Tuesday, January 29, 2008

Spa Finder + Spa Wish sitting in a tree...

I don't know if you have heard that SpaFinder has bought out SpaWish. They are now Spa & Salon Wish and while they are keeping the SpaFinder brand for higher end resort and destination spas, their new Spa & Salon Wish brand will focus more on mass-market desires for local day spa services.

I remember when Peggy, the owner of Preston Wynne, asked me to join her in not accepting SpaFinder gift certificates anymore. She said that Pete Ellis, the CEO of SpaFinder, had finally figured out a way to take money out of spa owners' pockets. At first, I was kind of at a loss as to what she meant. But, I think am now starting to see the light.

You see, SpaFinder has been dumping their gift certificates at Costco for some time now. You can buy a $100 SpaFinder gift certificate for $79. And you can then take that gift certificate to spas like mine and pay for $100 services. So why pay $100 per service when you can pay $79 per service? How does this hurt spas like me? Well, firstly, I don't get that $100, I get $83 when SpaFinder pays me back. So how can SpaFinder be making money if they're getting $79 but paying out $83, you ask? Well, if Costco comes up to you and says, "Here's $20 million for a bunch of Spa Finder gift certificates at $79 each," are you going to say no? Heck no. You're going to gamble and hope that you can turn the $20 million into $21,012,658 before the underlying gift certificates get redeemed...hope they can play the market.

Anyway, the dilemma is now whether to continue accepting these or not. Clearly, accepting them poses the problem I just stated above. But not accepting them is kind of like being one of the OPEC cartel and trying to fix prices...because other spas will. Clients who are stuck with SpaFinders are not going to just choose to come to our spa and pay full-price...they're going to go to other spas and use them. And then we run the risk of losing them. So either all day spa owners agree to not accept them (and we have to trust each other), or the ones who stay in the game accept them and try to take the lion's share of this market.

What to do, what to do...

6 comments:

peter said...

Pretty easy for me as a spa owner. I know Costco sales are only twice a year..holiday. Next my certificates will never be sold through big retailers so I get new business I never saw. Sometimes I see one of my customers but not many...mostly new business. I redeem online with ACH bank transfers as I complined years ago about slow cash flow...now it is instant for redemption. I will take all this business I can get including yours thank-you. I only pay SpaFinder when I see the customer but pay yellow pages and newspapers etc before I see a customer...pretty simple math to me.

Mare said...

8-10 of my regular customers always seem to pay with SpaFinders now. I sure do miss the full $100 as I only get $83 now from them. But I did make the decision to continue to accept SpaFinders for the time being for all the reasons you mentioned. Thanks for your input. You seem like a very savvy businessperson. Good luck running your spa!

shdog said...

What happen when you go Costco buy a bunch of gift card for $79 and redeem yourself for $83?

Dallas Doc said...

They are selling them for 69 at Costco now. I'm going to stock up for the entire year!

Prestige Dayspa and Studio said...

I must say that as a business owner I am so disappointed in my partnership with them. They do not feel it necessary to pay their partners for services rendered. I have been waiting on a payment from them since December 29, 2016 and have been given so many lame excuses as to why we have not received the payment. The sad part is that I now have 2 clients scheduled that want to use their gift cards and I am inclined to cancel if we will never receive payment for the services. They are so un-professional and I can not believe they are treating the spa partners this way. I am filing a complaint with the BBB on today as well.

Unknown said...

I work at a salon where they accept spa finders. The owner takes the discount off of the service price. So say I do a color service for $100 if they have a spa finder the service gets discounted price and 17% so I get commission off of $83. Is this how your salons do it?