The Simple Life
Open Any Spa Magazine, Including This One, and you're likely to see articles about innovative new products, treatments, and machines available in spas. As anyone who has ever talked to the press knows, new stuff makes the world go round. Innovation is an entrenched part of the American business culture. We're told constantly that it's how we differentiate and add value. And in a fast-paced industry like ours, we're convinced we must innovate or else we will fail. Just look at the size of the average spa menu. From Ayurveda to quasi-indigenous offerings, we've thrown just about everything against our faux-finished walls to see what sticks. The spa down the street just brought in LED facial treatments? Hollywood is buzzing about hypnotherapy facials? Gotta keep up with the Spa Joneses. Or do you? Innovation can indeed provide you with a competitive advantage but only to a point. A recent article in Harvard Business Review (HBR) titled "Innovation vs. Complexity," written by Mark Gottfredson and Keith Aspinall, discusses the dark side of innovation: complexity. Complexity is the enemy of profit. The more complicated your spa becomes, the more expensive it is to operate.
Keep your retail area uncluttered and simple, like the appealing space at Nurture Spa (New Hope, PA).
Let's look at that bloated service menu again. How many of those innovative services are really adding value to your company, and how many are merely making things more complicated? Does offering 30 treatments, rather than eight, really enable you to sell more? Or do these excessive choices bog you down instead—or worse, bewilder your customers into not choosing at all?
Let's look at the impact of a big spa menu on your operation. More protocols require more training. This means it takes longer and costs more to get new employees up to speed. Esthetic services, for example, are highly product driven, which means that you will have to incur the cost of stocking more back-bar products. Adding services to your menu may also result in needing new equipment. There's the cost of purchasing the equipment, as well as the cost of maintaining it. The more types of equipment you have, the more likely you are to have a piece of equipment off line and unavailable. That means you're more likely to disappoint a customer. You'll probably need a larger facility to deliver all of those services. You have to have a wet room to offer body treatments with a Vichy shower, right? The more services you offer, the harder it is to manage the quality and ensure consistency. Less consistent quality means more customer service comps and adjustments. That means you'll need more management hours and potentially more management personnel.
A big service menu is often more confusing to customers than a small one. Customers often choose not to choose at all when presented with too many choices. Your mega menu is longer and more expensive to print. There is more copy to write and maintain on the website. There are also longer explanations required on the phone when potential customers call with questions about your many different services. The HBR article discusses something called a "Model T Analysis." What product or service would your company offer if it only offered one, your Model T? At our spa, the Model T would be our most popular facial. Offering one facial would be the point of maximum simplicity. But with only one facial, it's not likely that we're going to provide enough value to the customer. We know that a certain number of choices are important, but how many are enough? The Model T exercise is a great way to streamline your offerings. If you began at the other end and asked instead, "What can I get rid of?" it's not likely you'd discard a significant number of services. You might trim things a bit. Then, after attending a trade show, you might decide you want to expand your menu, and you'd be back where you started.
Minimize your menu offerings and provide clients with a simple, easy-to-follow option and watch your costs decrease and your bottom line increase.
Approach it instead from point zero and ask yourself, "Which service is absolutely essential for us to offer? What do we know is successful and highly popular?" Upon determining that, you'll be able to reduce the size of your menu more effectively.
There is another way to determine when your service menu is too complex. Identify the services that drive 80 percent of your revenue. If you're like us, that list of services will be breathtakingly short. At one of our locations, that meant keeping only four facials on the menu. This sort of dispassionate analysis is a must in the instinctive business environment of spas. It answers the question, "What do we really sell?" and ignores the tendency to second-guess yourself.
Operational procedures can always be simplified and clarified. In our spa, for example, we decided we needed to designate a certain color linen for each department so we could accurately track purchases per profit center. The body therapists used green towels and sheets, and the estheticians used beige towels and sheets. The linens were stored in different cabinets, and there were separate bins in the laundry plant for the green and beige linens. Various people had to keep track of the linen count and alert purchasing to place orders with different vendors. In the past, one of our issues has been an obsessive need for detailed data—regardless of whether or not anyone was analyzing or utilizing that data. The information about the linen cost wasn't benefiting us in any way. So, yes, we're switching over to one linen color. That will enable us to purchase less frequently and from just one vendor. Our laundry operations will be more efficient because we don't have to separate colors. The positive domino effect goes on and on.
Our new controller, Roxanne, has taught us another way to reduce complexity. For years, we obsessively comparison-shopped different vendors to save a few pennies per item. What we didn't realize was that it cost us $25 each time our accounts payable department processed an invoice. So our savings were eliminated by the increased cost of managing numerous vendors. As part of our simplification process, we are consolidating vendors and using key distributors more often.
Another way we create complexity, waste, and poor cash flow is through excessive order sizes and high inventory holding costs. Price breaks for higher volume purchases are not always beneficial if that product isn't moving fast enough. For example, I may increase my order size on cosmetics to ensure that I receive price breaks on lip gloss, but if I'm only going to sell 10 of those per quarter, I've lost again. Increasing the turnover of your inventory helps your business run smoother.
Simplifying workflow appeals to everyone in the company, at every level. Set a standard that any new product or service must offer compelling value before it is added. When you roll out a new product or service less frequently, you'll give it the attention it requires for a successful launch.
Using one color for linens is a quick and easy way to make operations more efficient.
Experiment and improvise to test your ideas, and be ready and willing to discard any product, process, or protocol that doesn't work. Ask your employees how you can make their procedures and protocols easier to follow. And the next time you start worrying that you're missing the boat because you aren't offering those organic artichoke exfoliation treatments like the spa down the street, take a deep breath and enjoy the freedom that comes with the simple life.
Peggy Wynne Borgman is the CEO of Preston Wynne and the director of two Preston Wynne spas. Borgman is a principal consultant and seminar leader for Preston Wynne Success Systems and author of Four Seasons of Inner and Outer Beauty: Spa Rituals for Well-Being (Broadway Books, 2000). She is also a member of The Day Spa Association's advisory board. You can reach her at firstname.lastname@example.org.