Spa Business issue 4 2011 - TourismInsights

Spas report they
use a basic offer to
attract new business
via deal sites, then once
customers call to book,
they upsell them
PHOTO:ISTOCK.COM/©STÍGUR KARLSSON
the deal the more volume will be generated,
so the pressure is often to go for deep discounts,
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. The
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 loyalty
– the deal site or the spa?
There’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 customer’s
email address, so this is subtly fought
over, with the deal site limiting the information
it passes over to the operator – typically
just the name and booking number – and
the operator looking for the first opportunity
to capture the customer’s email so they
can set up a link to sell deals direct.
Some booking software tackles this by
ensuring customer’s email address and contacts
are captured at checkout under the
credible guise of emailing a receipt. They
can then be stored to the customer record.
Other operators report that they use a basic
offer 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 offer add-ons, such as facility use.
So how do you prevent existing customers
being upset by seeing better deals popping
up in deal sites? The advice is to email them
personally the day before thanking them for
their custom and offering 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 normally
prevent it, although some will insist
on exclusivity on deals. An alternative is to
build in an extra discount for loyal customers
and deliver this via the deal site.
CREATING GREAT DEALS
The key to structuring a successful deal is
finding a formula which creates a margin for
the spa and deal site while making a compelling
offer for the consumer.
Popular options include two-for-one deals,
which are reportedly more successful than
buy one, get one free – indicating how small
differences can have a big impact. Another
option is to focus on adding value by bundling
in own-brand product lines: mark-ups
on these are usually sufficient 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.
This approach only works with own-label
products, however, because retailed brands
have minimum pricing which prevent discounts.
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.
The use of deal sites by spas is a sign the
industry’s finally starting to get to grips with
yield management – many years after the
hotel and airline industries. These sectors,
along with other areas of the travel trade,
have educated consumers to expect premium
pricing for peak times, discount for
off-peak and special deals for loyalty.
When deal sites first started making an
impact on the industry, some operators
expressed their horror at what they saw as
the devaluing of their offer and the undermining
of margins. But things have moved
on and our investigations for this feature
reveal that many spa operators are using
them with increasing effectiveness.
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.
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