Welcome back to the 4 Horrible Mistakes You’re Making with Spa Branding & Marketing series! We’ve talked about spa branding mistakes and the top thing you’re doing on your website to make it as un-searchable as possible. Now, we’re going to talk about money. I know, talking about money is a bit of a sticky subject, but we really gotta talk about this one. It won’t be that scary, I promise.
When it comes to attracting potential clients to your spa, many of you may first think of offering a discount to increase awareness of your spa to first-time guests. Spoiler alert: it is a bad idea.
Instead, you want to increase loyalty. I’m sure you’ve heard the adage, “It’s cheaper to keep a client than to gain a new one.” That’s what we’re going to talk about today.
Mistake: Offering discounts for first-timers through Groupon and LivingSocial
In last year’s ISPA Snapshot Survey on Marketing, offering a Discount for First-Time Customers was listed as the least effective promotion used by spas. 33% of all spas said this promo was only somewhat effective. 18% of all spas said it was not at all effective. The only other promotion with a similar efficacy rate was the Free Gift With Purchase promo.
While the Discount for First-Timers is the least effective promotion, combining that with Groupon or LivingSocial has the extra added effect of repelling your loyal regulars and turning your spa into a chaotic zoo. Kind of defeats the whole notion of a quiet, peaceful sanctuary doesn’t it?
Even though you’ll get a quick cash infusion, the long-term repercussion of using Groupon promos involves damaging your brand and reputation. No promotion is worth a hit to your reputation. As we discussed in Spa Branding Mistakes You’re Making and How to Fix Them—Part 1, trust is the most important value for your brand.
Last year, a Forbes Five-Star resort spa in Southern California ran a Groupon promotion for a deeply-discounted couples’ massage. I have to admit, it was a very enticing deal. 50% off for a couples’ massage at a swanky resort spa that normally doesn’t do discounts? I’m in!
Apparently, everyone else thought the same thing. The promo was for a weekday. That’s usually a slower time for the spa, but it was jam-packed on the day of our appointment. And from what I heard from the massage therapists and an on-duty manager there, it was jam-packed for months as they fulfilled all 2,500+ Groupon promos they sold.
Let that sink in for a second: over 2,500 vouchers sold. Multiply by two people. So not only was the spa busy, but it was filled with first-timers who weren’t familiar with spa etiquette. The once-quiet sanctuary transformed into a loud party atmosphere. Every day.
Loyal regulars weren’t having it and left in droves. Therapists were left exhausted and without their usual commissions and tips after all the first-timers left.
Did these $200 Groupon guests return? Not likely. They weren’t the people who would usually visit in the first place, spending at least $175-$200 on a regular 60-minute massage.
And now this Forbes Five-Star resort spa has joined the ranks of every discount spa out there who uses Groupon and LivingSocial regularly to drive traffic and create awareness. Their therapists are tired, their loyal clients have jumped ship, and it’s hard to attract new guests because of their tattered reputation.
Brand perception is measured in several different ways, but you only need a quick look at the spa’s Yelp page to see that the Groupon promotion was a disaster for both the spa operators and guests. Sadly, their reputation has taken a huge hit.
Frankly, I’m not sure how they’ll recover as there are so many other luxury and mid-market options for spa-goers within a 5-mile radius. And their reputations haven’t been touched by offering discounts.
So how should you fix, or better yet, avoid making this costly mistake?
How to Fix It
Offer slow-period discounts (days of the week, a month or two during the year) combined with a loyalty program for the most rewards for both you and your guests. The ISPA snapshot survey I mentioned before showed the most effective promotion a spa could run was a discount offered during slow periods (mostly mid-week). 35% of all spas said that this discount was high on the efficacy scale and 26% of all spas said their loyalty programs were very effective promotions.
Having a rewards/loyalty program for your business encourages profitable actions that drive customer loyalty. This turns existing customers into powerful marketers through referrals. It also rewards your best customers for consistently buying from you.
A points program would be the simplest way to start. It’s a great way to get your customers to perform “valuable store actions” (increase their expenditure) and return more often.
A VIP program gives increasing rewards to your best customers as they engage with your spa and retail section. With this type of program, you can create tiers to give your best customers the most benefits. Everyone likes perks and loyal customers who are consistent like them even more. They get that little hit of dopamine every time they buy from you; they get a bonus for doing what they always do.
Offering slow period discounts is a no-brainer to keep your spa humming at a decent pace. It’s comfortable for your guests, your therapists, and your bottom line. If summer is a slow time for you, create a Summer Escape package that includes all kinds of seasonal goodies.
Wednesdays are dead, so how about a locals special that not only fills up your schedule, but encourages local loyalty? If you have a loyalty program in place, a promo where locals get double rewards on Wednesdays would be profitable.
The Key Takeaways
The best way to avoid the Groupon-induced drama is to avoid Groupon. When you use Groupon, your reputation will likely take a hit—no one wants to see that happen to you!
Trust is a key factor in your branding and perception. It is a major contributing factor when turning first-time customers into loyal clients. You want them to return and extol your virtues to anyone who will listen. Do whatever you can do protect your reputation.
Instead, offer a loyalty program to incentivize and reward clients for making purchases. Not only does it benefit them because they’re reaping the rewards for their mind, body, and soul, but they’re getting that dopamine hit every time they get purchase and receive a perk. It’ll keep them coming back for more!
What loyalty system do you have set up in your spa? If you don’t have one, what other kinds of programs are you putting in place?
The fourth and final installment of our 4 Horrible Mistakes You’re Making with Spa Branding & Marketing series is all about influencers and why you have to think long and hard before using them in your marketing. So if you’ve ever thought about trying influencer marketing, you won’t want to miss this one!