IN A TOUGH ECONOMIC ENVIRONMENT, SHOULD SPAS CIRCLE THE WAGONS OR WIDEN THE CIRCLE?

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By Bart S. Foreman, president and co-managing partner, Group 3 Marketing

2003 has been a tough year for spas. Blame it on the stock market, eroding consumer confidence, corporate downsizing, terrorist threats, or continuing uncertainty in the Middle East; but whatever it is—it's not business as usual. There has been an unquestionable business downturn in both spas and salons since the war began.

Uncertainty has been coupled with additional corporate downsizing. Since much of a spa's business comes from discretionary income, the challenge for sales has grown. When clients change their buying patterns, as an owner, you should resist the urge to cut the budget, and instead focus on re-invigorating your marketing efforts with more zeal, vigor and passion than ever before. Let your competitors take the wait-and-see approach. They can circle their wagons while you widen your circle.

According to a recent SPA*TRADE survey, direct mail is one of the key marketing efforts for spas. There are many types of "direct marketing;" some are wasteful and some are powerful. Spa marketing efforts should address three areas — acquiring new clients, growing existing clients and communicating a consistent brand message.

n Acquiring new clients should be done through advertising, PR, and events. Regardless of the list source, mailing postcards to acquire new clients generally will result in a low return on your investment. Use media driven strategies to create awareness and attract new clients.

n Your clients are your franchise — the lifeblood of your business. Wow them with service and exceed their expectations on every visit. But don't stop there. Create an on-going marketing campaign to sustain their business. Retention is not enough — it's the status quo. Sustain and grow their business. You've heard of proactive marketing, so do it—widen your circle, expand your horizons and try marketing models that are new to you.

n Your brand message can be further reinforced through on-going communications with your clients. Look for value-added benefits to enrich your spa's experience. Explore a marketing partnership with a local restaurant or business. Stay competitive in today's competitive environment, by expanding your circle with new benefits, like wellness, while maintaining a consistent brand message.

Use a database driven model— and reap many rewards through greater retention
You may think you "know your clients," but do you? Knowing their spa preferences isn't enough. Build an all-encompassing relationship marketing program and outsource not only the mechanics but the tracking and analysis as well. Many software packages have such tracking, but why be left alone to find the time to figure it out and actually get it done?

Reward clients for their continuing patronage. Savvy spa owners realize that staying connected with clients between visits is essential to creating relationships that last. Retention is important to the success of every business, and this business is no exception. Clients not only enjoy rewards, they expect them

Change their purchase patterns. Identify clients who are not buying retail or certain services and give those clients incentives to purchase. That's what we mean by sustaining their business. Consider the impact on your business if 5% of your current clients bought one more service or tried one more product in the next 90 days — and then liked it enough to buy again. Do the math; then widen the circle.

The simple truth is that clients have many choices. And, thanks to modern technology, it is easy for them to find alternatives. Just go to the Internet and take a virtual tour of your competitors' spas; where you can compare prices and menus with a click of a mouse. Your clients are doing it and if you don't reinforce your presence, you'll lose clients.

Remember, everyone has potential.

g Your best clients have the potential to leave

g Your marginal clients have the potential to spend more

g New clients have the potential to come back

The new Millennium buzzword - TOUCHPOINTS
There are many touchpoints that let you stay connected with clients. Widening the circle means engaging in marketing tactics that deliver on-going communications with your clients.

g Begin with new clients. Follow-up in a week with a personal message thanking them for trying your services. Ask for their feedback and invite them back for a second visit. Test different strategies with regard to incentives for the second visit.

g Stay connected with current clients. Reward them for their patronage. Communicate what's happening at your salon and encourage e-mail addresses as an important and low-cost touchpoint.

g Try to recapture lost clients — and that should be anyone who has not had a service appointment in over ninety days. Ask if they had a service problem and promise to fix it. Offer a special incentive to get them back. Remember, there may be a competitor who is also trying to widen the circle at your expense.

g When a team member leaves — aggressively communicate with those affected clients to retain them. Clients belong to your spa not the departing employee. Let those affected clients know your spa cares about them and do it quickly.

Clients are your most valuable assets. Use every touchpoint to stay connected and continue to try new ideas whenever possible.

Recognize that as good as "do-it-yourself" sounds, it is likely to fall by the wayside.
Many spa software packages have a "loyalty" component built in. Don't be trapped by the promise that you can do it on your own. Even the best of intentions provide no assurance that timely mailings will get out to clients. If you have already circled the wagons, who's going to do it? Widen the circle and outsource the execution of your on-going communications.

If you have circled the wagons, you have effectively blocked out the future. When you widen the circle, you can take advantage of all the dynamic marketing and analytical tools at your disposal and make something positive happen. Look around. Analyze your team's performance, talk to every client if necessary. Analyze your software. If you are not getting the reports you need, change — upgrade — and get the tools to make your business grow in today's unstable dynamic environment. And finally, develop marketing initiatives that are customized to your specific needs so you can stay connected with your clients between visits and build retention.

Bart Foreman is president and co-managing partner of Group 3 Marketing, a full service marketing company, founded in 1988 and headquartered in Wayzata, MN. Group 3 Marketing has developed a pioneering relationship marketing initiative called TheClub@® MY SPA. For more information about Group 3 Marketing and the programs they have developed, visit their website at www.group3marketing.com. Bart can be reached at 888-571-6554 or by e-mail at bforeman@group3marketing.com.

©Group 3 Marketing 2003.