Spas report they use a basic off er to attract new business
via deal sites, then once customers call to book, they upsell them
the deal the more volume will be generated, so the pressure is oſt en to go for deep dis- counts, even if it means it drives the spa into a loss-making position – the deal site doesn’t care, because it gets its cut regardless. T e proportion due to the deal site ranges from 15 per cent for those on travel agency rates anywhere up to 80 per cent.
WHO ‘OWNS’ THE CUSTOMER?
Customer ‘ownership’ is a big issue and it all comes down to who owns the contact details and to whom the customer feels loy- alty – the deal site or the spa? T ere’s anecdotal evidence that customers
can sometimes feel more loyal to the deal site, with the spa element of the transaction being a commodity to be bought at the cheapest rate. This is a contentious point which goes to the heart of the relationship between the deal site and the spa operator. ‘Ownership’ revolves around the custom-
er’s email address, so this is subtly fought over, with the deal site limiting the informa- tion it passes over to the operator – typically just the name and booking number – and the operator looking for the fi rst opportu- nity to capture the customer’s email so they can set up a link to sell deals direct. Some booking soſt ware tackles this by
ensuring customer’s email address and con- tacts are captured at checkout under the
SPA BUSINESS 4 2011 ©Cybertrek 2011
credible guise of emailing a receipt. T ey can then be stored to the customer record. Other operators report that they use a basic
off er to attract customers via deal sites – a well-priced 30-minute massage, for example
– and then once the customer calls to book, they upsell them to either a longer treatment or off er add-ons, such as facility use. So how do you prevent existing customers
being upset by seeing better deals popping up in deal sites? T e advice is to email them personally the day before thanking them for their custom and off ering them a deal which is as good or better than the one that’s about to be pushed out through the deal site. Although most deal sites would prefer
this didn’t happen, their contracts can’t nor- mally prevent it, although some will insist on exclusivity on deals. An alternative is to build in an extra discount for loyal custom- ers and deliver this via the deal site.
CREATING GREAT DEALS
T e key to structuring a successful deal is fi nding a formula which creates a margin for the spa and deal site while making a com- pelling off er for the consumer. Popular options include two-for-one deals,
which are reportedly more successful than buy one, get one free – indicating how small diff erences can have a big impact. Another option is to focus on adding value by bun-
dling in own-brand product lines: mark-ups on these are usually suffi cient to allow a product to be combined with a treatment to make a package with high perceived value, while allowing a good margin for the spa. T is approach only works with own-label
products, however, because retailed brands have minimum pricing which prevent dis- counts. Well-known retail brands add a value of their own and operators report they can justify up to 10 per cent higher prices on a like for like treatment as part of a deal. T e use of deal sites by spas is a sign the
industry’s fi nally starting to get to grips with yield management – many years aſt er the hotel and airline industries. T ese sectors, along with other areas of the travel trade, have educated consumers to expect pre- mium pricing for peak times, discount for off -peak and special deals for loyalty. When deal sites fi rst started making an
impact on the industry, some operators expressed their horror at what they saw as the devaluing of their off er and the under- mining of margins. But things have moved on and our investigations for this feature reveal that many spa operators are using them with increasing eff ectiveness. Turn the page to read our expert comments
on how spas can exploit the opportunities presented by deal sites, while safeguarding their reputation and bottom line.
Read Spa Business online
spabusiness.com / digital 25
PHOTO:
ISTOCK.COM/©STÍGUR KARLSSON
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