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by Douglas Preston
 If you've been following my presentations in the esthetics convention circuit one message is probably ringing in your ears by now: the real money for spas and salons is in the retail! I run all over the stage waving my arms trying to draw attention to this crucial point. Consider the benefits: takes up little floor space relative to the revenue, requires less skilled labor to deliver, repeats itself, build equity into a business, maximizes the value of each client, on and on. Who can argue the wisdom of this idea? A lot of business owners and service technicians do. After all it was the joy of performing specialized treatments that lured us into business in the first place, not the base pushing of beauty products, right? Do we now want to risk driving our clients away by high pressure sales tactics?
The truth is those faithful customers of ours were customers of someone else before we settled them into our spas and salons. Even before adding the personal services habit to their growing list of life's essentials they were probably already intimate with the old vanguards in grooming aids, namely, Lauder, Revlon, Redken, and many others. A peek into our clients' bathroom cabinets, shaving kits, and makeup bags will instantly reveal the hard work of cosmetics companies paying off. And remember, that's your client they're successfully selling to and, quite possibly, undermining all of your hard work in the salon treatment room. So, in the true spirit of being a personal services professional, you have an obligation to assert some stewardship over your clients' choices in home use products. Now that I've utterly convinced you to reconsider the necessity of retailing in your business the question remains as to what you should sell.
Beauty professionals have a curious habit of casting loyalty behind specific product lines which they have come to personally "believe in". The idea is that they have discovered the product line which produces results, presumably the results the professional and client is looking for.
Our belief suggests then that without this uniquely effective product our work, reputation, and business will suffer. We want to offer our clients the best and think we have found it. But doesn't everyone among our professional colleagues? And if they don't use and sell the same product line we do are their clients being denied the benefits they might have? Aren't they being cheated? How do those salons manage to stay in business and busy doing it any other way than you do?
 The point I'm raising here is that there are any number of reputable and effective product producers among the enormous competitors in this vastly lucrative field. When a client is satisfied with what you and your products are doing for them you can generally assume that you have achieved your professional goal. Your client is happy, you have been properly paid, and all is well; or is it? One important measure of business wellness is in the profitability your time, work, and financial risk delivers to you. If you're entirely satisfied with the income your business provides keep reading because no one ever has to much and most of us are probably wondering how to improve the picture.
There are a number of ways to improve the profit margin in your business. Raising your service prices will certainly increase revenues, and if you are booked out for 6 weeks I certainly recommend that you do. But there is the potential of customer exodus if the price is excessive for their budget or the value they place on the service itself, and some may resent it outright. You could attempt to build your per customer sales (yes, that's selling again), or you could simply work longer hours which might increase revenues but carries corresponding cost factors along with it. But if you don't want to take risks or add to your already overburdened work load you might, and should, consider reducing the cost of doing business. And a great place to begin is in the price you pay for the products you sell to your clients.
 I don't play favorites in the products game. I'm personally not interested in philosophies, skin care systems, or spokespersons. At my day spa I'm interested in customer satisfaction and the production of enough profit to stay in business and keep that satisfaction going. It's not an easy task as a lot of you must know by now.
And for those of you who have financial reports accurate enough to gauge your real profit you know just how difficult achieving a worthwhile profit can be. If you're in business you have got to do whatever it takes to remain there and still deliver a quality product. This is where the marketing of private label products only begins to look appealing.
 I've had countless esthetic and salon professionals attempt to debate the benefits of sticking with name-brand products only or as their main retail offering. Up close those benefits can look pretty attractive: market recognition, free sales support and education, national advertisements, brochures, printed bags, counter signs and, sometimes free samples. How could anyone argue the value of all these perks? Okay, I will.
First or all let's consider the benefits which are supposed to create strong sales activity in the salon: market recognition of the product, advertisements, bags, brochures, signs, etc. Have you any means in place to actually measure the performance value of these "benefits"? I'm talking about the tracking of sales directly related to the efforts of the product line itself. If not then you may be playing a very expensive game of assumption and be needlessly giving away a lot of money. My day spa does a whopping 42% of its total sales in retail products, most of it private label, and the rest receives almost no institutional support to speak of. We seem to be getting along without it. We bag in our own bags, use no product brochures, sample from our own stocks and then only as a last resort. Nor would we be very happy about paying for color ads through profit company margins when most of those appear in magazines targeted toward the industry itself; that's your competition to be exact. And in 14 years as a spa owner and cosmetics retailer the number of customers who came to us asking for specific brands has been negligible. So where's the benefit?
What about the free education? Certainly this is an item worth selling a product line to receive, right? Well let's look at it. The focus of most product-sponsored education is product ingredients, efficacy, and salon treatment application. While account representatives want and need you to sell the line they also are sensitive to service professionals' customary ambivalence about active retailing.
The hope is that by filling you with product and treatment knowledge the enthusiasm will somehow translate into enhanced retailing receptiveness, and you'll sell more product. Maybe so, and if so, does that enthusiasm last? Perhaps there are client concerns and interests you could address which would apply to anything you might be carrying; then you could carry anything.
Now how free is the free education you've been receiving? Here's an easy way to tell. Let's say you sell $100,000.00 worth of skin care products in your business this year. And, for the sake of averages, we'll assume those products had a wholesale cost of roughly $50,000.00. You earned then $50,000.00 in gross profit on those sales. But what if the same $100,000.00 in product sales cost you only $25,000.00 at wholesale? The loss to you in gross profit would be $25,000.00. Since the name-brand product line provided the "free" benefits and the private labeler didn't this means the free benefits factored over 12 months actually cost your business $2083.00 per month! That's $4166.00 a month on $200,000.00 in annual sales, and $6246.00 per month on $300,000.00 in sales. My business will generate over $750,000.00 in retail product sales for 1997; you can calculate the losses in terms of gross profit if I were selling primarily name-brand products at 50% markup. Luckily for me I don't have to. You and I can buy some pretty impressive education from private sources for a fraction of the revenues we lose in low profit margin sales. And there would still be plenty of income left for yourself or reinvestment into your company, that is, if all of your overhead costs are under control.
And overhead is really the point when we get right down to it with regards to profits. When product representatives show us the dazzling 50% profit margins we'll make selling their line it is gross profit that's being referred to. Overhead, that menacing and unruly expanse of operating costs, can easily consume the remaining 50% of your revenues, and often more than that. Product reps don't like to discuss operating costs because they often don't understand the revenue/cost relationship and certainly can't control them for you. You are asked to keep your eyes on the gross profit which is also often the only profit equation business operators comprehend as well. But this is at the very heart of why most businesses underperform financially or fail ultimately, and it's information critical to the success of your salon or spa.
This is by no means an anti-name-brand product campaign. Most producers I have evaluated offer very high quality and reliable products, as do most of the private-label manufacturers I am familiar with. In fact I strongly recommend that salon owners and independent service professionals offer a mix of private label and name brands. Since customers are all different in their tastes and preferences you will do well to provide alternates to a single product line approach to retailing. But profit must never stray far from your business attention which means stocking your shelves with a greater percentage of higher margin products. This will boost your average profit margin for sales overall and allow you to satisfy a wider range of client demand. It just makes good business sense.
 Most private label product companies are easy to do business with. While often bare bones in terms of packaging and sales support services (remember, those things cost you), they generally offer fairly complete treatment lines composed of high quality ingredients. At this writing high margin body care products remain woefully behind the selections available in skin care or makeup. You'll probably have to print and apply your own labels, mylar is a good choice as it wears well in water, unless you opt for screening services which require larger minimum orders. Ordinarily you can order as few as six pieces per item and sometimes fewer but the wholesale cost rises as the minimums drop. Private label manufacturers carry sufficient liability insurance to protect retailers and most have generous return policies for damaged or defective stock. I've also found many of them remarkably responsive to retailers' suggestions concerning formulation, selection, and criticisms. Some will formulate and manufacture to your specifications if you're willing to ponie up the investment for such inventory. Unless your volume in sales is stupendous I don't recommend tying up your capital in niche products requiring massive minimums and costs in warehousing.
The best advice is to talk with those who are already in the business of selling private label products. You'll have to qualify this advice against a number of possible scenarios.
For example, if a retailer reports an unsatisfactory experience selling these products you need to know the following: a) were the products of good quality?, b) were they promoted actively or left to sell themselves?, c) was the sales or service staff behind the product line?, d) what was the customer feedback?, e) how long did the business offer the line?, e) what has sold better, and why? In other words there are many reasons products don't sell but in spas and salons I work with the problem is usually that the business doesn't adequately promote them. When you sell a private-label product you are generally employing the power of your own professional reputation to convince a client to follow your advice. If you need an outside voice to do that for you then you may be lacking in the confidence needed to really build your business. After all, whether a product comes or goes it has to be you who remains in place servicing the customer and supporting a career. If a product line suddenly disappears will an entire following of salon professionals be swept away with it? Probably not. Believe in yourself first and let the products (and profits) reflect that successful perspective. So go ahead, be your own endorsement and sell the name your clients really trust, yours!
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