Spa Revenue (Yield) Management. By Leslie Lyon Friday, 25th January 2008

This is zeroing in on the best mix of services and products to sell at given times to generate the highest revenue and profit.

All of these ideas for better business practices are really about managing financial outcomes. You have probably been hearing more and more lately about Yield Management, which is exactly what is being talked about within this article.

There are business measures that have been used for many years in the hotel and airline industries that help to maintain a consistent, somewhat controllable, even predictable bottom line during seasonal highs and lows and fluctuating supply and demand.

Although still in the testing and infancy stages in the spa industry, some of these measures are flowing through to become viable business solutions to the challenges we face on a daily and weekly basis. If we study our historical reports, we can analyze these past results to more successfully adjust sales and pricing in order to achieve better results in the future.

Spas are a good candidate for Yield Management, as we experience extreme fluctuations, to the point of turning away clients on Saturday, and not having a single one on Monday.

A business can't stay in business that way for long. Consider this summary of business improvement alternatives:

• Sell premium services only at peak spa times
• "Cap" the number of lower margin services you accept in a day, leaving space for the more profitable ones
• Sell and redeem Spa Packages only during off-peak times (not weekends)
• Structure your menu to drive profits, not sales. Use cross selling and suggestion selling techniques on your brochure.
• Train booking staff to sell higher priced/higher margin services first
• Train all staff to sell higher priced/higher margin products
• Base Staff compensation on available margins for both services and products
• Have high priced staff members administering high priced/high margin services
• Have all staff trained to contribute to generating future revenue through employee programs like Mini Marketing
• Design floor space with premium services and products in mind
• Offer "price advantages" on future bookings for off-peak times
• Install week day/weekend pricing schedules, and even time of day pricing programs
• Always have a last minute price advantage on services. Notify staff of the openings so that they can sell them. Notify clients so that they can buy them.
• Base all price advantages (discounts); promos and campaigns on available margins.