By Peggy Wynne Borgman, CEO, Wynne Business, Preston Wynne Spa

Congratulations. If you’re reading this, chances are you survived 2009 and are working your business strategy for 2010. No one I’ve talked to is budgeting for growth (we’ll all be delighted if it happens.)

We’re constantly asked what the successful spas have done, are doing, to strengthen their operations. I’ve been happy to hear how many companies whose top line plummeted still posted a substantially better bottom line than in 2008. Our own Preston Wynne spa is a good example. Sales were off 22% in our Silicon Valley day spa in 2009, but the bottom line was 500% better. That didn’t happen by accident, of course–the survival instinct is a great motivator.

We also had a blowout gift season during the holidays, with the final tally showing our sales up 16% from the previous year. That was the result of aggressive promotion, deals that encouraged larger purchases (we gave a $50 services gift certificate, which expires in 90 days, for every $200 in gift cards purchased.) Another spa in our Northern California Spa Leadership Round Table became, in her words, “her own Spa Finder” selling a limited number of gift cards at a substantial discount. While we are not a fan of discounting, the limited-edition approach is a great way to protect perceived value. (We used this same “only x available at this price” approach this month to sell costly cellulite therapy packages. We had a stunning response.)

Here are some of our key observations, looking back at the Year from Hell.

Cost cutting was a way of life, but we saw the limitations of that approach in hotel spas especially. There’s only so much you can cut before folks start to question your price point.

One trend we noted is that hotel spas are being given more voice in the way they market to day and past guests. Hotels have stopped “tolerating” their day guest segment and started actively courting a local market. Results-oriented and wellness-driven programming (though not too far off the beaten path of stress reduction and de-aging) has helped resort and hotel offerings increase their appeal to affluent locals, who are willing to pay a premium, but not for a “fluff and buff.”

Isolated destination spas were hit much harder than facilities near population areas.

Day spas were generally more resilient, in part because of their ability to “run and shoot,” as opposed to having more entrenched and institutionalized ways of doing business. If you were a large, lumbering property in 2009 you were in a world of hurt. We didn’t see a lot of creative, guerilla-marketing ideas emerging from that sector of the spa industry. Defensive cutbacks, again, don’t take you very far.

Salon spas performed the best. Clients still need their regular maintenance. Skin care services have outperformed massage, because massage is being commodotized in many areas by budget operations like Massage Envy. (If I need a kink rubbed out of my shoulder, I may be willing to let a stranger to do that, but I’m not going to play around when it comes to my face–I’m going to my trusted esthetician.) That is not to say that higher end massage services are being outmoded–it means that you need to offer a real experience to get people to pay the premium. None of this “phoning it in” business that we still see in so many hotels and resorts.

Retail has been hit hard, but retail-focused, spa-flavored operations (i.e. CVS Pharmacies’ new Beauty 360, et al) are on the rise. The spa channel needs to get much more creative to win back its share of consumer beauty spending. Part of the challenge is structural. Visit most any spa and see if it feels like a place a passer by or browser can go shopping. Spa design has focused more on grand architectural “entry statements” than engaging customers with shopping and buying cues and good retail design–which can be grand in itself. (Want ideas? Attend the GlobalShop expo in Las Vegas this March.)

Expecting all our retail to come as the result of services is an outmoded idea. Retail must be more experiential, going beyond the tired boutique approach. We must embrace the idea that some of our clients are going to be retail, rather than service, clients, and if we didn’t insist on making service the price of entry, we’d have many more customers who just want to shop with us. Some Successful Survivors have this “retail first” attitude, not making it the cherry on top of their revenue, but making it the tail that wags their spa dog.

Those big retailers sniffing around the spa world aren’t stupid…they know that there are higher sales per square foot in a retail store than a spa. A token spa presence (sometimes one treatment room) is enough to give them the spa cachet and win that customer. Spa purists may cringe, but Successful Survivors shrug it off as industry evolution. They “follow the money.”

Exclusive and unique products are vital to customer loyalty. Successful survivors use private branding in their retail mix, though it is not always obvious as such. Fewer and fewer sophisticated operations just slap the spa name on a private label product–they’re actually creating brands.

Events and parties are surprisingly strong. This is a very supportive trend for resort and day spas, and those who have *unique environments* are finding there is a steady demand for social events. Spas have become a mainstream venue for entertaining. Successful Survivors are reaching out to their marketplace to make sure that there is awareness of their event and party capabilities.

Successful Survivors were creative with their marketing mix, but they didn’t drop everything to start Tweeting. Facebook Fan Pages were a favorite way to build community and get the word out about events.

I often heard old media like the Yellow Pages kicked around. However, YellowPages.com is now the 17th ranked site in the world, and the only way you get in there is to have a presence in the book. Though it’s fairly expensive as a per-click program (we paid about $1.95 per click last year) the Yellow Pages customer, online or not, is on a mission, not wandering. AT & T just added a new direct mail postcard program that we’re trying too–no minimums, incredible targeting capabilities, about $1.00 per card, all in (though there is a base subscription of $200 per month). I’ll let you know how that works.

In general, the Successful Survivors group shared these traits:

• they worked hard on building value for customers, taking nothing for granted
• they aggressively managed utilization but segmented their customers so they were not bombarding their entire customer base with special offers
• Instead of relying on discounting, they created lower-price point services (45 minute format, for example) that still enabled them to protect their value proposition but offered customers the opportunity to “spa” for less
• they reduced overhead expenses continuously, but protected expenditures that had high perceived value for customers. In our spa we call this law “If it touches the customer, it has to be perfect.”
• they reduced the richness of compensation plans
• they suspended paid time off benefits, and this year, are partially restoring them as a perk for employees who meet their sales goals
• they got their managers out of their offices and onto the floor
• they communicated continuously and were open about their financial health with their team
• they cadged clever ideas from other industries
• they used inexpensive marketing tools, including social media, to talk to their clients and build business
• they improved and/or paid close attention to their web presence
• they set goals, coached, and “touched” their team members every month

I am pretty confident that 2010 will be nearly as challenging as 2009. It’s hard not to feel fatigued by this record-setting recession as it drags on, bumping along the bottom. One thing is certain: sharing strategies with other spas is a great way to increase your business intelligence. I’ve said it before, but I’ll say it again–form a round table with your peers (non competitive spas in your region) and get together every other month to share what’s worked and what hasn’t. It’s free and it’s fantastic.

Be sure to join the Wynne Business group on Linked In, where such sharing is highly encouraged!

We’d love it if you’d post your best marketing idea from 2009 here as a comment.