Flipping a Market Entry Threat to Growth Opportunity
I wasn’t long into my tenure at the 10-location-strong Gene Juarez group when I recognized a potential threat developing. A new breed of spa industry companies was beginning to offer memberships rather than simple per-service charges. Although still relatively new, this model was gaining traction, drawing in clients to their ‘club’. It’s a clever idea. The more I thought about it, the more curious I was. Even though Gene Juarez is much more luxury-oriented, I couldn’t deny that it could also potentially help us grow.
I changed my viewpoint from threat to opportunity when we decided to establish our own spa membership, along the same lines as a gym membership. The program covers only the spa side, but it offers clients a great deal. They buy into the membership for six months at a time for $88 a month, choosing from one of four treatments each month – each representing a substantial saving on the regular charge to non-members – plus a further 10% off any additional services, 15% off Pur Skin Medi Clinic and 20% off spa retail products. We have experimented with 3 and 12 month plan and found 6 months to be the best.
It’s ideal for a frequent user, but it has also proved a draw to the not-so-frequent and even some rarely-go clients. They can spread the cost of their treatments as well as enjoy the benefits of a closer, more special relationship with their salon. We also offer every client who refers a friend an extra month free, helping drive referrals.
Membership currently sits at around 1,000 clients, with some ebb and flow. Around a third do not renew their membership immediately, but new sign-ups usually outnumber the drop-offs so overall grow is sitting at around 5% each month. I’m happy with that.
Especially as it brings in $88,000 of guaranteed business for GJ spas every month while helping reduce the impact of no-shows, as the service is already paid for. Members can only use the salon Monday to Friday so it drives business in the quieter periods earlier in the week.
But the greatest benefit we’ve seen so far are is an increase in non-spa users buying the membership, and a growth in new to GJ customers coming on board. My belief is that the membership will continue to be improved and grow – a great deal for clients, a regular income for the salon; plus a stronger, closer tie between client and salon.
Pros and Cons of Membership Programs
Drives traffic in quiet times
Good channel for cross marketing other services
Attracts new clients
Perfect gift package
Margin reduction on services/retail revenue
Challenging to sustain memberships
Potential to cannibalize existing revenue