If you’re looking to purchase a hot tub, one of the main selling points is its relaxing and soothing capabilities. But when ThermoSpas, Inc., the Wallingford, CT, hot tub manufacturer, filed for Chapter 11 bankruptcy protection in February 2012, with reportedly $2.6 million in assets and nearly $18 million in debts, the future appeared very, well, non-relaxing.
So when Jacuzzi Group Worldwide announced in May 2012 that one of its affiliated companies acquired the assets of ThermoSpas, the move was seen as questionable within the industry: why would the industry leader – who created the whirlpool bath – invest in the assets of a much smaller, bankrupt competitor? Would Jacuzzi invest in ThermoSpas®, or were they merely removing a competitor?
Any skepticism was soon proven to be unwarranted, as ThermoSpas Hot Tub Products, Inc. was formed to continue selling ThermoSpas® products. Following the acquisition, significant investment was made in the ThermoSpas® brand, with the assets and resources needed to improve and elevate customer satisfaction and product quality. The story of why Jacuzzi made the commitment is one of a very unique business model, and a very unique way of doing business.
A Unique Model: Direct-to-Consumer Sales and Lead Generation
Unlike most other hot tub retailers and manufacturers, ThermoSpas® has the distinction of being one of the only brands in this industry that is sold direct-to-consumer.
This strategy, launched in 1995, leveraged print, infomercials, and eventually the Internet to educate potential customers on the benefits of hot tubs. Starting with only a toll-free number, this pioneering tactic was one of the reasons why the company was able to continue its growth. The centralized call center allowed customers to talk to a representative or schedule an appointment with a factory-trained technician. Instead of having dealers across the country, ThermoSpas could focus on the products coming out of its New England plant. This also meant that customers could open up the Yellow Pages or search online for local hot tub retailers anywhere in the country and find a number for ThermoSpas.
Unlike ThermoSpas, traditional hot tub manufacturers sell through independent dealers, and rely on those dealers for local marketing efforts. They traditionally do not conduct ongoing national TV campaigns like ThermoSpas. And with no dealers, ThermoSpas’ business model linked them closely to their consumers. According to Cassandra Moren, senior director of consumer goods industry marketing at Oracle: “Direct to consumer interaction is growing, as evidenced by the research, and it is critical in today’s highly-competitive global economy that consumer goods companies take advantage of every touch point with the consumer.”
Over the years, ThermoSpas has also proven that they can get people interested in hot tubs, helping not only its own sales, but also the sales of established brands, such as Jacuzzi® and Sundance® Spas, who are attempting to reach new consumers.
Acquire Technology and Distribution Center
ThermoSpas has illustrated that it’s an innovative company that has redesigned and enhanced hot tub technology. In fact, in the late ’90s, the company made advancements in shell fabrication, cabinet making, patented Throttle Control Valves, plumbing, and even water-testing technology. All of the state-of-the-art technology that ThermoSpas had achieved was accomplished by engineers who created machinery exclusively for the company.
Several months after the company’s assets were purchased by a subsidiary of Jacuzzi Group Worldwide, it was announced that ThermoSpas would continue to operate out of the same Wallingford facility, as a Northeast distribution center. Since Jacuzzi Group Worldwide is based in California, having a distribution center in the densely populated Northeast allows for faster and more convenient shipping of parts and hot tubs to customers.
Is It Working?
How has the acquisition fared? In the years since, Jacuzzi® has continued to cement itself as one of the most popular and trusted hot tub brands. By investing in and leveraging ThermoSpas’ media reach, lead generation, and customer-direct approach, the brand has been able to continue growing the hot tub category..
But, what about ThermoSpas®?
Roughly one year after the acquisition, the “new” ThermoSpas announced significant improvements in customer service, including:
The customer-first approach has helped the company grow online and improve customer satisfaction. With ThermoSpas now achieving such positive ratings, acquisition of the ThermoSpas assets has added up to a great deal more than the sum of its parts. It’s not just Jacuzzi Group Worldwide that is taking note of these improvements – potential new customers everywhere are, too.