How to make money from your spa: 3 key business optimisation techniques

 

Spas are complex operations that require skill, resources and planning to manage successfully. In this post, we show you how to boost revenue by making the most of your spa’s resources. Just follow these three practical steps and you’ll soon notice an increase in revenue.

 

1. Be flexible with your pricing

Avoid being rigid about your pricing policy. Be flexible and adapt your prices to your different types of clients and to different times of the day. In terms of your print collateral, you can add off peak and peak pricing to your price list so that guests know when they pay full price and when they don’t. Alternatively, you can insert a small note to inform guests that during a certain time period, they can enjoy a discount on all treatments. This would work like the ‘Happy Hours’ do in bars.

 

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Divert traffic from your peak hours to your off peak hours: diverting traffic is always preferable to having to turn down clients. The airline industry offers a useful example of how to do this effectively. They are extremely successful at optimizing revenue (also known as ‘yield management’). If you book your holiday or airline ticket months in advance, you will get a cheaper price. If you book during peak period, Christmas, summer, and so on, you’ll pay a higher price.

 

2 Yield airline  

 

There is no reason why your spa should do business in a different way to the airline industry. There will be clients who are price sensitive and won’t mind having their treatment at a less favourable time so long as they get a decent discount. Your price insensitive client or the client who is time constrained won’t mind paying the full price for a treatment, but it would need to be at peak time.

 

2. Know your “star” treatments

Choosing the different therapies, treatments and services of your spa is a complex undertaking. To do it successfully, you need to apply the principles of ‘treatment menu engineering’. This involves a careful analysis of your treatment and service offering as well as your customer mix.

To effectively engineer your menu, study your treatments sold on a regular basis. Know which are your best-selling treatments, which ones give you the most margin, and also those that are not doing so well.

To give you a greater level of insight, take all the treatments in your menu and divide them into four different sections that will provide you with a clearer idea of the level of sales and the overall impact of the different treatments and services in your bottom line:

  • Stars: The group of treatments that have low cost of sales but are strong sellers
  • Plow horses: Treatments and services with a high cost of sale but at the same time are strong sellers too
  • Puzzles: Treatments where the demand is not too strong but where the cost of sale is also low
  • Dogs: These are your high cost of sale treatments that sell poorly

 

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Adapt your treatment menu according to customer actions. There is no point keeping on your treatment menu treatments that your clients are not buying – particularly dogs. Sell your clients what they want to buy and not what you want to sell.

Your treatment menu should be updated every few months to cater to the evolving wellness and beauty needs of your clients. However, avoid drastic changes your treatment menu all at once. It can have negative effects on the perceived experience of your regular customers.

For more information about treatment menu engineering, see How to open a spa: Part 4 – writing of the treatment and services menu.

 

3. Be dynamic about staff scheduling

Your staff is your number one asset. Without good qualified staff, your spa will not be a success. However, most spa managers complain that they do not have enough staff, especially during peak times. This means they need to turn down clients.

The idea behind dynamic scheduling is to optimize the number of therapists you have. One of the main challenges spas have is predicting demand levels. Sometimes, when you think your spa is going to be quiet, it turns out to be extremely busy. Equally, when you think your spa is going to be busy, it turns out to be very quiet. So instead of having four therapists doing nothing, or giving them downtime duties (such as deep cleaning, stock take, and so on), send some of them home. They’ll be happy too.

Some spas have expanded this idea further: they are now creating a ‘hour bank’ and appointing therapists ‘on call’. Depending on times of the month, the therapist ‘owes’ hours to the spa, or the spa owes the therapist ‘overtime’. Instead of being paid overtime, therapists can also choose to have a day off instead of using one of their holiday dates.

 

 

How can dynamic scheduling help your spa?

  • You have a higher control of your staffing schedule
  • You have therapists when you need them (due to the on call system)
  • Your therapists are happy as they don’t feel overworked and they remain motivated – sitting around and doing nothing is a drain of general team motivation
  • Your spa don’t incur huge overtime pay
  • Your therapists are more engaged and willing to help

 

This blog post offers a concise introduction to the topic of optimising your spa’s performance. For a more in-depth look at this subject, see this presentation on revenue management by top spa business specialist Sonal Uberoi.

By Sonal

Sonal Uberoi creates and delivers smarter spas around the world. Spas and hotel groups hire Sonal to help them design, set up and manage their wellness businesses. Her finance background and worldwide operations experience in the spa, wellness and hospitality sectors make Sonal the go-to expert for business optimisation solutions. Connect with Sonal on LinkedIn www.linkedin.com/in/sonaluberoi.

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