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).

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!

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

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'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.

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
www.esspa.com

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.

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.

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.

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.

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.

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!

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!