Wynne Business Spa Industry Update

The New Luxury Customer

2009-10-22T07:40:00.000-07:00

If you haven't already discovered her, please make a point to visit luxury marketing consultant Pam Danziger's website, http://www.Unity Marketing Online.com.

Danziger's luxury research firm just completed "A Study of the 'New Normal' Luxury Consumer Market AFTER the Recession."

Danziger was one of the few marketing experts who accurately predicted the impact of the recession on affluent consumers, the supposedly "recession proof" demographic, as far back as 2007.

I plan to attend her upcoming webinar on the New Luxury Customer on November 12.

In particular, I'm interested in the five "psychographic" profiles she has discovered in her research, and how spas might market to them:

"X-Fluents (Extremely Affluent) who spend the most on luxury and are most highly invested in luxury living. In the report you will learn how the share of X-Fluents is on the rise in the current market, as other personality types drop out of the overall luxury market.

Butterflies, the most highly evolved luxury consumers who have emerged from their luxury cocoons with a passion to reconnect with the outside world. Powered by a search for meaning and new experiences, the Butterflies have the least materialistic orientation among the segments.

Luxury Cocooners who are focused on hearth and home. They spend most of their luxury budgets on home-related purchases

Aspirers, those luxury consumers who have not yet achieved the level of luxury to which they aspire. They are highly attuned to brands and believe luxury is best expressed in what they buy and what they own.

Temperate Pragmatists, a newly emerged luxury consumer who is not all that involved in the luxury lifestyle. As their name implies, they are careful spenders and not given to luxury indulgence."

Danziger's studies are designed for luxury marketers and priced accordingly; however, even small businesses can learn a great deal from her free "executive summaries" and from hearing her speak.

Who's Your Gladys?

2009-09-30T21:41:00.000-07:00

One of the highlights of my year has been the inclusion of our spa, and our customer service philosophy, in a new business best-seller, Who's Your Gladys? (American Management Association Books)

Naturally, we're thrilled about the chapter devoted to Preston Wynne Spa. But I'd have bought the book anyhow. It's one of the most solid, meaty and actionable customer service books I've come across in years. Authors Marilyn Suttle and Lori Jo Vest have done a tremendous, and remarkably mindful job of distilling customer service wisdom from an array of different businesses and industries.

As the authors remind us, "When times are tough and customer dollars are scarce, it's the companies with exceptional customer service that weather the storm. If you want to keep customers coming back and happily recommending you to others, now is the time to ramp up your customer service to the highest possible level. Even when the economy gets back on track, those with extraordinary customer care enjoy the most profits."

It's difficult to bang this drum too much. With your company in a defensive crouch, it's hard to simultaneously create the mindset of gracious hospitality.

I'm reminded of the scene in Gone with the Wind, when Scarlet pulls down her mother's velvet drapes in the devastated mansion and has a new, fashionable dress sewn up to create the illusion of prosperity for a crucial meeting with Rhett Butler.

More than a few of us have felt a bit like Scarlet this year, projecting an aura of velvety ease and abundance to our clients while slashing expenses and biting our nails behind the scenes.

But one of the things we cannot skimp on is good staff, proper supervision and effective training.

Training is not just that moment when you sit everyone down for a formal educational session. Training can and should occur every time you interact with your team, and when they watch you interact with customers. The best supervisors identify and guide their teams through the inevitable "teachable moments" that occur on the job.

The good news is that formal training is becoming significantly less expensive and significantly more accessible, thanks to technology. Wynne Business Spa Consulting has added webinars to our educational lineup, designed for both management development and employee training. They're fast, affordable (no travel, either!) convenient, and we believe they will encourage more spas to make training part of their regular routine.

We're also partnering with Coyle Hospitality Group, the wonderful Mystery Shopping firm, for a series of employee training courses. These are based on specific "moments of truth" in a spa's service delivery cycle. We're starting with the Reservations call. Those of you who have worked with Coyle know how many "moments of truth" are documented in one short reservations call.

Guess which element of a good Reservations call is most often omitted, according to Coyle? The upsell. We prefer the term "optimizing," because far from simply being a way to extract more money from a guest, this process is a way to showcase your expertise. Optimizing a guest's services increases the possibility that a guest is going to get exactly the treatment they want and need, and the results that they desire. That increases the possibility that they'll be delighted, and return again and again.

If a guest is habitually relegated to your base sticker price, plain vanilla offering, they may not comprehend that there are other fabulous options on your menu. (Yes, you spent hours writing it, but most customers don't spend hours poring over the menu.) It's our reservation team's responsibility to guide them toward the best treatment for them. It's more than upselling, it's good customer service.

How do they "get" this? Indoctrination. Education. Demonstration. Repetition.

Hearing it done right, over and over again, is key. Does this get tedious? Um, yes. Your spa must be willing, in restauranteur Danny Meyer's words, to use "constant, gentle, pressure" to ensure that team members adhere to your service standards. And honestly, it's not hard.

You just can't be lazy.

The companies chronicled in "Who's Your Gladys?" share this commitment. It takes different forms in different companies, but maintaining high service standards is a core value and it comes from the heart. It doesn't waver because the winds of recession are howling outside. It's not about giving "just enough" to get by while things are tough, or allowing team members to slack off because you feel badly that their pay has been reduced.

It's certainly not about chopping away at the little things your customers appreciate. They'll never forgive you. The dollars I could save by not providing granola bars and tampons would be met with an "equal and opposite reaction" by our clients. (Yes, we have a few tricks--arranging fewer of these items in smaller containers, to making grabbing a handful and stuffing them in a handbag feel conspicuously greedy.)

Businesses that want to emerge on the other side of this economic swamp must give even more than they did before. Yes, some customers are raising their pitchforks and torches over the tiniest mishaps these days.

When these moments occur, remember Holly Stiel's words of wisdom: "Being Right is the Booby Prize." Smile. Dig down. Give more. It will only hurt for a minute.

See you at ISPA!

Speaking of this amazing customer care guru, don't miss Holly's amazing new presentation at ISPA, SILK: Service in Loving Kindness. It will rock your world!

Customer love can't stop now: donation strategies that work

2009-09-03T11:20:00.000-07:00

I overheard the donation-request conversation at the front desk of our spa and introduced myself with a warm handshake. Nervously, our customer described her back to school night event, which would include 500 affluent families in our town. She was the new President and hated doing "asks." She apologized several times for the imposition.

Her idea was to have a quick drawing at the beginning of her two PTA meetings (on consecutive nights) and award a $25 gift card to one parent in the audience. Her vision, she said, was to help participants feel more "cared for" by the organization. Oprah style, the gift cards would be attached underneath chairs. She would draw one winner each night.

Her request was incredibly modest.

"We're not going to give you two $25 gift cards," I began, as she shrank back in dismay. "We're going to do something better."

First, I described our Community Investment Program which is a system we've created to both manage donation traffic, which can be very disruptive in a small business, as well as provide a new model for fund raising that conserves volunteers' valuable time.

As a non profit board member myself, supporting a terrific domestic violence agency I believe that event-driven fundraising has its place, but it's also too often a fire drill. Small businesses get fatigued by being constantly asked for donations. Volunteers, like this poor woman, get burned out. An organization can erode its base of support by demanding too many stressful "asks" of its volunteers.

The Community Investment Program enables any supporters of one of our registered non-profits to designate 3% of their spa purchases to benefit that group.

"Once you're registered, all they'll have to do is mention the Saratoga PTA as they're checking out," I explained. "We'll send you a check once a quarter."

Periodically, we offer "double rewards" and "triple rewards" for a designated period, to create some fresh excitement for our charities. We also offer the opportunity to do a "micro fundraiser" with four or more participants, and receive "quadruple rewards." (which is still just a 12% donation for the spa.)

A nearby jeweler and hair salon also participate in the Community Investment Program. The jeweler presents her checks at the non profit's meetings to make sure to drive the point home. Schools, arts organizations and social services organizations are all participants in CIP.

Back to our PTA President. She was delighted to hear about the CIP. But I wasn't done with her yet. I liked her concept, but I knew it would get lost in the shuffle of a big meeting with 250 parents each night.

"We're going to give you six $50 gift cards for your drawing," I explained. "Three for each night. That will create a little more excitement."

I thought she was going to faint.

"I shouldn't say this," she finally told me. "But I was just down the street at (Spa X). At first, the two young women at the front desk were friendly when I walked in. One was on the phone at the time."

"When I launched into my request, the one on the phone held her finger to her lips and 'shushed' me," she said in astonishment, obviously still reeling from this experience. "And the other one stopped smiling."

They sent her away empty handed.

The new, excited, President of the Saratoga Elementary PTA had just been given the bum's rush by my competitor for a request with a hard cost of about $20.

She walked through our door next. No wonder she was so apologetic!

Not only did we grant her modest wish (and then some) we provided her with a real connection. We gave her a new way to raise money, as well as exceeding her expectations. By demonstrating generosity and support, we sealed her loyalty as a passionate advocate of our business.

People who lead organizations are generally not shrinking violets. They're usually from the group that marketers call "Influencers," the 10% of the population who tells the other 90% where to shop, eat and play. The woman who is charged with leading a group of 500 parents and teachers is now in our corner.

This experience underscores several key behaviors and attitudes that are helping us survive the downturn:

1. Remain generous and supportive of your community, especially when you don't feel like it! Be careful what you cut, and the messages those cuts send. A business that relies on discretionary income and consumer confidence can't afford to send the message "times are tough." It's too easy to spook customers right now.

2. Get closer to your customers. Spend time on the operations floor. So many serendipitous connections come from having an ear open, and being in the right place at the right time. Most good spa managers and operators are out of their offices. A recession requires "all hands on deck."

3. Get closer to your staff. My presence doesn't have to be heavy; I often am "incognito" as a 'customer' having my makeup applied, or enjoying a manicure at the manicure bar. This is the perfect way to catch your staff doing things right, coaching on the best verbiage, or demonstrating the way to respond to situations like a donation request.

Lower Sales, Higher Profit?

2009-08-04T19:51:00.000-07:00

How have we managed to improve our spa operating profit so dramatically during a downturn?

1. We've protected our gross margin. While we've increased incentives we've refrained from hysterical and unrestrained discounting, or what we call "Dropping the D Bomb." Our gross profit margin is 55%, just as it was last year. I'd like to see it get to 60%, but the fact that we are holding steady on the Middle Line is absolutely crucial to profit.

We reduced compensation this year as well, about 7% across the board, including commissions, which has also enabled us to keep the Middle Line healthy. Think of your gross profit as the war chest you build to pay out all your overhead expenses.

This is one area where you have control and discretion, but all the decisions are big ones. And you can't achieve this performance without private branding in your mix. Your gross profit on retail is sales minus cost of goods sold minus retail commission paid.

If you're like most spas, you get a 40% gross profit margin after COGS and a 10% commission. (Hey, I don't make the rules. Complain to the vendors who maintain the 50% gross margin "tradition.") That means our spa drives 15 points of gross profit more than you do on your retail sales.

2. We've cut operating expenses across every line item in our budget, being careful to preserve client amenities and the "little" luxuries that clients really notice. This is not something you do once; you do it over and over, even after everyone insists there's nothing more you can save.

True confessions: nothing could be further from my personal style than penny-pinching, but I have learned to love it, embracing my inner "Beverly" (my mom, the Depression Baby, who elevates it to a fine art.)

Instead of the question, "What difference is it going to make if we spend an extra ten bucks on this?" I have a completely different frame of reference. "Why should I waste any money?" is my new mantra.

And oh, have I wasted money.

How much? The latest report, at the halfway point of 2009, showed our overhead expenses lower by $160,000 than the same time in 2008. Overhead!

As we like to say around Preston Wynne Spa, "no one died; no one bled." The cuts were made, we adjusted, and we went on. For example, my operations director now has a modest office adjacent to the operations floor, rather than in a separate building. Talk about eliminating waste. Wasted steps, wasted morale--problems get solved faster when you know the boss is right there and ready to listen.

Don't get me wrong. We have also identified areas of "diminishing returns" for spending cuts. For example, we've cut our concierge team a little too far, placing too great a burden on aforementioned operations director, who wasn't able to complete our important monthly check-in meetings with staff because she was "lashed to the mast" at the front desk.

So we're putting some resources back...that's the other thing people forget about cuts. They're reversible.

They haven't got time for the pain...

2009-07-06T21:59:00.000-07:00

We all know that the two big motivators of human behavior are 1.) avoiding pain and 2.) gaining pleasure. For years, the spa industry grew on the obvious attractions of motivator #2. And life was good.

But times have changed, and the spa industry been remarkably slow to pack away its "champagne wishes and caviar dreams". (If you're still larding your marketing communications with words like "luxurious," "indulgent," and "exclusive," please go to the back of the class.)

This year, it's all about helping your guests overcome pain. Results-oriented services are withstanding the recession's battering far better than those perceived as merely relaxing. Even stress relief is looked upon as a guilty pleasure. (It's a recession--everyone's stressed out!)

Maybe you've only used the word "pain" sparingly til now. Perhaps a discreet mention in the copy for a massage treatment. But many, if not most, of our clients are living with pain, and don't even realize that their spa therapist can actually do something about it. You need to tell them.

No, we're not recommending a return to dreary YMCA-style rubdowns with smelly liniment. Pain relief can and should be...fabulous.

Our newest offering, Thaiyurveda, is a Thai-inspired warm herbal poultice massage. The treatment, created by the inimitable healer Camille Western, is exotic, intriguing, and incredibly effective for pain relief. (I maintain that even listening to Camille describe the treatment in her melodic Puerto Rican accent is pretty good therapy.)

We introduced our new Thaiyurveda Warm Herbal Massage during a recent client spa party, with "bite size" samples administered on a table smack in the middle of our spa lobby. Guests swooned with delight...er, pain relief.

The next time a client calls your spa to inquire about treatments, make sure your staff asks, "Are you experiencing any muscle pain or discomfort?" "Sell in" with pain relief, to get them onto the table, but "sell through" with a luxurious experience, to get them to return. Offer motivating series specials (we like a summer 'mini series' of just three treatments.)

With a slight attitude adjustment, your spa can join the companies who know that "no pain, no gain," is one of the great truths of marketing during a downturn.

Time for a website redesign? Don't forget social media...

2009-06-04T22:04:00.001-07:00

Your next website is going to look different than your last. And not just because it's going to include the little Twitter birdie and the exhortation "Follow Me!" on your home page, or the Facebook icon, leading them to your spa's Fan Page or Group.

Your customer conversation is truly going online. Why let your spa lie there and take the pummeling of Yelpers in silence? You can be part of the dialogue. You MUST be part of the dialogue.

Social media experts agree, this is not a one-night stand. As with all effective marketing campaigns, social media campaigns are for the long haul, not just for "crying wolf" as one expert calls it. They take time and nurturing. And golly, no one has quite explained how they're going to make money yet. But the collective wisdom is, we all need to get on the train, even if we're not sure it will take us to Profitville.

"I don't have the time!" protest small businesses. But I think we all agree that we have time to talk to our customers. If a customer calls you on the phone, you answer it. If ten customers did, you'd answer those ten calls. And maybe hire someone to help you. Even spas are finding social media geeks within their teams and turning over much of this dialogue to them. We know that talking to customers is Good. And talking to customers generally leads to selling things to customers.

So when it's time to re-imagine your website, your Newsroom page is going to be a lot more dynamic, not a mouldering graveyard of old media placement pdfs, as most of ours currrently are. We're as guilty as the next, for the moment.

No, our website's new newsroom is going to look a lot like this souped-up baby, The Social Media Newsroom, a copyright free template from the nice folks at PR Squared

I'd love to hear from spas who are getting results from social media. What are you doing?

Small, Medium, Large and Extra Large

2009-05-26T11:07:00.000-07:00

I'm a fan of looking outside my industry for fresh ways of solving problems, and I was delighted last month at SpaExec NYC to have a chance to do just that.

Leo Renaghan, Emeritus Professor from the Cornell University School of Hotel Administration, delivered the keynote address, "Creating Customer Value in a Down Economy." Providing insights into the social and emotional factors that affect economic decision-making, he encouraged the spa marketers in attendance to reframe our marketing messages to increase perceived value.

His thoughts on pricing impacted me the most. He explained that when consumers are given a choice of soft drink sizes that includes Small, Medium and Large, Medium beverages are sold the most. When Extra Large is added to the choices, Large beverages are the best sellers. Why?

Consumers perceive the Large to be the best value, but only when juxtaposed with Extra Large.

So perceived value is very much about context, and pricing has an enormous impact on perceived value. Yet the spa industry's understanding of the price-value equation is only just evolving. What sort of pricing context do we offer our customers? As little as possible, it seems. This probably springs from a shared misapprehension that we are "above" pricing tactics, such as dropping a service price to $99 from $100. In any other industry, such practices are accepted. But the spa industry has a stubborn affection for increments of $5.

It's not just about reducing price. Another example Renaghan provided was the improvement in sales that followed a product when its price was adjusted from $105 to $119.

How could one apply this example to services sold in the spa? At our spa, we decided to roll out a new promotion, called "Small Indulgences," designed to appeal to consumer's thawing desire to treat themselves well after months of sensible behavior. American consumers don't seem to do well with privation, and thought the "I deserve it" ethos is now officially unfashionable, it is also utterly indelible.

Small Indulgences was inspired by a very similar promotion being offered by one of the spas in our Spa Leadership Round Table, a group of Bay Area spas that get together every other month to share best practices. Avant Garde, led by the irrepressibly creative marketer Blanca Caballero, has been running their "Spa Tapas" promotion with great success for over a year.

We decided we wanted to focus attention on our menu of 45 minute spa treatments, which are normally priced at $75, as well as a luxury pedicure that is 75 minutes, for $75. So our menu consisted of a facial treatment, a massage, and a pedicure, to keep things simple.

One "indulgence" can be had for just $69 (a mere $6 off its normal price, a discount that most consumers would sniff at were it described as "9% off.") Two can be purchased for $129, and three can be had for $199. And in every case, the discount is less than 10%.

Voila! Small, medium and large. (extra large will be tested next!) The consumer suddenly has choice. They're in the driver's seat. The first purchase, the single Indulgence, is virtually a no-brainer, because that price point is so low. It opens what I call the "shopping door" in a consumer's head. (I'm sure there is a real scientific term for this phenomenon: you agonize for a half hour about whether to buy the dress...yet once you decide to buy it, you add a pair of shoes and a cute shawl. What just happened???)

So, while they're convinced that they deserve one little Indulgence...golly, that "Medium" starts looking good. Two spa treatments for $129? You can't beat that.

We launched the promotion through our favorite medium, the e mail blast, limiting it to weekdays. We had a strong response, stronger than we got for our "Buy a full session treatment and receive an additional 30 minutes of treatment with our compliments," which of course is a much better value.

This is yet another cautionary tale for folks who think throwing discounts at their customers is the best way to improve sales. We call discounting the "D" bomb, but I think "D" is the grade that marketers deserve if deep discounting is all they can come up with. (Come to the front of the class and write on the chalkboard "I won't mindlessly discount my great spa services" 100 times!)

"Small Indulgences" doesn't tear down our brand, or create expectations that more and more free stuff will be shoveled out as time goes on. It actually enables a new guest to try our spa, or an infrequent visitor to return more often; it taps into the midmarket price point without diminishing our brand promise. Wouldn't you rather have a bona fide spa experience than visit a storefront budget massage place? (Hint, luxury spa operators: there is a way to beat 'em at their own game, and it doesn't have to cost you giant chunks of margin.)

Renaghan recommended the book "Predictably Irrational," as a great introduction into the often baffling art and science of predicting consumer behavior. I can't wait to read it!

March Madness: a grassroots marketing story

2009-03-26T22:57:00.000-07:00

I love being a spa marketer, and cooking up wonderful new ways to promote spas. But more and more, I love other people's ideas (OPI.)

This idea comes from Preston Wynne, but more precisely, from a Preston Wynne employee, one of our newest.

We had a team retreat in February and created "three commitments" for the first half of the year. One of these commitments was, "Do something you've NEVER done to market the spa in a new way."

Where do the best new ideas come from? Your new people.

Our newest esthetician came to me and asked me if she could have permission to send out her own "March Madness Special." She wanted to send an invitation to any client who had not yet rescheduled with her to come in and enjoy another facial treatment, and, as her gift, she would lavish them additional thirty minutes of upgrades.

She didn't want or expect to be paid for this time. It was her gift to them.

Employees often forget that spas are making a contribution too, when a service is given away using time that could otherwise be sold. But Jennifer "got" that. She knew this was an equal contribution. Our mutual unsold time could be invested, at no cash expense, to bring her customers back in. She thought that was a pretty good deal. She was more interested in generating activity than in being compensated for every minute of her time. She knew that she was sowing the seeds to grow her clientele. And she was delighted that we were willing to go along with her plan.

Fussy marketing maven that I am, I had to control my impulse to refine Jennifer's offer. "March Madness" isn't a phrase you'll find in my copywriting. Was it too shrill? Was it incongruent with our brand? But I controlled my impulse to control, because I didn't want to squelch her radiant enthusiasm. This was a fantastic idea, and it was totally aligned with our team Commitment. These are moments that managers dream about.

Jennifer told a few of her co workers about her idea. Two others joined the "March Madness" promotion. Others pooh-poohed the idea of "working for free." The Madwomen busily prepared their personal offers, and put them in the mail. Jennifer herself mailed out 70 cards. Their energy was contagious. Even the skeptics were curious about what was going on.

We ended up crafting an offer for the estheticians and for the body therapists, so we'd have a SKU in the system for each of the unpaid "Madness" treatments. Other than that, this was grassroots marketing all the way. Into the mail their cards went, and we waited for the response.

It was swift and enthusiastic. Jennifer's book began to fill. So did Elena's, the first massage therapist to get on board. Word traveled quickly, and the "Madness" spread.

In fact, this offer has garnered the best response of any we've done this year. Why?

1. It's personal. It came from their service provider, not from the "business."
2. It's timely. It touched them at the moment they were ready for another treatment, and leveraged the fresh memory of their great spa experience.
2. It was sent via snail mail. Say what you will, but internet marketing fatigue has set in. A hand addressed card is a real attention grabber these days. If you're finding that your e mail blasts are generating fewer returns than they used to, mix it up!
3. It's a great value. Full stop.

This offer is also one of the best business builders we've done. Why?

1. It is focused on creating the behavior that we need most from our clients: repeat visits. It cements the relationship.
2. It showcases us at our best, in a longer-format treatment that will deliver more benefits to the client. It's not our "base sticker price" treatment. It introduces clients to irresistible upgrades they might not otherwise have sampled, and they'll be back for more.
3. It shows our staff that they have influence over their clients, and builds their confidence. Think the "Madwomen" will be shy about inviting these clients back? Probably not.

Have a great grassroots marketing story? Share it with me!

The Gift Horse Rides Again...

2009-03-16T21:48:00.000-07:00

Time to dust off your gift card refund policy and make sure your team knows how to handle the influx of requests that will be coming your way.

Thanks to holiday promotions that we run, clients often buy gift cards for their own use. Sadly, with layoffs on the increase, they're hoping to put the money from this purchase back in their pocket. My operations director Nandita reported to me today that she's fielded three calls in the last few days from guests requesting refunds.

Our policy is to provide cash refunds only within the first two weeks after a purchase.

A client making this request is probably abashed, if not mortified. Make sure your team knows to handle them with kid gloves--and the right amount of empathy. Have them explain your policy gently, if in fact you don't offer refunds.

If you do give cash refunds to gift purchasers, brace yourself!

With cash flow slowing, and operating capital in short supply, gift sales are one of the few ways that spas can raise money. That cash is essential to your health. Hang onto it for dear life!

Of course, you can make a case-by-case call, just as you would for any customer service situation. If you make the business rules, you can break them too. It's always worth weighing the cost of being a stickler.

As my dear friend Holly Stiel tells us, "Being Right is the Booby Prize!"

Coming Soon to a Spa Near You: Unions!

2009-03-02T10:15:00.000-08:00

I'm a small business owner who voted for President Obama, with one big reservation: his support for the controversial "Employee Free Choice Act," which fundamentally changes the process by which employees can be organized by a labor union.

According to the National Federation of Independent Business, under the new card-check system mandated by the Employee Free Choice Act, "a union gathers authorization cards signed by workers that express their desire to unionize. The unions would be able to collect these cards from your employees and independent contractors for as long as it takes to get 50 percent plus one," says author Lena Anthony, who penned an article on the topic for the current issue of NFIB's My Business magazine. (www.mybusinessmag.com)

Under current law, the "card check" system is a voluntary option for companies. However, the preferred method for most employers is a secret ballot, which is supervised by the National Labor Relations Board.

"The NFIB believes a secret ballot election administered and supervised by the NLRB is the only way to protect the integrity of a worker's right to vote because it is a more accurate indicator than authorizing cards of whether employees actually wish to be recognized by a union. Each employee's choice is made in the privacy of a voting booth, with neither employer or union knowing how the individual voted," explains Anthony.
Enabling employees to vote privately on whether to unionize seems to be the best way to prevent manipulation and intimidation by either the employer or union organizers. The bill, named the "Employee Free Choice Act" (remember the "Clear Skies Act"? Sounds like the same folks named this one) there is an implication that employees currently don't have a free choice. Hello? Secret ballot? Reminds me of how we elect...a President!

Call me an idealist, but my belief is that if all businesses were run well and run ethically, we wouldn't have a demand for labor unions. Alas, we know that there are plenty of badly run businesses out there, and employees that are badly treated, and in a bad economy, things will likely get worse.

I think it's a testimonial to the core values of the spa industry that there are few unionized operations. However, unions would take a dim view of my perspective because like all other institutions, they now exist, in part, to perpetuate themselves as institutions. They need and want more money, like institutions do.

Yet union coffers have been dwindling since the 1980's. Perhaps the decline in labor union dues is a sign that the "price value" equation offered by unions has lost some of its appeal--after all, union representation is a service that employees pay for.

However, the conclusion that's been drawn in Washington by politicians that rely on union support is that this decline is due to the fact that it's too hard to organize. Hmmmm. I realize the President owes a debt of gratitude to organized labor for his victory, but I would like to finally see a President who pays more than lip service to the idea that this nation is sustained, built and ultimately healed by small business. And I've yet to meet a small business owner that thinks things run better after their company was unionized.

As hard as it is to make a go of it now, if the Employee Free Choice Act becomes reality, your path to profitability will be that much steeper. Don't think you're safe because you're small; it's actually easier to unionize small businesses. Under the card-check system, you won't even know you've been organized until you receive the notification that your spa is, voila, a union shop, says NFIB Executive Vice President Dan Danner. "Then the clock starts ticking for you to agree on a contract. If you can't agree on a contract within 120 working days, the Employee Free Choice Act mandates compulsory, binding arbitration on the employer and the employees as part of the collective bargaining process."

If they're forced into a collective bargaining situation, I know plenty of spa owners who will throw in the towel. We all know that there are easier ways to make a living than by employing people, even without having to navigate the delicate protocols of operating a union shop. Many an esthetician-turned-spa owner will likely just turn esthetician again, and slip off into the peace and quiet of a more profitable private practice. (And heaven forfend, we'll have yet another batch of spa consultants flooding the market!)

Personal service businesses are old school, old economy, and often labors of love. When labor doesn't love us back...beleagered small business owners will find other ways to express our entrepreneurial urges. And I guarantee you they will involve fewer, if any, employees.

Unfortunately, we small business owners are a squirmy bunch. We're independent, we don't play well with others and we're politically all over the map. (Instead of lobbying, we'd rather do something productive--like generate two-thirds of the jobs in this nation.)

If our new government is serious about job creation, the first order of business is to ensure that it's easier, not harder, for companies to succeed, and to keep employing the workers we currently have. I desperately hope that one of President Obama's first "shovel ready projects" isn't digging a grave for small business.

Please contact your US Senator, forward or excerpt this blog wantonly, and learn more about the Employee Free Choice Act.

The Recession and Your Spa Business: What's Ahead?

2009-01-27T23:48:00.000-08:00

How did you start your day today? If you’re like me, you attempted to divine what sort of mood the country was in when you got up, checking the news as you got your game face on. The big story (as it’s been for awhile) was layoffs. I’m sure we were both wondering what all the economic doom and gloom meant for our discretionary-income driven spa businesses.

I have to say, tonight I feel I am a bit closer to getting my arms around this confusing mess. I had the good fortune to hear Christoper Thornberg, an economist, speak at my Entrepreneur’s Organization chapter event in Palo Alto. (If you own a business with at least $1 million in annual sales, you should join your local chapter of this brilliant business organization—now!)

Thornberg is an expert in the study of regional economies, real estate dynamics, labor markets and business forecasting. He’s a principal at Beacon Economics, an economic research and consulting firm that specializes in real estate markets, local economic development, and public and private policy issues. As part of the California Council of Economic Advisors, Dr. Thornberg advises State Controller John Chiang on the state’s crucial economic issues.

During his lively and often very funny talk (I think he might be able to bill himself as the Lewis Black of Economics) I took copious notes, hoping to absorb and share as much of it with you as possible. One thing the spa industry doesn’t do much is look outward. Indeed, we’ve spent years congratulating ourselves on our fabulousness. So it’s a real blow to our pride to realize we’re subject to the same laws of business gravity as everyone else. And that, perhaps, we are far less prepared than many other businesses to weather this storm.

Here are some of the key ideas I was able to take away from Thornberg’s talk.

- Recessions follow huge imbalances. (See: dot bomb) For this one, we had three big ones: housing, finance, and excessive consumer spending. Before they blow up, these massive imbalances/bubbles are usually accompanied by what he calls ‘the four most dangerous words in economics’: “This time it’s different!” (If you still believe that, I have a rental property in Arizona I’d like to sell you.)

- We need to stop watching what Wall Street does, and looking to the stock market as a barometer of things to come. I’ve already resolved: no more reading the Wall Street Journal in the morning. Published at ground zero of the economic collapse, it’s immersed in its own toxic habitat of doom and gloom. He called equity markets “the thirteen year old daughter of the economy”—in other words, major drama queens. He quoted a Wall Street financial advisor, who proclaimed late last year that “there are two positions out there—cash, and fetal.” Do we really want to believe this? If we’re to succeed in this climate, we have to make our own weather (see my previous blog on this subject!)

- It’s never as good as you think, and it’s never as bad as you think. Consumer and business sentiment has rocketed from denial (the party is never going to end; the housing market is going to have a soft landing) to abject hysteria (the US economy has forever lost its mojo, and we’ll be a bit player on the world stage going forward, a new Dark Age is beginning, etc.) A couple of years back, Thornberg was one of a few lonely Bears, a party pooper derided for his predictions of financial mayhem and a disastrous real estate crash. Interestingly, he’s now a Bull--while most everyone else is rending their garments and sprinkling ashes on their heads.

- This is not your mother’s Depression. Thornberg scoffs at the notion that we are heading into a depression. However, he’s unstinting in his description of the fine mess we’re in: the worst recession since World War II. As he says, “It’s a normal very bad recession.” His estimate: two more years of hard slogging.

- Unemployment is a lagging indicator. The layoffs that are happening now are not predictors of the future, but symptoms of excesses the past. Companies are finally shedding jobs in response to the falloff in demand for their goods and services. Another great reason not to listen to CNN, MSNBC, etc., while getting ready for work!

- The majority of the drop in consumer spending has happened in the automotive sector and in the decline in the price of gas. (Maybe a reporter will throw that in at the end of the story, but it won’t be the lead.) Services are selling better than products. My controller Roxanne showed me a newspaper story with a graph the other day showing how badly sales had dropped during the 2008 holiday season from 2007. The dropoff was downright dizzying—til you looked more closely at the chart and saw the graph was calibrated in hundredths of percentage points. With all the finger pointing going on right now about “who’s to blame,” it’s amazing to me that the media does not recognize their role in throwing gas on the flames. Granted, we do know that the luxury sector, which lagged behind others in going off the cliff, finally caught up with a startling 35% decline during the holiday season. (Hey, what do we expect for calling the super-affluent demographic “recession proof”?)

- Our national obsession with stopping foreclosures overlooks a very important fact: people shouldn’t keep homes they can’t afford. Foreclosures are just a symptom of the overconsumption that drove this meltdown. Thornberg says simply, “Foreclosures are not necessarily bad for the economy.” To put it in terms business can relate to, once people stop throwing 70% of their income at their mortgage, they can afford to buy other stuff. Of the credit damage that is occurring to many consumers, another businessperson I know remarked, “A couple of years from now, it’ll just be like having a tattoo: a mistake a lot of us made in our past.”

- Bank consolidation ( failure) is going to be a fact of life. 8000 banks will become 4000, says Thornberg. If you have more than $250,000 in a small bank, get it out of there, is his advice. The words “bank failure” strike terror into our hearts, since this phrase is inextricably linked in our minds to the Great Depression. But bank consolidation is inevitable. It will take another two years for all the bankrupt banks to admit that they’re broke. California, says, Thornberg, is filled with these walking-dead “zombie banks.”

- Our concern with ‘what the banks did with our TARP money’ and politicians’ desire for strict accounting demonstrates our and their lack of understanding of how banks work. “It’s like pouring a quart of water into a bucket that’s half full and asking, ‘where did our water go?” Bank lending is down in large part to a decline in demand. Businesses are not expanding right now; they’re shrinking. You don’t borrow money to shrink. That is, unless, you’re broke. And banks aren’t lending to companies that are broke (any more.)

- When banks tighten up lending, the Fed can print more money and put it into the supply. When banks loosen lending practices, the Fed pulls money back out of circulation. (We hope!) Thornberg says banks are still lending money, but not making risky loans. He gave the example of a builder he recently sat next to on a plane. The builder was lamenting the lack of financing for his projects, yet he refused to pay a higher interest rate, inject more than 7% of his own money into a project, or sign a personal guarantee. This may be how it was working a couple of years ago, but not any more. Businesses have to shoulder more risk.

- “We’re on the back end of a twelve year bender and we’re waking up with the mother of all hangovers.” The good news to me here is that, in the words of the twelve-step world, we’ve admitted we have a problem. If we successfully complete our economic rehab program, Thornberg sees positive growth in the second half of 2010. That program should include middle class tax cuts, he says, and helping people save more by spending less. It wasn’t that long ago that the savings rate in the US was 10%. In the past few years, we stopped saving, and developed a real talent for living beyond our means.

- Consumer and business weakness will continue for awhile, though some businesses should see growth by the fourth quarter of this year. Remember, we’ve been in this recession for awhile. It’s not just starting. And one of the few ‘laws of gravity’ in economics is that recovery is inevitable—the market digests its mistakes and slowly gets healthier. But for many of us operating businesses, it’s a grueling test to see who will survive.

- This is the time to look for opportunity. For example, falling home prices mean that those of us with California companies can compete for workers with the rest of the country. There’s been a huge exodus of talent from our state because of the high cost of housing. There’s also opportunity awaiting us in the shakeout, which will correct market saturation. Let’s face it; the country has a few too many spas and spa vendors. I hate to say it, but every time I’ve hit the trade show floor lately I wonder to myself, “Can all these companies possibly be necessary?” Our abundance-loving culture makes it hard to admit such un-Kumbaya thoughts, but we’ll be a healthier industry when we have healthier players. In the meantime, hunker down and renegotiate everything. Have a lease? You may be surprised at your landlord’s willingness to lower it if you commit to a new, longer term. Push back when vendors raise prices.

- Cash is king; if you’ve got it, your company will have the opportunity to buy competitors’ assets for fire sale prices. (See: Warren Buffet. In fact, see his new biography, Snowball. You’ll see as you read it that now is the time to build your empire. If you’d rather not tackle this massive book, which chronicles such fascinating details as the type of packaged snacks he enjoys, just head to the children’s section in the bookstore and re-read the Tortoise and the Hare.) There’s even a chance your competitor will suddenly close his doors and a desperate real estate broker will call you with an opportunity to acquire a fully equipped, operational, just-add-water spa—for the cost of rebranding the place. Leasing companies need to keep the lights on and the parking lots full in their shopping centers. A spa owner I know just walked into precisely this opportunity.

I have to say, I found Thornberg’s talk tonight to be refreshing and even encouraging. I think most of us have been paddling around in the murky pool of this recession, wondering how deep it really is. Just experiencing the sensation of your toes touching the bottom is comforting--even if you’re still in over your head!

High Heals

2009-01-07T17:54:00.000-08:00

The new Spa Finder Trend Report, Susie Ellis' excellent overview of industry influences, cites as a key trend the increasing acceptance of "energy work" in spas. On the opposite end of the spectrum, we know that cosmeceutical ingredients and medical aesthetic technologies continue to grow in sophistication. What do these two trends have in common?

At our recent Holiday Client Appreciation Party, we offered an array of free mini spa treatments to our guests. The two most popular "attractions"? An esthetician who was giving Reike facial treatments, and a therapist who specializes in Intuitive Flower Essence Readings.

Now, we're located in the very workaday Silicon Valley. For all our innovations in technology, we are not a terribly adventurous lot. (We're not Marin County. We wear sensible shoes and carefully sanitize our yoga mats.)

Cosmeceutical and medical spa innovations appeal to the client who wants to receive profound benefits from their self-care investment. Energy work is sought out by clients who want to go beyond the basic spa benefit of relaxation. But within these very different modalities, there's a common thread, and that's healing. We may not think of aesthetic medical procedures as healing, but the end result is repaired self esteem. That's emotional healing.

These distinctions may seem like semantics, but they are actually clues to your clients' deeper needs, the kind of needs that will motivate them to spend discretionary income during a severe recession.

The rules of the game have changed. Clients still want--more than ever--what we have to offer. But to justify their choices, the benefits they receive from spa services must be unassailable. How effective are you at articulating the benefits of what you offer?

Because your clients must take their cue from you: they need to be able to explain why they do what they do. They will have to make a case for their choices to family members, friends, colleagues. "I'm worth it!" just doesn't cut in the the cold light of 2009. Why is your spa worth it?

Have you retooled your marketing copy to bring it into alignment with the newly sober mood of today's consumer? (Hint: "indulgence," "luxury," "exclusivity" are soooo 2008!)I can't emphasize enough the importance of relanguaging the spa experience, not just in your brochure or website, but for your employees. We can't win the new game playing by yesterday's rules, or with yesterday's scripts.

Most spas have understood for years that at the heart of what we do is healing. We may have lesser or greater degrees of comfort with that concept. But during a year when everyone is "hurting," healing is one of very few activities everyone can justify.

Another deep need that spas have almost unwittingly found themselves meeting is consumers' craving for fostering deeper connections and more meaningful relationships with special people in their lives. Where do you foster this sort of connection? Perhaps over a cup of coffee at Starbucks, but also, particularly during special occasions, within the sanctuary provided by spas. The notion of spa-as-sanctuary is hardly new (as evidenced by the number of spas bearing this name or a version of it.) But the reason for seeking sanctuary now is not just about zoning out in splendid isolation--increasingly, it's about finding the ideal environment for enjoying quality time with friends and family. ("Girlfriend Getaways" were one of the few categories of travel that grew last year.)

American consumer culture has turned a page. To find our place in this unfamiliar new story, spas must make sure we remain relevant. And that relevance comes from meeting our clients' needs for healing, meaning, and connection.

The Power of 100

2008-12-17T13:46:00.000-08:00

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.

The Kindest Cuts

2008-11-01T10:44:00.000-07:00

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!

Leading through the storm

2008-10-13T09:39:00.000-07:00

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.

The Non Revenue Producing Space Odyssey

2008-08-13T15:43:00.000-07:00

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!

Staycation Nation

2008-08-11T21:00:00.000-07:00

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.

Don't drop the "D" Bomb!

2008-06-12T21:47:00.001-07:00

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.

The Voodoo Reviews Do, Part Two

2008-03-24T23:41:00.000-07:00

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.

The Hard Answers on the Soft Sell

2008-02-25T19:21:00.000-08:00

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.”

Gift Horse Redux: The Three Year Rule!

2008-01-14T17:24:00.000-08:00

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.

Son of Gift Horse

2008-01-01T19:10:00.001-08:00

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.

The Gift Horse

2007-11-08T23:14:00.000-08:00

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

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

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

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

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

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

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

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

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

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

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

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

Saturation Nation: The Spa Market Matures

2007-09-10T21:18:00.000-07:00

Does anybody do market research any more?

I hate to be a party pooper--especially with a consulting business that serves appetizers to the party goers. (Spa Startup Workshop, anyone? Take two, they're small.)

But really, people!

Market research is not asking your friends if they'd like for you to open a spa.

Market research is not visiting every resort spa in the hemisphere and deciding that the local market is sorely lacking in 400 square foot treatment rooms with ensuite Swiss showers, heated floors, saltwater aquariums, fireplaces and butler service.

The high end of the spa market is saturated. Yes, there are pockets of opportunity here and there. But saturation is a hard reality. The high net worth individual has an abundance of choices when considering where to spend their spa dollars. And increasingly, they're spreading the love around.

The problem with would-be spa owners is that, all too often, they're hard core spa goers. I know, that sounds like a Good Thing. We wouldn't want to buy wine from a winemaker who wasn't a wine drinker. We wouldn't want to eat an elegant dinner at a restaurant run by someone who only eats fast food.

But the spa goer-turned-spa entrepreneur--sort of like restauranteurs and winemakers--are often inspired by a deeply personal vision. That vision sometimes borders on obsession. These are the clients that start the conversation with the spa consultant by discussing in breathless detail the water feature they're planning for the entryway. (They've even got the Malaysian stone mason they've imported to do the work living in their guest room for three months while it's been constructed.)

If you're extremely lucky, your personal vision will prove compelling to lots of potential customers. If you're not so lucky, you'll blow a couple of million dollars on a spa that you simply can't afford to operate. And because you're such a spa geek, it will be impossible for you to believe that your marketplace just isn't ready for the Organic Tibetan Yak Milk baths, and worse still, doesn't even appreciate the heated, tumbled marble mosaic tile floors. The Philistines!

I know this sounds silly. But the people getting caught in this "if we build it, they will come" trap are not lacking in brains or even business education. There are plenty of MBAs freaking out over their spa's P & L tonight.

So if market saturation is nigh, why aren't more spas going out of business? Surely
we should be witnessing a shakeout. That's what happens in an industry that's saturated.

As usual, the answer is that spas are Special. Because they inspire irrational passion, there is usually someone waiting in the wings to catch a swooning spa. That entrepreneur may be paying pennies on the dollar for the facility, or may simply be walking into a lease--sometimes on a fully equipped spa. So their odds of success are better than the original operator's.

If you're considering the best way to enter the spa market, look for a customer group or market that's not being served. (Note that I say "customer group." You're not a group. It's likely that you are even an anomaly.)

One of my consulting clients literally searched the entire United States for the community with the perfect demographics and psychographics for her startup spa. When she found it, she moved there and opened a spa. She is successful because she listened to the market and she built her venture--and her life--around the needs of her customers. Her motto could easily be, "If we build it, it's because they're already here."

One area of the spa industry in which opportunity still looms large is spa management. Relative to the number of spas out there, there are very few spa managers. Experienced managers are being wooed by everyone from big hospitality organizations to day spas.

This is also a great place to start for an aspiring spa owner. If your principal experience with spa operations is being a spa client, you owe it to yourself to get a reality check. Go behind the curtain and see what's really happening while you're dozing under your Blueberry Antioxidant mask.

Spas always need smart, motivated people to man their front desks. Be frank about your ultimate aspirations; not everyone wants to play Spa University for you. But I know the best way to prevent another new competitor from entering my market is to give them a front row seat to the phenomenon of Spa Saturation!

The High Cost of Free Time

2007-09-04T19:53:00.000-07:00

In this month’s Wynne Business newsletter, I discussed the impact of paid time off on your revenue production budget. I mentioned the rather shocking discovery that our employees work just 80% of their scheduled hours, through a combination of paid time off and additional unpaid time off. Spa therapists and practitioners enjoy having a flexible schedule that enables them to travel, take classes, or leave the spa “if there’s nothing going on.” For many employees, unpaid time off is an additional benefit of working in the spa setting.

Unpaid time off is often looked at as an entitlement: “I’m not here; you don’t have to pay me, and someone will work this shift—so why can’t I go to Maui for my yoga retreat?”

Many spas have policies dictating how much unpaid time off is allowed. In the “real world” this is standard boilerplate HR/employee manual stuff. In Spa World, it’s the exception. (Employee manual? Please visit the “tools and products” section of our website and we’ll help you make one of your very own!)

At Preston Wynne Spas, unpaid time off is meticulously tracked through the time clock in our Millenium software. All employees have a “bank” of unpaid time off they’re allowed to take within a year. They can put time back into their bank if they cover a shift for another employee.

One hair raising point about the importance of tracking hours worked. If you offer medical benefits, you need a way to demonstrate that covered employees are indeed working the minimum qualifying hours. “Close enough” isn’t. In spas where service providers are paid by the appointment (commission or fee-for-service) managers often allow employees to cut a shift short if they’re not scheduled with a client.

If there is a major medical insurance claim by an employee, the first thing your insurance company will do is audit their timesheets. If the employee has not actually worked the qualifying hours, even if they’re a just a few hours shy, you’ll be stuck with the entire bill for their care. Imagine what would happen to your company if an employee had a catastrophic illness or injury, and you were left holding the bag!

In many spas, extra unpaid time off is permitted for employees who can get their assigned schedule covered by another service provider. In our own spa, a wall in our employee prep area is usually covered with “coverage request” forms, in which service providers solicit co-workers to take over a shift for them. Though these coverage requests must be approved by their supervisor, the standard operating procedure has been to allow employees to take as much time as they’re able to cover.

What’s wrong with this picture? Well, imagine a popular esthetician, Busy Esty, getting “coverage” from her co-worker, Newbie, who as yet has few requests. Busy Esty’s regular request clients aren’t going to accept an appointment with the newcomer. Nor does Busy Esty want to give up her regular clients. So a shift that would have been 100% sold out is now 25% utilized. And worse yet, those regular guests who would have made 10 visits to the spa this year are going to make one less. They’d rather just “wait” for Busy Esty.

Here’s another scenario. The esthetician who is “covering” for Busy Esty is popular too, but she’s coming in on a day she doesn’t usually work. Her clients are accustomed to seeing her on certain days of the week, and at certain times. Even though she is offering them an opportunity to come in and see her, they’re less likely to move to a different day and time than their normal slot. So once again, the shift is undersold when it should be full. It is crucial that anyone “covering” a shift has the ability to generate the revenue for that particular shift.

If your spa is to reach its revenue budget, two things have to happen. As mentioned in our newsletter, you have to set accurate goals for sales production. (We call these Contributions, since “quota” is a dirty word to Spa Folk.) We know that we have to gross the number up to account for the fact that our workers will only complete a portion of their assigned schedule. Depending on how lax or strict you are about unpaid time off, this number can range from 10-30%.

As I mentioned, our employees have been working, on average, 80% of their scheduled time. Imagine, only having 80% of your workforce on hand, but setting their sales contribution as though they were on hand for 100% of their shifts. When you’re in the hands-on Personal Services business, it’s not going to happen. You’re going to miss your goals.

A tremendous challenge for quality spa operators is the shortage of qualified employees. No spa I know has a vast talent pool of massage therapists, estheticians and nail care experts at the ready whenever they need a hand. Instead, well trained staff members are often feeling that they’re stretched a bit thin, and working more shifts than they prefer.

So how can you manage unpaid time off in a way that works for your team and your bottom line? Here are some basic ground rules.

1. Set a limit on unpaid time off. You can’t afford not to. Make sure the amount of time is reasonable for both your company and your team. In our spa, the unpaid time off benefits are as follows:
- After 12 months, 5 unpaid days may be taken per year
- Years 2-5: 10 unpaid days may be taken per year
- Years 6-10: 15 unpaid days may be taken per year
This is based on a full time schedule. Part time employees receive fewer unpaid days off per year—remember, they’re working fewer days to begin with!
Remember that this time is in addition to vacation, sick and holiday pay.

2. Increase the benefit with seniority, but within reason. Those employees should have lots of regular requests.

3. It’s perfectly reasonable to ask that if an employee can’t commit to fulfilling their schedule within the parameters of your time off policies, then they should not obligate themselves to so many days to begin with. By committing to fewer scheduled days and picking up additional shifts to cover co-worker’s days off, they could end up with a similar outcome in terms of the number of total days worked, and the spa can have a more predictable way of generating revenue.
4. Enable employees to “bank” unpaid time off and build up their reserve by covering shifts for co-workers. This puts some control back in their hands.

5. Communicate to employees when they are running low on unpaid time off. Help them strategize about how to use their unpaid time off. If they’re used to an endless supply of unpaid time off, having new limits can be a rude awakening.

6. Say “no” when you have to. An employee who continuously consumes all their time off and still expects more is not committed to the same goals you are. You may think they’re invaluable, but upon closer examination, you may find that their contribution to your success is minimal.

Unpaid time off is a great benefit for workers in our industry. Just make sure that you receive enough bang for your buck—just because you don’t write a check doesn’t mean you’re not paying for it!

Whose Side Are You On, Anyway?

2007-05-28T21:29:00.000-07:00

Call me late to the party. I didn’t pick up Danny Meyer’s wonderful “Setting the Table” until last month, whereupon I devoured it with the sort of unbridled pleasure that I normally reserve for dessert. Don’t be deceived; this richly detailed book is a substantial main course. To flog that food metaphor one more time, it’s a banquet of great customer service wisdom, distilled over the twenty-plus years that Meyer has been operating his restaurants in New York. I’m abashed to confess that I have been a customer of none of the diverse restaurants that make up the Union Square Hospitality Group, which include The Union Square Café and the Gramercy Tavern.

There are several wonderful themes running through this book. One is Meyer’s refreshingly frank description of the challenges of delivering great hospitality and the tactics he’s used to ensure guest satisfaction. For those of us who experience each lapse in our spa’s performance as a personal failure, it’s heartening to remember that failure is an inevitable part of the learning process. An accomplished Michelin-two-star chef I know explained to me very matter of factly, “On any given night, I know that 3% of my guests will not be completely satisfied.”

It’s only a failure when we don’t learn from these experiences and use them as an opportunity to make our companies stronger and our guests happier. The concept of continuous improvement, the Total Quality Management concept of “kaizen,” acknowledges that perfection is a never-ending journey, not a destination. Meyers offers himself as a companion on this journey for any willing “hospitalitarian.”

Another theme of “Setting the Table” is his description of his deeply committed path of service to others through food and hospitality. Many of us will recognize ourselves in his desire to maintain that visceral customer contact, even as his company grows past 1,000 employees and six unique restaurants.

Meyers’ gift here is expressing his philosophy in ways that are easy to understand and still resonant and fresh. I particularly enjoyed the concept of making sure that guests feel that we’re “on their side,” when they encounter disappointments or obstacles such as a fully committed schedule. This concept is one that you can instantly share with your spa team. Indeed, most of our employees are emotionally on the guest’s “side”, yet when they can’t grant a customer’s wish, find themselves feeling defensive. I’m not even talking about rudeness here, just the uncomfortable necessity of pushing back, resisting, or turning someone down.
Many spa operators will find employees acting as what Meyer calls “gatekeepers”, pushing back firmly against un-grantable customer requests, without conveying to that guest how much you’d like to grant their wish—even when you can’t.

Here’s how that conversation typically would go with a guest calling your spa for an appointment for herself and her two daughters this Saturday:
GUEST: I’d like to make an appointment for three facials this Saturday morning around 10 a.m.
SPA RESERVATIONIST: Oh, I’m sorry. We’re completely full on Saturday. Can I check another date for you?

While technically this is a correct response, and doesn’t violate any obvious laws of customer service, think about what’s happening for the guest. She’s made a request and been—nicely—rebuffed. She may be feeling disappointed. She may even be feeling foolish. The reservationist, while polite, has not conveyed empathy beyond the expected “I’m sorry.” And by offering another date, the reservationist hasn’t really acknowledged that the guest is probably disappointed or frustrated by this turn of events. One moment, she’s eagerly calling us, ready to give us her business. The next minute, she’s shot down.

How can we let this guest know we’re on their side?

Here’s how I’d “rewrite” the response:
SPA RESERVATIONIST: I’m so sorry, I would really love to get the three of you in for treatments this Saturday, but it looks like we’re currently full. Can I put you on my waiting list for a cancellation? We’d be delighted to give you a call if anything changes.”

Regardless of the guest’s response, we should also offer, “Would you like me to check an alternate date for you?” or even suggest a possible Plan B if there’s an obvious alternative (for this guest, we could offer a Sunday instead of a Saturday if it were open.) Too often customer service agents play a game of “guess what I’ve got in my hand?” forcing customers to recite a litany of their own alternatives rather than proactively offering suggestions.

This type of response honors the customer’s desire to do business with us and lets them know we would really like to welcome them to the spa and that we are going to make an extra effort on their behalf. It also relieves some stress for your customer service front line. It sounds elementary, but next time you listen to your team, ask yourself, “Are they making our guests feel like we’re on their side?” It may surprise you. It’s a subtle adjustment, but the emotional impact is tremendous.

Raising Your TQ (Talent Quotient)

2007-04-10T22:11:00.000-07:00

If your company has been around as long as ours has—23 years—it takes a lot of energy to keep your processes fresh, and your edge sharp. Like any long-established company, we have a strong culture, and a (sometimes maddeningly) predictable way of doing things.

One of our core values is “Build and Protect and Fun and Harmonious Work Environment.” Lately, I’ve been reconsidering this idea. Not that I think fun and harmony aren’t important; they’re critical to the happiness of our spa workforce. But when it came to hiring, I realized we were looking for “our type”—an employee who seemed to harmonize with the existing team—very possibly at the expense of talent. One of the other three core values, “Achieve our Goals,” seemed to be taking a back seat to Team Harmony in the recruiting process. For example, I’d get a little nervous around people who seemed too driven or intense. Candidates who firmly proclaimed that one of their goals was to open their own spa were often passed over—hey, I didn’t want to play “spa university” for an ambitious job-hopper.

For years, we cultivated a very homogeneous team. And then something great happened. We experienced a lot of turnover within a short period of time. And in the process of rebuilding our team, I looked hard at the assumptions we’d been making about what constituted a “successful” Preston Wynne employee.

During this time I read “First, Break All the Rules,” the outstanding Marcus Buckingham book based on Gallup surveys of employees and managers. The subtitle of the book is, “What the world’s greatest managers do differently.” Among the behaviors it describes is the relentless quest for talent—finding it and developing it. I recognized immediately that talent had not been at the top of my list of must-have’s. Certainly, aptitude was crucial. But for years, I’d maintained that personality was the most important trait; we could teach someone with good aptitude the technical skills they’d need, because we had a strong in-house training program. But talent is more than attitude and aptitude. True talent includes passion and drive and often, an ineffable “X Factor”. We’d often been spooked by our passionate, driven candidates. When one “got through” they might succeed, but just as many probably felt ignored. We offered a certain management style that worked very well for the majority of the team—but it didn’t always meet the needs of exceptional people.

When I look back at the top talents I’ve employed, they’ve often been what are known as Positive Deviants. They stand out. Some have been a little eccentric. Some have been a little messy. Some have been downright obsessive about their craft. The one thing that talented folks seem to have in common is that they don’t have a lot in common. It’s crucial that you suss out their particular needs—their quirks, their obsessions—and you take care of them.

By encouraging you to lavish your talent with attention, I’m not suggesting that you hire prima donnas and encourage them to run amok. We’ve all seen the destructive power of “superstar” employees who are not held to the same standard as their co-workers. That sort of talent is very costly, because the performance of other employees is undermined by their resentment and frustration. Often, when an intolerable superstar is fired, the performance of the rest of the staff leaps.

The 80/20 rule of employee development holds that managers spend 80% of their time dealing with the 20% of their team that underperforms. Our culture focuses energy on fixing weakness rather than accentuating strengths, which on the face of it is practical. In busy spa operations, squeaky wheels get the grease. But your best investment of time and energy is in strong, talented people. Your challenge as a manager is to make sure the smoothest-spinning wheels are very well maintained.

Customize the way you approach your talented workers. Tailor the way you communicate with them, cultivate their abilities, and support them in their career development. Invite them to share their talent with others. We encourage our top talents to act as peer mentors and help disseminate their skills and knowledge. But one size does not fit all when it comes to top talent.

Positive deviants bring a tremendous amount of passion to the workplace. When blocked (by rigid bureaucracy, lack of management “quality time” or under-motivated/ under-performing team mates), this can turn into frustration. Mentoring is essential to their well-being and development. I realize now that neglecting talented and seemingly self-regulating employees to spend our energy rehabilitating problem children is a recipe for a talent hemorrhage.

To flog that metaphor, I’m happy to say that we have lots of vital “new blood” in our team, which is energizing and uplifting the veteran staff members as well. I understand now that we must resist the temptation to “set them and forget them” because they’re self motivated. (Talk about no good deed going unpunished.) Instead, we’ll keep the bars set high for our talent—only by challenging them will we keep them fully engaged.

CREATING A REALISTIC CANCELLATION PROTOCOL

2007-03-30T18:24:00.001-07:00

Spa guest appointment behavior has changed dramatically in the last five years, as our culture has become increasingly "non-committal." What used to be considered "flaky" behavior has become the norm; lives are ever-busier, schedules are more hectic and ever-changing, families are running a dozen different directions at once every day of the week.

This is not good news for businesses that run on appointments. However, trying to make your customers operate by your rules is a losing strategy. It is impossible to be rigid and customer-centric at once. In today's marketplace, a competitive advantage can be had by being flexible and accommodating. It may be time to re-evaluate your cancellation policy, particularly in light of increased competition.

There are two goals in cancellation management. One is to ensure that employees who are paid by the appointment are not unduly impacted by customer cancellations. The second is to accommodate guests' busy lives while not completely ceding control of your revenue. In other words, being completely flexible is as dangerous as being completely rigid.

Good schedule management is an important benefit you offer to your therapeutic treatment staff. Good schedule management will enable you to attract top service providers, who in turn will give your guests the best possible service.

A key element of good schedule management is an effective cancellation / no show program. A good cancellation / no show program will provide flexibility for your guests, compensation for your service providers and recompense for your business.

We ask our guests to provide at least 24 hours notice with any changes to their reservations (48 hours for reservations of 2 or more hours). If for any reason they need to change within the 24 hour window, we’ll make every effort to fill the vacated appointment time with another guest. If we’re able to do so, there is no charge. If we are unable to fill the vacated time, we simply charge $40 per hour of service reserved (or portion thereof). This flexible cancellation protocol applies to all guests, regardless of their reason for change… a sick child, a last-minute weekend away, an injured pet, etc.

We’ve found that our flexible $40 charge, rather than the full amount of the service (as many spas charge) provides our guests with flexible options. Flexibility is the key word in your communication with guests. Generally, customers recognize that the business requires a reasonable financial commitment from them to ensure availability of an appointment. By charging only a portion of the reserved services value, we demonstrate our understanding that a cancelled appointment is a disappointment for all involved and that we're not penalizing them, but rather protecting the earnings of our employees.

Administration of an effective program is 100% reliant on the compliance of your front desk/reservations staff. It is imperative that all reservations are guaranteed with either a gift card or a credit card, and that your protocol is clearly communicated to all guests. If these components are missing, your program will not work. We make a notation in our guests’ files to communicate internally that the guest is aware of our protocol.

A courtesy reminder goes out to our guests approximately 48 hours prior to their scheduled visit. This can be a phone call or an e mail. (Our Millenium software program lets us automate our e mail confirmations, a huge time saver. This has become our guests' preferred confirmation medium.)

Let the guest know you will assist them if they should need to make any changes. By calling 48 hours in advance and enabling changes up to 24 hours before their appointment, we make sure that guests have plenty of time to amend schedules without penalty.

The confirmation also gives you another opportunity to reiterate your cancellation protocol to the guest. We use the following telephone script for our confirmations:

“Good morning. This is Paul calling from Preston Wynne Spa in Saratoga. We’re calling to confirm Babette’s appointment for this coming (day/time). If for any reason you need to make a change to your reservation, please let us know soon as possible at 408-741-5525, as your appointment is guaranteed for this date and time. Thank you so much. We look forward to seeing you on (day/time).”

The administration of your cancellation program can become unwieldy and costly if not kept in a simple format.

What happens when a guest cancels within the window, or no-shows?

We use a simple form for the support staff to complete when a guest cancels/changes their reservation within the 24 hour window (technical team members complete the form for ‘no-show’ appointments). We typically receive between 1 and 3 cancellations/no shows per day, so processing the forms through the front desk has been the ideal solution. Because we process the cancellations on a daily basis, utilizing additional staff resources to administer the program is unnecessary. An added benefit is the guest receives notice of the charge in real time, making the collections process highly effective and consistent.

Treatment staff are compensated for a portion of their normal per-treatment rate, using the funds received by the cancellation program. Out of the $40 received by the spa for a cancellation, the employee who lost the appointment receives $25. The rest is used by the spa to defray the administrative cost of the program, not to mention payroll burden on that $25.

By stabilizing employee earnings, the spa can establish its role as an employer of choice. A good cancellation management program produces a genuine win-win!

PRIVATE THOUGHTS: NEW THINKING ON PRIVATE BRANDING FOR SPAS

2007-03-26T18:12:00.000-07:00

Following is a recent column I wrote for American Spa magazine's "Business Builders" column. Wynne Business receives many questions about private labeling, a tremendous hot-button topic in the industry. We also deal with the topic in depth in our Real World Startup Workshop. As well, our Spa Directors' Management Intensive always includes a lively conversation about the pros and cons of private branding.

“Branding” is the marketing buzzword of the decade, and a process that business experts consider essential to success. Our lives are touched by iconic brands such as Apple, Nike,
Harley Davidson and Coach, and as entrepreneurs we dream of creating a household name of our own. Brand-building in a spa requires branded products and services. But whose? As a spa consultant, I’m constantly asked by my clients which brands I think are the best. The question seems perfectly reasonable, save for one thing. If you spend all your time building someone else’s brand, who’s going to build yours?

Think for a moment about Target’s branding strategy. The democratization of style and design is Target’s brand promise. It offers enticing private brands created by household name designers—but unlike traditional retailers, these brands are exclusive to Target. What a strategy!

Now I’d like you to think about the day it’s time to retire. Your business valuation is probably not going to be very impressive; this is the service industry. What do you have to offer that potential buyer? Brand equity. Customers who are loyal to your company, its products and services.

A real brand is more than a sum of its operating parts. It has a life of its own.
A great spa brand offers unique, proprietary experiences that customers can’t have elsewhere. And contributing to those unique experiences are great products that they can’t buy elsewhere.

Many of our industry’s manufacturers understand branding far better than the spas they serve. If you’d like to carry certain prestige brands, they require that you include some of their proprietary services on your spa menu. This is brilliant branding—for them! But when Prestige Brand has installed their proprietary services on the menus of both you and your competitor, how will you differentiate yourself?

Here’s another common scenario. Spa X retails a popular product brand—we’ll call it Myrtle’s Miracle. As estheticians come and go at Spa X, they’re “pollinated” by Myrtle’s Miracle, and then one fine day, they take their brand loyalty with them to Spa Q, their next destination. One can virtually map the “explosion” of former estheticians using MM from its epicenter at Spa X. The market is eventually awash in a profusion of competitors selling the same product—Myrtle’s Miracle. The various parties content themselves with a smaller slice of the same pie.
What if, instead, Spa X sold their own private Brand X, which was exclusive to them? When Susie the esthetician heads to greener pastures, Brand X, happily, does not go with her. Clients of Susie’s who love Brand X still visit the spa to buy it—making it easier to Spa X to woo them back. To make it easy to keep Brand X in its clients’ hands, Spa X also retails its exclusive Brand X in its online store, eventually creating a following for the product in people who have never even visited the spa. When it’s time for Ms. X to retire, and sell her company, she has a true asset in Brand X.

Many of my startup clients feel they’re not “ready” for a private brand when they first open their doors. I tell them if they’re afraid to put their name on a bottle, they’d better not put their name on a building, either. Many of my turnaround clients feel that they can’t give up the support they receive from their brand. Support is an area where brands truly shine. But that support can come at a tremendous cost.

Exclusivity is one of the two key benefits of private branding. The other is profitability. I’ve yet to learn how or when it was decided that spas should receive 50% gross profit (or less) on products that we sell. Oddly, no manufacturer I’ve ever asked about this has been able to tell me why; it’s been industry standard for so long. Back in the days when our industry was comprised of mom and pop salons with proprietors “behind the chair,” and independent operators or therapists renting rooms, 50% gross profit worked fine. In today’s high-overhead spas that pay 10% retail commission to employees, it doesn’t pencil. At Preston Wynne, if a manufacturer can’t deliver at least a 60% gross margin, I just can’t afford to carry their product.

As a one-time owner of a private label company (spun out from Preston Wynne in 2002), I might not appear to be the most objective person when it comes to the spa industry’s private label-vs.-branded debate. But as a spa operator, I use a very objective measure when I compare the benefits of private branding—my profit and loss statement.

Much like the generic food companies that sprung up in the 1980’s, private brand manufacturers in our industry at first struggled with the perception that their offerings were sub-par. And to be frank, sometimes they were. The quality of private brand products has steadily climbed in the 20-plus years I’ve been in business, and options have expanded. Through careful research I’ve been able to hand-pick a collection of wonderful suppliers whose formulas consistently delight my guests.

The private label trend is growing—as more professional managers bring best practices from other industries and bump their heads against our industry’s notoriously low profit margins, private label sales have steadily climbed. To many of the “outsiders” I’ve consulted with, private label is a foregone conclusion. They can’t make their business plan work without it. Unlike the estheticians that fell blindly in love with Myrtle’s Miracle, their first priority is making sure that their business is healthy and profitable.

But wait. You’ve probably talked to spa owners who have dabbled with private brands and insist that they “don’t sell.” This actually translates to, “My staff doesn’t sell.” (This in turn translates to: “I don’t know how to motivate my staff to sell.”) Whenever Wynne Business does turnaround work with a spa that is not selling well (with a retail ratio—the percentage of retail sales to total sales—below 25%) they insist that their branded products sell the best. Of course they do!

A private brand product line does best in a spa where the brand—the company—is respected and supported by its employees. A private brand does well in a well-run organization. Private branding is not the panacea for poor management, or lack of management. In a weak organization, a strong outside brand may actually provide some of the support, structure and vision that’s lacking in management. This is an appealing proposition for many technicians-turned-managers who lack the skill or even the will to manage their spas and their retail programs. Ultimately though, branding autonomy gives the company the best chance of maximizing profit and value.

I can vouch for the fact that retail sales in the spa environment have become more competitive and more difficult in the past ten years. Our spa’s customers are bombarded by companies marketing skin and body care products and cosmetics, including department stores (your number one competitor) drugstores (number two) infomercials, specialty retailers like Sephora, multi level marketers, natural foods stores, even doctors.

Yet the fact remains that the primary influencer of a spa guest’s beauty and self-care purchases is their service provider. It’s a powerful sales platform. In the treatment room, thanks to the magic of the spa experience, and the rapport and trust you’ve built with your guest, you are in charge. That means your brand has the opportunity to compete, head to head, with the best-marketed lines in the world, and win.

TODAY’S OPTIONS IN PRIVATE LABEL

1. “Over label” private label. These collections of products come ready to sell, in generic packages that are often clean and attractive; you add your label. You review the vendor’s stock offerings and pick the products that you like best.
With over label, someone in your operation literally applies your labels to the products. CBI Laboratories, Coats Aloe, YG Laboratories and Manna Cosmetics’ Esthetic Research Group all market “over label” products. If you are buying large quantities you can silkscreen containers instead; however, the minimum orders for most spas are prohibitive.
2. Semi-custom, or “custom label” private label. Again, you choose your products from a library of finished products, and the manufacturer labels them for you. These products come to you ready to put on your shelves. The semi-custom option may include the opportunity to re-name products or even rewrite label copy, which can increase your house brand’s distinctiveness. New, high tech printing processes have made custom labeling inexpensive and fast. Some of these manufacturers have small minimum orders.
Branded companies are also testing custom-label divisions. Maui based Island Essence provides custom-label and semi-custom bath and body products to the Hawaiian spa market, and AcquaCures, based in Hollister, California began offering its bath-and-body Passport to Beauty Collection for custom labeling since 2005.

3. True Custom Manufacturing. This type of private branding enables you to create your own formulas. You’ll choose from packaging components—bottles, jars, lids, dispensers, boxes--to assemble a collection with a specific look. Minimum orders for some packaging components can be 10,000 pieces or more. Finally, you’ll complete your product’s image with custom labels, silkscreening, or hot stamping with high-end metallic foils.
Development costs for true custom products are very high, with R & D costs of $20,000 per product or more not uncommon. One custom manufacturer, Covalence, in Phoenix Arizona, has modest R & D charges that bring custom formulation into the realm of the affordable. They also wholesale their own library of products, which can be over-labeled or custom-packaged.
Custom manufacturing requires an enormous commitment of time and energy on the part of the spa, and a champion is needed. If you’re collecting feedback from your team, you’ll need good project management tools in order to keep track of your many iterations and the outcome of each version’s trial. I generally discourage new spas from undertaking a full custom manufacturing process, or insist that the scope be very limited. Few are prepared for the cost, the time commitment, and the focus required.
Owning the formulas for your own product line, though? Priceless.

4. Hybrid Private Branding. Branded companies who pay attention to the trends have seen the private label juggernaut coming. Some are now engaged in co-branding with prestige spa brands, a relationship that can hopefully provide the best of both worlds: exclusivity, and brand-building for both parties.

MAKING ONLINE REVIEW SITES WORK FOR YOU

2007-02-23T14:44:00.000-08:00

In a recent American Spa magazine "Business Builders" column, I described our company's experience with the growing phenomenon of online review sites. I have a confession to make. My feelings about the fastest growing and arguably most influential online review site, Yelp, have changed. In a plot twist straight out of a romantic comedy between totally mismatched, star-crossed characters, I have...gulp...fallen in love.

How did this happen? For a couple of months, anyone who talked to me about marketing was likely to hear my rant about the dark side of user-generated-content.

The key to this 180 degree shift lies in the ability Yelp gives you to contact folks who review you. After I had a number of positive exchanges with my critics, the frustration abated. I realized that this was no different than the "real world", in that I could communicate with clients and do what was needed to make them happy. And ironically, the more I interacted with Yelp users, the more I came to appreciate the potential of this medium and the value of this group of consumers. I stopped being a Review Site Victim.

The Yelpers (as they’re known) we invited back to the spa invariably posted amended reviews that also discussed our commitment to customer service. They are also self-selected as a group of people who enjoy telling others about businesses that they like. If we can make them happy, we have harnessed a very inexpensive marketing asset. The traffic to this site is staggering.

Here’s how to make yourself the online reviewer’s spa of choice:

1. Respond promptly to all reviews, good, bad and indifferent. (Yelp has a contact interface that preserves their anonymity if they so choose, but still lets you get in touch.) Thank the reviewer. I have given upgrades and perks to people who have given us a particularly nice review, and let them know I’d like to meet them when they visit the spa again. Reviewers are used to no response from businesses. Show them some love! I think hearing from us also makes them more responsible reviewers. Suddenly, they’re reviewing the businesses that are the livelihoods of real people, instead of a faceless corporation.

2. For negative or indifferent reviews, offer to rectify the situation and enlist the reviewer’s help in improving your service. We have them Mystery Shop us, as our guest. This also educates them on the complexity of delivering great service and makes them a more informed reviewer. (It also sharpens their eyes when they visit a competitor who does not do all the things that we do to ensure a great customer experience!) Without exception, the “returning reviewers” who originally posted negative reviews have amended their online reviews and praised our customer service. Not one of these individuals was asked to change their review as a condition of their service re-do. We expected the results to speak for themselves, and for the reviewer to do the right thing. So far, they have. (Only one reviewer I've contacted has eluded my attempts to make her happy--refusing to respond to my invitations to return as our guest. This individual had not had a service at our spa in five years.)

3. Join the review site and write reviews (no, don’t review your competitor’s spa!) This makes you a member of the community, a comrade in arms. As a fellow Yelper, you have some “street cred” with this new generation of reviewers. The more useful and interesting reviews you write, the more respected you'll be as a peer.

4. Finally, you can now participate in Yelp’s “featured business” advertising program. Yes, I am giving them my money! (That's true love.) This enhanced listing includes a detailed description of our company and a slide show of photos from our spa, which appears when someone searching for a spa in our area clicks on our listing. Sweeter still, my ad shows up when they click on our competitor’s listings! With our listing, I've included a “personal message” and a photo of myself, further cementing the personal connection with the reader.

The happy epilogue: my staff are talking about the new customers they're getting from Yelp. We've also instituted a practice of having our management team members call all new customers 48 hours after their first visit to the spa, to see if we have met their expectations, and to learn if we could do anything better. Rather than wait to have a disappointed customer post a review, we're being more proactive than ever before.

As good as we thought our customer service was, Yelp has helped us make it even better. What's not to love about that?

New Year's Evolution: Getting Focused

2007-01-02T12:32:00.000-08:00

There’s a lot of interest right now in a concept called the Law of Attraction—a principle that states what you focus on, you get.

Many of us are in our spas today, our first work day of the New Year, vowing to do things differently in 2007. Making resolutions, or goals, is part of the process of focusing on what you want. But as we all know too well, that’s the easy part.

Everyone uses different tools to help them get focused. Spa operations, in their lovable, chaotic way, have a unique way of de-focusing us on those long term, big ticket goals. By now (it’s noon on Tuesday, January 2) you may well have been thrown headlong into something called “the tyranny of the immediate.” An emergency, a crisis, an operational hair ball that requires untangling.

Stuff happens.

Here are some simple techniques I’ve learned for keeping my important goals in focus:

Morning Routine:

Start your day by reviewing your big goals. You’re fresh and energized at the beginning of the day. This is the perfect time to focus on those high-value goals, like launching a new sales training program for your estheticians. Make time for this every day. This is an “important but not urgent” activity that is crucial to success.

Avoid the trap of starting your day with e mail! This is one I learned from Verne Harnish, the great business expert and author. When you start your day with e mail, everyone else’s priorities become yours—you start in a reactive, not proactive state. Schedule time for your e mail and leave it alone in between. It will eat your day and leave you little to show for it.

Create a fresh, reprioritized new “to do” list every day.
This is one of the best ways to focus your attention. There is no perfect formula for a daily list format—it’s whatever works for you. Over the years, my daily list has turned into an Excel spreadsheet, where I have my “projects” listed along with the next three action items for each. This works better for me than a linear list, because it keeps my to-do items in categories and my deliverables in manageable numbers. I update it every day at the computer and print a fresh copy. During the day, I scribble messages and notes on it—Post It notes get attached, too. Everything I need to do ends up there, and only there. That’s key. Then…

Evening Routine:

1. Transfer “to do” items from your list to your calendar by day’s end.
Nothing is more demoralizing and de-energizing than a list of things to do that’s as long as your arm and keeps growing. Assign dates and times to as many of your to-do items as you can. It will give you a much more real sense of how to get things done—and what you can’t do. (You might start saying “no” to activities that are not high-return!) Your goal should be to keep your list as short as possible.

2. Give yourself credit for your daily accomplishments. No, the action items never end, but that’s no reason to focus only on what you haven’t done. Make sure that part of your end-of-the-day ritual is focusing on what you did accomplish that day. Write it down.

Focus is the most common trait of very successful people, regardless of their industry. So now when stuff happens—massage therapists call in sick, shipments get delayed and equipment breaks—you’ll still have spent “quality time” with your key goals every day. And that, day by day, becomes your New Year Evolution.

Food for Feedback

2006-12-19T15:38:00.000-08:00

FOOD FOR FEEDBACK

I don’t talk to many spa owners who feel their customer service is sub-substandard. Many already use customer-feedback tools, including customer comment cards and even in-house or professionally conducted surveys. The more vigilant spas are monitoring their buzz on online review sites like Yelp! And Citysearch. According to the University of Michigan’s American Customer Satisfaction Index, customer happiness is at its lowest point in two years.
Getting into our customer’s heads has turned into an obsession. What are they thinking? What are they saying?

Turns out, there’s one simple question that will not just tell you what they’re thinking, but predict its impact on your bottom line. A system called the Net Promoter Score measures the likelihood of a customer recommending you to others—which proves to be a very accurate indicator of business success.

Fred Reichheld, a business consultant and author, recently released his book The Ultimate Question, which explains the Net Promoter Scoring system. The system, which the author has used for three years, was also described in an article in the Harvard Business Review last year.

The question is very simple: “On a scale of 0 to 10, how likely are you to recommend us?”

A score of 9-10 indicates a delighted, loyal customer who is willing to promote your company. 7-8 suggests satisfied customers who are “passive”, or non-promoters, and 6 or below is an “active detractor,” someone who is promoting you to others—in the wrong way.

In other words, the only customers who will build your business are the ones who give you 9’s and 10’s. To get your Net Promoter Score, you subtract the percentage of detractors from promoters. Reichheld says that most companies he studied actually scored between 10 and 20, with the “A Players”, appropriately, racking up scores over 80%.

The author tested many similar questions before hitting on this one. For some reason, the Ultimate Question crystallizes feelings about customer satisfaction almost perfectly, creating a highly accurate indicator of a company’s ability to win new customers and retain existing ones.

Best of all, it’s simple. You can implement this system tomorrow at your spa. Place cards with this question at your front desk and have your concierges graciously invite each departing guest to complete one. It will take about ten seconds. We added two questions, with the same 0 to 10 scale, asking guests to rate their individual therapist’s “recommendability” and their satisfaction with our facilities and amenities. We also give them a space for comments under each. This helps us pinpoint areas for improvement. We also discreetly note the guest’s name on the card after they’ve departed, so we can address specific situations that need to be rectified.

We review our score at each week’s management Progress Meeting.

If you’re new to customer feedback tools, take heart. For years, I ran my spa without explicitly asking for people’s honest feedback. It’s easy to get complacent, or assume you’re doing the best job you can. No one wants to go looking for trouble. But like any long-avoided cleaning chore, once you roll up your sleeves you’re glad you got into it. Though no one likes to be criticized, “outing” customer problems and frustrations ultimately empowers you and your team, improves your business and increases everyone’s confidence.

I’ll never forget reading our early comment cards—it wasn’t fun, but I was grateful to finally have the bag off my head after five years in business! The first time you pick up a stack of comment cards from your front desk, you may get butterflies. Then it becomes routine, even something you look forward to. Customer feedback provides the crucial course corrections you need to make sure you keep your business steaming confidently through the spa industry’s choppy waters.

Visit netpromoter.com for more information on how you can use the Ultimate Question in your company.

Welcome to the Wynne Business Spa Industry Update!

2006-12-13T11:37:00.000-08:00

Welcome to the Wynne Business blog--I'd like to involve you in a frank and engaging conversation about the latest business thinking, trends and market conditions in the spa industry. Each month, if not more often, I'll share my thoughts about the issues that impact spa operators--from small to large. As an avid consumer of conventional business media, I'll also pass along resources and ideas that I find especially useful. (Check out this month's issue of Harvard Business Review for an excellent article on strategies for dealing with low-cost competitors!)

THE BAY AREA SPA LEADERSHIP ROUND TABLE DEBUTS IN JANUARY!
I'm very excited to announce the launch of the Bay Area Spa Leadership Round Table on January 31, 2007. If you'd like more information on this quarterly Round Table, designed to disseminate best practices and provide cutting-edge management intelligence, please contact Program Host Dionne Fountain at df@wynnebusiness.com. Membership is open to spas with annual revenues of $1 million or more, and a different member spa hosts the meeting each quarter.

The three hour format includes a group round table discussion, an expert presenter, and a "case study" in which the host spa can present an idea or issue they'd like group input on. Meetings run from 9:30 a.m. to 12:30 p.m., and kick off with a continental breakfast at 9:15 a.m. Annual membership will be just $100 for four meetings, and up to two representatives of the member business management team may attend.

The Bay Area Spa Leadership Round Table is sponsored by Wynne Business and Spa Trade.