Your top business resolutions for the new year.
Here we go again with the New Year's resolution to do better at business. We say it, we mean it, but year after year, many of us have only a vague idea of what it is we're resolving to do. The spa industry is still young; it feels too new to have undergone enough scrutiny and analysis for us to learn from mistakes. Besides, how can business improve when we're at the mercy of the economy, the staffing pool, politicians' whims and, as we saw with Katrina, even the weather? If you're thinking that all sounds like excuses and lame ones at that, you're right. Like its baby boomer clientele, the spa business isn't as young as it used to be. It's matured to a point that industry observers can tell us a lot about what works and what doesn't. The consensus is good news: we actually have quite a bit of control over whether a spa succeeds or fails. Like other industries, we have a set of best practices that we can follow to ensure success and permit us to keep that resolution after all. For 2007, these are the Top 10.
best practices ... spa policies
Spas have no trouble creating policies, but enforcing them is another matter. Best practices call for written job descriptions, rules, marketing initiatives and goals. When there's a question about any of that, you can go to a file—computer or hard copy—and pull up the answer. "A lot of protocols are not written," Bonnie Canavino president of consulting firm Spa Specifics, Inc., laments. "They're assumed; it's as if they're in the air."
Notes industry consultant Susan Papageorgio, founder of Inspired Learning, "Benchmarks, success profiles—anything you have that's written down helps. People need to be told things over and over."
Recently an owner asked Canavino to provide training for her reception staff, but the salon had no written detailed job descriptions. "People must know what they're training for," says Canavino. "But at that salon they had no manual. It's a huge problem in our industry."
Without duties spelled out, it may never occur to estheticians to go out into the hair area and cross-market their services. They may not even walk the finished client to the reception desk and show her retail products. If these requirements are written down, however, there's no question.
All written material must be consistent with the spa's culture. "The more you can put things into patterns, the easier they are to manage," says Papageorgio. "Then your team knows when things are going to happen; there are no surprises."
best practices ... training
New estheticians are more sophisticated and educated than ever. "The schools have really stepped up to the plate," says Papageorgio. "Schools are running better business models and turning out better graduates." However, this has put pressure on spas, she continues, because today's new hires have higher expectations for what comes next.
"Today, salons and spas must offer a structured, organized way of training new people," Papageorgio explains. "You can hold weekly classes or assign the new person to a mentor—however you want to do it. Spas that do well with this concept are the ones that flourish. Your number one commodity is your people. Invest in them."
Canavino suggests incorporating a minimum 30- to 90-day entrance program to take new technicians "from license to confidence." It's not enough to bring in a manufacturer's educator to do product knowledge, she adds. "Someone just out of school doesn't know your culture, may not have all the skills and probably doesn't have the confidence."
Training doesn't end with the entrance program, either. Says Canavino, "What doesn't work is training staff and just expecting it to happen—without having a manager to make sure they're carrying out what they learned."
Papageorgio agrees that the managerial staff must conduct ongoing, if perhaps informal, coaching throughout the staff member's career. "Coaching opportunities are everywhere," she says. "Just walk onto your floor and notice ways you can direct your staff's performance. You can have a coaching conversation about any simple thing; you just clarify what you expect from the person. People want to follow direction, and doing this continuously means you won't have to give redirection."
Supervisors tend to let things go the first time or two and only intervene when the staffer has done something wrong over and over. By then, the owner is exasperated. Best practice is to bring up the issue immediately. "You're not allowed to save up," says Papageorgio. "That's when it becomes conflict."
It's also best to be direct; the management person who notices the problem should be the one to mention it. Says Papageorgio, "When the manager informs the employee, 'The owner saw you leaving your towels around,' the staffer becomes defensive, develops a 'bad attitude' and sends the whole thing into a downward spiral."
Spa staff can be a greater challenge to monitor than salon staff. Notes Canavino, "Unlike supervising a hairdresser, you don't have the advantage of seeing spa staff work. They close the door." That's why it's important to include retailing and marketing in your initial training program and follow their client retention numbers closely.
best practices ... management
Everyone on staff must be onboard with your policies and precedures. Here's where spa owners tend to weaken, watering down the rules to "if you have time and feel like it." This staffer's trained in European facials, that one's your most requested massage therapist and the other one's an aromatherapy expert. So what's the big deal if they arrive late, take a pass on staff meetings or refuse to sell retail products? It's a big deal because it takes only a pinch of attitude to poison a whole soup of discipline.
"Without standards and consequences, the enforcement simply turns into nagging," says Douglas Preston, a former spa owner who now coaches salon and spa owners through his consulting firm, Preston Inc. "Staffers learn very well how to let an owner's nagging roll off their shoulders."
Preston advises owners to make everything—including expectations for growing their business—crystal clear right from the beginning. "It all starts with the hiring," he says.
"Explain that the job requires people to have a license, show up on time, look good, have technical competence—all of the basic requirements. On top of that, inform them that another minimum requirement is productivity through selling services, service upgrades and products." According to Papageorgio, that's exactly how it was handled by former Seattle multi-spa owner Gene Juarez, who told applicants, "We have certain ways we do things, and when you come to work here you agree to do things our way."
On the surface, this autocratic approach seems to be at odds with another best practice—team collaboration. Experience has shown that employees are more likely to buy into policies that they helped to create. Yet Papageorgio maintains that there's no contradiction, since a well-run business allows for every voice to be heard.
"With proper communication channels, employees can share new ideas and offer other ways to do something," she explains. "Without those channels, all they do is criticize and complain. At staff meetings, focus on how to improve things and let staffers know they really will be heard."
In fact, says Preston, a good team will feel invested in the profitability of the business. "The way to put it is that everyone here must help keep the business going," he says "When technicians fall short on business growth, owners must be prepared to lose an otherwise good employee. It's the same as if they'd failed to wash their hands between services. You must make rules and hold them to the rules."
best practices ... customer service
Clients come into the spa for all sorts of reasons—to feel better, look better, relax, rejuvenate and recharge. Now you can add a surprise addition to that list: to socialize. "The spa has become the new bar," reports Colorado spa consultant Melinda Minton. "People go there to be with friends; singles go to meet singles. This trend cuts across age groups. We don't have barn raisings, we don't do church the way we used to and our families live all over the country. People go to the spa to feel like they're part of something. That's a big switch."
One way to encourage group bonding is to do waxing out in the open. "Wax bars are popping up everywhere," says Canavino. "It's only facial waxing, mostly brows. People are comfortable with that. And it allows the spa to introduce the client to other waxing services."
One of Canavino's clients installed a wax/skin care/make-up bar in the lobby. "You can see it from every department of the salon and spa," Canavino reports. "The client can get her brows done at the bar, but has to go to the spa area for all other waxing. It works phenomenally."
That movement from one area to another is what Canavino calls "client flow," and she says it's essential to the client experience. No longer can a spa sit back and have the client come in, get a service, pay and leave.
"Make it a structured experience," Canavino recommends. "That will make a big difference in building business." Tightly plan every aspect of the visit, she advises. The flow begins with the "culture welcoming," followed by a service that allows the client to choose complementary services that the technician suggests. After that, Canavino builds in relaxation time, retail time and prebooking the next visit. Best practice also requires keeping detailed client records. Not only will you track clients' habits and preferences, but you'll be able to identify your top-spending clients and put your customer service efforts toward their needs. Typically, 20 percent of clients visit the spa once a week and bring in the bulk of the revenue. "The big mistake spa owners make is paying more attention to the 80 percent than the 20 percent," says Minton. "They take their best people for granted." No matter how much of a customer service stickler you
are, there will always be some dissatisfied clients. Like every other best practices procedure, handling complaints requires
a solid plan.
"Spas should have one person, someone in management, who addresses all serious problems," Canavino says. "Clients don't want to repeat their complaint to three different people; this also helps your staff, who won't have to invent solutions themselves."
best practices ... service menu
Prepare your wet room, because water is making a big splash. "It used to be that if you didn't have a hydrotherapy room, you weren't a 'real spa,'" says Minton, reviewing the early days of adapting the European spa concept to the U.S. "But our clients didn't buy water services—Americans don't want to be open and wet and lying on a table somewhere—and the staff didn't even understand what a Vichy shower was. Owners started using their wet rooms to fold towels."
Happily, clients are now willing to dip a toe into the hydrotherapy waters. Massage in water is big at resort spas, Vichy showers are making a comeback and the new open flotation tank is putting a modern stamp on this service category. "Americans are getting it," says Minton. "But offer clients a disposable bathing suit; they're still modest." Don't forget what we learned in the earlier days: keep the room warm, and use dimmer switches.
The return of hydrotherapies may simply be part of the steadily growing wellness movement. "We've been talking about wellness forever, but now it's really happening," Minton says. "People want to feel better."
While the medispa landscape is saturated, Minton says the bridge between day spa and medispa is wide open. "There's plenty of room for spas that offer fitness rituals, yoga, Pilates and nutrition," she observes. "We're seeing the next stage of this industry."
best practices ... leadership
Best practices start at the top. It's up to the leader to set expectations high. "Best practice is a no-compromise leadership commitment to do it the best and only the best," says Neil Ducoff, founder of Strategies, a consulting firm specializing in the salon and spa industry. With strong leadership, you know who you are. You know where you fall in the competitive market, what you look for in an employee and why clients choose your business.
In best practices, leaders maintain excellence and consistency while staying flexible in order to adapt to a rapidly changing industry and business environment. While the leader may feel pulled from every direction, industry experts insist that the key to profitability is staying unwaveringly true to every aspect of a solid business plan, even if it means delaying an action, revising a previously successful procedure or losing an employee.
Depending on the size of the spa, frequently one owner cannot do it all. "Today businesses do well with layers of management," says Canavino."Best Practices require the right infrastructure," agrees Ducoff, a judge for the most recent Global Salon Business Awards. For example, when Canadian spa owner Eveline Charles approached the $3 million range in sales with two large facilities, she hired a full-time accountant. Says Ducoff, "Eveline recognized the need to have her internal structure disciplined." No matter how many people you can afford to help you, however, the buck still stops at the owner's desk.
best practices ... building a brand
Think of a cookie-cutter. Craft one in a shape that distinguishes your business from all others, place it on the cookie dough, press down hard and discard everything outside the edges. That's what "branding in the spa" has become; no longer can you develop a fabulous signature service and expect it to shoulder the entire branding burden.
"Differentiate or die," declares Minton. "If you're neither different nor a franchise, why would someone come to you? Even if you are a franchise and keep consistency throughout your locations, you still must offer something that sets you
apart from the pack."
But originality doesn't come easily. "What I see over and over is copying," adds Minton, who also heads The Spa Association. "You can't be a leader if you copy. People always think their idea is the best, most unique idea in the world, but usually it's been done. Try to be truly unique."
Everything you do must contribute to your core concept, Minton continues. Keep no hangers-on in your service menu or on your product shelves. "If you're offering services and you don't understand why, stop doing them," Minton advises. "Everything must be results-driven."
Your spa's image includes not only the look and feel, but also how you sound. "Be very conscious of language," advises Canavino. Best practices land that tone at somewhere in the friendly-yet-professional range, and the owner must hold that note with both staff and clients.
"You can't be really nice to clients and then not treat staff with the same respect," says Papageorgio. Even your signage must fall in line. A simple "We don't accept checks" sign could be worded in a more positive way, says Papageorgio, adding, "Don't post sarcastic notes in the backroom like, 'Your mother doesn't live here. Clean up after yourself.' A new staff member might be put off instead of seeing it as humor."
Dolce Divino Salon & Spa provides a good example of how one concept can drive a business. Located in a bustling area of Corpus Christi, Texas, the spa is convenient to the young professionals who work nearby. Consequently, owners Alexa Gonzalez-Barter, Ariel Moore and Ambrose Gonzalez focus almost exclusively to the working professional, setting their number-one goal as getting clients in and out as quickly as possible.
"Some retired people do want to take their time and spend all day with us," says Gonzalez. "We adjust as needed; we don't rush people out. But our bread and butter is the working professional."
How does this play out? New technicians practice speeding up their craft. A manicure/pedicure is scheduled while highlights are processing. The esthetics rooms are equipped to do massages, facials and waxing; instead of having the client move from room to room, the next technician takes over in a flash. Proper training keeps quality control from suffering, he adds. "We don't really cut corners," says Gonzalez. "We just do everything more efficiently." Entire office staffs come to the spa together. "It gives the
staff that works together a chance to drink and spend time socializing, and they can each get a pedicure in 15 minutes,"
says Gonzalez. "We're able to do a staff of 30 in a reasonable amount of time." With word of mouth revving the marketing engine in
the corporate world, "quick" is also the way the Dolce Divino name spreads.
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."