Thursday, November 8, 2007

The Gift Horse

We've all heard the expression: don't look a gift horse in the mouth. I confess, I looked, didn't like what I saw, and put the gift certificate horse out to pasture for a number of years. But the old girl still has some life in her, it turns out. A lot of life.

Those of you who never had a second thought about gift marketing can probably go get a Starbucks and touch up your manicures. For the rest of you who have had dark nights of the soul wondering if you were undermining your core business by flogging the gift horse--read on.

When I lead spa seminars, there is always a bit of bewilderment when I discuss my conflicted relationship with gift marketing. (Whenever you find someone wringing their hands and muttering over the merit of gift sales, whisper the words "escheat law" and watch them jump. Go on. It's fun.) Here's the problem. In many states, gift certificates cannot be expired. I've yet to meet a spa that keeps its hands out of the unredeemed gift cash cookie jar. You know you want it. We all do. We know that a substantial portion of these gift cards and certificates will never be redeemed.

If all we had to worry about was whether we had the ability to honor these certificates or not, it would be lovely. But unfortunately, we have a balance sheet that keeps us honest about our appetite for gift cash. And many spas in states where gift cards can't be expired face a creeping liability that doesn't go away. That liability may not seem "real," to you--the villagers with the gift certificates, pitchforks and torches won't march on your spa some night, demanding massages and pedicures. However, this paper liability can eat away at the living heart of your company, your owner equity. Buy your CPA a nice lunch next week and learn why this is not a Good Thing.

But let's put this particular gift marketing issue aside for a moment. My sentiment about gift sales made an about face last year after we conducted a customer survey that indicated one third of our top 350 clients had made their first visit to Preston Wynne with a gift certificate. Perhaps this comes as a "duh" to you. It did not, to me. That's because, back in the late 90's, when our spa was a mecca for the Queen for a Day Spa Pamper Package Gift Recipient, we learned that rampant gift sales had pushed down profit, pushed up employee turnover, and nuked our retail sales ratio. The typical spa gift recipient did not reschedule, did not begin a home care regimen, and (wince) often didn't leave a gratuity.

But times have changed. Many more Americans are now spa-goers, and spa gift certificates these days seldom go to Spa Virgins. They're being given to experienced, educated, and can-you-say-Qualified spa goers. Yes--the men and women that we love. Gift certificates, in short, can be the beginning of a beautiful relationship.

If you've noticed that the lines of dutiful gift buying men seem shorter each holiday season, you've hopefully marked an increase in online gift sales.

Please tell me that you can sell gifts online. This is as essential as breathing in today's spa industry. A gift shopper who cannot complete a secure gift card purchase transaction on your website will quickly move on to a spa that can fulfill. None of that "submit this request form" business. So last century.

After a long period of flat sales, gift activity at our spa began to grow again last year thanks to our new "print your own" gift certificate capability. Adding to the excitement: these were almost entirely brand spanking new customers, who found us through a web search.

Please, please tell me that your website is search engine optimized. If not, you're missing out on a lot of gift sales. You're missing out on a lot of sales, period.
(I'll throw in a plug for our web developer Accelerator Enterprise Technologies here; go find them at

Kick off your selling season with a special event that encourages your regular guests to pick up spa gift certificates before the 12-days-of-Christmas wave hits. Offer an incentive--we'll be giving away a gift certificate for a spa pedicure with every $150 in gift cards a guest purchases. Because these giveaway gift certificates are promotional, they can be expired. We expire them in 90 days, offering plenty of time for the guest to use them. Do these sales cut into our regular gift volume? We don't think so--most of those late-season buyers are guys buying for wives and sweethearts, and most of the people that take advantage of the pre-season promotion are spa regulars, about 90% of whom are female.

There's more than one way to make a gift horse gallop. See you at the races!