How do you build a successful service business when your customers' experience is almost completely in the hands of your employees?
That was the question facing Katie Grennan when she founded Toronto-based Alma Natural Quick Spa in 2011. She knew her ideas would resonate with people looking for a great spa experience, but how could she ensure that she could deliver on those ideas consistently when she wasn't providing the services herself?
Ms. Grennan had never worked in a spa, or even in a service industry, before founding Alma Natural Quick Spa in 2011.
After obtaining an undergraduate degree in engineering and an MBA, she worked for Fortune 500 companies such as Pfizer Inc. and L'Oréal Group in New York. When her husband took a job in Toronto in 2010, she decided to make a change.
"When I was doing my MBA, I knew that I wanted to start my own company someday," Ms. Grennan says. "And then when we moved to Toronto and I had to start over again anyway, it seemed like the right time."
The idea of a spa based on natural products came from her experiences in New York. With a very demanding work schedule, the only time she made for herself was when she went to a local "hole in the wall" nail bar. Ms. Grennan describes it as her "oasis."
"They knew me and they did a great job, and I never would have gone anywhere else," she says.
But one day, when her husband picked her up, he said, "How can you go in there? It smells bad and the people working there have to wear masks."
She started to wonder how she could provide the positive things she loved about the spa experience without the negatives.
In developing her concept for a spa, Ms Grennan did a market survey to find out what people thought was missing from the spa experience. She says it became crystal clear that not only were people concerned about toxic products, they were also critical of service quality. They wanted their nail polish to last and to be able to communicate with their esthetician. They didn't like the pretentiousness of high end experiences and paying $80 for a pedicure that was the same quality as a $30 pedicure.
The quality of service someone receives at a spa is directly related to the likelihood that they'll return, Ms. Grennan says.
"If someone has a bad experience on their first visit, they won't come back. Hopefully, they will complain and you'll learn from that feedback, but they won't come back. If it's their second or third time at your spa and something goes wrong, about half of your customers will give you another chance. So it's critical to get it right the first time, but even after that, there is little room for lapses in quality."
Given the importance of the individual estheticians in delivering the Alma spa experience, Ms. Grennan knew she had to hire carefully. She focused on three key critieria.
First, she only considered people with an esthetics degree, which involves a year of training and provides in-depth knowledge of skin, nail and hair. "A high level of technical skills is central to consistently high-quality outcomes, and we're able to offer real, lasting benefit to our customer, versus just cosmetic benefit" she says. "Besides requiring a degree in the field, we have practical interviews, so that people can demonstrate their skills before we make a job offer."
Second, she looked for people who can converse and write in English because she believes that communication is essential to developing a rapport between an esthetician and clients. This rapport extends beyond the spa itself, since estheticians are encouraged to stay in e-mail contact with their own clients to provide ongoing education on products and the health of their skin and nails.
Third, Ms. Grennan wanted to hire people who love to, as she puts it, "learn, grow and deliver a great customer experience." This emphasis on continuous improvement involves extensive ongoing training, being responsive to customer feedback, and individual monthly coaching sessions.
Ms. Grennan has learned that there is not one type of personality that's best-suited for a high-quality experience. Customers are diverse; some don't want to converse in the spa and prefer a more laid-back esthetician, while others want to learn more about the products and services offered and prefer someone who is more outgoing. It's therefore important to hire different types of people and to think about who will be a good fit for each customer.
With these guidelines in mind, Ms. Grennan has retained her five initial estheticians, hired a sixth, and is looking to hire two more.
Although Alma Natural Quick Spa has been open for less than a year, its performance metrics are impressive. The spa has a client base of 1,500 people and repeat customers make up two-thirds of the business. Impressively, the client conversion rate – the proportion of first-time customers who become repeat customers – is 50 per cent, well above an industry average of 30 per cent.
Ms. Grennan is offer to a good start in delivering consistent, high-quality service and providing a new oasis for customers.
Special to The Globe and Mail
Becky Reuber is a professor of strategic management in the Rotman School of Management of the University of Toronto.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Your Business website.
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