Making your treatment menu work for you.

In keeping with our “slogo” (a new word we have coined for this year) for the month of January – “Out with the old, in with the new” I have decided to focus this blog on a part of the spa business that we often forget to update. You know that cupboard in the kitchen; where everything in the front gets used but the items at the back are forgotten? Our treatment menus can get stale and dusty and just like those unwanted Tupperware containers; unnecessary treatments take up space not only on the menu but in our stock cupboard and bank balance too.

Now I am sure you are confused as to why I’m only launching this blog now…we’re already in February??? The truth is; when I first sat down to write this article; I was so excited. I typed away putting as much information into it as possible. I had SO much to get in and so little time. I wrote furiously filling the pages and I was very excited to see what I had created. When I was finished, I went back to the beginning and started reading; with that much information and insight into this topic I was sure it was going to be one of the best blogs to date. I was not expecting the train wreck I found! With little to no planning and by not breaking each point down into digestible pieces I was left with a disastrous mess that was going to take some doing to fix.

I quickly realized the similarity between what I was writing about and this very article. “Practice what you preach Philippa” said my inner voice and I started all over; this time breaking down, planning and presenting a carefully constructed piece of writing that would help, you, my reader to ensure you got as much as possible out of the information.

So there are 4 specific points I want to bring up in relation to the treatment menu and how to make it work for you.

1. Price Point
2. Cost of Sale
3. Spend per hour
4. Customer experience

Price point

When was the last time you had a price increase? So often my clients say they are scared to put their prices up. I always ask them if they are scared to close their doors or scared to take money home at the end of the month? Your suppliers aren’t scared of inflating their prices, neither is your landlord, when he applies your annual rent increase. So why should you be? Our treatment prices are generally WAY to low in South Arica anyway; so why not at least keep up with your rising costs. Our inability to keep up with these growing expenses is going to be our demise. For one thing, we cannot raise staff salaries if we are not making any money. They will remain earning the pitiful amount they have been and they will continue to leave when they are offered just R500.00 more a month!

You will have to continually have to focus on retail sales; setting unachievable targets that demotivate the staff. Targets that move their focus from their treatment because of the doleful amount of comm they receive for doing these treatments. Our overall business profits will also remain negligible as we continue to slave away for little to nothing at the end of the month. We sell international brands and we are paying international rates for the products but then sell our treatments for a fraction of what they cost. It just doesn’t make sense.

As much as I know you think annual price increases will equal annual culling of customers; I will promise you that the majority of clients will not flinch. The odd client will want an explanation to which you will have a reasonable rebuttal. One or 2 clients who cannot afford it will leave. This is the story of inflation and unfortunately we are working in an environment where we have to keep up with rising costs, just like everyone else does. The owner of supermarket cannot leave the cost of bread at the same price as it was in 2013; he will be paying money into his business instead of earning it. We have to do the same, throw caution to the wind and up your prices in 2015. You cannot afford not to, you will be SO pleased you did.

Cost of sale

So now we know we have to increase our prices because everything else has gone up. Where do you start? A lot of the time we do not even know why we have priced a service a certain way. These are the first questions you need to answer:

• Do you understand YOUR cost of sale?
• Has your accountant told you whether or not to include salaries and commission into your cost / just commission / just salaries?
• What else do you include in your treatment price to ensure you are actually able to take money home at the end of the month?
• Do you have a list of all your monthly running costs so that your costs are real and complete?
• Do you actually know what your products and treatments cost you as a percentage of the treatment price?
• Have you broken your menu down, looked at your cost per treatment. Do you know what your profit margins on each treatment?
• Are you actually making money or giving the treatment away?

 

Is your head spinning? I’m not surprised…this is not easy stuff. But I urge you this year to do this exercise! If you do not know how please call me and I will be more than happy to assist you. You will be alarmed to see what comes out of this investigation and you will no longer be scared of giving your prices a gentle hike to avoid the landlord coming to bolt your doors shut in the very near future.

Only good can come from understanding your treatment costs and working into your menu. You will know what a product costs. You will ensure you do not have professional stock lying around; unopened and going “frot”. You will generally be tighter in controlling EVERYTHING that is going on; in and out of the stock room. You will understand how important it is to ensure that suppliers cost of treatment is not too high and that the treatments you are doing are working for you not against you.

When you look at these things under a microscope you will see how much working with local brands can benefit your bottom line. The introduction of at least one of these brands becomes a really good idea. If your customers are Uber price sensitive then they will welcome the change. Their monthly treatment and product bill will not be as exorbitant as usual and they can get more bang for their buck! Our local brands are awesome and just as effective. You will be SO surprised how great they are for your bank accounts as well as you customers skin.

 Spends per hour

Do you just sell all the same services all the time? Yes, its quick and easy and we get the client off the phone as quickly as possible. This makes me want to scream! We have gotten so lost that we do not even know what we are here to do anymore and the proverbial “sausage factory” is what we have all become. We do not look at our spends per hour and how to drive them up; so the same old Swedish massage and basic facial gets booked every time. We hope against hope that our therapist will upsell in the treatment room – which they never do. All that specialised stock we spend thousands of ZARs on; sits in our stock cupboards getting dusty or its just added to the treatment and is not recorded. Your money walks out the spa with your client or your client walks out unwowed by the treatment and thinks “Oh well, just another facial nothing special”.

I once did an exercise with a client; banned everyone booking general treatments. Their spend per hour went up by 25%, customer satisfaction sky rocketed and their therapists where loving doing different treatments every day. The clients were actually being asked what they wanted to achieve with the treatment. The results they saw were better and they did not mind pay the extra for a specialised treatment. After 6 months we were able to objectively look at our best sellers and get rid of the treatments that did not sell at all. We were able to see which brands where performing and which ones we could drop. Our profits increased and our costs stabilised. It was incredible how something so simple could have such a huge impact on the business.

Customer Experience

We have to keep a close eye on our treatment menu; not only from a price/ cost perspective but from a customer experience perspective. If we have product going stale in the cupboard, we can be guaranteed we have stale treatments being carried out on the treatment couch! We need to move with the times, ensure we are giving our clients the latest and greatest services. Now more than ever our clients know what’s hot and what’s not. No longer are product houses only seen in trade magazines and shows. They are advertising in the glossy’s and editorials are all over the place. Not to mention all the blogs out there and all over social media bringing new trends and products to the fore and right in the face of the consumer. They are out their showing off what they have to offer. They want the consumers going the establishments that stock their products.

So if you are still only doing French manicures and faradic facials your treatment menu is stuck in the 90’s and that is unfortunately where your spas or salons’ profit will be too. Keep up with the times – look at all the new and exciting stuff that’s out there. Get your clients buzzing and lining up to experience the new best things you have to offer. Don’t get stuck trying to flog a classic facial that sees no results or the same old Swedish massage that consists of 3 different effleurages and hacking and cupping to drive your customer out the door not begging for more.

 

Need help getting this done? Do not stumble around in the dark. Call me on 011 616 0825 / 078 145 3336 or email me on philippa@spasense.co.za