These days, life – in general – feels like one continuous EFT.[gap height=”15″]
Paying virtually every type of recurring fee for a purchase is done by direct billing to a credit card or drafted from our checking or debit account. We’ve all become accustomed to paying for our cars, mortgages, cable service, insurance, etc., with an automatic, monthly EFT. [gap height=”15″]
Since we’ve become so conditioned to paying for things in this manner, it’s only logical that our salon guests would also prefer to pay for tanning services in the same way.[gap height=”15″]
And, when operated effectively and efficiently, an EFT membership program can generate a reliable stream of cash-flow that can help reduce the financial peaks and valleys that are a result of the inherent seasonality of our business.[gap height=”15″]
In fact, every major U.S. tanning salon chain has come to rely on EFT memberships for a large portion of their annual revenue. However, EFT-based tanning memberships are not without their challenges. It takes time to establish a program and get members to join it. You must also have easy-to-use salon management software that allows you to apply and track all charges and credits, etc. And, to make the program cost effective, you need a sufficient number of members to participate – usually about 50-100 minimum. [gap height=”15″]
If you’re just starting out with EFT, I suggest creating a program in which you “manually” bill your members’ credit cards each month until you build up enough members to roll out a software-based program.[gap height=”15″]
And the greatest challenge that all salons must overcome in order to maximize the true potential of their EFT program deals directly with the “life expectancy” of each membership.[gap height=”15″]
Regardless of your geographic location, the average term of an EFT membership is typically just 4-5 months. That is, tanners tend to join in January and quit in May or June. While the 4-5 months of revenue is great (and many salons also implement a minimal membership “freeze” fee to try and keep the account open and prevent customers from canceling), it can be a hassle to constantly chase down customers and renew memberships year after year.[gap height=”15″][gap height=”15″]
Extending the Life-Expectancy of the EFT Membership[gap height=”15″]
The practice of “joining and quitting” is a phenomenon almost exclusive to tanning salons. For example, the life-expectancy of an EFT membership at a health club is often 2-3 years. For massage centers, its 12-18 months. For cable and internet services it’s an eternity![gap height=”15″]
Bill Hurt, the former owner of tanning equipment maker Sun Industries and an industry pioneer used to say that, “the indoor tanning season begins when the Super Bowl ends.” And for more than 30 years, he’s been right on target.[gap height=”15″]
But why should the “billing season” end when with Memorial Day or the Fourth of July? It’s been proven that if salon operators market their EFT memberships effectively – by adding more value and pricing packages competitively – they can extend the life of their average EFT membership substantially, and generate revenue year-round.[gap height=”15″]
The tanning businesses that have been most successful in extending the life expectancy of their EFT memberships are those that make the programs easy to join, and then provide their customers with enough added value that they choose not to quit. [gap height=”15″]
For example, if your entry-level EFT tanning membership is $18.88 per month (which provides unlimited use of level-one units), you could include one free session in your top-level unit each month that the tanner pays the $18.88.[gap height=”15″]
For most salons, the single-session price in a top-level tanning unit is usually about $20+. Presented properly, the salon guest will quickly realize that basically, they are getting to tan all month on the entry-level units for FREE. In reality, the only added costs to the salon is the difference in operating cost between the entry-level and top-level units.[gap height=”15″]
{NOTE: To help demonstrate to your tanners the true value of the program, it’s important to use the single-session price for the top-level unit, and not the “upgrade” price. “Get one Level-5 Session – a $20 value – FREE every month!”}[gap height=”15″][gap height=”15″]
Learning from the Competition[gap height=”15″]
I often hear salon owners complain about health clubs offering tanning for only $20 per month. What we must realize is that the health club is not simply charging $20 per month – in reality, they’re charging $240 per year, as the majority of their customers stay on the EFT membership program for years and years.[gap height=”15″]
If every customer in your database spent $240 per year on UV-tanning services alone (remember, this does not include lotion or other retail product sales), you would be well on your way to operating a very profitable salon.[gap height=”15″]
Do the math. If you have 1,000 customers is your database and each one spent $240 per year, you would generate $240,000 annually from UV-tanning alone. You could then add another $30,000-$50,000 per year in lotion sales (based on industry averages). [gap height=”15″]
And since most health clubs do not offer spray-tanning, (or do not do it well), this would generate another $25,000+ per year. [gap height=”15″]
All total, you would generate about $325,000+ annually – from just 1,000 customers (based on just $20 per customer per month).[gap height=”15″][gap height=”15″]
A Day Spa Just Waiting to Happen[gap height=”15″]
The real success begins when tanning salon operators broaden their horizons, add more products and services to their menus, and attract more diverse customer types.[gap height=”15″]
“At most salons in America today, the service choices include ‘tanning, tanning or tanning’.” That is a statement I must attribute to Mike Blore, the owner of California Sun Spas. With 22 facilities in the Sacramento area, Mike and his wife Ashleigh operate one of the industry’s most successful businesses – with many of their salons generating more than $1,000,000 annually.[gap height=”15″]
In the last few years, the lineup of products and services at California Sun Spas has expanded to include Wellness Pods, red-light therapy systems, zero-gravity massage chairs and consumable weight-loss supplements. They use these “spa services” as marketing tools to sell everything in the salon – including UV and spray-tans – and keep their customers loyal and satisfied.[gap height=”15″]
“To keep people on the membership program, it’s not enough to just offer tanning,” Mike states. “You have to sell products and services that appeal to a wider audience – and then cross-promote between product lines.”[gap height=”15″]
For example, the California Sun Spas will often include a “free week” in the Wellness Pods or massage chairs to EFT program members. Purchased separately, the week of sessions would be $40. By including them in the membership, the salon is able to provide the appearance of a $40 discount when in reality, they are simply giving away “time.”[gap height=”15″]
“We offer all-inclusive memberships that include every service we have, including UV-tanning, spray-tans, wellness pod sessions, red-light and massage, plus special pricing on select retail products,” Mike explains. “These programs are among our best-sellers and customers are inclined to stay on the programs much longer than the memberships that offer tanning only.” [gap height=”15″]
According to Mike, his typical EFT member uses an average of six sessions per month. This allows the salon to sell a high volume of packages and generate steady cash flow, regardless of whether customers use their sessions or not.[gap height=”15″]
If you would like more information on developing a new EFT program or maximizing the sales and profit potential of your current program, email jerry@istmagazine.com.[gap height=”15″]
The greatest challenge that salons must overcome in order to maximize the true potential of their EFT program deals directly with the “life expectancy” of each membership.[gap height=”15″]
