INSIDER INDUSTRY. by american spa

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1 AUGUST 2017 INDUSTRY INSIDER by american spa We polled more than 1,000 spa professionals from across the country to uncover key wellness industry trends in marketing, retail, customer service, profitability, and more. SPA CHECKOUT SPONSORED BY:

2 FREE DOWNLOAD The self-booking spa. An online booking whitepaper. All-in-one spa software to run your entire business. Discover the benefits for your business book4time.com

3 Spa software that just works. Cloud-based spa management solutions to help you grow your business and delight customers everyday.

4 THE INSIDE SCOOP I spend a lot of time in the field connecting with my industry colleagues. Whether it s a spa director or an advertising partner, people always want details about the size and scope of the industry. That s why we launched Industry Insider, our annual reader survey, more than a decade ago. Our readers are wellness leaders and decisionmakers looking to better their businesses, so who better to ask about key industry developments? This year, thanks to our exclusive partner Book4Time, we were able to turn this report into a special take-away insert that you can reference all year long. Looking for benchmarks in things like top-grossing services, customer trends, profitability, staff compensation, training, and more? This is the perfect tool. And any trend stats wouldn t be complete without addressing technology. Along with some interesting insights into spa technology use, Book4Time also tapped into their client research to provide you with even more details on customer booking behavior and mobile trends. Check it out to make sure you re doing everything you can to cultivate clients and meet their booking needs. I hope you use this valuable report to find out how your spa stacks up to those of your peers and provide you with ideas for growth and improvement. This year s numbers reflect positive news for revenue growth, staff salaries and retention, retail offerings, and more. I look forward to hearing your feedback and am hoping the positive movement continues. Best wishes, Julie Keller Callaghan Editor-in-Chief/Publisher jkeller@questex.com american spa EDITORIAL Editor-in-Chief/Publisher Julie Keller Callaghan Executive Editor Heather Mikesell Art Director Kara Magliaro Managing Editor Natalie Maneval Social & Digital Editor Ani Palen Editorial & Sales Coordinator Samantha Reed OFFICE 757 Third Ave., 5th Floor, New York, NY tel: (212) , fax: (212) SALES Director, Integrated Media, Eastern Region Lucy Hugo, tel: (203) , lhugo@questex.com Director, Integrated Media, Western Region Kristina Panter, tel: (714) , kpanter@questex.com Industry Insider by American Spa is published by Questex. Corporate Offices: 275 Grove Street, Suite 2-130, Newton, MA 02466; Copyright 2017 by Questex. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or by any other information storage and retrieval system, without permission in writing from the publisher. PHOTOGRAPHY: LUIS ERNESTO SANTANA 2 INDUSTRY INSIDER AUGUST 2017 AMERICANSPA.COM

5 SPA STATS HOW MANY TREATMENT ROOMS DOES YOUR SPA HAVE? 61% 23% 16% 1 to 4 5 to 10 More than 10 please identify your spa as one of the following: WHAT IS THE TOTAL SQUARE FOOTAGE OF YOUR SPA? Less Than 2,000 50% 2,001 to 4,000 25% 4,001 to 10,000 14% More than 10,000 11% Single Location Spa 90% Multiple Location Spa (2 to 5) 8% Chain Spa (more than 5) 2% WHICH OF THE FOLLOWING BEST DESCRIBES YOUR SPA: Day Spa and Salon 31% Day Spa 24% (No Hair Services Offered) Resort/Hotel Spa 13% Medical Spa 6% Wellness Center 5% Dermatology/Cosmetic Surgery Practice 4% Health/Fitness Club Spa 2% Destination Spa 0% Nail Salon 0% Other 15% HOW MANY YEARS HAS THE SPA BEEN IN OPERATION? when will your spa next be renovated or expanded? % 29% 13% 18% 20% Fewer than 2 2 to 6 7 to 9 More than 10 15% 21% 17% 47% SPONSORED BY: AMERICANSPA.COM AUGUST 2017 INDUSTRY INSIDER 3

6 FINANCE what is the approximate annual revenue of your spa? Less than $25,000 $25,001 to $50,000 $50,001 to $100,000 19% 18% 15% TOP-GROSSING SPA SERVICES: #1 Facial/Skincare Services #2 Bodycare Services #3 Hair (Salon) Services #4 Massage Services #5 Nail Services #6 Retail Sales #7 Fitness/Exercise #8 Waxing #9 Other $100,001 to $250,000 $250,001 to $500,000 $500,001 to $1 million 13% 10% 11% $1 million to $5 million $5 million to $10 million More than $10 million 11% 2% 1% PLEASE INDICATE REVENUE CHANGE: 2016 (ACTUAL) 2017 (ANTICIPATED) Decrease 11% or More 3% 3% Decrease 6 to 10% 3% 2% Decrease 1 to 5% 14% 5% No Change 16% 12% Increase 1 to 5% 36% 31% Increase 6 to 10% 18% 28% Increase 11% or More 10% 19% what factors below are most likely to hamper your profitability in the coming year? Ability to Find Employees 34% Supply Costs 33% State of the Economy 33% Increased Competition 29% Keeping Prices Competitive 27% Maintaining Adequate Cash Flow 24% Retaining Employees 19% Insurance Costs 13% Ability to Develop Leaders 12% Government Regulations 9% Unmanaged Growth 6% None of These 12% 4 INDUSTRY INSIDER AUGUST 2017 AMERICANSPA.COM

7 STAFF ON AVERAGE, MOST EMPLOYEES RECEIVE 8 TO 20 HOURS OF TRAINING EACH YEAR. WHAT TYPE OF FORMAL TRAINING DOES YOUR STAFF RECEIVE? Manufacturer-Provided Training 52% Online/E-learning 51% In-Spa Training 50% Trade show/conference Training 49% Distributor-Provided Training 37% Other 34% None of these 4% WHAT EMPLOYEE BENEFITS DO YOU OFFER AT YOUR SPA? Company-Paid Training 46% Flextime 36% Incentive Programs 33% Spa-Provided Health Benefits 25% Career-Advancement Paths 20% Job-Sharing Opportunities 13% Association Membership 13% Benchmarking 6% None of These 26% WHAT IS THE AVERAGE RETAIL SALES COMMISSION AT YOUR SPA (PERCENTAGE OF RETAIL PRICE)? 0% what is the average tip on spa services? (percentage of service fees) 0% 1%-5% 6%-10% 11%-15% 16%-20% 21%+ 6% 4% 14% 20% 50% 6% 26%-50% 76%-100% 14% 1%-25% 13% 51%-75% 3% 66% 4% APPROXIMATELY HOW MUCH DOES YOUR STAFF EARN? how many employees either quit or were terminated in the past year? 0 45% 1 or 2 31% 3 or 4 10% 5 or 6 8% 7 or more 6% POSITION $0 TO $35,000 $35,001 TO $70,000 $70,001 OR MORE Esthetician 60% 38% 2% Massage Therapist 62% 37% 1% Nail Technician 80% 19% 1% Spa Director/Manager 36% 44% 20% Stylist 58% 33% 9% SPONSORED BY: AMERICANSPA.COM AUGUST 2017 INDUSTRY INSIDER 5

8 CUSTOMER WHAT IS THE MOST EFFECTIVE METHOD OF CUSTOMER RETENTION? Not Not Somewhat Highly Used Effective Effective Effective Social Media Marketing 7% 5% 49% 39% /Internet Advertising 16% 3% 46% 35% Referral Program 16% 11% 48% 25% Loyalty Programs 41% 8% 33% 18% Newsletters 41% 10% 35% 14% Direct Mail/Coupons 68% 8% 15% 9% Charity Events 30% 24% 39% 7% Magazine Advertising 63% 11% 22% 4% Newspaper Advertising 63% 16% 17% 4% Telemarketing 81% 8% 9% 2% WHAT PERCENTAGE OF YOUR CLIENTS ARE REPEAT VS. NEW? 69% 31% repeat new what percentage of your clients are male or female? 80% FEMALE 20% MALE PLEASE ESTIMATE YOUR CUSTOMER BASE BY AGE: 13 to 19 years old 5% 20 to 30 years old 17% 31 to 50 years old 38% 51 to 60 years old 26% More than 60 years old 14% please break down your customer base by ethnicity 68% Caucasian 11% African- American 11% 7% 3% Hispanic Asian Other SPA CHECKOUT 6 INDUSTRY INSIDER AUGUST 2017 AMERICANSPA.COM

9 DOWN TO BUSINESS do you offer a private-label brand in your spa? YES NO 26% 74% through which channels do you purchase the following types of products? Supplies and Products Manufacturer Direct % Distributors % Beauty Store Suppliers % Online % Retail Stores % Fixtures and Furniture Manufacturer Direct % Distributors % Beauty Store Suppliers % Online % Retail Stores % Spa Equipment Manufacturer Direct % Distributors % Beauty Store Suppliers % Online % Retail Stores % 87% Product Reputation 60% Education Support 42% Brand Awareness WHAT FACTORS ARE MOST IMPORTANT TO YOU WHEN SELECTING SPA SUPPLIES? 78% Price 53% Innovation/ New Technology 37% Sales Representatives Business Equipment Manufacturer Direct % Distributors % Beauty Store Suppliers % Online % Retail Stores % 61% Availability 50% Ease of Use 33% Warranty/ Return Policy 61% Manufacturer Reputation 46% Unique Ingredients None of These 1% WHAT PRODUCTS DO YOU RETAIL? Skincare...92% Bodycare...71% Cosmetics...55% Haircare...42% Candles...40% Nailcare....40% Lash-Enhancement..31% Jewelry...31% Robes...26% Vitamins/Nutrition Supplements...24% Clothing....23% Tea...22% Books....15% Music...13% Fitness Apparel...13% Hair Removal...11% None of These...4% SPONSORED BY: AMERICANSPA.COM AUGUST 2017 INDUSTRY INSIDER 7

10 TECHNOLOGY HOW MUCH DID YOU SPEND ON COMPUTERS AND TECHNOLOGY IN 2016? 37% $0 to $1,000 4% $10,001 to $15,000 15% $5,001 to $10,000 38% $1,001 to $5,000 6% More than $15,000 how do you track client appointments? WHAT TECHNOLOGY HAS MOST EFFECTIVELY IMPROVED YOUR SPA S PROFITABILITY? 25% #1 Spa Management Software #2 Social Networking Sites #4 Digital Imaging/Photography #5 Internet Sales (Products, Gift Certificates, etc) Manually #3 Communications #6 Specialized App 59% Spa Software/Online 16% what social media tool is most effective for marketing your spa? 0% Mix of Manually/Online No Tracking #4 Periscope #1 Facebook #5 Snapchat #2 Instagram #6 Pinterest #3 YouTube #7 Twitter 8 INDUSTRY INSIDER AUGUST 2017 AMERICANSPA.COM SPONSORED BY:

11 TECH PULSE FROM A look at compelling technology-related statistics, info, and more to help you run your business. 9.6% OF CUSTOMERS BOOK OUTSIDE BUSINESS HOURS the average online spend is 14% more than in person or on the phone THE AVERAGE TELEPHONE APPOINTMENT TAKES ABOUT 10 MINUTES 75% of millennials would rather lose the ability to talk versus text. 76% said they prefer texts over calls. 43% who recently attended a spa used web or mobile technology.

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