SpaBoom Teams Up with SpaFinder
October 3rd, 2007 • Posted by Stephany Toman • Permalink
We are happy to announce that SpaBoom and SpaFinder are now working hand-in-hand, bringing our combined energy to the spa marketing table to create new and exciting ways to benefit our clients. SpaFinder has purchased an interest in SpaBoom, and we have agreed to share technology as well as customers as we identify new and better ways to increase your exposure (in a good way!) and help you sell more gift certificates to boot.
“Our investment in SpaBoom is part of our commitment to help our spa marketing partners succeed in an increasingly competitive marketplace,” said SpaFinder, Inc. CEO Pete Ellis. “We’re looking forward to providing spas with a new level of marketing value that’s going to immediately pay off with more customers and more profits for them.”
Bill Bice, founder and CEO of SpaBoom shares his thoughts. “Gift certificates, which typically represent between 10 and 25 percent of a spa’s total sales, are a critical source of revenues and customers for spas. This agreement will enable our shared customers to increase gift certificate sales on two powerful fronts: their own web sites and SpaFinder’s vast distribution network. It's really about creating the best of both worlds for our clients, and ultimately increasing their reach and revenues in the process.”
Ellis and Bice both anticipate a deepening partnership moving forward, leveraging the companies’ respective technological, data and marketing strengths and services to develop new solutions and ideas for the global spa industry.
Stay tuned for more announcements in the coming weeks. We are excited about what the future holds, and will share news as it develops!
In the meantime, know that all of the things you've come to expect from us at SpaBoom will continue–our great service, our love for all things 'spa', and our respect and appreciation for all of the great SpaBoomers out there who have made it possible to grow and make cool things happen in our first 3 years!
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How wonderful! I Have personally met Jasmine from SpaFinder when she visited Chicago. SpaFinder is a great and very professional company, together with SpaBoom equals sucess! Great idea, I can't wait to find out the details!
SpaBoom – I think that is great for you! I just hope you won't charge 17% on the dollar as they do at SpaFinder. We like SpaFinder a lot, but we like SpaBoom better because it's more "win-win" for the spa and SpaBoom. One incentive to using SpaBoom is the great service for the great price.
Good luck and keep Booming!
Sandra K.
Not sure what to feel right now about the acquisition. I'm concerned about fees going up. SpaFinder currently charges 17% for gift certs. If SpaBoom moves towards 17% fees then I would cancel my dynamic website as well as my gift cert processing through SpaBoom.
On another note, I am very pleased with being on the SpaFinder program and I've been very happy with SpaBoom. As long as any price changes are in the salon owners favor, I will be even happier!!!
I have met the lovely Suzie and Marlinna from SpaFinder at Red Mountain Spa in Utah where they unveiled their new computer software for spa owners. I have concerns about SpaBoom joining SpaFinder. My concern is over the fact that SpaFinder wants to drive all your spa business through their new software and expects a percentage of ALL business sales that you do in your spa whether it comes from SpaFinder or not. I have worked 6 long years to build my business, and often do not make profit on a client until they come in the second or third time depending on their service, and what sale or promotion that brought them in in the first place. I can't help but feel that the relationship that I currently have with SpaBoom is going to be jeopardized in some way by SpaFinder's involvement with my gift certificate sales through SpaBoom. I already pay SpaFinder 17% of my sales through their gift certificate program (up from 15% a year ago). What next?
Exciting. I am interested in the details effecting spas like mine that already have dynamic websites via SpaBoom and have an enhanced listing with SpaFinder.
I think this is wonderful!
The SpaFinder and SpaBoom value propositions are very complimentary, but very different.
While I would sincerely LOVE to charge our spas and salons 17% for their GC sales using SpaBoom technology (only because I have little ones to keep fed, healthy and happy), there is absolutely NO WAY we could stay in business charging such a rate. Can you say "customer rebellion??!?"
No, SpaBoom has no plans to change its rates.
We believe the relationship with SpaFinder will increase the value we can provide SpaBoom customers, because it allows us to leverage SpaFinder's marketing power for our spas, as well as provide incentives for our respective customer bases to utilize each other's services. In other words, if it's not a win-win for our respective spa clients, I will be extremely disappointed.
I too am concerned about the % rate we will have to pay by joining with SpaFinder. I like SpaFinder, they seem to drive some business my way, however, after paying them 17%, $50 to be listed monthly, $600 for enhanced listing (and these are rates from over a year ago)… then paying commission, overhead, etc… well you know the story. That was when I owned a large spa, I sold my spa and now I am a solo practitioner and make more profit going it alone. Still, 17% is a little over the top. Please don't go there — I don't want to have to consider my options. I love SpaBoom, you guys are excellent and do what you do really well. Don't let "Corporate America Thinking" drag you into the rat race. Keep up the good work.
The "merger" is good only insofar as we; the spa owners are also merged and not purged by having to take 17% fees from both of you!!! The beauty of SpaBoom was selling our own individual gift certificates and being able to make a reasonable profit from doing that. While I belong to the SpaFinder program as well; I see SpaFinder as a "filler" for days where our appointments are lower. No one wants to take a 17% hit on all of our gift certificate sales… neither do any of us want to sell just within our own spas. There needs to be a meeting of the minds and a happy and fair compromise so "we all succeed". I am happy for you both; but in order not to have a rebellion I hope you will vigorously rethink your fee structures.
Everyone, including SpaBoom needs to realize there are other companies which work very similar to SpaBoom. They are more general, and not so spa orientated, but they do exist. SpaBoom does have competition, and I would hope that would keep the prices of their gift certificate program in check. Perhaps SpaFinder needs to rethink their price structure and lower their rates. I am thinking the reason they bought a piece of SpaBoom is because SpaBoom was taking too big a piece of the pie. From time to time the SpaBoom people have let us know how many gift certificate have been processed through the system. If you work with the numbers, you will see that SpaBoom is making a lot of money off their small percentage. Just take a look at the posts about the new building and all the remodeling that is being done. Chump change doesn't pay for all of that. There are four ways SpaBoom can make more money. They can raise the percentage, they can sign up more spas, they can have their existing client base sell more certificates, or they make more when their clients raise their rates. I too hope SpaBoom doesn't get to greedy, because then I too would be shopping around for a different company.
Just to be clear: SpaBoom will not change its rates. We will continue to be affordable (See our pricing), and we will continue to work hard to maintain an outstanding service.
SpaFinder and SpaBoom have NOT merged. SpaFinder has taken a small investment in SpaBoom to solidify our partnership, whose express aim is only to provide a win-win to our respective customer bases.
I think our previous blog posts have given the wrong impression about our profitability. Yes, we are in a new building, but we're leasing a very small bit of space from the VC firm that originally invested in us. We're still operating in the red, although hope to claw out of the red middle of 2008. When you look across all our spas, our revenue per org each month is very modest.
Given the general tenor of these posts regarding fee structures, I am very interested in hearing suggestions of what sort of fee structure SpaBoom should use. Tom, above, suggests we rethink our fee structure. We're always open for suggestions. We worked really hard to create a fee structure that was "results driven", reduces risk for spas trying us out, and provides an incentive to work on increasing GC sales (hence our sliding scale).
OK, I have a concern. Every salon/spa that is set up with SpaBoom has their client or customer database list. Is SpaFinder going to market to our customers? This is private information that is owned by each salon/or spa. Why else would they want to own part of the company? Please respond.
Wow, Anne! Great question!
You are correct, in that SpaBoom maintains the customer contact information of our spa clients. We get this information from the GC sales, and we take the responsibility of safekeeping and safeguarding this information very seriously. Our company policy regarding this is simple: Your customer data isn't ours to sell or give away.
This is detailed in our General Terms of Service (TOS), under the section "Customer Data & Co-branding." Please check it out.
I need to explain the language in our TOS a bit: Because we provide services for so many spas, and other markets (i.e. restaurants, health clubs, etc), we assume a customer that purchases a GC from one spa may end up purchasing a GC from a different spa, or a restaurant, or another business. We would like that individual to be able to use his/her same email address, password, address, etc, to simplify the buying process. The question becomes, who owns this particular customer's data? The answer is, that customer does, as well as each organization that customer does business with. Our TOS is written with this in mind.
What does it mean to you? It means two things: First, SpaFinder nor anyone else will be marketing to your customers as a result of getting their hands on the customer database. Second, an individual customer could contact us and request we remove their information from the customer database, and we would do it.
So, to repeat for the sake of being crystal clear: SpaBoom will never intentionally release or sell your (or your customers’) private information to a third-party, and you shouldn't either.
Note that SpaFinder does NOT own SpaBoom. So, they cannot demand access to our customer database. But, knowing the great folks over at SpaFinder, they would never ask, because they share the same values about privacy as we do. Even if SpaFinder did own SpaBoom, they still couldn't use the customer data as you fear, because they are under the TOS.
Great questions. Keep them coming!
Love to have a chance to explain our relationship. The reason we invested in SpaBoom is because it offered another model for spas to increase their revenue. We are not involved to raise rates, in fact we are involved to help spas find more ways to raise their revenues and profits. Couple of other things, while we do charge 17% on our gift card sales we do so because we sell through 31,000 retail locations plus incentive houses… they take 12% to 15% of our mark-up. So we are not getting fat on the 17%, we are enabling more customers to find your spa. Think about this, we have cards in many locations that are only $25 cards. We do this to create a customer coming to your spa that you can up-sell and the cost for the customer acquisition is only $4.25. Pretty cheap marketing and you only pay when you see the customer at your spa. Next, regarding our new online booking program which was previewed at Red Mountain… this full point of sale system has no up front fees and has something else no point of sale system has… CUSTOMERS that you never saw. This system would cost $20,000 for spas to buy but we have built an easy entry system for spas that also comes with some exciting credit card savings that make this system cost neutral… meaning you can have a point of sale system that has customers attached to it and costs you essentially nothing. This is all part of our business rational to be the best company you can work with to help you in the spa business. So for your thoughts about costing more, toss those out and think more revenue and less cost to get the income. Then you will understand our business philosophy.
Pete Ellis, CEO, SpaFinder
Thank you so much for explaining how its going to work & what it means to us in regard to fees. This is very exciting! How cool!
Additional thoughts… in all my prior businesses I have had the model that everyone must win. The companies we do business with, the customer and the company I am the CEO of. This means that every thought is put into making spas do better by working with us. ISPA recently released research that said that the industry was flat and that spas had no increase or in fact went down in revenue. We also do research internally for publication on the spa industry. Spas in our programs increased revenue from 2005 to 2006. Another great benefit by working with us is that our website http://www.spafinder.com gets over 5 million spa consumers a year coming to us and many use us as a directory. This means that they go to spas listed in our programs just because they are on our site and WITHOUT gift certificates being redeemed. I am proud of the fact we are in this business to be an asset. I am also an open book on my thoughts and not afraid to discuss because frankly the TRUTH SHALL SET YOU FREE… meaning we have nothing to hide. So much so that if anyone wants to talk to me you can call my direct line at 212-716-1210… Pete
Perhaps SpaFinder will take notes from SpaBoom and move their 17% down to a more reasonable rate. From what I'm seeing, I'm not alone in thinking that SpaFinder is taking advantage. I too, accept the SpaFinder GC's, do the $50 per month and the $600 per quarter. This is tooooo much SpaFinder. Get more reasonable or I'm gone next year!
ps. I'm glad to hear that SpaBoom is not going to follow suit on the 17%. It keeps me from hiring a webtech to develop in-house gift certificate web pages!
Congratulations!!! Yes, some remarks I am in agreement with because we are working hard for each $, but I believe in unity where everyone become stronger because some job is taken from you and done by professionals. And yes, if it will be to expensive then each of us will make their decision to stay or to leave. I am with both companies for some years and I am very happy. If everything will be as it is promised — we will be winners. Both companies are great source of help on a daily base. Let us try!!!
We are so happy to have our web site with SpaBoom. I do worry how the partnership will effect my percent of GC sold. We were considering leaving SpaFinder because they charge so much, we only used them because we needed exposure and didn't have a web site. Please don't sell out to a higher percent. By the time the owner gets his share there already isn't much leftover!
Here at SpaFinder one of my main objectives as VP of Day/Med Spa Sales and Marketing is to help our Spa partners grow their business and be more profitable. SpaFinder cannot exist without your business and if you, the spa owners, are successful, we are successful. Period.
There seems to be a bit of confusion about what marketing programs we offer and what are the costs involved. So here is the description of the two types of memberships that we offer:
We pride ourselves on being hands on when it comes to customer service. I am always available to answer any of your questions and concerns and help you in any way I can to take the most advantage of SpaFinder marketing program and your listing. Please do not hesitate to give me a call at 212.716.1196 or email me at milana.knowles@spafinder.com. I look forward to hearing from you.
First of all, I love the results we see from SpaBoom sales and the fact it is so user friendly. The fees are reasonable and it's a win-win business situation. That being said, I hope the partnership with SpaFinder doesn't ruin what we have all come to enjoy.
We too, are considering leaving SpaFinder because of the fees. When a customer wants to use a SpaFinder gift certificate to purchase a spa package that has already been discounted, the spa isn't left with much after their 17% is taken out. Will we be indirectly paying more fees to SpaFinder for SpaBoom gift certificates purchased through our website?
Before making any decisions, try to step back and look at the big marketing picture. To bring a new client through your door, I assure you, costs so much more than 17%, you pay on a gift certificate or card (your new client costs you most likely between $4.25 – $17).
I invite you to analyze all your marketing strategies and what it cost you to get a new client come to your spa. Divide the money spent on an initiative with the number of clients it brought in and you will get a clear picture of the cost per client.
Upon visiting your spa once, clients come back to you without SpaFinder gift certificates, spend money in your retail area and upon receiving a great service are very likely to purchase gift certificate directly from you. So let’s not lose sight of the residual revenue from every new, satisfied client.
How about the large percentage of the spa goers that do not hold a SpaFinder gift certificate and use our website just to locate a great spa in their neighborhood?
Milana — If the 17% is not an issue, and SpaFinder does not own SpaBoom, then your previous statement is a moot point, and irrelevant to the SpaBoom – SpaFinder issue. If you will indeed be charging the 17%, then I can see why you would be touting the laurels of what a great job SpaFinder does with web ubiquity. So, which big picture should we be looking at here? And I assure you, spa owners ARE looking at the big picture and scrutinizing their budgets wisely (why would you assume we don't?). If they didn't, they would be out of business quickly.
Are you trying to convince us that the 17% is a good idea, or that we can trust that our relationship with SpaBoom will not change?
Another thought: Advertising has taught me that my demographic is zip code driven. Meaning the majority of clients come from a 10 mile radius of my spa. The number of clients that come in due to a SpaFinder or Spa Wish gift certificate is a small fraction compared to the number that comes in due to my advertising programs. I appreciate that SpaFinder is a quality company that feels their software would be a quality offer for any spa owner, but I feel strongly that the volume of clients that come from my advertising campaigns would never be replaced by the SpaFinder program. The numbers just do not add up. I have had many advertising/business partners that believed strongly in their products and made great claims to the volume of work I would receive from their programs/efforts on my behalf that just never materialized. The ratio of client base that I bring in myself is far greater than anything anyone else has ever said they could bring to my spa, and I could not imagine having to split a portion of that for the much smaller ratio brought in by SpaFinder or Spa Wish. My independent contractors take 50% off the top, then 17% to SpaFinder before I ever cover the brick and mortar expenses. And don’t forget I still would like some salary for myself. Silly me.
To tell you that I am happy with 17% will be not right, but I would like to share how I manage 17% or 15% (Spa Wish). All my employee signing paper, at the hiring time, that they agree to split 17% or any specials that I run through the year. And I do not have problem with this issue. And another thing, client cannot use SpaFinder, Spa Wish toward purchasing House Gift Certificate (you are setting your rules).
And I must to admit that Milana Knowles happened to be right when she is talking about clients that found us through SpaFinder site without purchasing their GC. I believe that if the promise from both (SpaBoom and SpaFinder) will be kept; they can do much more for us. They have a lot to offer and I think near future will prove it.
Congratulations to you, but I don't think it is in the best interest of YOUR customers. I am disappointed and won't go into a lengthy explanation because I am sure it has all been said by the others. Just chalk up my comments on the NAY side!
Hi everyone. I've enjoyed reading all the comments posted RE the SpaBoom and SpaFinder teaming up and see it is a spirited conversation! Since I am the President of SpaFinder (and the wife of Pete – posts #14 & #16) I thought I may as well join the conversation.
First let me say that we are really happy about our involvement with SpaBoom. As we have kept watch over the spa marketing landscape out there, SpaBoom caught our eye early on. We liked their business model and appreciated that they were really tech-savvy. I also loved their sense of humor which is apparent from their blogs. When Peter first visited the SpaBoom offices in Albuquerque, New Mexico he came home reporting that they are "the real deal." Pete has a stellar tech background and so do they and the personalities clicked. Then when Bill and Larry came to our SpaFinder offices in New York, we all got to see just how the business models, the missions and the values fit together. And as Pete said in his blog post above, every relationship has to be a win, win, win, win. It has to be good for the customer, the spas, SpaBoom and SpaFinder (in that order by the way).
On a personal note, it was fun for me to share with Larry and Bill that my entire spa career began in New Mexico — at a place called Tom Young's Health Spa — and to find out that Larry had actually been a member there many years ago! That is where I interned as a senior in college — it was my first spa job and where I fell in love with the business. (You might ask why I would be interning in Albuquerque, New Mexico when my undergraduate degree was from the University of Illinois? Well, let's just say it was over 30 years ago and had something to do with a an old boyfriend who moved from Illinois to New Mexico… and the rest of that story can only be told after a few glasses of wine.)
So enough about relationships and onto some business observations. First, I am noticing that we need to do a better job communicating the cost and value of our SpaFinder relationship with some of our partner spas. Ouch! Some of the above comments are a bit painful. In particular I am so surprised that two people mentioned that they pay us $600 a quarter and $60 a month when we have no such program. The only programs we have for day spas are one in which people pay $25 up front and no fees at all after that except when there is a is a gift certificate redemption, or the enhanced listing program where there is a $60 a month fee that gives the spa a weblink. And by the way the weblink often leads to customers clicking on the spa's website where they can buy the spa's gift certificate which is why it is so valuable to many spas.
However… we need to take responsibility for the fact that there are some partners who are not clear about their fees since there is confusion and so we will go back to the drawing board to fix that. My apologies.
I do want to add one more point to the discussion that hasn't been said. I think that one thing that shows that most of our spa partners are happy partners is that while any spa can leave the SpaFinder program at any time they want, they hardly ever do. I think that in the end our partners do feel that the relationship is beneficial to them. I don't think we would have 3,800 spas accepting our gift certificates with another 50 – 100 added each month if it wasn't a win/win situation for everyone. And if it was so inexpensive to provide this service, there would be more competitors doing so — which there are not. It is very expensive for us to build the relationships we have with corporations such as American Express, Neiman Marcus, 1-800-Flowers and all the others which bring more spa-goers into the market for everyone. No one spa alone would be able to service a national or international account — we can only do that together through our partnership.
I think that the SpaBoom/SpaFinder relationship will be a good one for the spas and I believe all of us will do everything we can to help keep the costs down. In the mean time, we will continue to help grow the pie… by creating more spa-goers!
Susie, I just sent an email to Milana explaining to her that I "applied" for a basic listing on SpaFinder on or about September 14th online on your web site and have never heard back from any of you and still do not have a listing. I used you guys for a couple years, sold my business last year and the new owner still uses you and has kept the "enhanced listing" for $600 per quarter and the monthly fee of $50 or is it now $60 so she can have a "link" to her website from her SpaFinder listing.
To the SpaBoom clients, another way around losing more than 17% of your profit when accepting SpaFinder GCs is to notate in your ads or on your website: *offer does not apply to or excludes third party gift certificates. That way you do not have to suffer further discounts on your spa packages or advertised specials.
Did you know that Costco offers SpaFinder GCs at a 20% discount upon purchase? I had a client walk in (before I sold my spa — I am a solo practitioner now) and she said to me: "I purchased my own $200 worth of SpaFinder GCs at Costco for 20% off ($160) then take them to the local spas that accept them and receive more for my money when I take advantage of their advertising promotions, etc. Smart lady eh? BTW — my girlfriend in Huntingbeach CA gave me the heads up on the *notation – she puts it in all her ads and on her website — I do however, like the idea of making the employees share the discount… Glad I am the only employee though!
Milana–What you say is correct. But what you don't seem to give any consideration to is that every SpaFinder recipient is NOT a new customer. Many are repeats and if these certificates are used for any special promotions (discounts) we loose at your expense! I don't want to look at your big marketing picture if you can't see our big "let's stay in business" picture.
I understand the owner's point of view very well. I was there fighting the same battles for many years myself. The reason I speak about the big picture is that no one marketing strategy is enough to create a successful business. The new clients, the old clients and everything in between make for a great business. Distributing your marketing dollars and putting them where you get most return is crucial.
When I ran spas, I was faced with same decisions and looked at all the issues you’re looking at.
The bottom line for me was that the new business SpaFinder drove and the business it brought through the corporate partnerships and vast incentive business, outweighed the repeat customers and marketing fee. I always thought that discounts (such as the one at Costco) inspired my regulars to come more often and therefore spend more in my retail area. They also encouraged more of the “reluctant” clients to treat themselves to a spa experience. According to many spa industry experts, great retail selection and robust sales affect your bottom line a lot more than your service sales.
How the program contributes to your bottom line? That is the decision only you can make. As I mentioned, if you want to discuss it with me, please do not hesitate to call.
Valentina, to answer your question about allowing clients to buy your spa’s gift certificates with SpaFinder’s is perfectly fine. Why not? You may allow your clients to buy anything in your spa using the certificates or cards. Retail, services or even your own gift certificates. We even suggest to issue your own gift certificates or store credits if the client does not use the entire amount during their first visit, so they come back to your spa.
Stephanie, if you’d be kind to e-mail me your information to milana.knowles@spafinder.com, I will look into what happened with your listing and get back to you personally.
Just one more thing I forgot to mention. There seems to be a thread of statements mentioning a cost of $600 per quarter. I have no idea where that is coming from. I don't want to sound redundant but that charge is non-existent. The cost of Enhanced program is $60 per month and no other costs are involved.
In conclusion, I just want to add, that cooperation between SpaFinder and SpaBoom has been forged with your spa business in mind. Both companies want to bring more value to their existing programs and try give you more value.
I understand everyone's point of view. SpaBoom provides a web-based service that allows us to market and sell the convenience of real-time certificates. It has to be cost effective and have a value for the service. SpaBoom does deliver this service well. The relationship of SF and SB can only add value. Many of us just happen to do business with them both. SpaFinder and SpaBoom are two different business models that complement each other. This is a very important quality in a partnership. With all this in mind and us it creates for a great synergy effect in our business industry. I always look for this strength in any business partnership. I market and advertise in many different areas and of course like any business owner want to see the return on the investment and/or expense for it. I have been with SpaFinder and Spa Wish since their inception. The question is: Whether it drives new or returning clients to your business and is cost effective for your business? I always look at it as business I would possibly not have if I didn't partner with SF and SW. We all want our marketing and advertising dollars to bring in customers. SF and SW are just another marketing avenue that drives customers in without you spending a dime beforehand till they come in. The listings are another marketing tool available to us and are all by choice. It is always to your advantage to use the tools available to you if they work for you. I have found SpaFinder to do just what they were intended to do. They are professional company and provide our day spa industry a service that helps us grow.
Milana, I emailed you. Also, my bad on the $600 fee for enhanced listing. It is NOT for the enhanced listing it is for the "Featured Spa" listing.
Lots of lively discussion here — obviously spa owners/managers are passionate about the 3rd party gift certificate business.
SpaBoom: Many in the spa industry took umbrage when SpaFinder started selling gift certificates at Costco at 20% less than what we would sell them for. It felt as though they were robbing us from both ends — the sale of the gift certificate and the redemption. (By the way, WaySpa just took up the same practice and are getting the same result — defections). PLEASE take a lesson and avoid these types of 'opportunities.' Doesn't feel like partnership.
I am so glad that Maria brought up Costco question since I wanted to explain the benefits of that relationship and let you know exactly how it works.
When we chose Costco, among many other retail chains, we based the decision solely on the demographics they cater to. This national chain has the best demographics and highest income per capita of any other potential spa goers! I want you to know that we turned down Sam’s Club as we wanted just one partner for this unique partnership.
In working out our relationship we offered to feature our product (SpaFinder gift certificates) only twice a year, Holiday Season and Mother’s day. Costco wanted us to offer it year round, but we negotiated with them to limit it, as we thought this in the best interest for our spas, SpaFinder and Costco.
The discount of 20% that is offered to Costco shoppers is in its entirety absorbed by SpaFinder, and has no effect on your bottom line whatsoever. There is no down side to your business apart from occasional “regulars” taking advantage of the offer. Think of it this way, even when you have your own promotions, some of your existing clients may take advantage of it. The question is; does it make them come more often than they usually would, and that you need to determine for yourself. As I mentioned, each owner needs to evaluate pros and cons of any marketing incentive.
The fact is that only 10 spas in total have dropped out of SpaFinder’s program because of the Costco relationship but hundreds more have joined, in fact almost 100 per month. This tells us that great majority deem the relationship great for their business. Spa owners send us feedback everyday that is extremely positive regarding our marketing programs, like a recent one from CastleSpa in Plainfield, New Jersey, saying that they “loved our program as it sends them on average 10-20 new clients a month.”
As a national brand, Costco chose to carry our product since we offer huge nationwide network of spas, so when shoppers buy gifts for their friends and family out of town, it is you that benefit from these incremental sales. People buy for friends and relatives in Chicago even though they bought at a Costco in the San Francisco area.
This is a great forum to express some thoughts, so here is one more. Jimmy LeSage of New Life Hiking Spa told our CEO, Pete Ellis, 4 years ago that our fees were too high. Pete Ellis explained our financial model and then asked Jimmy if he would rather SpaFinder go out of business. Jimmy’s initial answer was a fast, “YES,” he said, however he continued to use our programs. Several years later he married a very savvy marketing person, Kathleen. She started working more on the relationship with SpaFinder rather than complain as Jimmy did. Today she will tell you that SpaFinder is the most important partner they work with for developing business. She even told us to give you her phone number if you wanted to verify… 866-298-5433. Here is the thought, marketing is our strength and we bring thousands of people to spas each month. We pay out almost $2 million per month to our spa partners and generate millions more in business for them each month. Don’t forget that it costs us money to develop these customers for you… many, many $ millions each year.
We like the SpaBoom model, as it offers something we don’t, an extremely cost effective way for spas to generate their own gift certificates. This is the reason we wanted to partner up and offer our spa partners an additional way to increase their business. At the end of the day SpaFinder is here to help spas stay in business and increase their revenue. We also want to emphasize the fact that we love SpaBoom’s low cost model and do not want to interfere with their well-run model.
I am happy that this partnership generated interest and lively debate, as it offers us a chance to explain the advantages and ideas behind the initiative.
NIIICE!! After watching the "industry" and the "internet" for over 10 years, I saw SpaBoom as the gem it is early on.
Good job SpaFinder you are still the Industry Leader. Kudos to SpaBoom — great news for a toddler.
Keep us posted in at timely fashion as to how the merge will affect our business and when. This way we can implement new policies, processes and procedures to avoid client confusion, thus ensuring that our relationship remains prosperous for all parties concerned.
The fact that the individuals most responsible for the actions of both SF and SB are taking a very active participatory role in this blog provides ample reason why one of the first things I did when I opened my spa over 5 years ago (we signed our lease 2 weeks before 9/11 — talk about second thoughts) was to join SpaFinder (we also joined Spa Wish at the same time but it seems that there are more SF clients and they seem to spend more). It is also the reason that I was one of the very first to sign up with SpaBoom (after many direct discussions with both Bill and Larry). I don't know what data ISPA is looking at but ESSPA continues to expand at about 30% per year (my biggest problem is finding enough staff that wants to actually work). Knowing that we are always one of the first and few spas in our area to be listed with partners such as SF and SB, my guess is that besides our providing the best services anywhere in a uniquely inviting space, it is our commitment to the online community that has allowed us to grow so much.
Let me distill my verbosity to this — ESSPA goes to every length to make it as convenient as possible for our current (and potential) guests to find us, learn about us, interact with us and do business with us. SpaFinder helps us do exactly that. Personally, SpaBoom has been substantially more benefit at a better ROI but they are two different pieces of the puzzle. SpaFinder is advertising/marketing and their services are reasonably priced for what they provide (and I will definitely take the association with Amex and Nieman Marcus, etc that comes with the SF network). SpaBoom is part of our direct sales effort and the fees associated are more than reasonable for the services they provide.
At ESSPA, we do as much as we can on our own. For the things we either can't (or don't have time for) do, we try to find the best partners possible to help us. SpaFinder we chose a long time ago, SpaBoom we chose as soon as they began. They both have helped us grow our business.
All this being said, Congrats to Bill, Larry and everyone at SpaBoom (and to Susie, Peter, et al at SpaFinder). Oh and one more thing — Please don't raise any prices.
Best,
Eva Sztupka-Kerschbaumer
http://www.esspa.com
Milana makes an excellent point about Costco. Because spas themselves are not selling the gift certificates, they are only redeeming them. If SpaFinder absorbs the cost of the discount, and the spas still get refunded the full amount minus the traditional 17%, then what is the problem? The only entity that I can see who loses in this situation is SpaFinder. Also to bridge on Maria's comment about WaySpa: the fact that another company is following SpaFinder's lead, to me, just indicates that other companies have evaluated our relationship, and feel that is a great idea and not “defectionous.”
This has been an interesting (and frustrating) blog to read. I am partnered with both SB and SF and feel like I have an edge on my local competition. I own a spa in a valley with many small towns and a few bigger ones. Advertising in all of these small towns can really add up. I am one of two spas that accept SpaFinder in a 65 mile radius. That 17% that I pay SF is hard to let go of but has been well worth every penny I have given up. I am really excited to see the participation of Costco because I know that if someone can get 20% off of a gift certificate then they are more likely to buy more and yet I am still spending the same 17% with a lot more local exposure. What SpaFinder gets from my spa is pennies compared to what I pay for internet and phonebook advertisements and it is up to me to get that client to come back and be a permanent customer to my spa. Yes they get a SF from someone and try another spa but we provide such a wonderful environment and services that they will come back. I also make a point to let the customer know that they can buy their GCs directly from our website and it is even more convenient. I appreciate the service I get from SpaFinder and SpaBoom because it has increased by business tremendously and given me a leg up on my competition. But that doesn't mean I like paying the 17% from SF, it just means I think it is worth it! Does this investment mean more benefits for SB and SF partners?
I really love all the comments, suggestions and concerns raised so far. I have also received emails and calls from some of our clients, expressing their feelings, perspectives and thoughts.
I've learned a few things with this discussion. First is that SpaBoom offers a service that is valued, which tells me we're doing something right. However, if there's a hint that things might change at SpaBoom, it causes great concern. We have a responsibility to learn, reflect and understand this … as a company and in our communications.
Second thing I've learned, brushing aside the heated discussions on SpaFinder's fees, is that there appears to be overwhelming consensus that SpaFinder does indeed provide an important marketing channel for spas. This is important to me personally, because we really, really want our relationship with SpaFinder to work, be productive and be successful.
We're proud of where SpaBoom is today, but we have so much further to go. Key to growth and strength will be relationships such as the one we have with SpaFinder. It's absolutely critical to our success to partner with the right organizations. This takes work, research and luck. Partners not only have to have the right position in the marketplace, they must share our values, match our culture and offer complimentary products and/or services. We have a number of high-quality partners, and SpaFinder is right there at the top the list.
Some clients mentioned to me personally that they enjoyed SpaBoom because we're a small company, and expressed disappointment in our evolution to a larger company. I have a couple of thoughts about this. First is, we're STILL a small company, and that's not going to change anytime soon. Second is, our pricing model is based on quantity, which means we need to grow significantly to make the business model work. The trick is, keeping a high-level of customer service and a small company feel, as we reach that size.
So, our focus is going to continue to maintain great technology, customer service and partnerships. Without pricing changes. And, integrating our offerings with our partners.
And, Jillian, yes we're currently working on benefit opportunities for joint SpaBoom / SpaFinder clients. Stay tuned for more information!
Larry.
I am excited about the new partnership, but I am also concerned like the others about SpaFinder's excessive fees. I have been using both SpaFinder and SpaBoom and I have to say I more than broke even my first month with SpaBoom. I have been with SpaFinder the exact same 8 months and I am still in the red with them. All of their fees are killing my bottom line. I doubt I will go for a second year with SpaFinder. I am dedicated to SpaBoom!
By the way, Larry Donahue, you truly should NOT "brush aside" the heated discussions on spa finder's fees! Don't forget that this is a point that we as your clients are looking to YOU to address carefully. THINK ABOUT IT!
Our fitness & spa facility in Phoenix, AZ joined SpaBoom immediately following a email we received back when they were just starting up and it has not only been a great value, but allows us to offer immediate gratification to those last minute shoppers. However, when it comes to SpaFinder, I too find their rate of 17% excessive as well as their $60 a month enhanced listing fee. I have expressed this issue directly to SpaFinder many times especially when I receive the absolute same benefits and advertising from Spa Wish, and their rate is only 15% and I pay just $150 a year for a enhanced listing with website listing and description. Spa Wish also sells their Gift Certificates in many stores so really what makes SpaFinder believe they are so much better when they cost so much more. The bottom line for us is I love it when I have a new client with Spa Wish and I'm just remotely pleased with a SpaFinder Gift Certificate knowing yes I've brought in a new client, but it is costing me more to do so. Plus I seem to get more non gift certificate holders off of Spa Wish since I can afford that enhanced listing (go figure).
I too also require my technicians to split the cost of accepting any 3rd party certificate with the store, this just makes since for all involved. I'm paying for the advertising so why shouldn't they contribute in the end. I too also agree that it is important to set rules for accepting 3rd party certificates limiting the use towards spa packages since we have already given a great discount. The one certificate I don't split with my technicians is the SpaBoom their rate is great so please don't change a thing. So I would say I too am dedicated to SpaBoom and the jury is still out for SpaFinder. Hopefully SpaFinder will truly take to heart all of these postings and concerns and realize you will grow faster by being more competitive that trying to make people believe your all that and a bag of chips!
With all that being said… here is to all of the wonderful spa owners out there who work there butts off trying to make their spa a success and as one poster wrote possibly take a little something for themselves. That is my goal at the present since we are just completing our 3rd year and are still in the red. But I know this is going to be my year. So here a toast once again to all of us obtaining our dreams of running a successful business!
I’d like to try to do a better job of explaining our partnership with SpaBoom, in order to make it clear that our intention is to help spas gain market share and revenue.
It is very important that you, as a spa owner, understand that the relationship with SpaFinder on your part is voluntary. We have been very fortunate that nearly 4,000 spas find our programs helpful in their marketing efforts. If a spa loses money with our marketing initiatives, they should certainly not be part of our program, no more than we should lower our fees to lose money in order to help market a spa.
We invested in SpaBoom to help our spas gain a better foothold on revenue increases and to do this with the present fee structure model they presently offer. We like it as is! But please look at one big issue: SpaFinder brings you customers, and with SpaBoom, you must find your own. There’s nothing wrong with either model, but in the end, I think you will find that both require effort and money spent to be effective.
We have explained a few times that we pay out 15% margin of our card/certificate sales to large retail distribution channels. We then charge a fee of 17%, which is only 2% above some of our channel commission rates. We do this for a tremendous amount of revenue coming to our spas. By the same token, we send out about $2 million a month, in payments, to spas in our programs. The nearest competitor does less than 1/10 that, or $200,000 per month.
So it takes marketing expenditures for us to develop this large revenue stream for our spa partners. We cannot do all that without revenue support.
Our website puts your business in front of the vast audience of spa-goers, so we do what we do best, and hopefully spas see us as a huge asset. Should this not be the case, I or anyone in our company is happy to discuss it. In the end, you, the spa owner, get to choose whether it this program is worth your while.
I cannot speak for SpaBoom, but I do know that they want to have a spa as a partner only if the partnership works for both parties. This is a principle both our companies share. Larry and the group at SpaBoom are all in sync with a core value system that says, deliver as much as you can, for as inexpensive as you can. At the end of the day we think we both deliver — or, our businesses would not be growing at such rapid rates.
My Very Best to You All,
Milana Knowles
Pretty sure the way SpaFinder makes its Costco and other GC programs work is on the unredeemed gift certificates. Our issue is this: the cash sits in SpaFinder's account. What gets redeemed, we pay 17 percent on. We get ZERO on the unredeemed ones, and we all know how much that is. We also do not get the benefit of the cash flow from the time the GC is purchased and the time it is redeemed. Add that into the fees and the costs increase beyond the 17 percent fee, especially if you have a strong brand or market share. For some, it may be well worth it. Just weigh all the facts when deciding.
We love SpaBoom b/c the cash sits in our account the second the GC is purchased, and until it is redeemed… or not! We have a lively website so it works very well. SpaBoom — how about some loyalty or affinity programs? We would love it!
Hate to say it, but I agree that 17% PLUS the cost to be listed on SF is entirely too high, and if you don't watch out, can almost put you out of business! It sounded like a great idea at first, however, when I really started calculating what it costs to accept SF, plus, most people pay the balance on a credit card (yes, credit card fees) plus, the commission to the technician… hmm… what is the owner left with??? ALMOST ZILCH, how's that for paying your high electric bills, phone bills, water bills, payroll taxes, maintenance fees, etc, etc…
It may not be right for every spa, however, if a client wants to use a SF certificate, we let them know that we charge 15% BECAUSE we are charged 18% and it takes approximately 3 weeks to be reimbursed. Most people pay the 15%, very few look elsewhere, and that's okay. We also let them know that if they choose to purchase a gift certificate in the future, please do so through the spa (no additional fee).