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Douglas Preston has been called a business savior, a spa industry leader, and a non- traditional thinker in spa design and management. His unorthodox views have influenced the decisions of spa owners and planners throughout the US and Canada. His following of business devotees believe that his insights have been pivotal in the success of their companies. One thing is certain about Preston, spa and salon consultant: he’s no Dr. Feelgood when it comes to dispensing business advice. He’s a straight-talking professional who doesn’t wince at dispensing unpleasant doses of reality when the job demands it. He’s also known as a sympathetic and positive business coach among some impressive names in the spa industry.
I spoke with Preston at a recent trade event and he provided some interesting insights on the present and future outlook for the day spa business.
INTV: I’ve heard spa business people refer to you as the “spa guru”. Is this an accurate description of you and your work?
DP: (laughs) Well, I haven’t checked my cult status lately. No, I think I’m just a voice in business who earned some attention for questioning many of the popular beliefs about the way that day spas should operate.
INTV: Okay, you know what I’m going to ask next. Tell me more about that.
DP: I’ve been pretty vocal in questioning assumptions about the supposed big profits and glamorous ownership in starting up and running a day spa. These assumptions have created a flood of investment into new spa businesses. This includes the conversion of salons, health clubs, and even certain medical practices into spa facilities. Investors seem far more interested in not missing the boat than in thoroughly checking out the boat they’re climbing into.
INTV: What’s generating all this investor frenzy?
 DP: Sales, lots of them! The big media buzz about hot day spas and the celebrities who lounge in them, and the explosive growth in sales revenue, attracts capital. We have the “quick riches” investor, the franchise dreamer, people with windfall play money, and high-risk borrowers who are betting everything in the spa game.
INTV: So, what’s the problem here? You say that spa sales are really jumping so why shouldn’t an investor get into a hot market?
DP: It’s this: sales are only an indicator of cash inflow, the money crossing the counter your way. What sales don’t reveal however is just how much of that money flows the other way, the dollars that cover the cost of getting those sales. People simply assume that because a spa is large and luxurious, and gets plugged by Travel and Leisure, that it must be successful. They’re looking at the veneer of that business and believe that the dazzle runs all the way to the manager’s office. But many spa owners have discovered a far less satisfying result, especially those attempting to work a treatment room and also manage operations. They run into trouble quickly.
INTV: What seem to be the major reason things don’t work as planned?
DP: Right there, in the planning. Many spas are begun with a grand idea but no business plan, the formula that tells you whether or not this thing is going to be financially worthwhile. But even a well thought out business plan needs to be evaluated by an expert in the field, someone who knows the inside realities of spa management, and I’m not talking about your accountant here. Most business plans I’ve seen have exaggerated profit projections ; overestimated sales, underestimated costs, plotted along too short a time line. Entrepreneurs like to rely on feasibility studies that tell them their target market will support their sales projections, but then we’re back to using cash inflow as a sign of success. That’s not a good plan.
INTV: Aren’t some of big cosmetic companies beginning to open day spas now? Why would they get involved with a business that seems easy to lose money in?
DP: I’ve been watching that trend. On the surface it doesn’t seem to make sense that a major cosmetics company would invest heavily into personal services facilities. But take Elizabeth Arden for example. They have a massive day spa expansion plan underway. Arden is really in the business of selling consumer goods, cosmetics, but their marketing efforts in the past two decades haven’t kept pace with the evolving tastes and image of younger women. So the company is giving itself a makeover in an effort to become more appealing in the emerging market. Day spas will help establish the Arden product line with this new consumer, so you can view the cost of operating these facilities as one big marketing expense. And from that perspective, it’s probably a smart plan. There are many businesses that do this. Las Vegas casinos make money on the gambler, period. The rest of it: the rooms, the shows, and the rides, is a money-losing fantasy that attracts money losers. My own day spa loses money on every spa package gift certificate customer but those certificates provide a steady flow of client prospects whom we hope will become regular single service and retail customers.
INTV: Why do you call the package client with a gift certificate a prospect? Aren’t they already doing business with you?
DP: Yes, but not the right kind of business, the business that can sustain us over the long haul. The gift certificate client is more difficult to convert into a regular customer; he or she often gets the spa gift because they won’t indulge themselves this way without prodding. Just having a day at the spa usually isn’t enough to prompt this person to begin regular spa visits. Packages are costlier to deliver than single services and reduce the retail potential available in shorter client cycles. So until we can create a profitable relationship with that client we view them as prospects.
INTV: But isn’t that a contradictory idea about what a day spa is? I mean, you’re set up to attract the package customer and yet you don’t value them as much as a client who gets a facial or a massage only?
 DP: We value all of our customers of course but over the years we have had to face the fact that some sales are better than others. And this is the point, we need to recognize that a day spa is a business before anything else, and it has to look after its financial health as much as its service quality. We may not be able to serve clients from every income level or offer all the new wellness programs we’d like to when making money is a serious consideration. I’m sure the airlines would love to seat every passenger in wide plush recliners and still remain profitable. So while we continue to offer spa packages at Preston Wynne, we have made a decision to gradually return to esthetics programs as our principal and more profitable offering. I have advised other smaller operators to do likewise.
INTV: What’s the most difficult part of your work as a spa consultant?
DP: Besides living on hotel food, the hardest thing I have to do is tell a business owner that her/his company has essentially failed. There’s a real horror in learning that, especially as they watch sales dollars pour in; they just don’t want to believe it.
INTV: How do you know a still functioning business has failed?
 DP: There’s plenty of signs that point to an inevitable end, and not only because of a bad financial situation. Companies often fail because of owners refuse to improve their management skills or to appoint someone who can do the job effectively. Instead they make do with poor training and communication, impatience, double standards, and reckless spending. This leads to high employee turnover and disloyalty, declining customer satisfaction, and severe cash shortfalls. If change for the better doesn’t happen fast then the game is over and I have to spell it out for them. As sad as this seems, sometimes getting out is the best (and only) solution.
INTV: But there haven’t been many day spa closures, have there?
DP: No, but that’s not the real story. Many salons for example stay alive by being sold to other hopeful investors, usually an employee of the business, who then struggle to make it pay off. Many of my clients are businesswomen, and a large number of them have difficulty feeling comfortable about money. Some feel guilty about profiting as an employer, which tempts them to be over-generous with payroll and benefits while suffering personal financial hardship. Lots of these operations persist because the owner/operators have been willing to put up with years of underpaid hard work. And while a company may resist closing many of them probably should. The day spa is a relative newcomer to the health and beauty scene but is subject to the same realities that have made so many conventional salons barely worthwhile as a business investment.
INTV: Sounds gloomy! Is there an upside to the story?
 DP: It’s not gloomy really but you have to understand that, except for a spa startup project or training program, most clients call me to help them solve severe problems in their businesses. People who feel well will rarely seek out a doctor. The upside, and there is a wonderful upside, is that you can have a terrific time and make a considerable amount of money in the spa, esthetics, and salon business if you invest and manage it carefully. I’m certainly not sorry about Preston Wynne’s performance, something anyone who wants to could reproduce. It’s gratifying to watch companies turn around, to get a call from an owner who’s thrilled about how well things are going after making some needed changes. It happens pretty often, thankfully!
INTV: So would you recommend a “physical” for healthy businesses?
DP: Oh, absolutely, and it’s the wisest time to work with a consultant. I can go in to the best-run companies and find remarkable untapped income and profit opportunities lying around. Some people think that this means trimming quality just to squeeze out a larger bottom-line, but that’s incorrect. Waste and inefficiency are dangerous bugs in any business and they can really hurt when sales occasionally dip. A thorough review and evaluation of one’s operation is a smart investment for the spa or salon owner. They’re shocked when they see the overlooked revenue potential and how much money they might’ve had. So the first thing I do with a client is find the money to more than pay for my services, which is easy. That done, we get busy fixing the company. Business owners have a tendency to get complacent; a fresh, experienced eye can see a lot.
INTV: Tell me, what is your favorite spa?
 DP: Now that would be a politically incorrect thing for me to reveal, wouldn’t it? Seriously I don’t have a favorite spa destination but I do have a preferred way to be treated as a customer. I don’t want to see any of the stress, disorder, personal dissatisfaction, and indifference some spas seem to be drowning in. A recent visit to a new luxury Las Vegas Hotel spa was the epitome of this type of thing. The staff confusion got so ridiculous that the men waiting for services (myself included) burst out laughing. I then had to listen to my massage therapist complain about the problems the spa was experiencing and how difficult this was for the employees. Defensiveness was rampant and management wasn’t listening to its customers. They preferred to hand out service comps rather than hear customer complaints. So much for the “personalized care” we were promised. A spa should be anything but a real-world experience.
INTV: Who do you think is responsible for a situation like that?
DP: Everyone working there! But it begins and ends with management. Inadequate training, poor leadership, and the failure to measure and reinforce the results of that training leads to chaos. I never excuse a spa professional who thinks that it’s okay to vent their personal grievances with clients, as if that’s what the client was hoping for in their appointment. But it’s also a symptom of a management that’s totally unavailable or hostile to its staff. So this very unprofessional carping to customers can sometimes be viewed as an act of employee desperation. If the builders of resort and day spas would spend less money on the facilities and more on training programs there would be a lot more recommendable places out there.
INTV: But spa owners must be giving their employees at least some training, aren’t they? How else would staff even minimally know what to do?
DP: You’re very perceptive using that word “minimally”. Most training provided by spas is limited to treatment procedures, how to get about in the facility, and maybe a little product knowledge, at best. But too little attention is given to the finer details of a spa’s performance, and this produces disastrous results. Employees need and deserve a much greater education in the art of managing the customer’s experience at the spa. At Preston Wynne we devote significant time to an employee’s understanding of the spa’s purpose and their responsibility for the customer’s experience within it. We teach the subtle nuances of creating a seamless and relaxing client transition from one busy technician to another in a heavily populated spa facility. Employees are taught to appreciate how many points of customer evaluation there are before that customer even arrives at our door. We teach employees to accept ownership of problems they may encounter throughout their day and encourage finding creative solutions for them. And this is only a small part of our program.
INTV: Isn’t training on that level too expensive for some businesses?
DP: No, never! I’m constantly harping on this subject. What is expensive is the failure to provide it. Loss of customers due to poor employee performance, loss of employees because of poor management, morale issues among under-trained staff members that result in weak sales and even weaker client retention, it adds up. Failure to train is terribly expensive to a business and a disservice to everyone involved.
 INTV: Any final advice to your business colleagues?
DP: Yes. Keep at it! The same passion that got you into business will get you through it successfully. There are no success secrets, just solutions you haven’t discovered yet, and they stop coming only when you stop looking. So just keep your eyes open. Stick to your ambitions but shape your dreams around workable ideas, and remember to have some fun along the way! Get a massage or facial now and then, and take a day off occasionally even if you think you can’t.
INTV: Thanks, Douglas, it’s been an enlightening hour.
DP: See you at the spa!
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