Past Winner Stories
Master Spas
www.masterspas.com
What happens when your company is doing fine, but your biggest customer goes out of business? Robert Lauter, president of Master Spas, found out exactly what happens. You focus on innovation and push yourself to become one of the top manufacturers in your industry.
Lauter's company originally manufactured low-end portable spas that it supplied to big-box home centers, a low-margin business that in 1996 was doing less than $6 million a year in sales. But there was plenty of potential for growth, and the plan was to introduce a high-end portable spa to be sold through specialty retailers.
"This was a much higher-margined business," Lauter said.
The company would continue to sell to the home centers while developing its high-end Master Spa line. Though there were more than 100 established spa manufacturers at the time and the spa industry as a whole was soft, Master Spa launched its high-end line in early 1997.
It seemed like a good plan, and the company saw some early success in building relationships with dealers. But still, more than half its business remained with home centers. Then in 1999 its largest customer, Hechinger /Home Quarters/Builders Square, which accounted for more than 40 percent of its business, filed bankruptcy And not only did all that business disappear, but Master Spa was owed $250,000 that it would never recover. Its challenge was then to grow its dealer business and generate enough cash to overcome that quarter-million dollar loss.
"We decided to focus on developing the most innovative products for our industry, help our dealers learn how to sell them and then find a way to drive consumers into their showroom," Lauter said.
And all that had to be done on a limited budget and with existing staff. Out of that need for innovation on a shoestring, the company began its long list of industry firsts. It introduced bio-magnetic therapy in the spa. Master Spa also developed a model that offered a TV and stereo that popped up with the touch of a button. The Spa Theater System revolutionized the industry, and now nearly every major spa manufacturer offers some version of a TV spa, though Master Spa controls 60 percent of the market for TV spas and remains the first and only manufacturer to receive the Underwriter's Laboratory (UL) safety certificate for this product.
"The thing I enjoy most is the creative part," said Lauter. "Coming up with ground-breaking products like a spa with a pop-up flat-screen TV or innovative ways to market the products. It is a continual challenge and continuous fun."
The company also concentrated on providing dealers with top-notch sales literature, in-store displays and sales tools. Master Spa introduced the first interactive information system in its industry for use in the dealer’s showroom. To drive consumers into the showroom, Master Spa generates leads via its Web site, a site that has become the most visited spa site on the Web. This year, more than 25,000 Web site visitors will get a free Master Spa video or DVD and the name of the closest dealer.
The result of this effort? Master Spa saw sales soar from a little over $5 million in 1996 to $43 million in 2002. And in 2003, the company expects to do more than $50 million in sales.
Today, Master Spa ranks among the top-five manufacturers in the industry and remains the leading luxury manufacturer. In April 2003, Consumers Digest chose one of its spas as a "best buy" in the premium category. And in May, a Master Spa was chosen for installation at Camp David.
"We've grown from a 100,000-square-foot building to 180,000 square feet on 18 acres," noted Lauter. "And all along the way we grew from 30 employees to almost 300. The best part of running the business is working with a great team of people who care about what they do."
Lauter's company originally manufactured low-end portable spas that it supplied to big-box home centers, a low-margin business that in 1996 was doing less than $6 million a year in sales. But there was plenty of potential for growth, and the plan was to introduce a high-end portable spa to be sold through specialty retailers.
"This was a much higher-margined business," Lauter said.
The company would continue to sell to the home centers while developing its high-end Master Spa line. Though there were more than 100 established spa manufacturers at the time and the spa industry as a whole was soft, Master Spa launched its high-end line in early 1997.
It seemed like a good plan, and the company saw some early success in building relationships with dealers. But still, more than half its business remained with home centers. Then in 1999 its largest customer, Hechinger /Home Quarters/Builders Square, which accounted for more than 40 percent of its business, filed bankruptcy And not only did all that business disappear, but Master Spa was owed $250,000 that it would never recover. Its challenge was then to grow its dealer business and generate enough cash to overcome that quarter-million dollar loss.
"We decided to focus on developing the most innovative products for our industry, help our dealers learn how to sell them and then find a way to drive consumers into their showroom," Lauter said.
And all that had to be done on a limited budget and with existing staff. Out of that need for innovation on a shoestring, the company began its long list of industry firsts. It introduced bio-magnetic therapy in the spa. Master Spa also developed a model that offered a TV and stereo that popped up with the touch of a button. The Spa Theater System revolutionized the industry, and now nearly every major spa manufacturer offers some version of a TV spa, though Master Spa controls 60 percent of the market for TV spas and remains the first and only manufacturer to receive the Underwriter's Laboratory (UL) safety certificate for this product.
"The thing I enjoy most is the creative part," said Lauter. "Coming up with ground-breaking products like a spa with a pop-up flat-screen TV or innovative ways to market the products. It is a continual challenge and continuous fun."
The company also concentrated on providing dealers with top-notch sales literature, in-store displays and sales tools. Master Spa introduced the first interactive information system in its industry for use in the dealer’s showroom. To drive consumers into the showroom, Master Spa generates leads via its Web site, a site that has become the most visited spa site on the Web. This year, more than 25,000 Web site visitors will get a free Master Spa video or DVD and the name of the closest dealer.
The result of this effort? Master Spa saw sales soar from a little over $5 million in 1996 to $43 million in 2002. And in 2003, the company expects to do more than $50 million in sales.
Today, Master Spa ranks among the top-five manufacturers in the industry and remains the leading luxury manufacturer. In April 2003, Consumers Digest chose one of its spas as a "best buy" in the premium category. And in May, a Master Spa was chosen for installation at Camp David.
"We've grown from a 100,000-square-foot building to 180,000 square feet on 18 acres," noted Lauter. "And all along the way we grew from 30 employees to almost 300. The best part of running the business is working with a great team of people who care about what they do."