5 x 5 x 4 is an equation I like to share with aspiring spa professionals, and the people who hire them. This formula represents the foundation of a successful practice as a spa professional, be it esthetician or massage therapist: five days, five clients per day, four weeks per month = 100 regular clients.
For the sharp-eyed among you, that missing .33 weeks per month offsets the impact of time away from the job, paid and unpaid, here calculated as "only" four weeks a year—a conservative sum: see my earlier blog on the surprising pitfalls of sales budgeting.
This formula is the lifeblood of spas who cater to a repeat clientele: day spas, medical spas, and urban hotel spas whose regular guests include locals and business travelers. It is an unapologetically simplistic formula, but as a rule of thumb it works pretty well. At about 100 “regular request” clients, a spa professional reaches stability and success. Their practice isn’t full to bursting, which means there is additional earning potential. But they’re productive and prosperous.
Why is this number important? Because very few spa professionals actually have or use specific performance goals, which is the best way to gauge progress. If you knew that you needed to secure 100 happy and loyal clients, averaging a visit every month (some will come more often, some less) how do you behave? How do you prioritize your day?
For serious professionals, your thinking changes from the passive “what’s on my schedule today?” to the active “where are my clients—past, present, and future—right now, and how can I get them, and keep them, on my schedule?”
If you know you need 100 regular clients, you build a roster, quite literally—as in, you write them down and make notes about them, like any self respecting sales professional would. You record the names and preferences and needs of regulars-to-be and cultivate them—and their referrals--with tender loving care. This is not simply about chatting Mrs. Henderson up during her visits and asking after the daughter at USC. It’s about consciously creating a spa care program so beneficial to Mrs. Henderson that she wouldn’t seriously consider going elsewhere for her treatments. Even if someone hands her a gift certificate. Which they will.
The first time I won the gift certificate acid test against another spa’s unwitting, anonymous esthetician was 1985. The new guest came in out of social duty to the girlfriend who’d given her a gift certificate to my spa. She began by telling me in friendly but firm terms that she really liked “the girl” who had been giving her facial treatments. Whenever someone uses this vaguely anachronistic, pink-collar phrase, which I still hear around spas, I know we’ve got a new client in the making. It tells me that “The Girl” is simply a beautician, performing what we used to call “beauty operations” in the no-frills school I attended in the early 80’s. “The Guy,” her male counterpart, may be a masseur, (a term always uttered with uncertainty and awkwardness, and usually with the wrong gender) whose skill set is not quite something we’d describe as massage therapy. All snobbery aside, these folks may be well-intentioned and committed, in their own way, to the work. They are skilled enough to deliver a service that encourages a customer to return.
But customers fall into the hands of a truly committed professional, the scales fall from their eyes. The customer turns into a client. They adhere. That is, if the professional cultivates them properly. Making sure a client “sticks” to you requires a simple process. Commitment cannot just be to the craft (“I love being an esthetician!”) but to collecting and tending clients (“I love taking care of my clients.”)
Back to my gift certificate client. At the end of our hour together, she said with genuine surprise, “You know, I really like The Girl who gives me my facials. But we usually talk about our kids and our husbands. I learned so much today.” And at my invitation, she promptly rescheduled, coming for treatments with me for many years, until she moved from the area to retire. Her teenage daughter became a regular guest as well. I never forgot the lesson she taught me that day—and her comments became the basis of two of the principles of Selvice, the Wynne Business sales and service philosophy: “Create Compelling Solutions” and “Make it Fresh Daily.”
Most customers enjoy friendly banter with their service provider, but they don’t need to pay us $100 an hour and more for friendship (we hope.) Still, a client who has never experienced a game-changing treatment—the astonishingly effective massage, the transporting facial--may not even know that such a possibility exists. Value is created when we solve big problems for our clients: we unfreeze the frozen shoulder, we clear the erupting skin, or we elevate their self esteem through our graciousness, respect, warmth and unflagging attention. These are compelling benefits, valuable ones, and they bring the clients back to us. Even when times are tough.
Once we’ve made progress on the initial set of problems, the ones they “present” with, we can’t go onto autopilot. There are always other interesting issues to mine and improvements to make. You’ve got their trust and confidence now; it’s time to expand the scope of the program and introduce them to outcomes and benefits they may not have known existed. Like explorers, the best spa therapists continuously seek new ways to create value for the guest—we make it fresh daily, treating them with the same focus that we would the new guest, each time we see them. A great spa treatment program is a bit of a never-ending story, with new and wonderful benefits that continuously unfold. This requires that spa therapists keep eyes and ears open and don’t become one-trick ponies. The industry is full of reasonably skilled folks that stopped learning the day they left school. They (or their clients) eventually wither away from boredom.
I used to go through a ritual before I saw my last client of the day: I would clean, detail and re-set my treatment room as I would for the first client, misting it with some lavender and peppermint, smoothing the sheets with extra care, re-energizing the space. I never wanted a guest to feel that I gave anything less for my final client of the day than my first. I never allowed myself to get loose and lazy and overly casual, as some service providers tend to do when the end of the day is in sight.
In times as challenging as these, spas must once again get serious about benefits. Chocolate treatments and Margarita scrubs will still probably find a place on resort spa menus, but I’d be willing to bet that there is not much in the way of a steady “chocolate clientele.” (Forgive me if I’m wrong, devoted chocolate therapists.) Compelling value is about healing, pure and simple. That is the watchword for clientele building in this brave new year.
The sales profesional you see four times a year when she is in town for her company’s quarterly business review should be called, coddled, cultivated as if she lived ten minutes down the road. The client who lives ten minutes down the road should feel like family. (Well, an idealized form of family: one of the great charms of spa visits is that you are treated far better in our establishments than you ever would be by your spouse, your offspring, or any actual members of your family.) This is just as much a part of the job as understanding how to release tension in a client’s SCM or properly extract millia.
The spa therapist who is loathe to pick up the phone and check on a new client within a couple of days of their first visit will never amass the magic 100. The great irony of the trade is that many spa therapists are actually very shy individuals who are happiest interacting with silent, prone people whose eyes are shut. Take them out of the treatment room and ask them to have a conversation with a guest and they blink like owls in daylight, shifting awkwardly in the open and itching to return to the safety of their dim caves. The challenge is that the work of client-building happens, not just during the treatment, but in those conversations and interactions before and after the service.
To get your 100, you have to ask for it. This is what we call in Selvice “Extend the Invitation,” and it’s the bit everyone thinks they can omit if they’re good enough. Not true. I’ve seen modestly talented individuals enjoy great careers because they obey this law, and great talents fail spectacularly because they think (or hope) they are exempt.
Spa operators can help bridge this gap by providing, at critical touchpoints, superior customer service professionals, but counting on this as your primary strategy is risky. While you will always have gems, support teams are famously understaffed and turn over more quickly than other departments. As a 25 year spa operator I wish this weren’t so, but it seems to be one of those natural laws of the industry that we “work around”. The one reliable strategy is teamwork, lots of coaching (much of it positive—catching people doing things right), and a willingness to make clientele-building, if that’s your business model, a non-negotiable behavior.
But here is the most encouraging part of the Law of 100. If we assume a spa professional is at work 50 weeks a year (which is the basic agreement, though we know we usually fall short) they simply have to retain two clients a week to collect their 100 clients in the course of just one year.
Ask just about any spa therapist if they think they can hang onto two of the people they see in a week—that is, reschedule them before they leave--maybe even sell them a series--and most of them will say that this is reasonable and probably doable. As a point of pride, it’s hard for anyone with even a modicum of self confidence to admit otherwise. In fact, it’s tantamount to saying “fire me now!” for someone to bemoan the difficulty of snagging two return clients each week.
For your part, as a spa operator, you can provide a nice incentive for the guest to reschedule before leaving. Having a bit of “bait” in the form of an upgrade--please, no discounts, unless for a series purchase--bolsters the spa therapist’s confidence. It’s a conversation starter. It makes them feel better about their invitation.
The flood of new clients that follows the holiday gift season next month will provide plenty of guests who may not, like my long-ago client, even know they’re in the market for a new massage therapist or esthetician. It will also deliver people who have never even had a spa service at all. These prospects all have needs, concerns, hopes, frustrations. They don’t know what we can do for them. It’s our job to gently winnow those needs out and provide compelling solutions.
Don’t tell me she’s simply here to “relax,” and that’s why you didn’t attempt to reschedule her! Why does she need to relax? Did you find out? Do you know exactly what “relax” means to her? People spend tremendous amounts of money to “relax.” (See: Hawaii—a place she may not be going this January.)
Two per week. A lovely, bite-sized goal that will set your therapists on the road to 5 x 5 x 4 and their first 100.
There is an especially happy epilogue to my gift-poached client tale. Not long ago I was on an industry tour of the Wynn Spa in Las Vegas (the only thing I have that Steve Wynn doesn’t is an “e” at the end of my name.) As we entered the beautiful facility, I was introduced to the lead esthetician, a lovely young lady who looked awfully familiar. She recognized me as her and her mother’s long-ago esthetician. Not only had that day led to a long and happy client relationship, the facial treatmeants that she received had also sparked the daughter’s interest in a spa career.
The only thing more rewarding than creating a new client is creating a new spa professional from a client. That’s a gift that keeps on giving.
Wednesday, December 17, 2008
Saturday, November 1, 2008
The Kindest Cuts
We'd all like to sell our way out of a downturn, but the fact is, it's time to make some hard decisions and begin cutting expenses. There are a few questions to ask yourself when contemplating spending money:
1. Is this a "nice to have" or a "have to have" item or expense?
2. Does it "touch" the client (literally or experientially)? It is not worth keeping a frayed or stained robe in circulation to save a few bucks. Protecting your reputation is, as they say, "priceless!"
3. Will a cutback in this area seriously damage employee morale? It's inevitable you'll have to reduce spending in areas that affect employees. But make sure they know you are working hard to protect their core compensation and benefits.
You've probably already started on your "low hanging fruit" cuts. Here are some ideas that may be further up the tree.
1. Reduce your inventory. Identify the SKU's that make up the lowest 20% of product sales by dollar volume. Get rid of them. If you've sold less than ten of any product this year (unless it's a new product or very high ticket) get rid of it. Put these discontinued items on sale at a deep discount and wring the cash out of them. Try to get your annual inventory turns up to six, across the board.
2. Look at ways to make your support team schedule more efficient. Can a salaried manager step in for a couple of hours to cover lunch breaks, preventing you from having to bring in a staffer early or keep them late? Do you have to stay open as late as you do now? Not all reduction in operating hours makes sense. If your revenue production staff is paid by the treatment, you have just support staff overhead expense. Often just a couple of additional treatments will warrant keeping the spa open. It's important to have a "big net" to catch potential clients these days. Reducing hours may hurt more than help.
3. Look at employee perks. We're having to suspend a longtime perk, a free monthly employee treatment voucher. In its place we're putting a more liberal treatment "trade" policy and a way for employees to continue to enjoy treatments at a deep discount. Will it be a hit to morale? Somewhat. But we think we can show that there will still be plenty of opportunities to experience treatments. We've primed our team that "business as usual" is over.
4. Reduce training wages. Employee training is a big line item in many spas. Yet good training is generally perceived as a big perk for spa employees. What they learn in your spa is often a "portable" or resume-enhancing skill. We've dropped our hourly rate for training from $10 to $8.
5. Reduce the number of services on your menu. In a recent meeting with the team, estheticians suggested that we cut out three seldom-performed protocols which used a total of 13 products, none of which we're re-ordering.
6. Rework your protocols to use fewer supplies. If you use a laundry service, you pay by the piece. Lavish use of hot towels is typical in many spas--you can probably cut back without impacting the quality of the service. Create awareness of towel-use expense--post a humorous sign on the topic. Make sure no one is pulling a towel when they need a dust rag! Even a 10% reduction in linen consumption can make a noticeable difference in the bottom line.
7. Control the use of costly back bar. Even without a formal dispensary system, you can require estheticians to check out expensive peels and other high end supplies. Avant Garde spa in the San Francisco Bay Area recently instituted kits for all esthetic supplies save the basics (like cleanser and toner.) All masks, peels, creams, ampoules, etc. are dispensed to esthetician's individual kits. The sales reports must sync up with the products used. Unfortunately, during downturns, employees often give away upgrades on the sly to boost their tips, much like a bartender giving away a free drink. Avant Garde's owner Blanca Caballero reports savings of close to $1,000 per month on esthetic backbar costs.
8. For spas that have their own hot water systems, switch to an on-demand hot water heater. It will pay for itself very quickly in reduced utility bills--and you won't be as likely to run out of hot water.
9. During downturns, fingers can get sticky. Install a web-based security camera system that you can monitor from wherever you are. A decent system will run about $1,500, an investment with a fast return.
10. Outsource HR duties and payroll to a PEO (professional employment organization.) We've just started with a company called Avitus Group, a Montana based PEO, and are thrilled with the level of service. We tried the same with Paychex a couple of years ago and were disappointed. Payroll companies are increasingly trying to "bolt on" this type of service. However, it's the core business for Avitus and it shows. Our amazing HR rep says he's available by phone 24/7 and--guess what?--he is! Now Avitus is handling time-and-energy-draining activities like work comp claims, enrolling former employees in COBRA, or handling family leave. That leaves us free to concentrate on delighting our customers.
11. For newer spas, if you're doing a pay-per-click marketing campaign like Google Adwords, get professional help. While Google Adwords seems foolproof, and seems to be set up for the amateur user, mistakes are expensive!! It's estimated that 30% of the money spent on these campaigns is wasted. A couple of hours with a good PPC consultant is well worth the money. Like any other online marketing, PPC has gotten a lot more complex and sophisticated. Click fraud pales in comparison to simple keyword choice errors. (Need a PPC consultant? Contact David Victor, dv@acceleratoret.com)
12. Does your spa offer guests Points and rewards for their referrals, spending, etc.? To maximize cash flow, you may want to encourage them to defer use of their Points until next year, when sales may be stronger. (Fingers crossed) We've created the Sweethearts Club, enabling guests to bank their Points for Valentines gift cards, when we will redeem them at double the value.
13. Save money by moving more of your marketing online. Be sure to monitor your online reviews and "work" sites like Yelp for maximum exposure. Contact negative reviewers and treat them as you would a client who calls and complains. Don't demand a rewrite if a guest returns for a redo; the guest usually amends their comments of their own volition. Your review site appearances improve your search engine ranking. Solicit clients to post reviews on Yelp or Citysearch by including a link in your online newsletter.
14. Scale back the employee holiday party. Make it pot luck. Everyone knows times are tough. Make it fun, but don't feel obligated to keep up appearances with a fancy event you can't afford. If you're still doing an event at a restaurant, make it a weekday brunch rather than an evening event. They're shorter, don't involve alcohol, and usually don't attract guests. We have a "Wynnie Awards" ceremony with ours to recognize exceptional team members.
15. Some of the best ideas for saving money will come from your staff. Spa employees know how to be thrifty. Tap into that resourcefulness with a big, shiny new suggestion box in the employee area. Recognize everyone who participates and celebrate the ideas you're implementing.
Remember, the mantra is, "Is it a 'have to have' or 'nice to have'?" Remind your team, when they protest this or that change, that the mindset that worked in the past won't work in the future. Spa folk are not risk takers and they tend to dislike change. Helping them see that it's riskier to not change will encourage their participation and cooperation.
Have more cost saving ideas? Please share them with our readers!
1. Is this a "nice to have" or a "have to have" item or expense?
2. Does it "touch" the client (literally or experientially)? It is not worth keeping a frayed or stained robe in circulation to save a few bucks. Protecting your reputation is, as they say, "priceless!"
3. Will a cutback in this area seriously damage employee morale? It's inevitable you'll have to reduce spending in areas that affect employees. But make sure they know you are working hard to protect their core compensation and benefits.
You've probably already started on your "low hanging fruit" cuts. Here are some ideas that may be further up the tree.
1. Reduce your inventory. Identify the SKU's that make up the lowest 20% of product sales by dollar volume. Get rid of them. If you've sold less than ten of any product this year (unless it's a new product or very high ticket) get rid of it. Put these discontinued items on sale at a deep discount and wring the cash out of them. Try to get your annual inventory turns up to six, across the board.
2. Look at ways to make your support team schedule more efficient. Can a salaried manager step in for a couple of hours to cover lunch breaks, preventing you from having to bring in a staffer early or keep them late? Do you have to stay open as late as you do now? Not all reduction in operating hours makes sense. If your revenue production staff is paid by the treatment, you have just support staff overhead expense. Often just a couple of additional treatments will warrant keeping the spa open. It's important to have a "big net" to catch potential clients these days. Reducing hours may hurt more than help.
3. Look at employee perks. We're having to suspend a longtime perk, a free monthly employee treatment voucher. In its place we're putting a more liberal treatment "trade" policy and a way for employees to continue to enjoy treatments at a deep discount. Will it be a hit to morale? Somewhat. But we think we can show that there will still be plenty of opportunities to experience treatments. We've primed our team that "business as usual" is over.
4. Reduce training wages. Employee training is a big line item in many spas. Yet good training is generally perceived as a big perk for spa employees. What they learn in your spa is often a "portable" or resume-enhancing skill. We've dropped our hourly rate for training from $10 to $8.
5. Reduce the number of services on your menu. In a recent meeting with the team, estheticians suggested that we cut out three seldom-performed protocols which used a total of 13 products, none of which we're re-ordering.
6. Rework your protocols to use fewer supplies. If you use a laundry service, you pay by the piece. Lavish use of hot towels is typical in many spas--you can probably cut back without impacting the quality of the service. Create awareness of towel-use expense--post a humorous sign on the topic. Make sure no one is pulling a towel when they need a dust rag! Even a 10% reduction in linen consumption can make a noticeable difference in the bottom line.
7. Control the use of costly back bar. Even without a formal dispensary system, you can require estheticians to check out expensive peels and other high end supplies. Avant Garde spa in the San Francisco Bay Area recently instituted kits for all esthetic supplies save the basics (like cleanser and toner.) All masks, peels, creams, ampoules, etc. are dispensed to esthetician's individual kits. The sales reports must sync up with the products used. Unfortunately, during downturns, employees often give away upgrades on the sly to boost their tips, much like a bartender giving away a free drink. Avant Garde's owner Blanca Caballero reports savings of close to $1,000 per month on esthetic backbar costs.
8. For spas that have their own hot water systems, switch to an on-demand hot water heater. It will pay for itself very quickly in reduced utility bills--and you won't be as likely to run out of hot water.
9. During downturns, fingers can get sticky. Install a web-based security camera system that you can monitor from wherever you are. A decent system will run about $1,500, an investment with a fast return.
10. Outsource HR duties and payroll to a PEO (professional employment organization.) We've just started with a company called Avitus Group, a Montana based PEO, and are thrilled with the level of service. We tried the same with Paychex a couple of years ago and were disappointed. Payroll companies are increasingly trying to "bolt on" this type of service. However, it's the core business for Avitus and it shows. Our amazing HR rep says he's available by phone 24/7 and--guess what?--he is! Now Avitus is handling time-and-energy-draining activities like work comp claims, enrolling former employees in COBRA, or handling family leave. That leaves us free to concentrate on delighting our customers.
11. For newer spas, if you're doing a pay-per-click marketing campaign like Google Adwords, get professional help. While Google Adwords seems foolproof, and seems to be set up for the amateur user, mistakes are expensive!! It's estimated that 30% of the money spent on these campaigns is wasted. A couple of hours with a good PPC consultant is well worth the money. Like any other online marketing, PPC has gotten a lot more complex and sophisticated. Click fraud pales in comparison to simple keyword choice errors. (Need a PPC consultant? Contact David Victor, dv@acceleratoret.com)
12. Does your spa offer guests Points and rewards for their referrals, spending, etc.? To maximize cash flow, you may want to encourage them to defer use of their Points until next year, when sales may be stronger. (Fingers crossed) We've created the Sweethearts Club, enabling guests to bank their Points for Valentines gift cards, when we will redeem them at double the value.
13. Save money by moving more of your marketing online. Be sure to monitor your online reviews and "work" sites like Yelp for maximum exposure. Contact negative reviewers and treat them as you would a client who calls and complains. Don't demand a rewrite if a guest returns for a redo; the guest usually amends their comments of their own volition. Your review site appearances improve your search engine ranking. Solicit clients to post reviews on Yelp or Citysearch by including a link in your online newsletter.
14. Scale back the employee holiday party. Make it pot luck. Everyone knows times are tough. Make it fun, but don't feel obligated to keep up appearances with a fancy event you can't afford. If you're still doing an event at a restaurant, make it a weekday brunch rather than an evening event. They're shorter, don't involve alcohol, and usually don't attract guests. We have a "Wynnie Awards" ceremony with ours to recognize exceptional team members.
15. Some of the best ideas for saving money will come from your staff. Spa employees know how to be thrifty. Tap into that resourcefulness with a big, shiny new suggestion box in the employee area. Recognize everyone who participates and celebrate the ideas you're implementing.
Remember, the mantra is, "Is it a 'have to have' or 'nice to have'?" Remind your team, when they protest this or that change, that the mindset that worked in the past won't work in the future. Spa folk are not risk takers and they tend to dislike change. Helping them see that it's riskier to not change will encourage their participation and cooperation.
Have more cost saving ideas? Please share them with our readers!
Monday, October 13, 2008
Leading through the storm
None of us knows what is going to happen to our economy in the coming weeks and months, but one thing is certain. Your team needs your leadership.
Our industry that tends to wish away bad news (Downturn? What downturn?) but we all know that this is not the time for Happy Talk. Your team needs to hear from you. They know things are difficult. They're afraid. They need to believe that you have the confidence and smarts to steer your company through the storm. A recent article in Executive Coach broke it down succinctly. Here are the five steps author Karlin Sloan recommends:
1. Get your story straight.
It's important that you and other managers communicate a unified message. What is our strategy? What actions are we going to take? Why do we feel this will work?
2. Focus on those who are leading the charge under you.
The article admonishes leaders to avoid just "putting nose to the grindstone" and making sure you stay connected to all around you.
"Your first priority should be to get those who work for you to become a unified force," Sloan insists. Sloan also warns against focusing on departing employees (either folks who quit or are laid off) and make sure that you devote energy and time to the ones that remain.
3. Overcommunicate.
"If you don't know what will happen--say that," says Sloan. This is not the time for BS. Similarly, if you don't feel you have anything helpful or encouraging to say--and remain silent--rumors will pop up. A hard truth is better than anything the spa gossip mill will produce. Call a meeting and give a "state of the spa" address.
4. Practice gratitude.
Sloan points out, "When we practice gratitude, it changes our ability to motivate and inspire others." Be grateful for whatever you can, whenever you can. Even if it's getting the ten minute break to eat the lunch you brought from home, or the fact that it's a gorgeous, sunny fall morning. I make sure I visit the operations floor regularly so I can be grateful for our amazing clients, many of whom have been coming to our spa for over twenty years.
5. Use the crisis as an opportunity for learning and growth.
You can also use the crisis to do some of the things you may have wanted to do but were afraid you couldn't pull off--reductions in inventory that you knew were necessary, for example. Or perhaps getting your comp plan revised. When you're not having to be concerned about being the "bad guy" there are many tough decisions that get easier. Here, the economy is the "bad cop."
I would add another vital component for leading during a downturn: doing whatever it takes to keep your "game face" on for your team. You must be the source of strength. This is just as hard as it sounds. Exercise, meditate, sleep enough, eat properly, and oh yeah--get some spa treatments. You're not just training for a marathon, you'll be running one every week.
Another vital part of self care: peer support. Wynne Business started a Spa Leadership Round Table in the Bay Area, with non-competing member spas--but any spa can do it. It's a great way to share ideas and best practices, but it's also wonderful moral support during a crisis. I am also a member of the Entrepreneur's Organization, and I sure look forward to my monthly Forum, a sub-group I belong to, within my chapter. It's especially valuable to get outside the industry for new ideas and new thinking.
Our industry that tends to wish away bad news (Downturn? What downturn?) but we all know that this is not the time for Happy Talk. Your team needs to hear from you. They know things are difficult. They're afraid. They need to believe that you have the confidence and smarts to steer your company through the storm. A recent article in Executive Coach broke it down succinctly. Here are the five steps author Karlin Sloan recommends:
1. Get your story straight.
It's important that you and other managers communicate a unified message. What is our strategy? What actions are we going to take? Why do we feel this will work?
2. Focus on those who are leading the charge under you.
The article admonishes leaders to avoid just "putting nose to the grindstone" and making sure you stay connected to all around you.
"Your first priority should be to get those who work for you to become a unified force," Sloan insists. Sloan also warns against focusing on departing employees (either folks who quit or are laid off) and make sure that you devote energy and time to the ones that remain.
3. Overcommunicate.
"If you don't know what will happen--say that," says Sloan. This is not the time for BS. Similarly, if you don't feel you have anything helpful or encouraging to say--and remain silent--rumors will pop up. A hard truth is better than anything the spa gossip mill will produce. Call a meeting and give a "state of the spa" address.
4. Practice gratitude.
Sloan points out, "When we practice gratitude, it changes our ability to motivate and inspire others." Be grateful for whatever you can, whenever you can. Even if it's getting the ten minute break to eat the lunch you brought from home, or the fact that it's a gorgeous, sunny fall morning. I make sure I visit the operations floor regularly so I can be grateful for our amazing clients, many of whom have been coming to our spa for over twenty years.
5. Use the crisis as an opportunity for learning and growth.
You can also use the crisis to do some of the things you may have wanted to do but were afraid you couldn't pull off--reductions in inventory that you knew were necessary, for example. Or perhaps getting your comp plan revised. When you're not having to be concerned about being the "bad guy" there are many tough decisions that get easier. Here, the economy is the "bad cop."
I would add another vital component for leading during a downturn: doing whatever it takes to keep your "game face" on for your team. You must be the source of strength. This is just as hard as it sounds. Exercise, meditate, sleep enough, eat properly, and oh yeah--get some spa treatments. You're not just training for a marathon, you'll be running one every week.
Another vital part of self care: peer support. Wynne Business started a Spa Leadership Round Table in the Bay Area, with non-competing member spas--but any spa can do it. It's a great way to share ideas and best practices, but it's also wonderful moral support during a crisis. I am also a member of the Entrepreneur's Organization, and I sure look forward to my monthly Forum, a sub-group I belong to, within my chapter. It's especially valuable to get outside the industry for new ideas and new thinking.
Wednesday, August 13, 2008
The Non Revenue Producing Space Odyssey
Non Revenue Producing Space, or amenity space, is evolving. How has your spa, or the spas you work with, changed in recent years? What amenities are customers desiring or requiring in your marketplace? Be sure to share the type of spa you're operating. As part of my preparation for an ISPA talk on this subject, I want to hear the grassroots opinions and ideas from the industry--not necessarily the "party line."
What works for you? What is too costly, in terms of operational wear and tear, or just plain dollars and cents? Do your amenities help you command a superior price point? Are medical spas finding amenities support their core business, or consume precious real estate? Please share your ideas!
What works for you? What is too costly, in terms of operational wear and tear, or just plain dollars and cents? Do your amenities help you command a superior price point? Are medical spas finding amenities support their core business, or consume precious real estate? Please share your ideas!
Monday, August 11, 2008
Staycation Nation
Staycation, Part One.
The “staycation,” America’s stay-at-home vacation trend, is hammering the travel industry this summer. Economic slowdown and the horrors of summer air travel have caused many people to reconsider their plans for long vacations and especially trips abroad. Even affluent consumers are feeling this shift in sensibility; as news reports teem with stories of downtrodden consumers who can’t afford to gas up their cars to go to work, conspicuous consumption has become a bit too…conspicuous. It’s suddenly chic to be sensible. (An added bonus: one can often be “green” and sensible in one fell swoop.)
Europe’s loss may be US spa operators’ gain, however. Guests who previously headed to Tuscany for a couple of weeks are taking “consolation vacations” and treating themselves to spa visits close to home. Not just the odd massage or facial, but a day at the spa, with all the bells and whistles. These “sensible sybarites” are staycationing in your spa. Compared to a $5,000 trip to Fiji, a $500 spa package is a fabulous bargain.
We recognized this phenomenon halfway through the summer, when sales at our Preston Wynne Spa in California’s Silicon Valley jumped 28% from the previous year. Other spa owners began to report similar behavior from their guests.
While I would have loved to be a bit further ahead of the Staycation curve, this trend won’t end with summer. Here are some thoughts about how to market to this customer:
- Staycation guests are receptive to indulgent, all-inclusive spa packages; dust those holiday favorites off, call them “Staycation Specials” and put them front and center in your marketing campaign.
- Provide ideas for other staycation pleasures near your spa; wineries, art galleries or museums, botanical gardens.
- Have a drawing for a “staycation” package at the spa to increase awareness
- Increase awareness by talking about “staycationing” in your marketing and in person, with guests. Concepts like “staycations” grow in popularity when they are recognized and named.
Staycation, Part Two
I decided to “staycation” this summer myself. (Full disclosure: I don’t usually take a vacation in the summertime; I love Europe in September during ‘reentree,” when even Parisians pretend they’re happy to see you.) A summer staycation was a fine excuse for leisure and market research combined.
A spa visit was at the top of my “staycation” must-do list. I scheduled a half day at my spa, something I never do. I am a less than perfect guest at my spa. I rush from a meeting to a pedicure, and then invariably smudge my polish in my sprint to the next meeting. I shoehorn my spa experiences into the small cracks in my schedule.
Not this time! To ensure that I did not sneak into the office afterward, I scheduled dinner at a terrific restaurant in San Francisco. I’m unaware of regulations governing how far one is permitted to travel and still ‘staycation,’ but I’m fairly certain this was legal.
I chose an Ocean Glow (a body treatment that’s a hybrid of exfoliation and wrap), a massage, a facial treatment, and a makeup session. About four hours of services, which my normal state of Business ADD (BADD) would never permit. I wafted about in a big fluffy robe like a real client, anonymous to the other guests (and funnily, to some of my own staff.) I lunched on our outdoor loggia. The entire spa even looked different to me, wearing my “guest goggles.” (I still scribbled out a punch list of maintenance and repair items afterward. Old habits die hard.)
I was blown away. Perhaps most spa owners reading this blog would also rate their spas highly, but I imagine you, like me, rarely give your team the opportunity to truly strut their stuff.
I recently completed a benchmarking project for Wynne Business that involved visits to splendid, world-class spa operations. (A dirty job, but someone had to do it.) I’m pleased to say that the quality of our treatments and our team was comparable. But unless I’d had services under “real world” apples-to-apples conditions, i.e., a special time set aside for pure relaxation and self-care, I would not have been able to see that. I realized that when regular guests enjoy a half day or more at the spa, it deeply enhances their overall relationship with our brand.
Like a lot of card-carrying Type A’s, I’m hard on myself and the folks around me as well—all in the name of continuous improvement. My staycation experience helped me see that being pleased is not the same as being complacent. Spa teams—and their owners--need a regular infusion of gratitude to stay motivated, committed and inspired.
The “staycation,” America’s stay-at-home vacation trend, is hammering the travel industry this summer. Economic slowdown and the horrors of summer air travel have caused many people to reconsider their plans for long vacations and especially trips abroad. Even affluent consumers are feeling this shift in sensibility; as news reports teem with stories of downtrodden consumers who can’t afford to gas up their cars to go to work, conspicuous consumption has become a bit too…conspicuous. It’s suddenly chic to be sensible. (An added bonus: one can often be “green” and sensible in one fell swoop.)
Europe’s loss may be US spa operators’ gain, however. Guests who previously headed to Tuscany for a couple of weeks are taking “consolation vacations” and treating themselves to spa visits close to home. Not just the odd massage or facial, but a day at the spa, with all the bells and whistles. These “sensible sybarites” are staycationing in your spa. Compared to a $5,000 trip to Fiji, a $500 spa package is a fabulous bargain.
We recognized this phenomenon halfway through the summer, when sales at our Preston Wynne Spa in California’s Silicon Valley jumped 28% from the previous year. Other spa owners began to report similar behavior from their guests.
While I would have loved to be a bit further ahead of the Staycation curve, this trend won’t end with summer. Here are some thoughts about how to market to this customer:
- Staycation guests are receptive to indulgent, all-inclusive spa packages; dust those holiday favorites off, call them “Staycation Specials” and put them front and center in your marketing campaign.
- Provide ideas for other staycation pleasures near your spa; wineries, art galleries or museums, botanical gardens.
- Have a drawing for a “staycation” package at the spa to increase awareness
- Increase awareness by talking about “staycationing” in your marketing and in person, with guests. Concepts like “staycations” grow in popularity when they are recognized and named.
Staycation, Part Two
I decided to “staycation” this summer myself. (Full disclosure: I don’t usually take a vacation in the summertime; I love Europe in September during ‘reentree,” when even Parisians pretend they’re happy to see you.) A summer staycation was a fine excuse for leisure and market research combined.
A spa visit was at the top of my “staycation” must-do list. I scheduled a half day at my spa, something I never do. I am a less than perfect guest at my spa. I rush from a meeting to a pedicure, and then invariably smudge my polish in my sprint to the next meeting. I shoehorn my spa experiences into the small cracks in my schedule.
Not this time! To ensure that I did not sneak into the office afterward, I scheduled dinner at a terrific restaurant in San Francisco. I’m unaware of regulations governing how far one is permitted to travel and still ‘staycation,’ but I’m fairly certain this was legal.
I chose an Ocean Glow (a body treatment that’s a hybrid of exfoliation and wrap), a massage, a facial treatment, and a makeup session. About four hours of services, which my normal state of Business ADD (BADD) would never permit. I wafted about in a big fluffy robe like a real client, anonymous to the other guests (and funnily, to some of my own staff.) I lunched on our outdoor loggia. The entire spa even looked different to me, wearing my “guest goggles.” (I still scribbled out a punch list of maintenance and repair items afterward. Old habits die hard.)
I was blown away. Perhaps most spa owners reading this blog would also rate their spas highly, but I imagine you, like me, rarely give your team the opportunity to truly strut their stuff.
I recently completed a benchmarking project for Wynne Business that involved visits to splendid, world-class spa operations. (A dirty job, but someone had to do it.) I’m pleased to say that the quality of our treatments and our team was comparable. But unless I’d had services under “real world” apples-to-apples conditions, i.e., a special time set aside for pure relaxation and self-care, I would not have been able to see that. I realized that when regular guests enjoy a half day or more at the spa, it deeply enhances their overall relationship with our brand.
Like a lot of card-carrying Type A’s, I’m hard on myself and the folks around me as well—all in the name of continuous improvement. My staycation experience helped me see that being pleased is not the same as being complacent. Spa teams—and their owners--need a regular infusion of gratitude to stay motivated, committed and inspired.
Thursday, June 12, 2008
Don't drop the "D" Bomb!
Managing yield in spas has become a hot topic of late. Excess capacity is a challenge nearly every spa operator must face. Ensuring that you don't end up with too much unsold inventory is Job One for every spa marketer. And ensuring that employees stay busy and productive is Job One for every operations manager.
Since it's impossible for us to manufacture more weekend days (which usually sell out) we must focus on making our weekdays more productive. How do most businesses try to get customers to buy more? They discount.
Why is discounting the wrong strategy for spas? Because it reduces the cash flow you receive while simultaneously undermining the perceived value of your services. Spas sell an intangible--we're not retailing automobiles, dishwashers or home furnishings. We're not even selling transportation, as airlines do. We sell an experience. This experience is purely elective. No one goes hungry, or loses their job, because they don't go to a spa. That means luxury spas must jealously guard the perception of value.
A big change in perception occurs when you discount an intangible. It calls into question the real value of the experience. It reinforces the fear that the customer may already harbor: is this really worth it? Should I really be paying $120 for an hour massage?
And frankly, that's not why I really hate discounting.
I hate discounting because it's so...pedestrian. Marketing should be sexy. And discounts aren't sexy. Discounts elicit a sort of primitive, knee-jerk response from customers.
Mmm. Discount. Good. Give discount.
Discounting doesn't accomplish our goals as marketers. A discount can result in a burst of cash, but a hangover inevitably follows. When we create an incentive, we want our customers to think that our spas are even more brilliant and desirable than before. Discounts don't do this.
Let's look at another form of incentive: premiums and upgrades. When you offer more to a guest for the same price (more time, a higher value service, a gift with purchase) you have an opportunity to deliver better results and greater guest satisfaction.
Some examples of premiums and upgrades:
Pay for a 60 minute massage and receive a 90 minute session. A $48 value, with our compliments. (Anyone who experiences a 90 minute massage has a very hard time going back to a 60 minute session. Happily, we offer a 75 minute session, which now becomes an easy upgrade.)
Enjoy any full session facial and receive a stress-dissolving complimentary fifteen minute upgrade--a Lavender Scalp Tension Tamer, our UnThai the Knots neck and shoulder massage, a Warm Stone Foot Release. A $30 value, with our compliments.
Experience our new Bamboo Massage and take home our addictive Balinese Bamboo Sugar Scrub. A $24 value.
For every $150 in gift card purchases you make, receive a gift certificate for an hour-long Exotic Pedicure. Yours to keep or give! A $68 value.
What do you notice about these offers?
1. They showcase the other wonderful products and services that your spa has to offer.
2. They help guests understand new ways to improve and enhance their visit (this one, but future visits too)
3. They excite the imagination rather than just appeal to the basic impulse to spend less money.
4. They enable our team to perform more advanced and premium services, making it easier for them to suggest these treatments to other clients.
5. They fill our team's schedule, leveraging our greatest asset: time. Stabilizing demand enables you to retain better employees.
When creating incentives, it's important to "change it up." Discounts are notorious for training customers to just wait for the next price cut.
Never say always. Any promotion must be offered for a "limited time only," and "Supplies are limited." Put expiration dates on your offers.
Special offers and incentives are not an all-you-can-eat buffet. Make sure you include language that says, "may not be combined with any other offers or promotions, including series discounts."
Premiums and upgrades enable you to test different offers. Perhaps you'll repeat certain successful offers that work well for you. For example, our gift card/pedicure promotion has become a holiday standby at Preston Wynne. Clients love it, and it works very well for our spa.
We put expiration dates on our promotional gift certificates; even in states where gift certificates cannot expire, it's entirely proper and legal to expire promotional gifts and incentives.
If yield management is not a concern for your spa now, one thing is certain: it will be. There is something very exciting about selling such a perishable product. It requires exquisite reflexes, the ability to read between the lines of the appointment schedule and almost instinctively anticipate shifts in demand.
E mail marketing is a tool that's indispensible in today's revenue management programs--guests can opt in to your "last minute offers" list. This self selected, highly motivated group will be very responsive to your e mail messaging, and it prevents the rest of your clients from being "spammed" with offers they don't want--offers which may even negatively impact their perception of your spa.
The sight of an empty treatment room makes any good spa manager a little bit crazy. But it's imperative to create incentives that build your brand and drive higher levels of customer satisfaction--not just to make the cash register ring.
Since it's impossible for us to manufacture more weekend days (which usually sell out) we must focus on making our weekdays more productive. How do most businesses try to get customers to buy more? They discount.
Why is discounting the wrong strategy for spas? Because it reduces the cash flow you receive while simultaneously undermining the perceived value of your services. Spas sell an intangible--we're not retailing automobiles, dishwashers or home furnishings. We're not even selling transportation, as airlines do. We sell an experience. This experience is purely elective. No one goes hungry, or loses their job, because they don't go to a spa. That means luxury spas must jealously guard the perception of value.
A big change in perception occurs when you discount an intangible. It calls into question the real value of the experience. It reinforces the fear that the customer may already harbor: is this really worth it? Should I really be paying $120 for an hour massage?
And frankly, that's not why I really hate discounting.
I hate discounting because it's so...pedestrian. Marketing should be sexy. And discounts aren't sexy. Discounts elicit a sort of primitive, knee-jerk response from customers.
Mmm. Discount. Good. Give discount.
Discounting doesn't accomplish our goals as marketers. A discount can result in a burst of cash, but a hangover inevitably follows. When we create an incentive, we want our customers to think that our spas are even more brilliant and desirable than before. Discounts don't do this.
Let's look at another form of incentive: premiums and upgrades. When you offer more to a guest for the same price (more time, a higher value service, a gift with purchase) you have an opportunity to deliver better results and greater guest satisfaction.
Some examples of premiums and upgrades:
Pay for a 60 minute massage and receive a 90 minute session. A $48 value, with our compliments. (Anyone who experiences a 90 minute massage has a very hard time going back to a 60 minute session. Happily, we offer a 75 minute session, which now becomes an easy upgrade.)
Enjoy any full session facial and receive a stress-dissolving complimentary fifteen minute upgrade--a Lavender Scalp Tension Tamer, our UnThai the Knots neck and shoulder massage, a Warm Stone Foot Release. A $30 value, with our compliments.
Experience our new Bamboo Massage and take home our addictive Balinese Bamboo Sugar Scrub. A $24 value.
For every $150 in gift card purchases you make, receive a gift certificate for an hour-long Exotic Pedicure. Yours to keep or give! A $68 value.
What do you notice about these offers?
1. They showcase the other wonderful products and services that your spa has to offer.
2. They help guests understand new ways to improve and enhance their visit (this one, but future visits too)
3. They excite the imagination rather than just appeal to the basic impulse to spend less money.
4. They enable our team to perform more advanced and premium services, making it easier for them to suggest these treatments to other clients.
5. They fill our team's schedule, leveraging our greatest asset: time. Stabilizing demand enables you to retain better employees.
When creating incentives, it's important to "change it up." Discounts are notorious for training customers to just wait for the next price cut.
Never say always. Any promotion must be offered for a "limited time only," and "Supplies are limited." Put expiration dates on your offers.
Special offers and incentives are not an all-you-can-eat buffet. Make sure you include language that says, "may not be combined with any other offers or promotions, including series discounts."
Premiums and upgrades enable you to test different offers. Perhaps you'll repeat certain successful offers that work well for you. For example, our gift card/pedicure promotion has become a holiday standby at Preston Wynne. Clients love it, and it works very well for our spa.
We put expiration dates on our promotional gift certificates; even in states where gift certificates cannot expire, it's entirely proper and legal to expire promotional gifts and incentives.
If yield management is not a concern for your spa now, one thing is certain: it will be. There is something very exciting about selling such a perishable product. It requires exquisite reflexes, the ability to read between the lines of the appointment schedule and almost instinctively anticipate shifts in demand.
E mail marketing is a tool that's indispensible in today's revenue management programs--guests can opt in to your "last minute offers" list. This self selected, highly motivated group will be very responsive to your e mail messaging, and it prevents the rest of your clients from being "spammed" with offers they don't want--offers which may even negatively impact their perception of your spa.
The sight of an empty treatment room makes any good spa manager a little bit crazy. But it's imperative to create incentives that build your brand and drive higher levels of customer satisfaction--not just to make the cash register ring.
Monday, March 24, 2008
The Voodoo Reviews Do, Part Two
Spa operators have a conflicted relationship with online review sites. On the one hand, there’s few marketing modalities that are so powerful yet so inexpensive (read: mostly free.) On the other hand, there are few marketing modalities that are so utterly out of your control.
Danny Meyer of Union Square Hospitality Group likened publicity to “riding the tiger.” If you can stay on top, that tiger can take you places. Online review sites are like riding a pit bull. Because the pit bull is so much smaller than a tiger, it’s really, really hard to stay on top. Your feet are always dangling perilously close to that dog’s mouth. And it’s going at a flat-out run all the time. You can fall off. The only thing worse than riding the pit bull is realizing that the pit bull has gotten away and is tearing your business to pieces around the corner.
Here’s the way market leader Yelp describes its site: “Yelp is the fun and easy way to find, review and talk about what's great - and not so great - in your local area. It's about real people giving their honest and personal opinions on everything from restaurants and spas to coffee shops and bars.” Sounds harmless and lighthearted enough.
But we all know that review sites are subject to abuse. Competitors can create a pseudonym and post fake reviews trashing your business. This sort of thing makes spa owners crazy. It is exactly this nonsense that makes them throw up their hands and ignore online review sites altogether. I was working with a consulting client the other day who is trying to buy a business on the East Coast.
“What do their online reviews look like?” I asked. It’s a simple way to do some research on a possible acquisition, but just one of many things we look at. We keep the grains of salt close at hand.
“Well, they’re mixed,” replied the would-be buyer, with some trepidations.
“Is the owner actively managing them?” I inquired. The buyer said she’d find out.
In our next conversation, she reported, “She says that she just ignores those.”
I don’t blame her. Unfortunately, sticking your head in the cyber sand is a recipe for trouble.
I have to congratulate Yelp for coming up with programs for businesses that include very useful tools, such as an e mail alert whenever a new review is posted. Many business owners still don’t realize that you can contact Yelpers just by becoming one yourself. (That’s free.)
Because of features like this, Yelp has convinced me to give them money, even as their users alternately torment and delight me. Which means, as I have maintained in my past blogs, that Yelp is simply a mirror of the traditional customer relationship. Treat people well and they will do the right thing. Guarantee their satisfaction with your products and services. Make it right when you learn that you have done something poorly.
I have never asked a Yelper to change a review, no matter how nasty. I have simply contacted them and said, “I wish I’d known about this, and now that I do, I would like to make it right for you. Come back in and have the experience you deserved to have in the first place.” And most of them have responded the way customers traditionally do. They say, “I appreciate the fact that you contacted me. Okay, I’ll give you another chance.” And in every instance where we connected with the Yelper and got them to return, we found that the review was amended or updated. They often mention that they appreciate management’s commitment to customer service.
But wait. Just when I think I have my pit bull walking on a leash wearing a cute little “Preston Wynne Spa” sweater emblazoned with four and a half Yelp stars, I make a disturbing new discovery.
The term “viral marketing” has never been more apt than when describing online review sites. And like a virus, the Yelp community and “Yelpers” are constantly evolving. Of late, I’m worried that there is a new strain of Yelper emerging. I call her the “Super Reviewer.” She is a product, I fear, of too much fawning over the value of “user generated content.”
The Super Reviewer styles herself as a “real” reviewer. Even if she has visited your spa just once, she feels that her flaming is, to quote another famous source of user-generated content, “fair and balanced.” Unlike a normal customer, if she is contacted by the charbroiled business owner, she spurns offers of recompense, equating them to “bribes.” (There’s a worrisome thread in a Yelp community chat in which a couple of these folks discuss their disdain when restaurant owners attempt to curry their favor after a bad review with a redo or a comped meal. How dare we try to change their mind?)
Unlike a real reviewer, of course, the Yelper is spending their own money. How many visits would you make to my spa if you were disappointed or frustrated by the first? Probably just one. That’s another key difference between the amateur and the pro, in the world of reviews. A restaurant reviewer usually visits an establishment several times. (Ruth Reichl’s memoir of her days as the New York Times restaurant critic, Garlic and Sapphires, is a great account of the standards that apply in the “bigs.”)
My recent encounter with a Super Reviewer was a bit surreal. Yelpers often inject a bit of Facebooky “attitude” into their writing, and this review of our cellulite treatment crossed the line from saucy to snarky pretty quickly.
But I take all criticism seriously, regardless of the tone with which it is delivered. Because the messaging interface on Yelp is anonymous, I contacted “Princess” (no joke) with sincere apologies and an offer of a “do over.” This is SOP at our spa, where we guarantee guests’ satisfaction with our treatments. Her reply was polite but firm. The upshot: because of her impeccable standards of objectivity, she would have to stand by her review of our spa. She did offer, inexplicably, to give me an additional “star” for my customer service efforts.
Now this was a bizarre twist. We had taken her money, had not delivered the goods, and I was proffering recompense. I offered to provide her with a gift certificate to use at her convenience. All I needed, I wrote, was a real-world e mail address, and I could send her one of our convenient print-your-own gift certificates.
“Princess” declined once again, but she did suggest that I provide additional training for my employees. Stubbornly, I launched one more message, asking her cheerfully if she could recall the date of her visit so I could determine if her disappointing outcome occurred before or after a recent hands-on skills training for our body therapists. There was no reply. “Princess” had exhausted her patience with this pesky business owner. Her review sits on the website, unaltered, in all its “objective” glory.
During my 15 years in the facial treatment room, I “yelped” to my clients about businesses and restaurants that I enjoyed, hand-writing a page of recommendations when I heard they were visiting a favorite city. Yelp is tailor-made for my natural tendencies as a closet concierge. Yet as I Yelp, I find myself obeying my mom’s admonition, “if you can’t say anything nice, don’t say anything at all.” I may make a minor criticism as part of an overall good review, but I can’t shake the visceral knowledge that business I am reviewing is someone’s livelihood. I’m motivated to write about businesses that I really enjoy, and it’s easy to just ignore businesses I don’t like. This does not mean I am a shrinking violet when it comes to customer service. I am more than willing to stamp my little foot in person, but I have not developed a taste for online vigilantism. There are usually ample channels for direct complaints that should precede a public flogging. Call me old fashioned, but “flaming” someone from an anonymous perch just seems cowardly.
One thing about creating businesses: the way we expect people to use them and the way they actually do are often very different. If the Super Reviewer is an incipient trend, a mutation in the Yelp community, it could hijack the “fun” part of their site and sour businesses on the value of the Yelp merchant services model. After all, that’s where the money is—if I’m not mistaken. If I am denied the opportunity to apply real-world customer satisfaction “laws” in the virtual world, my willingness to sign checks for enhanced merchant services will wane.
Yelp provides lots of helpful prompts for businesses who are responding to Yelp reviews. “A three star review means the customer was satisfied. Keep it short and sweet,” advised a pop-up as I began a message to “Princess.” Apparently there are plenty of business owners who freak out the first time they go to the site and read the vitriol that may have accumulated there. In fact, Yelp is so determined to save you from yourself, Ms. Freaked Out Merchant, that it limits you to five messages a day and won’t let you message a reviewer if they have not replied to your last one. It seems that Yelp spends a lot of time thinking about how to protect its users from the folks who operate the businesses they have pilloried.
Thanks to the internet, and its endless supply of free user-generated content, consumer vigilantism has entered a golden age. The sheer reach of review sites flatter users into confusing their opinions with objectivity. One Yelper I noticed this evening has 50 photographs posted on her page, mostly of her. Rampant self-absorption is the heart and soul of every social networking site, but I wonder if Yelp can keep the Beast from co-opting its essential mission.
Consumer narcissism seems to underly an increasingly accepted societal norm: that those of us who operate businesses that serve the public, by this very act, relinquish our rights to be treated with civility. It’s as if someone revised the Golden Rule to exempt anyone accepting money for goods or services.
Maybe Yelp can start an online support group for us.
Danny Meyer of Union Square Hospitality Group likened publicity to “riding the tiger.” If you can stay on top, that tiger can take you places. Online review sites are like riding a pit bull. Because the pit bull is so much smaller than a tiger, it’s really, really hard to stay on top. Your feet are always dangling perilously close to that dog’s mouth. And it’s going at a flat-out run all the time. You can fall off. The only thing worse than riding the pit bull is realizing that the pit bull has gotten away and is tearing your business to pieces around the corner.
Here’s the way market leader Yelp describes its site: “Yelp is the fun and easy way to find, review and talk about what's great - and not so great - in your local area. It's about real people giving their honest and personal opinions on everything from restaurants and spas to coffee shops and bars.” Sounds harmless and lighthearted enough.
But we all know that review sites are subject to abuse. Competitors can create a pseudonym and post fake reviews trashing your business. This sort of thing makes spa owners crazy. It is exactly this nonsense that makes them throw up their hands and ignore online review sites altogether. I was working with a consulting client the other day who is trying to buy a business on the East Coast.
“What do their online reviews look like?” I asked. It’s a simple way to do some research on a possible acquisition, but just one of many things we look at. We keep the grains of salt close at hand.
“Well, they’re mixed,” replied the would-be buyer, with some trepidations.
“Is the owner actively managing them?” I inquired. The buyer said she’d find out.
In our next conversation, she reported, “She says that she just ignores those.”
I don’t blame her. Unfortunately, sticking your head in the cyber sand is a recipe for trouble.
I have to congratulate Yelp for coming up with programs for businesses that include very useful tools, such as an e mail alert whenever a new review is posted. Many business owners still don’t realize that you can contact Yelpers just by becoming one yourself. (That’s free.)
Because of features like this, Yelp has convinced me to give them money, even as their users alternately torment and delight me. Which means, as I have maintained in my past blogs, that Yelp is simply a mirror of the traditional customer relationship. Treat people well and they will do the right thing. Guarantee their satisfaction with your products and services. Make it right when you learn that you have done something poorly.
I have never asked a Yelper to change a review, no matter how nasty. I have simply contacted them and said, “I wish I’d known about this, and now that I do, I would like to make it right for you. Come back in and have the experience you deserved to have in the first place.” And most of them have responded the way customers traditionally do. They say, “I appreciate the fact that you contacted me. Okay, I’ll give you another chance.” And in every instance where we connected with the Yelper and got them to return, we found that the review was amended or updated. They often mention that they appreciate management’s commitment to customer service.
But wait. Just when I think I have my pit bull walking on a leash wearing a cute little “Preston Wynne Spa” sweater emblazoned with four and a half Yelp stars, I make a disturbing new discovery.
The term “viral marketing” has never been more apt than when describing online review sites. And like a virus, the Yelp community and “Yelpers” are constantly evolving. Of late, I’m worried that there is a new strain of Yelper emerging. I call her the “Super Reviewer.” She is a product, I fear, of too much fawning over the value of “user generated content.”
The Super Reviewer styles herself as a “real” reviewer. Even if she has visited your spa just once, she feels that her flaming is, to quote another famous source of user-generated content, “fair and balanced.” Unlike a normal customer, if she is contacted by the charbroiled business owner, she spurns offers of recompense, equating them to “bribes.” (There’s a worrisome thread in a Yelp community chat in which a couple of these folks discuss their disdain when restaurant owners attempt to curry their favor after a bad review with a redo or a comped meal. How dare we try to change their mind?)
Unlike a real reviewer, of course, the Yelper is spending their own money. How many visits would you make to my spa if you were disappointed or frustrated by the first? Probably just one. That’s another key difference between the amateur and the pro, in the world of reviews. A restaurant reviewer usually visits an establishment several times. (Ruth Reichl’s memoir of her days as the New York Times restaurant critic, Garlic and Sapphires, is a great account of the standards that apply in the “bigs.”)
My recent encounter with a Super Reviewer was a bit surreal. Yelpers often inject a bit of Facebooky “attitude” into their writing, and this review of our cellulite treatment crossed the line from saucy to snarky pretty quickly.
But I take all criticism seriously, regardless of the tone with which it is delivered. Because the messaging interface on Yelp is anonymous, I contacted “Princess” (no joke) with sincere apologies and an offer of a “do over.” This is SOP at our spa, where we guarantee guests’ satisfaction with our treatments. Her reply was polite but firm. The upshot: because of her impeccable standards of objectivity, she would have to stand by her review of our spa. She did offer, inexplicably, to give me an additional “star” for my customer service efforts.
Now this was a bizarre twist. We had taken her money, had not delivered the goods, and I was proffering recompense. I offered to provide her with a gift certificate to use at her convenience. All I needed, I wrote, was a real-world e mail address, and I could send her one of our convenient print-your-own gift certificates.
“Princess” declined once again, but she did suggest that I provide additional training for my employees. Stubbornly, I launched one more message, asking her cheerfully if she could recall the date of her visit so I could determine if her disappointing outcome occurred before or after a recent hands-on skills training for our body therapists. There was no reply. “Princess” had exhausted her patience with this pesky business owner. Her review sits on the website, unaltered, in all its “objective” glory.
During my 15 years in the facial treatment room, I “yelped” to my clients about businesses and restaurants that I enjoyed, hand-writing a page of recommendations when I heard they were visiting a favorite city. Yelp is tailor-made for my natural tendencies as a closet concierge. Yet as I Yelp, I find myself obeying my mom’s admonition, “if you can’t say anything nice, don’t say anything at all.” I may make a minor criticism as part of an overall good review, but I can’t shake the visceral knowledge that business I am reviewing is someone’s livelihood. I’m motivated to write about businesses that I really enjoy, and it’s easy to just ignore businesses I don’t like. This does not mean I am a shrinking violet when it comes to customer service. I am more than willing to stamp my little foot in person, but I have not developed a taste for online vigilantism. There are usually ample channels for direct complaints that should precede a public flogging. Call me old fashioned, but “flaming” someone from an anonymous perch just seems cowardly.
One thing about creating businesses: the way we expect people to use them and the way they actually do are often very different. If the Super Reviewer is an incipient trend, a mutation in the Yelp community, it could hijack the “fun” part of their site and sour businesses on the value of the Yelp merchant services model. After all, that’s where the money is—if I’m not mistaken. If I am denied the opportunity to apply real-world customer satisfaction “laws” in the virtual world, my willingness to sign checks for enhanced merchant services will wane.
Yelp provides lots of helpful prompts for businesses who are responding to Yelp reviews. “A three star review means the customer was satisfied. Keep it short and sweet,” advised a pop-up as I began a message to “Princess.” Apparently there are plenty of business owners who freak out the first time they go to the site and read the vitriol that may have accumulated there. In fact, Yelp is so determined to save you from yourself, Ms. Freaked Out Merchant, that it limits you to five messages a day and won’t let you message a reviewer if they have not replied to your last one. It seems that Yelp spends a lot of time thinking about how to protect its users from the folks who operate the businesses they have pilloried.
Thanks to the internet, and its endless supply of free user-generated content, consumer vigilantism has entered a golden age. The sheer reach of review sites flatter users into confusing their opinions with objectivity. One Yelper I noticed this evening has 50 photographs posted on her page, mostly of her. Rampant self-absorption is the heart and soul of every social networking site, but I wonder if Yelp can keep the Beast from co-opting its essential mission.
Consumer narcissism seems to underly an increasingly accepted societal norm: that those of us who operate businesses that serve the public, by this very act, relinquish our rights to be treated with civility. It’s as if someone revised the Golden Rule to exempt anyone accepting money for goods or services.
Maybe Yelp can start an online support group for us.
Monday, February 25, 2008
The Hard Answers on the Soft Sell
The news from the massage department isn’t good. Sales are down for the third consecutive quarter. Concerned, Mary Sayles, the spa director, calls in her new massage department lead, Josh Neiderman.
“I don’t think we should use our guests’ relaxation time to sell,” Josh says, in response to Mary’s grim report. They’re seated in her small office, next to a defective mag lamp awaiting return. “I believe that a massage should be performed in silence.”
“Do you think that our clients believe that too?” Mary asks.
“Yes,” says Josh. “I do.”
“But,” the spa director continues, “Aren’t there times during the treatment that you have to communicate with the guest? You know, to let them know it’s time to turn over, or ask them if the pressure is comfortable for them?”
“Of course,” replies Josh. “But that’s important to giving a good treatment. And it’s very brief.”
“Might you also ask if a tight area you’re noticing in their body is tender or sensitive?”
“I get what you’re saying,” Josh concedes. “Of course it’s not a 100% silent treatment. But I don’t want to subject our guests to a sales pitch. I don’t think the therapists should talk about products in the treatment room. That’s sacred ground to us.”
“Don’t we use products in the treatment?” Mary pursues, attempting to sound neutral. Her eyes are not focused on Josh, but fixed on the display of beautifully displayed body care products that sit virtually untouched in the spa’s retail area behind him.
“Yes, we use a massage oil blend with aromatherapy, and we use that analgesic gel on the tight areas,” Josh says patiently. “That’s protocol.”
“But you don’t think the client should know what you’re applying to their skin? I know I’m always curious about what’s being used on me,” Mary replies, warming to the subject. “And I bet some of them are very curious about our heat packs. Do they ask about those?”
“All the time,” concedes Josh. “But my job is to help them relax and get out of their head. If we spend the whole treatment talking they’re not going to unwind.”
Mary sighs softly. This is familiar ground for her, after ten years of operating spas. She’s freshly back from a trip to the local mall to inspect the latest lines at Bath and Body Works, where she witnessed a bustling trade in “professional” spa brands that had recently gone to the Mass Merchandised Dark Side.
“Why,” she asks herself, “can everyone but a real spa therapist sell spa products? No wonder these companies are abandoning us. We can’t seem to sell our way out of a wet paper bag.”
Does this scenario sound familiar?
Underlying Josh’s concerns about the client are some larger fears. The assumptions he makes about the client, which he’d likely represent as “intuiting” their needs, are based on his own personal limitations and anxieties. First and foremost, the social style of most spa therapists is not naturally given to perform the act we commonly call “selling.” This is because nurturers, healers and caregivers gravitate toward their work to enjoy a very different interpersonal dynamic. In the case of many massage therapists, their social style led them to a career that would enable them to avoid the kind of stresses, discomforts and conflicts that are common in the world of business and commerce. (Or what many second-career massage therapists call the “rat race.”)
Ask most people what “selling” is, and the terms you’ll hear are negative ones. Try this word association game: ask a few people to associate a word to “Salesman.”
The most common response you’ll get?
“Pushy.”
The predominant social style among massage therapists has been tagged by one popular categorizing system with the moniker “Amiable.” Amiables are relationship-driven and thrive as part of a team. Some of your therapists have a pinch of “Analytical” in the mix. These are the ones who are studying to become physical therapists, and are interested in the mechanics of the body. The friendly and voluble ones have more “Expressive” styles, perhaps garnering the occasional complaint from clients about chit chat in the treatment room, but logging the best retail ratios. You will rarely find the Type A “Driver” in a massage room. (At least, not for long. They’re the ones planning to open their own facility.)
Why does social style matter?
When trying to encourage sales-averse employees to talk about home care with their clients, not to mention long-term programs and other opportunities, it’s important to understand what motivates them, deep down. Mary Sayles is a veteran spa director, which means she’s more results-driven than the people she supervises. While relationships are important to her—the spa industry would have driven her completely around the bend by now, if not—her job depends on delivering measurable results. As well, Mary is probably more willing to take risks. There’s a good chance she views herself as a peer of the spa’s clients, even accomplished, assertive and affluent ones.
Our friend Josh is another story. As a care giver, he may be intimidated by the stressed-out Type A’s that frequent the spa. Like most of us, he projects his own beliefs, fears and limitations on the guests he works with, and overvalues his intuition, or ability to “read” people, in order to justify his reticence. He believes that Mary doesn’t understand what it’s like in the treatment room.
How can Mary meet Josh halfway and accomplish her goal of ensuring that there is a dialogue about home care in the massage experience?
1. Demonstrate viscerally “why” home care supports the therapeutic experience. The Amiable employee must understand how the relationship will be enhanced by this behavior. Mary knows well that handing her Amiable massage therapists a piece of paper with their sales goal on it and declaring “make it so!” is the quickest way to incite a stampede for the exits. Not much more effective is the exhortation “You need to educate your clients!” An effective learning modality is to give the employee a treatment and demonstrate the desirable behavior. The employee will have an opportunity to experience how good it feels when it’s done properly. Give a role play demonstration of what to say and when to say it, during a massage session. Demonstrate what it means to “educate”, then have the massage therapist switch roles and do it themselves.
2. Make the scary familiar with role playing. When law enforcement officers are being trained, they go through intense role-playing exercises called “scenarios” that enable them to experience the scariest, most heart-pounding situations they’ll encounter on the job and rehearse them. Mountain climbers practice on climbing walls. Include role-play scenarios in your training process.
3. Narrate. Mary has already included a variety of home care products in the massage treatment, the first step. It is the therapists’ responsibility to introduce the formulas being used and explain their purpose and benefits. This is a natural entrée for opening up a discussion of home care rituals at the end of the session. Josh quietly says, while applying the product, “This Sage Analgesic Balm will soothe these sore muscles.” Then, after a moment, he’ll check in and ask softly, “How does that feel?” It would be a curmudgeonly client indeed who’d object to this type of benefits-driven and personalized interaction.
4. Automate the process. Good design supports good salesflow. Mary can add tantalizing visual merchandising in the service areas to stimulate the guest’s shopping urges. A checkout “lounge” would ensure that her guests pause before departing, enabling the spa to present the home care and rescheduling opportunity while giving them a gentle way to transition from spa mode back to reality. Sampling, custom blending and play areas encourage even more engaged interaction with the spa’s products. The longer guests stay in the spa, the more money they’ll spend—and the more value they’ll feel they got from their experience.
5. Get everyone involved. Most therapists are receptive to the idea of a split commission with the front desk staff if they know they’ll be getting a piece of a larger pie. Getting the support team on board increases their income and job satisfaction, too. Most spa software enables you to create customized split commissions.
6. Find the words. Excessive reliance on scripting has gotten some luxury properties a bad rap lately, but if Mary doesn’t offer a “lexicon” of great words and phrases for her team to use, they may not be able to extend the invitation persuasively. After all, they weren’t hired on as copywriters. People that are wonderful with their hands are often a bit less wonderful with their mouths. Mary can provide a valuable service when she helps them overcome awkwardness with helpful phrases. If she’s smart, she’ll post them in her prep areas so they’re easy to master.
7. Encourage the team to share success stories. Mary probably has therapists on her team that have some wonderful personal “scripting” that would work for Josh, with perhaps a tweak or two to make it his own. Round table conversations at team meetings are one of the most valuable forms of training. Mary “can’t be a prophet in her own land”—in fact, it’s more like being the invisible adult in the Charlie Brown cartoon. All employees hear from her when she tries to explain “how easy” it is to recommend home care is “Wah wah wah wah wah.” When another therapist offers a tip or technique it’s much more likely to be accepted and adopted.
8. Inspect what you Expect. Mystery Shopping is an indispensable tool for monitoring performance. Mary must make sure she devotes plenty of energy catching people doing things right, too.
9. Value sales behavior appropriately. Since home care is significantly more important to an esthetician’s success than a massage therapist’s, it’s important for Mary to pick her battles. We’ve all been taught since childhood that we need to devote most of our time to fixing our weaknesses, and managers invariably spend the bulk of their time dealing with the shortcomings and issues of their poorest performers. This is one of the biggest productivity traps in any business. Our highest return comes from increasing our strengths. As Jim Collins points out, it’s not just important to have the right people on your bus, but they need to be in the right seats. If Josh is fantastic at retaining customers for the spa, Mary might just find someone else on the team to ensure that they get the opportunity to learn about and buy the spa’s fabulous home care offerings.
It’s six weeks and two coaching sessions after Mary and Josh’s frustrating exchange; the spa director stops to congratulate him on his increased retail ratio as well as his higher client retention ratio. Josh feels less harried by Mary, who has stopped issuing vague exhortations to “sell more,” in favor of supportive coaching and improved salesflow processes.
Josh seems to be blossoming. Mary has observed that the front desk employees are more attentive to the therapists and the clients alike, and truly acting like teammates. By pooling the concierge team’s sales commissions, she’s been able to keep their eye on the customer service ball, and not let their new incentive devolve into an overt competition with one another for sales.
“Yeah, Jennifer likes to joke that we’re “in business together,” says Josh, referencing the engaging spa concierge who has been racking up “assists” for him at checkout. “Splitting my commissions has actually doubled them.”
“That’s great,” she responds. “You deserve it.”
“I don’t think we should use our guests’ relaxation time to sell,” Josh says, in response to Mary’s grim report. They’re seated in her small office, next to a defective mag lamp awaiting return. “I believe that a massage should be performed in silence.”
“Do you think that our clients believe that too?” Mary asks.
“Yes,” says Josh. “I do.”
“But,” the spa director continues, “Aren’t there times during the treatment that you have to communicate with the guest? You know, to let them know it’s time to turn over, or ask them if the pressure is comfortable for them?”
“Of course,” replies Josh. “But that’s important to giving a good treatment. And it’s very brief.”
“Might you also ask if a tight area you’re noticing in their body is tender or sensitive?”
“I get what you’re saying,” Josh concedes. “Of course it’s not a 100% silent treatment. But I don’t want to subject our guests to a sales pitch. I don’t think the therapists should talk about products in the treatment room. That’s sacred ground to us.”
“Don’t we use products in the treatment?” Mary pursues, attempting to sound neutral. Her eyes are not focused on Josh, but fixed on the display of beautifully displayed body care products that sit virtually untouched in the spa’s retail area behind him.
“Yes, we use a massage oil blend with aromatherapy, and we use that analgesic gel on the tight areas,” Josh says patiently. “That’s protocol.”
“But you don’t think the client should know what you’re applying to their skin? I know I’m always curious about what’s being used on me,” Mary replies, warming to the subject. “And I bet some of them are very curious about our heat packs. Do they ask about those?”
“All the time,” concedes Josh. “But my job is to help them relax and get out of their head. If we spend the whole treatment talking they’re not going to unwind.”
Mary sighs softly. This is familiar ground for her, after ten years of operating spas. She’s freshly back from a trip to the local mall to inspect the latest lines at Bath and Body Works, where she witnessed a bustling trade in “professional” spa brands that had recently gone to the Mass Merchandised Dark Side.
“Why,” she asks herself, “can everyone but a real spa therapist sell spa products? No wonder these companies are abandoning us. We can’t seem to sell our way out of a wet paper bag.”
Does this scenario sound familiar?
Underlying Josh’s concerns about the client are some larger fears. The assumptions he makes about the client, which he’d likely represent as “intuiting” their needs, are based on his own personal limitations and anxieties. First and foremost, the social style of most spa therapists is not naturally given to perform the act we commonly call “selling.” This is because nurturers, healers and caregivers gravitate toward their work to enjoy a very different interpersonal dynamic. In the case of many massage therapists, their social style led them to a career that would enable them to avoid the kind of stresses, discomforts and conflicts that are common in the world of business and commerce. (Or what many second-career massage therapists call the “rat race.”)
Ask most people what “selling” is, and the terms you’ll hear are negative ones. Try this word association game: ask a few people to associate a word to “Salesman.”
The most common response you’ll get?
“Pushy.”
The predominant social style among massage therapists has been tagged by one popular categorizing system with the moniker “Amiable.” Amiables are relationship-driven and thrive as part of a team. Some of your therapists have a pinch of “Analytical” in the mix. These are the ones who are studying to become physical therapists, and are interested in the mechanics of the body. The friendly and voluble ones have more “Expressive” styles, perhaps garnering the occasional complaint from clients about chit chat in the treatment room, but logging the best retail ratios. You will rarely find the Type A “Driver” in a massage room. (At least, not for long. They’re the ones planning to open their own facility.)
Why does social style matter?
When trying to encourage sales-averse employees to talk about home care with their clients, not to mention long-term programs and other opportunities, it’s important to understand what motivates them, deep down. Mary Sayles is a veteran spa director, which means she’s more results-driven than the people she supervises. While relationships are important to her—the spa industry would have driven her completely around the bend by now, if not—her job depends on delivering measurable results. As well, Mary is probably more willing to take risks. There’s a good chance she views herself as a peer of the spa’s clients, even accomplished, assertive and affluent ones.
Our friend Josh is another story. As a care giver, he may be intimidated by the stressed-out Type A’s that frequent the spa. Like most of us, he projects his own beliefs, fears and limitations on the guests he works with, and overvalues his intuition, or ability to “read” people, in order to justify his reticence. He believes that Mary doesn’t understand what it’s like in the treatment room.
How can Mary meet Josh halfway and accomplish her goal of ensuring that there is a dialogue about home care in the massage experience?
1. Demonstrate viscerally “why” home care supports the therapeutic experience. The Amiable employee must understand how the relationship will be enhanced by this behavior. Mary knows well that handing her Amiable massage therapists a piece of paper with their sales goal on it and declaring “make it so!” is the quickest way to incite a stampede for the exits. Not much more effective is the exhortation “You need to educate your clients!” An effective learning modality is to give the employee a treatment and demonstrate the desirable behavior. The employee will have an opportunity to experience how good it feels when it’s done properly. Give a role play demonstration of what to say and when to say it, during a massage session. Demonstrate what it means to “educate”, then have the massage therapist switch roles and do it themselves.
2. Make the scary familiar with role playing. When law enforcement officers are being trained, they go through intense role-playing exercises called “scenarios” that enable them to experience the scariest, most heart-pounding situations they’ll encounter on the job and rehearse them. Mountain climbers practice on climbing walls. Include role-play scenarios in your training process.
3. Narrate. Mary has already included a variety of home care products in the massage treatment, the first step. It is the therapists’ responsibility to introduce the formulas being used and explain their purpose and benefits. This is a natural entrée for opening up a discussion of home care rituals at the end of the session. Josh quietly says, while applying the product, “This Sage Analgesic Balm will soothe these sore muscles.” Then, after a moment, he’ll check in and ask softly, “How does that feel?” It would be a curmudgeonly client indeed who’d object to this type of benefits-driven and personalized interaction.
4. Automate the process. Good design supports good salesflow. Mary can add tantalizing visual merchandising in the service areas to stimulate the guest’s shopping urges. A checkout “lounge” would ensure that her guests pause before departing, enabling the spa to present the home care and rescheduling opportunity while giving them a gentle way to transition from spa mode back to reality. Sampling, custom blending and play areas encourage even more engaged interaction with the spa’s products. The longer guests stay in the spa, the more money they’ll spend—and the more value they’ll feel they got from their experience.
5. Get everyone involved. Most therapists are receptive to the idea of a split commission with the front desk staff if they know they’ll be getting a piece of a larger pie. Getting the support team on board increases their income and job satisfaction, too. Most spa software enables you to create customized split commissions.
6. Find the words. Excessive reliance on scripting has gotten some luxury properties a bad rap lately, but if Mary doesn’t offer a “lexicon” of great words and phrases for her team to use, they may not be able to extend the invitation persuasively. After all, they weren’t hired on as copywriters. People that are wonderful with their hands are often a bit less wonderful with their mouths. Mary can provide a valuable service when she helps them overcome awkwardness with helpful phrases. If she’s smart, she’ll post them in her prep areas so they’re easy to master.
7. Encourage the team to share success stories. Mary probably has therapists on her team that have some wonderful personal “scripting” that would work for Josh, with perhaps a tweak or two to make it his own. Round table conversations at team meetings are one of the most valuable forms of training. Mary “can’t be a prophet in her own land”—in fact, it’s more like being the invisible adult in the Charlie Brown cartoon. All employees hear from her when she tries to explain “how easy” it is to recommend home care is “Wah wah wah wah wah.” When another therapist offers a tip or technique it’s much more likely to be accepted and adopted.
8. Inspect what you Expect. Mystery Shopping is an indispensable tool for monitoring performance. Mary must make sure she devotes plenty of energy catching people doing things right, too.
9. Value sales behavior appropriately. Since home care is significantly more important to an esthetician’s success than a massage therapist’s, it’s important for Mary to pick her battles. We’ve all been taught since childhood that we need to devote most of our time to fixing our weaknesses, and managers invariably spend the bulk of their time dealing with the shortcomings and issues of their poorest performers. This is one of the biggest productivity traps in any business. Our highest return comes from increasing our strengths. As Jim Collins points out, it’s not just important to have the right people on your bus, but they need to be in the right seats. If Josh is fantastic at retaining customers for the spa, Mary might just find someone else on the team to ensure that they get the opportunity to learn about and buy the spa’s fabulous home care offerings.
It’s six weeks and two coaching sessions after Mary and Josh’s frustrating exchange; the spa director stops to congratulate him on his increased retail ratio as well as his higher client retention ratio. Josh feels less harried by Mary, who has stopped issuing vague exhortations to “sell more,” in favor of supportive coaching and improved salesflow processes.
Josh seems to be blossoming. Mary has observed that the front desk employees are more attentive to the therapists and the clients alike, and truly acting like teammates. By pooling the concierge team’s sales commissions, she’s been able to keep their eye on the customer service ball, and not let their new incentive devolve into an overt competition with one another for sales.
“Yeah, Jennifer likes to joke that we’re “in business together,” says Josh, referencing the engaging spa concierge who has been racking up “assists” for him at checkout. “Splitting my commissions has actually doubled them.”
“That’s great,” she responds. “You deserve it.”
Monday, January 14, 2008
Gift Horse Redux: The Three Year Rule!
This just in. Or rather, my controller Roxanne was just in, and placed a copy of a San Jose Mercury News Article about gift cards on my desk. Highlighted in pink was an interesting paragraph, which had caught her eagle eye: "A National Retail Federation spokesman...emphasized that unused cards without expiration dates--and by law in California that includes all store-branded cards--still can be redeemed after a retailer records them as income." (Emphasis mine.)
Records them as income? Hmmm.
This led Roxanne to the State of California's website where she found Legal Guide S-11, "FAQs and Tips on Gift Certificates and Gift Cards." (While this guide does not include the update that took effect Jan. 1, 2008, enabling consumers holding gift cards with a value of $10 or less to receive cash from retailers instead of using them for a purchase, I think it's probably safe to assume it's up to date in other respects.)
There it was!
Question 7:
Q: "Does an unredeemed gift certificate escheat to the state?" (Oh, it's a verb all right. Imagine the television show: Escheaters!)
A: "Not if it does not contain an expiration date." (Folks who write laws enjoy double negatives; they sound scarier.) "Specified tangible and intangible personal property that is held or owing in the ordinary course of business and remains unclaimed by the owner for more than three years escheats (reverts) to the state. The escheat laws do not apply to gift certificates subject to the rules discussed above." (Emphasis mine.)
So hush my mouth. As a California gift card seller, I get to enjoy Big Sur, the Golden Gate Bridge, redwood trees, and the right to book unused gift cards over the age of three as revenue, even as I wave a fond farewell from my balance sheet?
Of course we must still honor these cards--that's part of the deal here in the Golden State, where gift cards never really expire. Even after they die.
Records them as income? Hmmm.
This led Roxanne to the State of California's website where she found Legal Guide S-11, "FAQs and Tips on Gift Certificates and Gift Cards." (While this guide does not include the update that took effect Jan. 1, 2008, enabling consumers holding gift cards with a value of $10 or less to receive cash from retailers instead of using them for a purchase, I think it's probably safe to assume it's up to date in other respects.)
There it was!
Question 7:
Q: "Does an unredeemed gift certificate escheat to the state?" (Oh, it's a verb all right. Imagine the television show: Escheaters!)
A: "Not if it does not contain an expiration date." (Folks who write laws enjoy double negatives; they sound scarier.) "Specified tangible and intangible personal property that is held or owing in the ordinary course of business and remains unclaimed by the owner for more than three years escheats (reverts) to the state. The escheat laws do not apply to gift certificates subject to the rules discussed above." (Emphasis mine.)
So hush my mouth. As a California gift card seller, I get to enjoy Big Sur, the Golden Gate Bridge, redwood trees, and the right to book unused gift cards over the age of three as revenue, even as I wave a fond farewell from my balance sheet?
Of course we must still honor these cards--that's part of the deal here in the Golden State, where gift cards never really expire. Even after they die.
Tuesday, January 1, 2008
Son of Gift Horse
Another holiday season has come and gone, and as the dust settles, spas everywhere are toting up their gift card and gift certificate sales. I hope you had a tremendous season. My last posting elicited several requests for additional information about the particulars of gift card expiration. To top it off, I read a disturbing article that may portend the future of gift marketing for retailers in states with Escheat Law.
My last posting discussed the double edged sword that is the gift business. We are aware that about 20% of the gift cards we sell will not be redeemed. Instead, they will be thrown away with the gift wrap, tossed into drawers, or uncomfortably avoided by Cousin Midge, who would never dream of taking off her shoes, let alone her clothes, for a spa treatment. What’s not to love about that? Well, in states where you can expire Midge’s gift card, there is much to love.
In California, we lost our ability to expire gift certificates and cards in 1997. Like earthquakes and wildfires, the Undead Gift Card is just the price we pay to live in this beautiful state. And to rub it in a little more deeply, the state of California enables third-party gift sellers, such as a shopping mall that sells gift cards redeemable at its retailers, or gift marketing companies such as Spa Finder or Spa Wish, to expire their gift cards.
At moments like these, I close my eyes and picture Big Sur, or the Golden Gate Bridge on a sunny day.
Hawaii and Maine are also among the states that do not permit expiration of gift cards. (They too boast incredible scenery. Is this more than a coincidence?)
Other states have enacted laws that dictate expiration periods. Kansas and Arkansas, for example, require that gift cards remain valid for five years, which is a nice, sensible period of time that would even give Cousin Midge a chance to stumble across her long-lost gift card.
So, let’s get into this topic in a little more detail. As I alluded to last time, Escheat Law treats unused gift cards and certificates as “abandoned property” after a period of “dormancy.” And guess what happens to this woebegone abandoned property? It can be claimed by the state. How long a dormancy period must pass before Cousin Midge’s long-lost gift card is pronounced dead? It depends on your state, but usually ranges from 3 to 10 years.
(For a quick update on gift card/certificate law, state by state, visit the Consumer’s Union Website:
http://www.consumersunion.org/pub/core_financial_services/003889.html)
Abandoned property laws were originally designed to enable states to help themselves to abandoned bank accounts or unclaimed stock dividends. Perhaps recognizing that gift cards and certificates are a horse of a different color, Arizona and North Carolina are two states which have excluded gift cards and gift certificates from the abandoned property laws.
As I mentioned last time, the phenomenon of escheat-law states going after spa gift card sellers’ “abandoned property” is virtually unheard of. I say virtually, and I personally have never heard of an instance affecting a spa. But I have a feeling that will change soon. Starting in…Maine.
Why? Let’s put it this way: when was the last time you heard a state official complaining about having too much money in the government coffers? Maine has decided that it will shortly begin enforcing its existing abandoned property law to collect money from gift card selling retailers. There’s a slight twist: Maine is only going to take 60% of the value of these dormant/abandoned gift cards from those lucky companies.
One hopes that the big retailers will close ranks and lobby the heck out of other states entertaining the same idea. The laws making this possible are in place in plenty of states, but enforcement has been minimal. So what has changed? It’s a bit of a perfect storm: gift cards, which replaced cumbersome paper gift certificates with instantly updated electronic databases, are easier to track. The ease and appeal of gift cards has grown gift sales exponentially. Much of the hand-wringing about lower retail sales we’ve heard from the media during the past several holiday seasons fails to take into account the impact of gift card sales, which can’t be counted until those magic cards are converted into purchases.
Gift cards are ridiculously convenient and appeal to the time-impoverished or just-plain-unimaginative among us. Their small size makes them easy to merchandise year-round, where they appear at the point-of-sale in nearly every major retailer. Gift cards’ small size, which makes them easy to slip into a wallet, also makes them easy to lose—and that means more “abandoned” funds to tap.
Just how abandoned are these abandoned funds, anyhow? Whenever we make a sale—gift card, service or product--there are hard and soft costs associated with it. We spent a lot of money this holiday season to inspire customers to buy gift cards, from the big Client Appreciation Event that cost over $10,000, to the additional staff that we brought in to handle the additional volume during the hectic week before Christmas. Year round, we maintain gift card records in our databases, for both gifters and giftees. And we pay the people that do this reporting and accounting; we also rent, and heat, and light the office space in which these folks work.
And, oh yes, we’ve paid taxes on the money already. The IRS and the State of California considers it taxable revenue if we “have use of” the money, even though Generally Accepted Accounting Principles (GAAP) don’t let us recognize the sale on our income statement until the gift card is redeemed for a service or product. (If this confuses the heck out of you, you’re not alone. Come to our Spa Director’s Management Intensive and we’ll get you fluent in gift card program management.)
In the state of Maine, the Powers that Be must’ve heard this sort of argument and concluded that businesses can hang onto 40% of the face value of their abandoned gift cards to cover such overhead expenses. When they come to get our abandoned funds in California, I suspect they will be a bit less generous. (I can hear Arnold exulting now about the wonderful new revenue source that did not require increasing taxes.)
What’s a spa to do? Well, it’s probably time to recognize that the gift card party may soon be over in the abandoned-property states, and to start placing half your gift revenues in reserve if cash flow permits. It will take a long time to adjust—if you’re not doing this now, you really can’t go cold turkey on gift cash and still fund your current gift redemptions.
But there is something you can do in the meantime: write your state representatives and squawk. It’s so easy now, via e mail, that there’s no excuse for not chewing on your Congressman’s ear regularly. Your state has a Chamber of Commerce. Stamp your feet and yell to them too. Running a small business here is about to get harder. In California, the most business-unfriendly state in the nation, that’s nothing new.
I think it’s time to go look at some redwoods.
My last posting discussed the double edged sword that is the gift business. We are aware that about 20% of the gift cards we sell will not be redeemed. Instead, they will be thrown away with the gift wrap, tossed into drawers, or uncomfortably avoided by Cousin Midge, who would never dream of taking off her shoes, let alone her clothes, for a spa treatment. What’s not to love about that? Well, in states where you can expire Midge’s gift card, there is much to love.
In California, we lost our ability to expire gift certificates and cards in 1997. Like earthquakes and wildfires, the Undead Gift Card is just the price we pay to live in this beautiful state. And to rub it in a little more deeply, the state of California enables third-party gift sellers, such as a shopping mall that sells gift cards redeemable at its retailers, or gift marketing companies such as Spa Finder or Spa Wish, to expire their gift cards.
At moments like these, I close my eyes and picture Big Sur, or the Golden Gate Bridge on a sunny day.
Hawaii and Maine are also among the states that do not permit expiration of gift cards. (They too boast incredible scenery. Is this more than a coincidence?)
Other states have enacted laws that dictate expiration periods. Kansas and Arkansas, for example, require that gift cards remain valid for five years, which is a nice, sensible period of time that would even give Cousin Midge a chance to stumble across her long-lost gift card.
So, let’s get into this topic in a little more detail. As I alluded to last time, Escheat Law treats unused gift cards and certificates as “abandoned property” after a period of “dormancy.” And guess what happens to this woebegone abandoned property? It can be claimed by the state. How long a dormancy period must pass before Cousin Midge’s long-lost gift card is pronounced dead? It depends on your state, but usually ranges from 3 to 10 years.
(For a quick update on gift card/certificate law, state by state, visit the Consumer’s Union Website:
http://www.consumersunion.org/pub/core_financial_services/003889.html)
Abandoned property laws were originally designed to enable states to help themselves to abandoned bank accounts or unclaimed stock dividends. Perhaps recognizing that gift cards and certificates are a horse of a different color, Arizona and North Carolina are two states which have excluded gift cards and gift certificates from the abandoned property laws.
As I mentioned last time, the phenomenon of escheat-law states going after spa gift card sellers’ “abandoned property” is virtually unheard of. I say virtually, and I personally have never heard of an instance affecting a spa. But I have a feeling that will change soon. Starting in…Maine.
Why? Let’s put it this way: when was the last time you heard a state official complaining about having too much money in the government coffers? Maine has decided that it will shortly begin enforcing its existing abandoned property law to collect money from gift card selling retailers. There’s a slight twist: Maine is only going to take 60% of the value of these dormant/abandoned gift cards from those lucky companies.
One hopes that the big retailers will close ranks and lobby the heck out of other states entertaining the same idea. The laws making this possible are in place in plenty of states, but enforcement has been minimal. So what has changed? It’s a bit of a perfect storm: gift cards, which replaced cumbersome paper gift certificates with instantly updated electronic databases, are easier to track. The ease and appeal of gift cards has grown gift sales exponentially. Much of the hand-wringing about lower retail sales we’ve heard from the media during the past several holiday seasons fails to take into account the impact of gift card sales, which can’t be counted until those magic cards are converted into purchases.
Gift cards are ridiculously convenient and appeal to the time-impoverished or just-plain-unimaginative among us. Their small size makes them easy to merchandise year-round, where they appear at the point-of-sale in nearly every major retailer. Gift cards’ small size, which makes them easy to slip into a wallet, also makes them easy to lose—and that means more “abandoned” funds to tap.
Just how abandoned are these abandoned funds, anyhow? Whenever we make a sale—gift card, service or product--there are hard and soft costs associated with it. We spent a lot of money this holiday season to inspire customers to buy gift cards, from the big Client Appreciation Event that cost over $10,000, to the additional staff that we brought in to handle the additional volume during the hectic week before Christmas. Year round, we maintain gift card records in our databases, for both gifters and giftees. And we pay the people that do this reporting and accounting; we also rent, and heat, and light the office space in which these folks work.
And, oh yes, we’ve paid taxes on the money already. The IRS and the State of California considers it taxable revenue if we “have use of” the money, even though Generally Accepted Accounting Principles (GAAP) don’t let us recognize the sale on our income statement until the gift card is redeemed for a service or product. (If this confuses the heck out of you, you’re not alone. Come to our Spa Director’s Management Intensive and we’ll get you fluent in gift card program management.)
In the state of Maine, the Powers that Be must’ve heard this sort of argument and concluded that businesses can hang onto 40% of the face value of their abandoned gift cards to cover such overhead expenses. When they come to get our abandoned funds in California, I suspect they will be a bit less generous. (I can hear Arnold exulting now about the wonderful new revenue source that did not require increasing taxes.)
What’s a spa to do? Well, it’s probably time to recognize that the gift card party may soon be over in the abandoned-property states, and to start placing half your gift revenues in reserve if cash flow permits. It will take a long time to adjust—if you’re not doing this now, you really can’t go cold turkey on gift cash and still fund your current gift redemptions.
But there is something you can do in the meantime: write your state representatives and squawk. It’s so easy now, via e mail, that there’s no excuse for not chewing on your Congressman’s ear regularly. Your state has a Chamber of Commerce. Stamp your feet and yell to them too. Running a small business here is about to get harder. In California, the most business-unfriendly state in the nation, that’s nothing new.
I think it’s time to go look at some redwoods.
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