Using Spa Management Systems to Enhance Profitability

SpaMantra India

www.spamantra.in

November 2011

The spa industry, like all business sectors, is continually monitoring performance to ensure they’re meeting revenue and profit targets.  Software tools have been available for more than a decade to assist directors in managing and enhancing the way they do business. 

The spa software market has matured, and some developers are providing leading-edge solutions that provide significant benefits -- from how the spa’s services are marketed to local clients and tourists, to how staff and transactions are tracked.  Some of the more recent software advances also involve significant reduction in up-front investment through adoption of cloud-based computing. 

A description of a few of the many potential benefits follows.  This is far from being a complete list.

Improved Customer Relationship Management (CRM)

“Technology in a spa provides a conduit for good customer feedback which, in turn, provides a clear synopsis of guest needs and preferences.  This vital data allows you to tailor spa treatments and marketing activities to focus attention on making your spa a more profitable enterprise.”  Warren Kok, Director of Marketing, China National Spa Association.

Perhaps one of the key benefits to employing advanced software is the depth of data they’re able to collect about their guests.  Utilizing software tools, the spa is able to enhance the ways in which they interact with their guests.   They’re able to:

• Build and maintain an extensive database of information on the spa’s guests.  This includes profiles, contacts, treatment history, retail purchases, inquiries and complaints.  The system should ensure that the spa captures and stores data on every interaction between the spa and the guest through all communications including email, telephone, fax, website and personal visits.

• Massage the data into usable, accessible management and marketing information. Ensure the data is up-to-date, allowing you to analyze historical data to identify trends.  Make the data accessible to management and marketing teams on a timely basis, allowing for corrections to stay in-line with preset CRM strategy.  Use the software to develop response and contact strategies that improve customer relationships, team productivity and profitability. 

• Share data across with proper management and marketing personnel to provide staff with a 360-degree view of the guest. This enables your team to provide a better service to the customer, and gives them the tools to identify sales opportunities based on the customer's history and preferences.  This access should be available at any time, 24/7.

A useful spa management system will allow you to improve the frequency and quality of customer contact by automating and personalize customer communications.  Use personal dates that are important to your clients.   There are important dates in every person’s life, such as his or her birthday, anniversary, child’s birth, graduation or job promotion.  Each of these events provide 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 these events are 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 traditional outbound campaigns.

Consider enhancing your guest relationships further though the use of social media. Gartner Research addresses the growth in the use of social media to enhance customer service, forecasting that 30 percent of leading companies will increase use of this tactic by 2013.  Data from social communities can be used to enhance customer profiles, improving service and guest satisfaction.

Maximize Yield Per Treatment

A significant benefit of maintaining historical data within the system is the ability to use statistics to maximize yield per customer.   Most spa directors will recognize that the demand for treatments greatly exceeds the supply during certain parts of the week, or even certain parts of the day. Using historical transaction data the manager can recognize when demand is strong, when it is moderate and when it is weak.

Using this data, management can set pricing strategies to manage demand at each level.  In times when demand is strong, prices could be increased to bring demand more in-line with supply. For times when demand is weak, enticing local guests with lower priced treatments may be an effective measure to increase demand and boost profitability.

Analyzing demand and setting pricing models is difficult when maintained by pencil & paper, or on a standard spreadsheet.   Effective review of demand, and setting pricing structures, becomes a much simpler task when using an effective management system. 

Employee Productivity

Employee productivity can be positively affected by the installation of an integrated Spa Management System.  By electronically integrating the booking agenda with client profiles and sales data, spa managers can receive daily and monthly statistical reports at the press of a button. 

Of particular value is the ability to know when therapists may have down-time, or time not booked into treatments.  These staff can then be assigned to other tasks, such training for new treatments or cleaning and maintaining another part of the spa.   Analytic tools will inform management that the scheduled staff are working toward making the spa a better place to be.

Reduce Inventory Costs and Out-of-Stocks

Knowing more about the historical sales pattern at the spa’s retail shop, and keeping track of minimum stock levels will assist in lowering the cost of both retail and professional stock.

When inventory and sales records were kept manually, the only way a spa would be able to keep retail items in the boutique and professional items in the treatment rooms would be to maintain a very high level of stock.  Managing inventory turn times and restocking times is a very difficult task when manually maintained.

With a properly implemented retail and point-of-sale system, lower levels of inventory can be stored in both the boutique and treatment rooms.   Each item is given a value that alerts management when these low-inventory levels are met.  Further, the system provides re-stock levels to ensure spa management places an appropriate order with suppliers.

Reducing the Cost of Technology

 ”One of our goals in adopting a corporate standard IT solution is to keep up-front costs as low as possible, and to reduce our carbon footprint while saving on power costs.”  Christine Hays, Vice President, Spa Operations, Oberoi Group.

Historically, spas implementing management software required an up-front purchase of hardware, software and training .. to the tune of US$ 30,000 to US$ 50,000 or more.   This would be for each spa -- a very pricy option for both startups and multi-property organizations.

Economic factors have been pushing spas and small businesses toward cloud computing, an alternative to the costly client-server model.  In broad terms cloud computing is the use of software, platforms or infrastructure offered by web-based service providers.  By eliminating the need for costly servers, locally hosted software and extensive training, a site can realize a significant cost-savings.

Cloud computing service providers focus their operational expenses on IT at a higher level than a business with a dedicated IT department. Because of a sharing of infrastructure, cloud providers can achieve better economies of scale, particularly as their client base grows.   These savings are passed on to the end-users .. the spa. 

An added benefit to adopting cloud computing is the ease of access to the spa’s vital data -- anywhere, anytime.  Spa Directors are a very mobile group.  One day they’re at the Indian Spa & Wellness Association’s Summit in Mumbai, another day in Delhi and then off to Shanghai, Bali, Phuket, New York or elsewhere.  

Placing spa data on the cloud allows managers to access corporate data from their iPhone, iPad or other mobile device.  The manager may be in Paris, but have a need (or simple curiosity) to see how the spa in Delhi is performing.  Cloud computing allows them the simple ability to query spa performance from anywhere.  An interesting bit about the cloud solutions – it can make initial investment much lower while providing easier access to data from anywhere, 24/7.

After a decade or more of various spa software options, the industry has matured and now provides a very robust and reliable set of tools to make a spa more profitable.   Following general market advancements, utilization of spa software has also allowed broader access to vital data allowing the spa to enhance customer service, increase revenues and minimize up-front investment.