How the Spa can Increase Customer Engagement

By Kimberley Matheson Shedrick Senior Vice President, WTS International | May 15, 2011

As the hospitality industry evolves in a dramatically changed landscape, the goals are ultimate customer engagement and relationships across all channels. This starts with a quest for creating emotional allure and going straight for the heartstrings; creating a lifelong consumer is the ultimate prize. Spas, more than any other hotel service or amenity, provide the personal, intimate and comforting experience sought by today's consumers and provide an entry into Relationship Marketing that hotels and resorts need to stay competitive.

A clear convergence is taking place between global trends in tourism and the components of wellness. In this context the spa becomes a focal point of interest. Proactively managing Spa, Fitness and Retail KPI's (Key Performance Indicators) remain of paramount importance in savvy management of business strategy. However, Spas have emerged from the recession as the new powerhouse engine for the development of creating life-long customers and taking hospitality "customer engagement" to an unprecedented level.

Customer engagement recognizes the long term value of customer loyalty with the key principle of retention by satisfying requirements through a mutually beneficial relationship. The practice of customer engagement is facilitated by tracking and analyzing of each customer's preferences, activities, tastes, likes, dislikes, and complaints (or effective conflict resolution). Spas have long tracked customer preferences by creating a database of when and how repeat customers buy their services and products, the options they choose, lifestyle concerns and special occasions. This becomes a powerful position from which to develop one-to-one marketing offers and product benefits.

This personalized relationship approach transcends the simple purchase-exchange process. Client contact becomes more meaningful and richer through the provision of a holistic, personalized purchase and experience, and the relationship becomes stronger.

Even a 5 percent improvement in customer retention can cause a significant increase in profitability, and depending on the industry, that net present value can increase between 25 and 85 percent. Once a relationship has been established with a customer, several factors converge to boost customer retention:

  • The cost of acquisition occurs only at the beginning of a relationship, so the longer the relationship, the lower the cost.
  • Account maintenance costs decline as a percentage of total costs (or as a percentage of revenue).
  • Long-term customers tend to be less inclined to switch, and also tend to be less price sensitive. This can result in stable unit sales volume and increases in dollar-sales volume.
  • Long-term customers may initiate free word of mouth promotions and referrals.
  • Long-term customers are more likely to purchase ancillary products and high margin supplemental products.
  • Customers that stay with you tend to be satisfied with the relationship and are less likely to switch to competitors, making it difficult for competitors to enter the market or gain market share.
  • Regular customers tend to be less expensive to service because they are familiar with the process, require less "education", and are consistent in their order placement.
  • Increased customer retention and loyalty makes the employees' jobs easier and more satisfying. In turn, happy employees feed back into better customer satisfaction in a virtuous circle.

The most effective hospitality brands are customer-centric with a uniquely crafted core proposition that delves into the psyche of their "best" customer profile. If the customer believes that they share interests with the hotel and spa brand there is deeper and more personalized engagement, which ultimately achieves more traction.

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The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.