Despite the lack of standard base salary, U.S. therapists earn the most worldwide.
Therapists in the U.S. are the best paid in the world and can earn up to US$4,166 (€3,100, £2,700) a month. Meanwhile their counterparts in Malaysia, with the worst salaries, only bring in US$308 (€231, £200). These were the findings of Real Numbers on Esthetician Compensation, a report published by leading industry body the Global Spa & Wellness Summit (GSWS) in April. One of the first analyses on global therapist pay, it marked the debut of the GSWS’s Metric Minutes – compilations of anonymously-sourced, industry data and stakeholder interviews that are designed to “simply start the conversation”.
Here, the GSWS has updated its findings to provide a snapshot of how aestheticians are paid in a selection of different countries – and the reasons why salaries vary so widely. The overview is intended to help operators and owners learn more about how our industry makes money (and in some cases does not).
On commission
Whether cultural, regulatory, or just habit, different countries pay beauty therapists in very different ways. Even taking into account the cost of living from one place to another, there are still major variances in average monthly pay.
In a large number of countries, the standard method of pay for beauty therapists is a monthly salary. Although, as shown in the table, there doesn’t appear to be any rhyme or reason to the amount of the salary. In almost every country, except for in the U.S., the salary makes up the lion’s share of monthly income, with commissions on services or retail comprising the rest. Service commissions are typically 5-10 percent of the cost of the treatment provided and are added to the monthly base salary.
In the U.S., however, it’s quite common for beauty therapists in day spas – which make up the vast majority of country’s spa establishments – to receive absolutely no base salary, earning all of their income as a commission on the treatment prices charged by the business. While this sounds unfair and quixotic, the result is that American therapists are the most highly paid in the world.
The U.S. also provides the biggest variety of pay plans which vary between states and cities or even two businesses in the same block. As there is no one-way things are done, methods of pay can be quite creative. Rather than paying a straight percentage for all therapists, for example, operators could offer more compensation to those who reach set benchmarks – such as better client retention rates and average customer spend – that help drive business. Alternatively, they can vary the percentage of compensation according to different services: paying less for treatments where a high amount has been spent on pieces of equipment, for example, to get a quicker return on investment. Slowly and incrementally, this is helping to offset the high staff overhead that U.S. spas face.
Retail commission – where therapists get a percentage of revenue from products they sell – is another possible add-on for salaries as spas all over the world offer products for home use. Globally, retail commission levels are fairly consistent at 5-10 percent of the retail price, which is typically all a business can afford on branded merchandise that already has high markup costs.
Benefits and taxes
Every country also has its own legal and cultural requirements for employers paying therapists concerning issues such as health insurance, retirement/pensions, and other social service benefits. The costs vary widely also, from an approximate 11 percent of payroll in the U.S. to as much as 40 percent in Sweden. It’s certainly incumbent on any spa business opening in a new country to fully understand all the different taxes and benefits that its expected to pay in addition to service provider salaries.
There’s no correlation between a therapist’s education and pay. Some countries require licensing for beauty therapy which typically involves up to two years of study. Meanwhile, in the U.S. an aesthetics license can be earned in many states in four months of full-time schooling; and there are still many countries, such as China, South Africa, Cambodia, the Philippines, and Brazil, where no license is required at all. However, the countries with the highest education costs are not those that pay the most. This could be a false economy – while an operator could potentially save money by hiring unlicensed therapists, the spa may develop a less desirable reputation, and incur additional in-house training costs as a result.
Something that is standard internationally is workers typically receiving 21 to 28 days of paid holiday a year. In China and Hong Kong, staff gets an extra months’ pay for Chinese New Year, along with two weeks off. That said, many global workers put in a lot of time and effort to earn such benefits – regularly putting in a six-day workweek, and in some resorts or on cruise ships working daily for two to three weeks before taking a day off.
In the U.S., paid time off is less generous: small spas will provide no paid leave, while spas that are part of larger brands will offer a week off after a year of employment, and that may increase to two weeks after two or three years of steady employment. Therapist schedules are also becoming shorter, often three to four days per week and part-time shifts are becoming more frequent as mandated health-care costs for full-time workers increase.
Growing concerns
Staff pay is, in most markets, the single biggest expense in spa business operations. This makes sense, as the inherent strength of spas is a labor-intensive product. But as companies continue to expand, and brands proliferate across country regions and borders, spa management teams should be aware of the differing pay, benefit and tax conventions. It’s not safe to assume that “what you’ve always done” in one country will be accepted in another, and this makes projecting turnover and profits more complex.
It’s no surprise that countries which pay the least in direct salary also have the lowest cost of living, however, this may also be a reflection of the importance of personal care to a specific locale or region, or the value placed on overall health and appearance. Spa services sit right at the crossroads of beauty services and healthcare, and in most countries spas are attracting increasing numbers of practitioners, who deserve the right to a fair living wage. But in situations where the desired pay is outsized compared to other overheads, it can make the ability for a business to earn a profit almost impossible, and negatively impact the growth potential for the industry as a whole.
If you have questions about spa employee pay and how to find what works for your business and your team, give us a call. Schedule a free 30-minute needs assessment here.
This article was originally published in Spa Business Magazine and on the Spa Business blog.
How To Impress Clients With Valentine’s Day Special Treatments
/0 Comments/in Featured, Spa Marketing /by lstarr@wynnebusiness.comHopefully, you’re having a busy January with service and gift card sales for Valentine’s Day. In our recent post with Valentine’s Day Sales Tips, we shared what you can be doing to grow Valentine’s Day sales. You just need to remind the entire staff to put their best foot forward; be punctual, fully uniformed, and ready to assist with clients or inquiries at any time.
What extra special treatments do you have planned for your spa clients?
It is likely that you will see some new clients for services over the weekend, especially if you’ve put in place holiday promotions, or you may have regular clients who bring a spouse or partner to enjoy a couple’s-oriented treatment. Valentine’s Day is a good reason for clients to be thinking about their appearance, so beautifying treatments and services will be in order before a night out on the town. Your staff should be aware of this potential and adjust their approach accordingly; for instance, if a woman comes in for a facial and makeup application before she heads out for the evening, she would likely appreciate not having her hairstyle ruined during the services. If time allows, free ten-minute eye makeup touch-ups can introduce new clients to your makeup bar. Some spas will even keep some long-stemmed roses at the desk, and present them to female guests at checkout. Have your staff think about ways they can impress both new and returning clients with your high standards of customer care.
Depending on your location, you may attract some walk-in traffic for Valentine’s Day with attractive retail displays visible from the outside. An array of price-points on your Valentine gift sets may bring in some new clients, and if they’re impressed with your selection, displays and knowledgeable sales staff they’ll be intrigued enough to return. Needless to say, clean shelves and ample displays are a must through the weekend.
Gift card clients offer a double opportunity; both the purchaser and the recipient of the gift card are potential repeat guests. If possible at the time of the sale, collect the pertinent information on the intended gift card recipients so that you can market to them later. In order to get more mileage out of this dual purchase, some spas will offer the purchaser a voucher to use for a return visit of their own; $20 off a service valued at $60 or more, or a free upgrade on a weekday treatment. Perhaps a red rose for the purchaser too?
No matter the reason the doors open over the next few days before Valentine’s Day, each person who enters should be greeted immediately and with genuine warmth and friendliness. Of course, your well-trained staff is always aware of opportunities to make lasting connections with the guest, but it might not hurt to remind everyone to “show the love” especially in a month that can be on the slow side.
Spa Leadership: Managing Spa Staff Vacation Time
/0 Comments/in Education, Spa Leadership Development /by lstarr@wynnebusiness.comFirst of all, does your spa even offer vacation or PTO (paid time off) benefit? Back in the “old days,” beauty therapists never received any paid vacation, but with the modernization of compensation plans, we are seeing much more of this. In fact, PTO is the second-most desired benefit to spa staff, after health insurance, and it is not all that difficult or expensive to offer.
Let’s say you have an esthetician who books $1500 in revenue per week, and she is earning about 1/3 of that or $500 per week. You can offer her two weeks of paid vacation every year, and the cost to you will be about one percent of her revenue production. In other words, not expensive as far as benefits go. If your staff receives a more aggressive pay plan, you can still likely offer one week paid vacation for a little less than one percent of their personal revenue production. If you are in the dark ages of high commission rates – you probably can’t do anything, and that’s a different conversation.
We know that working in a spa, while enjoyable, is still hard work. Your beauty therapists are giving, giving, giving to their clients all day, it’s a very “on stage” kind of work. They really do need some downtime; whether they take it all at once or in a couple of long weekends, it is something they should be encouraged to do. Everyone needs to recharge their batteries.
However, when you don’t have a therapist column available to book, that causes a decrease in revenue for your spa, unless you are lucky enough to have a substitute therapist arrangement. So the spa has to focus on ensuring there are available therapists, and that cash flow is not negatively impacted by paying for vacation time with money you did not receive.
Here are a few guidelines that may help you to be better prepared for vacation time:
It is generally advised that PTO not be rolled over into the next year, and not be exchanged for money. Especially in a wellness-based industry, we WANT the staff to take the vacation.
There should be some restrictions so that the business is not negatively impacted; for instance, your entire esthetics staff cannot take vacation at the same time. Depending on the size and arrangement of your staff, you should set expectations that no more than one or two people can be out at the same time.
Do consider developing a group of reliable substitute staff; this is a good option especially for massage. When you interview a potential candidate that you like but do not have a position for, you can offer them work on an occasional, substitute basis, like filling in for vacation or taking a shift for a current staff member who has a conflict. It’s a great way to get to know someone before making an employment commitment, plus it provides a revenue option for the missing technician.
Do you need help creating a solid plan for staff vacations? Contact us for a free consultation.
What’s Your Biggest Spa Organizational Issue?
/0 Comments/in Education /by lstarr@wynnebusiness.comWhat’s your biggest organizational issue?
At first glance, your response might be, “Simple, I need to clean off my desk.”
But we’re talking bigger, deeper, wider organization.
Because really, you want your business to run smoothly, right? You want your staff to know the “rules,” and not have to stop to ask you questions all day. You want your clients treated with the utmost in care and respect at all times. You want to have a good reputation in your marketplace, so you can continue to attract new staff, as well as customers. And those things don’t happen by accident. They happen for businesses who have systems and structure, businesses that are, in a word, organized.
I know it’s challenging to feel organized in the spa environment. Some of the common spa work environment factors that challenge organizations are:
Operating Hours
In an office that’s open from 9-5, M-F, it’s easier to set aside some time for “busy work” such as end-of-the-year cleanouts and reorganization of supplies. You can stay an hour later one night, or come in an hour early one morning. We can do that in the spa also, but it’s a lot more difficult, especially as spas are often open six and even seven days a week, and the days are long. Some spas are open as many as 70 hours per week, and when the spa is open, there are hopefully clients there, making it difficult to tackle behind the scenes tasks.
Software
These days, most every spa has it. But many still don’t use it to its full advantage or are not even aware of many of the built-in capabilities of their systems. There may be existing solutions to some of your pressing problems, like tracking staff vacation requests, or professional inventory supplies, and certainly client files and marketing efforts. Yes, there is no time to take tutorials and learn, but really, are you getting your money’s worth from your system?
Isolated Environments
In the spa, strangely, when the business is at its most busy, no employees can be seen. Customer service, yes, but everyone else is tucked away in their treatment area working on-on-one with a client. This doesn’t make it easy to work together; you can’t lean into your fellow employee’s cubicle and share information, or work collaboratively. So this slows things down.
Physical Space
Since revenue-producing space is at a premium in the spa environment, there is not typically a lot of back-of-house space available. Some front desks don’t even have the luxury of a back counter for storage of retail supplies or pending sales, and many spa owners share their office space with the laundry. While this makes it very difficult to get organized, it also makes it even more imperative that we do so; with lack of resources, everything should have an assigned place.
Here is some useful advice from professional organizer and author Debbie Lillard, owner of Space to Spare. Lillard advises on her website that “You may never have a perfectly neat office, but you can be functionally organized by following my method of C.P.R.”
Categorize
Whether you are talking about your desk, a closet or the whole office, start to put things in categories. If one pile is too big, break it into sub-categories.
Purge
Toss whatever is outdated, no longer useful information, duplicate material or broken electronics. Keep the basics: a work table, filing drawers, a cabinet or closet for supplies, bookshelves, and maybe one whiteboard or bulletin board.
Re-arrange
When you are left with what you use, start to arrange the workspace into functional areas: equipment & supplies, filing, Action items (to do, to read, to call, to send), and put things where you naturally use them. Use bins or containers that you already have or purchase ones that are the right size for what you need.
Lillard website and books share a wealth of advice, and you can follow her on Twitter at @DebbieLillard.
So don’t be shy, wade in and get started. The new year is 10 days old already!
Valentine’s Day Treatments And Tips To Increase Spa Sales
/0 Comments/in Featured, Spa Marketing /by lstarr@wynnebusiness.comAdd Valentine’s Day Treatments to your Menu
Boost sales and increase customer convenience with Valentine’s Day gift packages
It’s Time For Your Spa’s Post-Holiday Clean Up
/0 Comments/in Blog, Spa Business /by lstarr@wynnebusiness.comIn this, the last week of the year, it’s time to take stock of your facility and retail area. Hopefully your careful planning in purchasing and displaying a carefully selected variety of holiday merchandise resulted in positive sales increases for Q4, but no doubt you have some merchandise left over.
Now, what should you do with the remnants?
When is the holiday officially over? The answer is January 2.
I’ve walked into some salons and spas in mid-January and found them still decorated to the hilt with ribbons, bows, and fading poinsettias. I believe that this is an area in which you should take your cues from major retailers, and denude your facility of holiday detritus sooner than later. Just like Starbucks switches back to those plain white cups right after New Year’s, it’s time to start fresh.
First, box up and put away all of the reusable decorations for next, or another, year. If you have living décors such as amaryllis, poinsettia or lilies, send them home with your staff members. Remove stringed and hanging lights and decals from windows. Drink up the Christmas blend coffee and distribute among staff and friends the rest of the cookies, cakes and other treats.
How about merchandise?
It’s okay to put merchandise on sale, but only for a short time. Gather up all of the remaining bits and have a holiday sale table, for a week or two, but then it’s time to move on. If they didn’t sell, bite the bullet and be decisive. Some high quality unsold holiday-themed gift merchandise such as makeup brushes, jewelry, cosmetic bags and household décor items can be stored and reintroduced next October, but the rest you should remove from both your shelves and your balance sheets. Offer it to staff for a fraction of the original price, sell it off (by the lot) on eBay, or give it to charity.
Purchased too many nail polishes or body lotions? Negotiate with your vendors and see if you can trade for new spring items. Overstocks of non-holiday themed items are particularly useful as grab bag rewards for client referral or loyalty programs.
Did you add special holiday services to your menu? If any of these was a particularly good seller, you may want to consider adding a version of it permanently to your treatment menu, just make sure that you remove something else when you do, to ensure against a swelling menu selection. Run a service sales report for the year, and consider removing any services that you performed 30 or less of.
The onset of a new year is also an ideal time for a good spit-and-polish cleaning of your whole facility, top to bottom. This is often best accomplished by hiring an outside cleaning company, not your usual cleaners who by now are ignoring the same continual problem areas that you were when you handled the cleaning, or may still. Fresh eyes and elbow grease are welcome. Or, find a 4 to 5-hour window of time when the facility is closed and invite your staff to come pitch in; reward those who show up with pizza, sushi and/or movie tickets. Perhaps, you can even give out raffle tickets for baskets of leftover holiday retail!
Are you ready to launch 2018 with new ideas and treatments? Do you need help putting together your plan? Tap into our experience and contact us for a free consultation.
Developing Your Spa Leadership Vision
/0 Comments/in Blog, Spa Business, Spa Leadership Development /by lstarr@wynnebusiness.comWhen is the last time your spa management to-do list said “plan for tomorrow?”
I don’t know about you, but I’m a list-maker. I keep piles of pads near my desk, and every day I make a list and date it. I place the high priority at the top, low at the bottom. Every other week I take the pile of notes with half-scratched-off items and start over. It’s an old-fashioned system but it works for me.
Spa Directors and managers never need to sit down and make a list of what they will do each day, in fact, they rarely get the chance. Spa operations are very fluid and in-the-moment, and it’s easy to just go with the flow. Chatting with clients, listening to an idea or complaint from a staff member, meeting with a vendor who stops by unannounced (so annoying!), taking a call from the media, and maybe you get a chance to review yesterday’s numbers somewhere in the mix. Spa management is definitely not a desk job, although sometimes you may long for a few minutes alone in your office.
Is this a good thing?
It’s certainly essential that spa management is readily available, and up-to-speed on everything that is happening in the spa on a daily basis. But this focus on the here-and-now can result in a lack of focus on the future. Thinking about the future feels like a luxury to many spa managers. However, it is no luxury for the health of the business; it is essential that someone is thinking about tomorrow.
So where is the balance?
Finding balance is a different trick for everyone, and there is no quick or obvious solution. But one key is to notice that you need it and to start looking for ways to create it. Yes, the everyday details of the business need to be dealt with, but very quickly you will find yourself immersed in today (and sometimes yesterday) and leaving the “plan for next week, month, year” entry unticked on your to-do list. Spa business managers often operate from a reactive, rather than proactive, approach, because of the non-stop demands on their time. The only way to stop this is to carve out a period each day, or even a few days per week, to have some quality alone-time; this may be more readily accomplished out of the spa, in fact.
Start small – an uninterrupted 30 minutes can do wonders and can be a springboard to more regular time-outs in the near future. Make some rules for yourself; this is not review time, it is forward-thinking time. Whether you use it to catch up on ideas from the spa trade magazines or to read the latest in business management trends and new concepts from Inc, Wired or HBR Magazines, or you just wander the local shopping mall and observe the stores and the people in them, you will open your mind to ideas and possibilities.
The hugely popular Mindful Magazine has many tips and methods to help you find some balance between high levels of activity and mindful pursuits. We can’t turn away completely from the demands of our daily schedule, but we do need to ensure that we create a plan to move the business forward, not just put out fires all day.
Help is only a few finger taps away; the Wynne Business Spa Director’s Management Intensive is now available as a self-paced online course. We offer an entire module dedicated to spa leadership essentials. Make 2018 your year to advance and register today.
Learn More About The Spa Director’s Management Intensive
You versus Your Spa Competition: What makes a client choose your spa?
/0 Comments/in Spa Business, Spa Marketing /by lstarr@wynnebusiness.comUnless you are a resort spa, directly after the holiday season, you are likely to see some quieting in your books, and perhaps even your regulars are MIA. What is your plan to attract new consumers, and how will your spa stand out from all of the competition?
You Vs. Your Competition
What Makes a Client Choose Your Spa?
Clients are becoming more aware than ever of the need for spa and wellness services; the messages cannot be escaped, even in mainstream media. But there are plenty of people who are still not sure what happens in a spa, and even more who don’t know what wellness entails.
The nature of the spa industry in America is such that the word spa has no clear connotation; it may be attached to a nail, tanning salon or hair salon as often as it is used in conjunction with skin and body services. The ubiquitous nature of the word is good for marketing in the sense that consumers are seeing it often and that reinforces the idea that spa is not just for special occasions. But it’s not helpful if consumers don’t know what it is. Therefore, one of the main concepts framing your spa marketing plan has to be clear communication of what your particular spa is, and is not.
It is likely that you have massage, body and/or skin care services on the menu, but beyond that, what words or concepts help to define your spa?
Is it botanical, holistic, organic?
Do you use Italian products?
Are you known for your customer service or outstanding results?
Is your staff highly-trained?
Many spa owners try an everything-but-the-kitchen-sink approach to creating spa businesses; long lists of every treatment imaginable, but no soul or clear identity. The more facilities like this exist, the more commoditized spa services become, and if your spa does not have a distinct identity or point of view, you will be lost in the crowd.
This article on branding gives some helpful hints on the best approach. Certainly, one of the important focal points in developing a brand identity is to make sure it resonates with your previously identified target audience. Don’t develop a spa concept or treatment menu because it interests you, make sure there is a community of prospective clients who need/want what you are offering, and also ensure that your spa is conveniently located for those prospects.
With this approach in place, you’ll have something to build on.
This article appeared first on the Booker blog.
Spa Therapist Salary: What should a spa therapist be paid?
/0 Comments/in Blog, Spa Business /by lstarr@wynnebusiness.comDespite the lack of standard base salary, U.S. therapists earn the most worldwide.
Here, the GSWS has updated its findings to provide a snapshot of how aestheticians are paid in a selection of different countries – and the reasons why salaries vary so widely. The overview is intended to help operators and owners learn more about how our industry makes money (and in some cases does not).
On commission
Whether cultural, regulatory, or just habit, different countries pay beauty therapists in very different ways. Even taking into account the cost of living from one place to another, there are still major variances in average monthly pay.
In a large number of countries, the standard method of pay for beauty therapists is a monthly salary. Although, as shown in the table, there doesn’t appear to be any rhyme or reason to the amount of the salary. In almost every country, except for in the U.S., the salary makes up the lion’s share of monthly income, with commissions on services or retail comprising the rest. Service commissions are typically 5-10 percent of the cost of the treatment provided and are added to the monthly base salary.
In the U.S., however, it’s quite common for beauty therapists in day spas – which make up the vast majority of country’s spa establishments – to receive absolutely no base salary, earning all of their income as a commission on the treatment prices charged by the business. While this sounds unfair and quixotic, the result is that American therapists are the most highly paid in the world.
The U.S. also provides the biggest variety of pay plans which vary between states and cities or even two businesses in the same block. As there is no one-way things are done, methods of pay can be quite creative. Rather than paying a straight percentage for all therapists, for example, operators could offer more compensation to those who reach set benchmarks – such as better client retention rates and average customer spend – that help drive business. Alternatively, they can vary the percentage of compensation according to different services: paying less for treatments where a high amount has been spent on pieces of equipment, for example, to get a quicker return on investment. Slowly and incrementally, this is helping to offset the high staff overhead that U.S. spas face.
Retail commission – where therapists get a percentage of revenue from products they sell – is another possible add-on for salaries as spas all over the world offer products for home use. Globally, retail commission levels are fairly consistent at 5-10 percent of the retail price, which is typically all a business can afford on branded merchandise that already has high markup costs.
Benefits and taxes
Every country also has its own legal and cultural requirements for employers paying therapists concerning issues such as health insurance, retirement/pensions, and other social service benefits. The costs vary widely also, from an approximate 11 percent of payroll in the U.S. to as much as 40 percent in Sweden. It’s certainly incumbent on any spa business opening in a new country to fully understand all the different taxes and benefits that its expected to pay in addition to service provider salaries.
There’s no correlation between a therapist’s education and pay. Some countries require licensing for beauty therapy which typically involves up to two years of study. Meanwhile, in the U.S. an aesthetics license can be earned in many states in four months of full-time schooling; and there are still many countries, such as China, South Africa, Cambodia, the Philippines, and Brazil, where no license is required at all. However, the countries with the highest education costs are not those that pay the most. This could be a false economy – while an operator could potentially save money by hiring unlicensed therapists, the spa may develop a less desirable reputation, and incur additional in-house training costs as a result.
Something that is standard internationally is workers typically receiving 21 to 28 days of paid holiday a year. In China and Hong Kong, staff gets an extra months’ pay for Chinese New Year, along with two weeks off. That said, many global workers put in a lot of time and effort to earn such benefits – regularly putting in a six-day workweek, and in some resorts or on cruise ships working daily for two to three weeks before taking a day off.
In the U.S., paid time off is less generous: small spas will provide no paid leave, while spas that are part of larger brands will offer a week off after a year of employment, and that may increase to two weeks after two or three years of steady employment. Therapist schedules are also becoming shorter, often three to four days per week and part-time shifts are becoming more frequent as mandated health-care costs for full-time workers increase.
Growing concerns
Staff pay is, in most markets, the single biggest expense in spa business operations. This makes sense, as the inherent strength of spas is a labor-intensive product. But as companies continue to expand, and brands proliferate across country regions and borders, spa management teams should be aware of the differing pay, benefit and tax conventions. It’s not safe to assume that “what you’ve always done” in one country will be accepted in another, and this makes projecting turnover and profits more complex.
It’s no surprise that countries which pay the least in direct salary also have the lowest cost of living, however, this may also be a reflection of the importance of personal care to a specific locale or region, or the value placed on overall health and appearance. Spa services sit right at the crossroads of beauty services and healthcare, and in most countries spas are attracting increasing numbers of practitioners, who deserve the right to a fair living wage. But in situations where the desired pay is outsized compared to other overheads, it can make the ability for a business to earn a profit almost impossible, and negatively impact the growth potential for the industry as a whole.
If you have questions about spa employee pay and how to find what works for your business and your team, give us a call. Schedule a free 30-minute needs assessment here.
This article was originally published in Spa Business Magazine and on the Spa Business blog.
How to Plan an Effective Spa Discounting Strategy
/0 Comments/in Blog, Spa Business, Spa Retail /by lstarr@wynnebusiness.comAre you struggling to fill your spa appointment books, but not sure about the discounting route? Proceeding with a cautious spa discounting strategy is the best plan.
Discounted pricing has become an important marketing tool in the battle to attract new clients, and keep the ones you’ve got. But it’s an undeniable fact that discounts eat into your already slim profit margins, and can negatively affect cash flow.
You’ve no doubt heard some of the horror stories generated by Groupon experiences, which share a similar theme. A small 4-treatment room spa that needs more clients decides to participate in a Groupon or similar promotion and ends up selling 400 vouchers. The 400 “new clients” descend on the spa, which is unprepared to handle them. There are not enough therapists, they’re not well-trained, and there is not enough laundry or front desk staff to ensure a smooth visit. The clients have a mediocre experience (what they expect for $50 is another story) and vow never to return. Some of them go so far as to post negative reviews on Yelp. The spa closes soon after.
Happily, the Groupon obsession seems to have subsided, and not all spas that participated in these types of promotions went out of business. But the fact remains that when you focus your marketing efforts strictly on price, you attract clients who are interested in price before all else; quality, ambiance, experience, the overall value that you can provide.
However, the concept of paying full retail for anything these days is not a given, especially for the millennial that are your clients. This is the brave new world we inhabit; trying to build a brand and attract clientele, give them an experience that at a minimum meets their spa expectations, and preserve your cash flow and profit margins all at the same time.
Ever since WWII, Americans have been in love with the idea of discounts. The thrill of getting something for less than the advertised price is more important than the acquisition, for many people. Or at least for people who are focused on price, rather than quality. Now our recent economic situation has created a new iteration on the discount strategy, the membership program.
No finer example of that exists in our industry than Massage Envy; over 700 locations, each grossing over a million dollars a year, and still growing. Volume like that inspires a lot of wanna-be’s, hoping to cash in on this concept, but I think the Massage Envy ship has already sailed. Not that you can’t have a discount membership program at your spa, but building an entire business around this concept has been done, and done well.
Certain industries have ingrained the discount message into consumers; just look at what is happening at department store JCPenney. Penney’s hired the innovative executive Ron Johnson, the former Sr. V.P. of Retailing for Apple, to be the CEO last fall. Johnson is credited with creating one of the highest sales-per-square-foot environments in the retail world at Apple, and Penney’s felt like it needed some innovation. The idea was that Penneys would shed its discount and coupon-driven mantle, and focus on providing everyday low prices and value, and staying away from the “sale” word. Turns out, folks that shop at Penneys like prowling the aisles for deals, and they’ve been staying away from the store in droves. The jury is still out on whether this experiment to transform the company and its reputation will be successful, but I give Johnson credit for bravery. I’m guessing it’s going to take more than just a few months to retrain the consumer on Penney’s new value proposition. Why? Because humans are creatures of habit.
So what does this mean for spas?
It means we need to be very careful about the message and image we convey to our target audience. If we start training guests that our prices are as malleable as they are at the department store, we risk beginning a dangerous downward spiral. Consider this interesting article, “Customers Will Pay More For Less,” by Alexander Chernev, in Harvard Business Review, in which two researchers discovered that consumers were willing to pay more for two separate items than they were willing to pay when the items were bundled together. For instance, people were willing to spend $225 and $54, respectively, on two pieces of luggage when purchased separately, but when they were bundled together, consumers were only willing to pay $165! The reason is attributed to a thought process called categorical reasoning and is especially present when an expensive item is bundled with a less-expensive one.
If you are creating special offers that pair higher-priced spa services with less expensive ones, you may be devaluing both of them in the eyes of the consumer. Be strategic and consistent with your pricing, and you won’t run the risk of thoroughly confusing the consumer about your true value proposition.
Do you need help identifying a solid discounting strategy? We can help. Our team has worked with leading spas across the globe. Contact us for a complimentary needs assessment.
Spa Success In Unlikely Places
/0 Comments/in Blog, Spa Business, Spa Marketing, Spa Marketing Page Featured /by lstarr@wynnebusiness.comOne of the crucial issues in spa marketing is to create a promise to the client that can be fulfilled by the spa, so that expectations are aligned with reality. In recent years, I’ve visited two spas that exemplified this concept, and I was unexpectedly delighted with both.
It might seem like being the only spa in a small town would help ensure your success. But what if that town was a mining town in the high desert, filled with pickup trucks and empty storefronts? My first pleasant surprise of the week occurred at just such a place. I enjoyed a facial performed with the expert hands of a well-trained esthetician, snacked on a variety of interesting dried fruits that are also available for sale, shopped in the well-stocked and merchandised boutique, and enjoyed the teamwork of a tightly-knit group of women who are setting the bar for their town, and it will be a hard act to follow for anyone else. In fact, this spa is so delightful, it recently won recognition for being one of the best spas in all of Wyoming.
The Tower hotel offers Ahsi Spa, but I elected to venture through the casino, over the walkway and into the tranquil and upscale environment of Four Diamond award-winning Lodge to have services at Skana. This spa offers 12 treatment rooms, salon, full men’s and women’s locker rooms with steam, sauna and whirlpool as well as a large co-ed whirlpool, and a Spa Café. The treatments were expertly done, and I enjoyed the facility which supported the menu of services based on Oneida Indian culture, but did not call overt attention to itself.
Both of these excellent spas illustrated the point that you don’t need to be front and center in the spa universe to be successful or to provide a top-notch experience for your clients. But you do need to have an identity and vision, to communicate that clearly in your marketing materials, and then be able to deliver on your promise to your guests. As the army says, “Be the best you can be.”
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A version of this post appeared first on Spa Standard.