Getting Labeled

BRANDING IS THE MARKETING BUZZWORD OF THE decade and a process that business experts consider essential to success. Our lives are touched by iconic brands such as Apple, Coach, Harley Davidson, Nike, Target, and countless others. As entrepreneurs, we dream of creating a household name of our own. Brand building in a spa requires branded products and services. A real brand is more than a sum of its operating parts. It has a life of its own. A great spa brand offers unique, proprietary experiences that customers can't have elsewhere. And contributing to those unique experiences are great products that can't be bought anywhere else.

Branding in Action

Here's a common scenario. Spa X retails a popular product line—we'll call it Myrtle's Miracle. As estheticians come and go at Spa X, they're "pollinated" by Myrtle's Miracle, and then one day, they take their brand loyalty with them to Spa Q, their next destination. One can virtually map the exodus of former estheticians using Myrtle's Miracle from its epicenter at Spa X. The market is eventually awash in a profusion of competitors selling the same product—Myrtle's Miracle. The various parties content themselves with a smaller slice of the same pie.

What if, instead, Spa X sold its own private Brand X, which was exclusive to them? When Susie, the esthetician, heads to greener pastures, Brand X does not go with her. Clients of Susie's who love Brand X still visit the spa to buy it, making it easier for Spa X to woo them back. To help keep Brand X in its clients' hands, Spa X also retails its exclusive Brand X in its online store, eventually creating a following for the product from people who have never even visited the spa. When it's time for Ms. X to retire and sell her company, she has a true asset in Brand X. This is a valuable lesson. Many startup clients feel they're not ready for a private brand when they first open their doors, but if you're afraid to put your name on a bottle, you had better not put your name on a building, either.

 Private Label Options
Private Label Options

Exclusivity is one of the two key benefits of private branding. The other is profitability. I've yet to learn how or when it was decided that spas should receive 50 percent gross profit (or less) on products sold. Back in the days when the industry was composed of mom-and-pop salons with proprietors behind the chair and independent operators and therapists renting rooms, a 50 percent gross profit worked fine. In today's high-overhead spas that pay 10 percent retail commission to employees, it doesn't add up. At Preston Wynne Spa (Sarasota, CA), if a manufacturer can't deliver at least a 60 percent gross margin, I just can't afford to carry its product.

Quality Control

Much like the generic food companies that sprung up in the 1980s, private brand manufacturers in our industry at first struggled with the perception that their offerings were sub-par. And to be frank, sometimes they were. However, the quality of private label products has steadily improved. Through careful research, it is possible to find wonderful suppliers whose formulas consistently delight.

Private Label Resource Guide
Private Label Resource Guide

The private label trend is growing. As more professional managers bring best practices from other industries and bump their heads against the industry's notoriously low profit margins, private label sales have steadily increased. To many of the non-spa-industry professionals I've consulted with, private label is a foregone conclusion. They can't make their business plans work without it. Unlike the estheticians who fell blindly in love with Myrtle's Miracle, their first priority is making sure their business is healthy and profitable.

You've probably talked to spa owners who have dabbled with private brands and insist that they don't sell. This actually translates to "My staff doesn't sell." This, in turn, translates to "I don't know how to motivate my staff to sell." A private brand product line does best in a spa where the brand—the company—is respected and supported by its employees. A private brand flourishes in a well-run organization. Private branding is not the panacea for poor management or lack of management. In a weak organization, a strong outside brand may actually provide the support, structure, and vision that's lacking in management. This is an appealing proposition for many technicians-turned-managers who lack the skill or even the will to manage their spas and their retail programs. Ultimately though, branding autonomy gives the company the best chance of maximizing profit and value.

Retail sales in the spa environment have become more competitive and more difficult in the past 10 years. Customers are bombarded by companies marketing skin and bodycare products and cosmetics, including department stores, drugstores, infomercials, specialty retailers, multi-level marketers, natural foods stores, and even doctors. The fact remains that the primary influencer of a spa guest's beauty and self-care purchases is his or her service provider. It's a powerful sales platform. In the treatment room, thanks to the magic of the spa experience and the rapport and trust you've built with your guest, you are in charge. That means your brand has the opportunity to compete head to head with the best-marketed lines in the world and win.

Peggy Wynne Borgman is the CEO of Wynne Business and the director of two Preston Wynne spas. Borgman is a principal consultant and seminar leader for Wynne Business and author of Four Seasons of Inner and Outer Beauty: Spa Rituals for Well-Being Throughout the Year (Broadway Books, 2003). She is also a member of the Day Spa Association's advisory board. You can reach her at [email protected].