exception. 


For spa retailers who offer servicing packages, the industry’s inventory shortage presents a perfect time to send out re-engagement emails in the form of service reminders. These emails should be friendly and factual. Let customers know that spa maintenance is more important than ever. Why? Three reasons: 


  1. A huge increase in spa orders has led to an industry-wide six-month gap between orders and deliveries if a spa needs to be replaced. 
  2. Pandemic-related supply chain issues mean it is harder to source replacement parts. 
  3. Regular service visits increase a spa’s longevity. 


After the third point, it’s time to issue a call to action: to take advantage of special offers on your team’s various servicing options.  


Creative retailers who don’t offer servicing can also benefit from this engagement strategy in two ways: partnering with a spa service to alert your customers, in return for a revenue share, or simply by removing the third point and changing the call to action: Order Your New Spa Now! 


Aftermarket Sales 

Another segment of the spa retail market to explore involves aftermarket products. Accessories are the obvious low-hanging fruit here, but chemicals and water care products provide an excellent source of recurring, high volume sales as wellOnce again, offering aftermarket promotions and making the customer aware of spa market realities via email, direct mail, and phone contact are critical ways to re-engage and incentivize customers. Offering buyer’s club or customer loyalty programs can also work well. 


Stay Connected with Your Customers 

During this period of longer production cyclesa top priority for retailers should continue to be staying connected with customers who are waiting for their spaRegular check-ins and up-to-date communications regarding production and delivery are essential to avoiding cancellations and negative reviews.   

The high demand for spas should be a great time to grow your business for the short and long term. New customers now can and should translate into future revenue. So by using your sales and marketing chops along with these tips, you can be intentional about avoiding a cash crunch. These are more than just tools for survivingused wisely, they can be tools for thriving.