THE IMPORTANCE OF SPA KPIs

Kirsty MacCormick highlights how Key Performance Indicators are essential for the financial and operational success of spas

Key performance indicators (KPIs) are one of the most important management tools a spa director or manager can have in their tool kit. Understanding what they are and how they affect the profitability and success of a spa operation is absolutely crucial.

It was more than 25 years ago that I was first introduced to using KPIs as a tool to monitor and drive performance. As a spa manager new to working with a larger team this was a light-bulb moment for me. It was my first management role within a spa operation, and I was still in the treatment room 50% of the time, our figures weren’t where we needed them to be, and it was challenging to see where the main issues were. Since then, I have used KPIs for every business I have worked with. For a larger, more complicated operation,

I will use indicators that measure the main revenue drivers, but also others to measure individual performances within the team. For a simpler operation or a spa manager beginning their journey, I would recommend starting with a series of targets that are easier to monitor and measure.

KPIs explained

KPIs are exactly what they stand for: the key performance indicators of your business, a series of targets that are used collectively to measure how effective your operation, a team or an individual is.

KPIs tell a story and paint a picture of the current situation whether positive or negative: they can highlight areas where you need to drive revenue, possibly with an additional promotion or offer; they can identify training issues within the team and individuals; and they can also bring to the fore areas of your business that are just not working and need to be changed.

Kirsty McCormick, The Spa Consultancy

KPIs can also be used to measure individual performances for bonus or commission structure purposes, as well as shining a light on softer targets such as guest feedback or human resources metrics including attendance or lateness. They can be applied to every aspect of your business and supervisors and managers can be measured on the results of their teams.

Recruitment, training and targets

I have always used KPIs to also look at possible training issues: if an entire team is not hitting its retail target then training is required; if one therapist is not as busy as they could be, maybe they need training in other treatments; and if a treatment rate is low then it could highlight that a promotional treatment was introduced or they were doing a lot of complimentary treatments.

KPIs can also highlight when you need to recruit: if your therapist utilisation across the team is consistently hitting 80% then recruitment is essential, or you will start having to turn away bookings. The right targets depend on your business structure and main revenue streams, and should be set in line with the budget you need to achieve. KPIs are also a great tool for GMs and finance departments – creating a simple dashboard for them and distributing it daily can provide a clear picture of where you are at.

Measuring team performance

Business KPIs should reflect the performance of your operation and its key drivers, including: Capture rate, the percentage of hotel guests booking into the spa; Guest mix, such as the number of residents compared to the number of outside guests; treatment room usage; therapist utilisation; average treatment rate per hour;• retail sales/conversion; number of members and average membership rate.

Individual therapists’ KPIs should include individual performance, average treatment rate per hour and retail conversion. For the reception team you should analyse the number of bookings taken, average revenue taken per booking, call conversion to bookings, retail sales and percentage of treatments upsold. For the fitness team, consider the utilisation and revenue of personal training classes, retail revenue and memberships sold.

One piece of advice I always give when starting to introduce KPIs is that if you’re not going to monitor these daily, then they are a waste of time. Monitoring KPIs on a bi-monthly or monthly basis will be too late – if the month is over there is nothing you can do to pull back performance.

Another point is don’t always look at individual KPIs without looking at the entire picture. For example, in most spas a therapist is usually rewarded for hitting their retail target but what if their other KPIs were not on target and another therapist, who didn’t hit their retail, out-performed them in utilisation and treatment rate – would that be fair?

Essential steps to success

How to establish, monitor and act on KPIs within your business

• Choose KPIs that reflect the operation and budget requirements of your spa

Communicate them to everyone involved and monitor daily: talk about them all the time and what needs to be achieved

• Ensure that the team know their individual KPIs and what they need to do to achieve them

• Ask team members to input their KPI results into a shared spreadsheet. This promotes healthy competition among the team

• If every team memberachieves their individual KPIs and they have been set in line with yourbudget. that means you achieve your budget!

With over 30 years’ experience in the spa and wellness industry, Kirsty MacCormick is the founder of The Spa Consultancy. Her expertise includesdevelopment, pre-opening project management and operational set up of arange of spas from commercial hotel and day spas to luxury five-starhotels and wellness destinations. www.thespaconsultancy.com