The Spa of Tomorrow

Do you wonder what spas may look like in the next 5-10 years? In this article, James Bremner, Senior Director of Marketing for SpaBooker, provides insight into how he envisions the customer journey may change, and it’s pretty exciting.

Engagement, relevance and immediacy: these are three words that are going to be central to consumers in the not-so-distant future. You may have seen the Steven Spielberg film Minority Report, where optical scanners read retinas and display advertising targeted specifically at that person. Well, that type of personalization and ‘suggested sell’ is not far away. The data is there, it needs extracting and then analyzing, with a healthy dose of intelligence thrown in.

‘Suggested selling’ analyzes a customer’s information and determines which retail product to suggest to that person. It takes all of their available information into account – age, what they’ve bought in the past and which services they usually have. It knows what treatment they just had, which product(s) are ideal post-treatment, and applies algorithmic calculations to pick appropriate products. In the future, this calculation may trigger a video to be displayed at the point of sale, inviting the customer to buy the product, possibly at a discount. It’s an incredibly powerful way to drive greater retail sales.

Now imagine the customer is part of a loyalty program and has an electronic loyalty card. The card has an RFID chip in it, which is essentially a radio transmitter. The computer at the point-of-sale picks up the radio waves, identifies the customer, plays the suggested selling video, sends some information to their smartphone and adjusts their loyalty points automatically. It may also check them out and apply the transaction to their account.

Let’s add another possibility; this time, exactly the same thing happens but the customer is prompted to rate the experience on their mobile phone. The review is added to the database, providing great feedback and allowing the spa to make the suggested selling algorithm smarter and to offer other services through various forms of marketing.

Social media may well play a part in the experience too. The customer’s review not only helps the spa but via services like Foursquare and Yelp, also helps the customer’s friends. This will develop into trust networks, allowing friends to decide which friends’ judgments they value most. They may even have access to promotions through these trust networks, creating more viral connections at every stage of the customer journey. There are endless possibilities as these types of connections expand and compound; like connecting these location-based mobile services via apps and websites with direct links to online booking and special discounts. Actually SpaFinder and SpaBooker combine to offer that right now!

This technology isn’t all here today, but you can certainly perform your own suggested selling right now. Observe your customers, find out who was buying a product regularly and then stopped, and ask them why. Offer them a small discount to start buying from you again. Try and up-sell your customers to the next price point . You can do all of this now with targeted marketing and you can even use social media to create groups of customers.

Watch this space for feature news as SpaBooker is continually innovating and thinking of new, bright and interesting ways to make your life easier and your businesses more profitable.

Global Spa and Wellness Briefing Paper: Part 2

Last week, SpaBooker VP of Operations, Dan Chandre, explored the impact of the recent economic climate on the spa and wellness industry in the United States. Here, Dan looks further at some of the statistics and innovation in the industry.

What would you consider to be the most interesting statistic to come out of your region in the past 12 months?

The most intriguing, and at the same time troubling, statistic that has emerged in the US spa and wellness industry in the last year has been the overwhelming percentage of single item transactions. Looking at a sample size of over 800 operating spa locations, over 80% of the transactions that occurred over the past 12 months only contained one ticket item[1]. The implications of a statistic like this point directly to the much discussed economic situation and reveal two key conclusions.

First, spa and wellness organizations in the US are doing a poor job of up selling add-on services to compliment the primary treatment. Additionally, the overwhelming majority of the single item tickets are for only the treatment performed, meaning that spa and wellness facilities are not doing a sufficient job at adding retail items to tickets. The importance of a successful retail selling operation is well documented, and adding retail to less than 20% of treatment tickets is not a positive statistic.

Second, the high percentage of single item transactions reflects on consumer buying habits in the spa and wellness arena. Ultimately it is the consumer that makes the buying decision, and this statistic implies that the consumer, while still consuming to a degree, is focusing on the core of their spa and wellness experience and not purchasing peripheral items. The silver lining is that it leaves room for improvement once the consumer loosens the proverbial “purse strings”.

What innovative things have you seen in the spa and wellness arenas in your regions this year?

One innovative trend that we’ve seen in the spa and wellness arena in the US is the growing importance of offering online booking for spa services. As simple as it sounds, the spa and wellness industry has been well behind the rest of the hospitality arena when it comes to offering the convenience of online booking to their customers, and in kind, customer adoption of this method of booking. In Q1 of 2009 across all businesses offering online booking on the SpaBooker system, there was an average of 10 online bookings per month per spa. In Q1 of 2010, that number has jumped to 29 online bookings per month per spa[2]. That’s a 190% increase in the number of online bookings made per spa per month with online booking available.

And what have you done to innovate your own business recently?

Since SpaBooker is an online, SaaS (Software as a Service) tool for spa and wellness companies to manage their business, we’ve focused on helping these businesses more easily connect with the online consumer, and more specifically, the mobile online user. The first avenue we took was to develop the SpaFinder iPhone Application, which allows consumers to search for spas directly on their iPhone, and through integration with the SpaBooker Platform, actually book appointments in real-time. This is a revolutionary step forward for the spa and wellness industry as it brings the concept of real-time booking to the fingers of the world’s most technologically savvy individuals. Secondly, we have optimized the online booking engines of all of our clients to adapt to mobile devices and provide an easy-to-use booking platform for all of our partners. The significant innovation in this regard is that we’ve done the mobile adaptation on their behalf so the individual businesses don’t need to commit time and expensive resources to have it done.

Tuesday Tip Celebrations!

It’s a year since we started the Tuesday Tip. Each week we send out an email to all our partners with a slice of information about how they can enhance their SpaBooker experience. It might be a guide to setting up a popular feature, or the answer to an often-asked support query. Whatever the topic, the Tuesday Tip is opened and enjoyed by our partners all around the world.

The Tuesday Tip this week celebrated its birthday by highlighting how to send birthday emails from SpaBooker. To continue the celebration, the SpaBooker Blog pays homage to the Tuesday Tip by providing some birthday tips of our own.

We recommend you start celebrating clients’ birthdays in three great ways. Each provides a really effective way to drive business and reward your best customers.

1. Happy Birthday specials are easy to set up with just a few steps. Visit System Settings>Specials>Add Special> Follow Steps 4-8. Pay special attention to Step Three, where you will decide how many days before and after the customer’s birthday the special can automatically be applied. When all the steps are complete, select Save.

2. Click here to see the Tuesday Tip’s description of how to send a Happy Birthday email in SpaBooker.

2. If you want to send your clients a more personalized email, use MailChimp to create a birthday template and send an email blast to a custom list. Monthly birthday promotions are great for increasing the frequency of visit. If you’re not using MailChimp already, contact us to find out how to add it to your SpaBooker account.
3.Watch out for those Birthday cupcakes with SpaBooker! In the Details tab of the customer profile, use the Birthday field to record the birth date. SpaBooker will automatically place a cupcake symbol on the appointment and next to the customer’s name prior to and after the actual birthday.

We do love feedback, so if you have topics you’d like to see the Tuesday Tip cover, please let SpaBooker's Partner Success team know.

Happy celebrating,
SpaBooker Blog

Robert Scoble Talks with SpaBooker's Own Daniel Lizio-Katzen

Earlier this month SpaBooker's managing director Daniel Lizio-Katzen sat down with building43's
Robert Scoble to chat about the technology powering the SpaBooker platform and some of the
new products in the pipeline. 

Global Spa and Wellness Briefing Paper: Part 1

The Global Spa Summit in Istanbul, Turkey explored the impact of the recent economic climate on the spa and wellness industry in the United States.SpaBooker VP of Operations, Dan Chandre, discusses the very clear and dramatic effect of the economy on the industry.

How has the recent economic climate affected the spa and wellness industry in your region, both negatively and positively?

The recent economic climate has had a very clear and dramatic affect on the spa and wellness industry in the United States. The economic crisis that all major industries experienced in the United States was exaggerated in the spa and wellness arena due in part to the period of time that immediately precipitated the collapse. Prior to the economic downturn, the spa and wellness industry in the US had experienced its most prolonged period of expansion and economic success. This, combined with the fact that most consumers budget for spa services comes from their disposable income, exacerbated the economic contraction that resulted from the poor economic climate. The combination of an expanded marketplace and the economic downturn resulted in distinct primary and secondary reactions in the spa and wellness industry.

The primary reaction of the spa and wellness industry in the US was an immediate market contraction and correction. In particular regions of the US, particularly Southern Florida and Southern California, the number of businesses in our industry had grown by so much that the supply greatly outweighed the demand. In areas of overcapacity such as these, the market saw immediate business closures throughout 2009. Of the businesses that survived in the US, over 45% reported reduced revenues compared to 2008.1 To survive, business owners needed to adapt to the economic climate.

One of the most prevalent negative effects of the recent economic climate is the propensity of spas to routinely and deeply discount the price of the services offered. Discounting is a slippery slope and one that has potentially irreversible effects. The industry is continually trying to strike a balance between rising overhead and labor costs and shrinking profit margins. Discounting only narrows the available margin for business owners. Furthermore, wide-spread discounting of services weakens the industry on a whole by devaluing not only the treatment, but also the provider performing it. Once an industry conditions its customers to expecting discounts as a pricing philosophy, it can be nearly impossible to revert to “rack rate” pricing.

Even when faced with challenging economic factors, the best and most industrious business owners find ways to steer through the difficult times and emerge on top without destroying the value of the services they are providing. There has been a short term shift from concentrating on the acquisition of new customers to focusing on the retention of existing customers. The spa and wellness industry in the US has reverted back to focusing on the core customer; the customer that existed prior to the massive expansion.

The shift to retaining core, loyal customers consists of three primary manifestations. The first is the growth and emergence of membership programs that focus on providing value to clients who are already consuming services on a regular basis. Contrary to traditional membership models that are designed to benefit the business through breakage, these membership models are designed to provide intrinsic value to the core consumers that are already spending; essentially providing them with added incentives to continue their spending habits and even increase their frequency of visits. A second trend is the increase of loyalty programs specific to spa and wellness operations. A parallel can be drawn to other hospitality industries, such as hotel and airline, which have been years ahead of spa and wellness with regards to loyalty and point programs, but to which our industry is now catching up. These programs provide an excellent and proven way to encourage customer loyalty and repeat spending. Lastly, more than ever before, spa and wellness businesses are leveraging existing clients to be the source of new clients. By structuring beneficial referral programs, spa and wellness businesses are able to capitalize on the social networks of their existing core clientele to grow their business.

Look out for second installment of Dan Chandre's Global Spa and Wellness Briefing Paper in the coming weeks.

Compensation Conundrums: Can you really afford percentage-based compensation plans?

In a recent Tuesday Tip to our partners, we highlighted the need to accurately reward staff as it is highly motivational, but can also have consequences if not structured correctly. Here at SpaBooker, we were fortunate recently to have one of the industry’s most prominent consultants, Lisa Starr of Wynne Business, come and talk to us about that most crucial of business decisions – how to structure compensation for technical staff?

Years ago, with the advent of salons morphing into spas, percentage-based compensation plans became the norm; and the rates can vary wildly by region as well as by individual. So, how do you plan and manage your overhead when the variables are so significant? Well, unfortunately the answer to that for many spa and salon businesses is that they can’t. Often, paying staff too much of every dollar of income, and tying that income to the price charged to clients, has led to businesses being unable to make a profit and the long term impact of this is terminal for the business and therefore for the staff’s employment – not good for anyone.

Lisa suggests that salons and spas willing to buck the trend and pay a fixed dollar amount per service can reach a win-win situation; fair rates of pay for technical staff based on their skill set and knowledge, and the ability to charge what you need to for services without forever sharing a disproportionate amount. Owners who structure their business this way can afford to hire excellent customer service staff and employ multi-faceted marketing plans, ultimately leading to longevity and growth for both the business and the employees.

If businesses take the time to calculate their operational overheads and deduct them from gross profit, the resulting amount should not be more than they are paying employees. Sounds relatively basic , but it’s a practice that is not necessarily followed in every circumstance and Lisa’s mission is to help businesses in the industry become sustainable, profit-making enterprises where everyone flourishes.

Once you’ve done this, you can hire a new employee with confidence and present him or her with a more specific compensation plan that is built around weekly or annual earnings, like most other jobs in the world. We know there is a trend for a trained professional to walk into an interview with a proposed commission percentage, which can even exceed 50%. However, now you can know exactly what you can afford to pay employees regardless of their proposal. Ideally, these programs have tiers or levels that will allow technical staff to move up upon meeting specific performance criteria that are within their control, thus providing a career path where increases in compensation are self-generated.

The wrong compensation plan may enrich your staff but can put you in the poorhouse. Using advice directly from Lisa Starr, we have some questions for you that you can use to make sure your compensation plan is on the right track:

• Does your compensation plan drive the right employee behaviors?

• Does your menu reflect the ability to up sell and increase average ticket?

• Are your performance appraisals tied to financial results?

• Are you in control of your labor costs?

If you answered no to any of these, you may benefit from taking it back to basics and calculating exactly how much you can afford to pay your employees moving forward.

About Lisa Starr:
Lisa M. Starr has almost 30 years of experience in the beauty industry, and is currently the senior East Coast business consultant to new and existing spas and salons for Wynne Business, a leading spa consulting company in the US. Her knowledge and experience include business operations and finances, marketing and advertising, inventory management, human resource development, and business process improvement.

www.wynnebusiness.com
www.spatrade.com

Want to go viral? SpaBooker makes it much easier than you think

Thanks to everyone who joined us for the Social Media Webinar – it was a big success and thanks to everyone for the great feedback. In fact, the average rating of the webinar by our attendees was 4+ stars (out of 5).

If you would like to watch the webinar on social media please click here (~25 minutes).

SpaBooker’s managing director, Daniel Lizio-Katzen, began the webinar by highlighting the size and growth of social media channels such as Facebook and Twitter. Facebook is certainly the most dominant player, but Twitter is growing quickly, with more people and businesses creating Twitter accounts every day. We ran a poll at the start of the Webinar to see just how many attendees were using Facebook and Twitter.

Take a look at the pie-charts below. You’ll see that, as expected, business use is lower than personal use, especially with Twitter. But don’t forget that the best way to promote your business is to have your messages ‘go viral’. That’s literally the spread of the message across friends of friends of friends etc… On Facebook it’s achieved by hitting ‘like’ and on Twitter by retweeting (RT). So, if you use your personal accounts to retweet and like Facebook posts, your friends may pick up on it and in turn pass it on. If their friends do the same, you’re starting to really amplify your message and that’s viral marketing!

During the Q&A, we had some recurring questions that may be useful in optimizing social media networks:

In order to connect my Facebook with other applications such as SpaBooker, where do I find my Facebook ID?

To find your Facebook page ID, simply go to your Facebook page. Next, hover over your profile picture. In the bottom of your browser window, you will find the page address, containing your ID. It will look similar to this:

The number following the equal sign is your ID.

How do I attach incentives such as promotions to people who book directly through Facebook or Twitter?

Using SpaBooker, you follow 6 simple steps to connect promotions with booking links listed on Facebook and Twitter:

1. Click on System Settings

2. Go to the “Specials” link

3. Find the Special you plan to promote

4. Select the “Promote” Link

5. In the window, you will find the short URL to provide for booking. Also, you can create a customized message to accompany the Tweet or posting.

6. Select “Send Now”

7. When a customer clicks the link posted to Facebook and Twitter, he or she will be directed to the booking engine and immediately notified that the promotion has been applied.