best practices ... marketing
If you're following the other Best Practices such as proper training and attending to customer service, you're already making a lot of marketing inroads. Your staff and top clients are your best marketing vehicles, say the experts.
Referral programs are still on the front burner this year for both attracting and retaining clients. "Through referral programs, clients should be able to accumulate points for 100 percent of the cost of a service," says Canavino. "I work with one salon that offers 25 percent off a service for each new client they refer. Refer four new clients, and receive a full service. This is an incredible tool for the new person on your team."
Preston supports a different type of referral model that relies completely on the strength of the relationship with the client and doesn't cost the spa a penny. "We already know people will refer with no reward whatsoever," he explains. "Why do they do that? Clients refer for emotional benefit. With that in mind, the easiest way to reward people for referring is for technicians to tell them how much they sincerely appreciate their referral.
Additionally, Canavino says spas get marketing buzz from:
€¢ "on hold" messages informing callers about special promotions.
€¢ newsletters and e-mails that highlight seasonal services and give clients a reason to come in.
€¢ sending out PR releases to consumer magazines. It takes only one mention in Allure or Lucky to get your phone ringing off the hook.
Don't neglect your website, adds Preston. Internet marketing continues to be an easy way to sell gift certificates and post promotions. Papageorgio suggests capitalizing on the new emergence of wellness as clients' motivation for choosing spa services. "By marketing the wellness concept, we can change the perception of spa services—they're not a luxury, but a necessity," says Papageorgio, focusing on the huge potential for attracting first-time clients. Calculate your marketing efforts as carefully as you plan the rest of your business, say the coaches. "For every piece of marketing, you need a meeting, a training and a launch," remarks Canavino. "Today we're very serious businesses; we're no longer the little spa on the corner."
best practices ... financials
All the effort you put into other areas of the spa won't mean much if your business is not in good financial health. "Hire a financial coach, take an online course, read books—find some way to become financially literate," advises Ducoff. "Ask your accountant questions about what each line item means so that you really understand the reports."
Ducoff says that every owner should know his income and expense expectations for 12 months out. "The measure of
best practices is in the balance sheet and profit and loss statement," he explains. It's all in black and white. With the P&L statement displaying income and expenses over a period of time and the balance sheet offering a snapshot of assets versus liabilities, they don't let the owner slip over the border into that tempting state of denial.
"We're seeing an awful lot of salons that claim to be number one in their market and yet have 'upside down' balance sheets—more liabilities than assets," Ducoff continues. "How would you feel if your mortgage were greater than the value of your home or if you owed more money on your car than the car is worth? It's not a good place to be."
According to Minton, salons and spas have already wised up and are boosting profit levels by becoming realistic with their number one expense: staff compensation.
"Pay scales are coming down," Minton says. "Estheticians used to be less educated and work part-time, but we still paid them a commission of 50 to 60 percent. Today's commission range is more like 39 to 52 percent." The trade-off lies in the benefits packages. Increasingly, spas are offering medical insurance, paid time off and free ongoing education.
The greatest challenge in cash management may be taming the wild darling of the spa business: gift certificate sales.
"Gift certificates represent an extraordinary opportunity," says Ducoff. "I know an owner of a spa with just four treatment rooms who does $150,000 in holiday gift cards. With no disciplines in place, spas can blow through that money, and it's gone when the fulfillment piece kicks in. When you get flush with cash and you're in great shape on New Year's Eve, that's the time to sock away that money."
Sticking to a written, realistic plan for your income and expenditures for all 12 months in 2007 will keep you financially fit, promises Ducoff. "So many owners get into the ugly cycles of feast or famine, and it's all self-inflicted," he says. "Understanding numbers and keeping control of your cash are requirements of playing the game of business."