The Spa and Leisure market, like most other industries, is one in which the firm’s directors and managers are in an ongoing struggle to achieve and increase spa profitability. The common methods to increased profitability are generally 1) through higher revenues achieved through an increased level of sales to existing clients, and 2) an increase in size of the spa’s current client base.
Spa managers can meet these needs through Customer Relationship Management (CRM), a tool that must be about business strategy, supported by technology -- not simply an IT solution imposed on staff to reform the spa-client relationship. CRM isn’t just about collecting, processing and reporting client information, it is about serving clients in an essentially enhanced way.
One of the leading corporate marketing mandates of the 1980s and 1990s had been a focus on “customer satisfaction”. The belief was that an elevated level of client satisfaction would lead to a higher client retention level. Corporate directors however, mistook satisfaction with quality and loyalty.
Studies have shown that more than half of the customers who have claimed to be satisfied have switched providers without hesitation. A Harvard Business Review report had indicated that over 65 percent of customers who chose a new supplier mentioned they were satisfied or very satisfied with their previous supplier. Simply maintaining a satisfied client is no guarantee that they’ll stay with the organization.
Successful spa marketing directors must recognize the shifting paradigm, and should differentiate their practices to stay ahead of the market. The proliferation of technology in marketing, and changing consumer habits has been driving a transformation in marketing, as we know it. Well-crafted CRM systems within the spa can help achieve higher goals, as they are becoming major competitive tools for successful organizations.
For an industry known for pampering and serving it’s clients, the Spa and Leisure market hasn’t been very successful in implementing CRM Systems. Generally the failures come from poor management and in difficulties collecting and standardizing data. Given enough resources however, these failures can be overcome.
Vanessa Gay, Spa and Hotel Operations Manager for The Lyall Hotel and Spa in Melbourne, Australia stresses that “educating staff and developing standard practices for data input has dramatically increased the value of our IT investment. We’re better able to analyze membership data and service our clients, which has had a positive impact on our yield. It is vital that set procedures are established and properly managed.” Ms. Gay, who is also the President of the Australasian Spa Association, has used a couple spa systems and had been significantly involved in the design and development of the system currently in place at The Lyall.
To ensure the spa fully realizes the value of its IT system, the vital paradigm change must be with management. The Spa’s directors should have a clear CRM business philosophy and the drive to bring a fundamental change to their corporate practices.
Traditional outbound marketing methods
Some researchers have estimated that the average
US consumer receives roughly 1 million marketing messages a year across all media. These include print and television advertisements, roadside billboards, postal fliers, email solicitations and even internet pop-ups.
This advertising onslaught has overwhelmed potential clients, leading to diminishing returns on direct marketing initiatives. The deluge of advertisements in postal boxes and email in-boxes has rendered campaigns to retain and acquire clients as ineffective.
Since these traditional direct marketing channels are becoming less effective, successful Spa marketing directors are changing from reactive to proactive by putting CRM to better use in several ways.
Event-Driven Client Interaction
There are important dates in every person’s life, such as his or her birthday, anniversary, child’s birth, graduation or promotion. Each of these events provides an opportunity to promote the spa’s services and products at a meaningful time to the client.
A personalized email wishing the client a happy birthday, or a special his & her service on their anniversary provides a much greater return on marketing initiatives. Since certain events are so significant to the client, the spa has an opportunity to strengthen their relationship and increase future business.
The spa can also send automatic confirmations for upcoming appointments, which provides yet another opportunity to highlight products and services in a message the client is more likely to open. These event-based outbound messages are seen as being less intrusive since they are based on recent interactions. Some have estimated that event-driven marketing efforts produce response rates five times greater than traditionally general outbound campaigns.
Ford Malmin, an owner in the Anushka Spa and Sanctuary with locations in the Palm Beaches, New York and Boca Raton feels that “a significant benefit provided by our system is the waitlist feature. In the event that one client cancels an appointment, our system notifies us immediately – allowing us to contact one of our waitlisted clients. The immediacy of our being informed allows us to provide adequate notice to our clients, helping us keep that appointment filled. We’re able to maintain our revenue, and our client’s level of satisfaction remains high.”
Enhanced use of Outbound Channels
Though the traditional outbound marketing campaigns (direct mail and telemarketing) have experienced diminishing returns, they can still be relevant marketing avenues. This will depend significantly on the organization’s CRM philosophy, data segmentation and the cleanliness of the data.
Experience has shown that a more detailed breakdown of client data will lead to a better overall telemarketing response – as the telemarketer will have a better idea of what data to focus on when speaking with a current or perspective client. The value of this data however will be of most value when it is current and highly defined.
Ms. Gay states that at The Lyall, “we record everything. We track their treatments, therapists and preferred products. We track their physical and emotional conditions. We also track whether or not they’ve purchased gift vouchers for others. The more specific data we have on the clients, the better we can service them.”
She adds that “this detailed and specific client information allows us to target marketing campaigns directly to our client’s needs. It is important that the data be well organized. The more uniform the data, the more successful the marketing campaign.”
It is also very beneficial for the staff to report all comments of the spa’s guests, both positive and negative. Those guest comments can provide a reason for future contact – perhaps announcing a new product line or as a response to recent criticism.
Building Inbound Marketing Channels
A significant benefit to an inbound request is that the client initiates it, at a time that is most convenient to him or her. When the client makes a service request, product inquiry, and/or order placement, they are willing to provide their time and attention as well as their permission to engage in a discussion with spa staff.
These interactions can be face-to-face at the spa, over the telephone or even over the web, and provide significant opportunity for staff to modify the dialogue to reflect the client’s current preferences and priorities. This more personalized approach allows the staff to cross-sell, up-sell, or make loyalty offers at the moment of contact.
Researchers have suggested that inbound marketing generates response rates 10 times higher than those associated with outbound batch campaigns. One reason for that is rather than being interrupted, the client decides when the interaction takes place and is prepared to consider the message.
Some have estimated that up to 50 percent of a client’s decision-making happens in real-time. That is, when the staff member has a client engaged in a discussion initiated by the client, there is a very good chance a decision can be reached at that time. Some staff will bring clients to a decision more than 50 percent of the time; other staff will be well short of that. The level of success will depend on 1) what client information is readily available to the staff member, and 2) how well the staff is coached on cross-selling and up-selling.
Anushka’s Malmin feels that a couple of the best marketing features of their Spa System are the level of data they’re able to maintain and the filters they can use to retrieve that data. He states “because of the sophistication of the system we’ve implemented, we’re able to put our finger on any data we desire – to the n’th degree. We know who bought what, when the purchase was made, and more. It allows us to better serve the client, as well as provides them advice on new products. The flexibility and availability of the data has definitely been a benefit to us.”
Information that would be of value to the staff member can include; what products should be recommended while the client is on the phone? How a complaint from a high-value client should be handled? By chance does the client have an upcoming special event such as a birthday or anniversary?
It would be a welcome, yet unanticipated surprise, for the client to be given a birthday or anniversary greeting when welcomed by a staff member. This data should be available to all spa staff to enhance the guest experience and boost the chance of an inbound cross-sell and up-sell.
Spas that can build proper inbound marketing channels have a powerful resource for driving revenue growth. They also have the basis from which to enhance customer loyalty, a significant factor in creating and sustaining profitability.
Enterprise-wide CRM data system
Customer Relationship Management has been a buzzword since the last decade, as CRM features made their way into Spa Management Systems. The simple addition of these features into IT solutions doesn’t provide the organization a better return on marketing campaigns. Often technical and human factors hamper the success of installed CRM systems.
A common complexity that is difficult to overcome is the sharing of data between divergent systems. It has not been uncommon to see a hotel PMS system installed at a large resort, with a Spa System provided by a different vendor, and the golf system provided by yet another.
In these scenarios, it is common that each system managing a given functional area (i.e. the Spa, Golf, Lodging) will collect important client data. Unfortunately this data is specific only to that functional area and not commonly shared with the full enterprise. Traditionally the extent of an interface between these divergent systems is simply to share account name and number data, followed by transmission of transaction billing details. Interoperability of all systems, and sharing of extensive client data is vital for the enterprise to properly service their clients and increase their guest’s experience.
No person within the enterprise should be surprised by client requests, demands or special events. For instance, a common client database should exist throughout the enterprise so that when a client moves from the hotel to the spa and to the golf course, all staff members are aware of special requests as well as the guest’s birthday or other special events.
The marketing paradigm has been rapidly shifting through this young millennium. Successful organizations will continue to monitor and modify their marketing techniques, utilizing all tools available to them. Properly managed, Customer Relationship Management is a valuable tool spas can use to, 1) increase return on marketing campaigns, 2) increase client satisfaction and the total guest experience and, 3) increase spa revenues and profitability.
Proper CRM is as much to do with business philosophy and management as it is about the software system. It is also about giving the client more than an expected level of service -- giving unanticipated value that a well-implemented and managed CRM system can deliver.
