Essential sat down with Laura Badcock, Essential’s chief formulator, and sr. vice president to talk about how spas and salons can use private label skincare to boost revenue and customer loyalty. Laura is a certified cosmetic chemist, a licensed aesthetician and a 20-year industry veteran to gather some tips for selling branded skincare products in your spa and salon. We updated this original post to include some additional questions and answers.
Q. How much money can a spa earn from selling retail products?
A. When I was in the industry in the early 2000s, it was known that 75% of a spa’s profit (not revenue) should come from retail. Nowadays, with the competition of big brands buying out spa brands and selling them to the public, retail makes up 10-15% of total spa revenue, which is roughly 25% of your profit.
Through many industry reports, we even see that there is a strong rise in spa visits. Yet, the amount of money spas make on an average visit has dropped slightly by 1.3% from $89 in 2013 to $88 in 2014. I believe this is, in part, because retail products are most easily accessible through Amazon and big name stores. Why should your customer come back to the spa in their busy lives when they don’t yet need their appointment, just to buy their product?
Q. How can a spa or salon benefit from selling custom-branded products? Any tips on boosting sales?
A. RETENTION, RETENTION, RETENTION! Do you have any idea how much each new lead or client that is drawn to your spa costs in cold, hard cash? I recommend to all spas to not shun walk-in clients, try not to put clients on hold when they call in for appointments, and most of all do not forget to pre-book subsequent appointments after a spa visit. Retention is the core of any sound spa business. One way to retain business, besides the three listed above, is creating a “business card” to be featured in your clients’ lives. Private Label your product by purchasing a product that you can package and label with YOUR spa’s name on it. Your clients’ friends will see this label on the clients’ bathroom sink and inquire about you. Your clients will be freely advertising you when they empty their purses at a restaurant to find their wallet and put your travel size lotion on the table. Waiters and patrons will see it.
I once read a study on Private Label in The Checkout (www.shopperculture.com), which indicated that the attribute of “trust” seems to be losing steam, and people are becoming less likely to doubt the quality of private-label brands. Finally, with retailers offering increased diversity and tiers within their private-label offerings, brands are starting to lose their hold on innovation and variety. Combined with the fact that 74% of shoppers who purchased a private-label product said it was better priced, there seem to be fewer and fewer reasons for shoppers to stick with name brands.
Regarding marketing your private label product, think about advertising and promotions. In my case, word of mouth was my most effective campaign. I offered a free waxing service with my client’s next appointment for every person they recommended to me. I had my business cards and would write my clients name on the back. If a new client came in and handed that to me, I would start saving them in my client’s treatment folder. Every time they came in, I would take that referral card out and shred it upon use. It was the cheapest way to advertise, and it was supremely successful. Of course, nowadays there are probably great options on one’s smartphone for tracking things like this.
And don’t forget about samples. Sharing a small sample of one of your private label products with a customer for her to take home and use breaks that initial barrier to try your product. Note what you sampled, ask her how she liked it and sample something else next time. Ask for reviews and quotes and use them in your marketing.
Q. How can a spa or salon get started without spending a lot of money to see if branded products work for them?
A. Find stock products from wholesale suppliers and manufacturers that you can repackage yourself. One way to know what people will buy is to create some protocols and begin using the products you think you want to offer and get real-time, real-customer feedback. You can always add an essential oil or a carrier oil (your manufacturing partner can help you determine how much if you need help with that). Then when you’re ready to start offering product for customers to take home, you can have empty bottles for people to buy and fill themselves from your ‘back bar’ collection– be sure to have labels available to put on the bottles. Or you can fill retail sizes and label them yourself and have a beautiful, totally unique offering.
Have fun with the product names. They should reflect your company’s brand and fit into the overall feel of your spa or salon. Your packaging choices should do the same. Avoid boring bottles if your spa is totally hip and cutting edge. Think hard about using glass. It’s beautiful, but heavy to move and can easily be broken. You likely have a designer you work with for marketing and branding and they should be able to offer input for you. You can even ask a select group of your VIP clients– who doesn’t want to be part of launching a skincare brand.
Q. How does a spa owner evaluate and choose a product line to fit their needs? What should they look for?
A. The right skin care products are integral to the success of a spa, both in the back bar and in retail. The Kline Group identified the top five beauty ingredient trends and here at Essential, we can agree to these based on trends, requests, and interest. Many of the trends are more about what products don’t contain than what they do. This is in part to NGOs (non-governmental organizations) who are targeting or vilifying ingredients, and these NGOs are easily able to target consumers through web traffic and advertising.
Other considerations for evaluation include:
- Multifunctional
People are busy. They wake up in the morning and rush through the day to get their families ready for work or dinner to bed, and then they do it all over again. People want to purchase products that have multiple skin benefits, and multifunctional products meet this need. These products simplify the beauty regimen by incorporating multiple benefits such as thinking about maturing or chaotic skin, cleansing, moisturizing, antioxidant values and skin protection. - Effective, but Gentle
Clients are seeking gentle products that nourish their skin without drying effects. New products are being launched with milder alternative ingredients. The skincare line Essential offers is preserved with alcohol which many people think of as drying. However, Essential formulates with ingredients that combat any drying. From amazing essential oil combinations to superb antioxidants and amazing butters and oils that all help aid against TWL or TEWL (trans epidermal water loss). - Natural
It should come as no surprise that natural products and ingredients are on the rise. People are more concerned these days wanting to use an ingredient they can recognize as being natural. Bear in mind though that the notion of “if I can’t pronounce it, it isn’t natural” does not apply. The common name JOJOBA oil is often mispronounced as JUH-JOE-BA rather than as HUH-HO-BA. But besides that point, Jojoba’s real name, Simmondsia Chinensis, is not easy to pronounce and if a company doesn’t have the common name on the ingredient list, will a consumer assume it’s not natural? - No to Animals
Animal-derived ingredients are losing their popularity due to the growing negative attitude towards the production process of these products. Clients are leaning towards the products manufactured by more eco-friendly, sustainable, ethical, and socially responsible brands; products containing animal-derived ingredients fall into forbidden lists. As a result, consumption of lanolin and derivatives is expected to decline, particularly in Europe and India. At Essential, we stopped using lanolin in the production of our stock products years ago. But we do use Beeswax and Honey– because of its extreme popularity. We can recommend replacements (and we do have vegan options of our beeswax products), but truthfully there is no great alternative for honey. - Regional Hot Lists
Each beauty market has its hot list of ingredients with questionable safety, with some crossing markets. Clients expect products in their market not to contain ingredients on their hot list. For example, the hot list in the United States includes parabens and triclosan, while Europe’s hotlist also includes methylisothiazolinone. At Essential, we can customize any of our products to abide by any of the hotlists, whether governmental hotlist like I just pointed out, or NGOs such as Skin Deep and Whole Foods. While we do our best to be up to speed, you’ll want to work with your own compliance team that specializes in the regulations of the country where you want to sell. - Sustainability and Social Responsibility
Consumers want to feel good about the products they buy and the products they put on their skin. Using sustainable packaging is just one piece of the sustainability puzzle. You’ll want to work with a contract manufacturer who builds sustainability into their products. Look for key indicators such as the use of solar power, responsible sourcing, carbon-offset shipping, Leaping Bunny Certification, and so forth.
Are you selling custom-branded products in your spa or salon? What considerations did you make when selecting a line of products? As always, Essential is here to help if you’re thinking about getting started and have any questions.
