Are membership salons the next big thing in beauty? You only have to look at the popularity of other subscription models such as Netflix and budget gyms to see there’s a consumer appetite for pay-monthly services. Yet, models where clients can claim treatment benefits on different loyalty tiers have been a slow burner in the UK beauty industry, only gaining traction in the past few years.
However, it seems more and more salons and spas are now starting to implement membership subscriptions, offering regular, affordable treatments for a set monthly fee, with varying success. Melissa Evans, national spa manager for spa group Spa Experience by Better (formerly Spa London), believes the concept’s popularity is to do with a greater focus on wellness. “At our spas, we have a wellbeing membership that encourages people to take up exercise as well as promoting regular relaxation. Clients love it and it’s benefiting the business, generating a guaranteed monthly income and a captive audience for treatments and retail.”
The UK has been slower than the US to take the plunge into subscription models and Charlie Thompson, co-founder of membership salon concept The Massage Company, thinks it’s because of the complexity of the venture: “The administration process of something like this takes time. The modern ‘budget gym’ model allows people to simply cancel direct debit payments and customers now have this expectation for anything linked to membership. It’s easy signing people up but difficult when clients’ payments fail.”
We caught up with three businesses that run these schemes to find out the pros and cons of membership subscriptions and how they make the concept work for them.
THE UNLIMITED CLUB
UGLY DUCKLING BEAUTY
Launched memberships: 2012
Price: £60 per month
Number of members: 70
East London-based Ugly Duckling Beauty has been running a subscription model for the past four years and is well on its way to becoming a members-only salon. For £60 a month, clients can book themselves in for an unlimited number of express treatments, from basic manicures, pedicures and lash lifts, to brow tints and leg, bikini, Hollywood, Brazilian, underarm and upper-lip waxes, as well as 20% off all other salon services.
“We’ve based our business on what our customers want than what we feel they need, so our offer is all about express services. Londoners are strapped for time and want something quick rather than indulgent – it’s all about maintenance,” says co-founder Monique Hassan-Sadiq, who runs the salon with her husband Edward. “We opted for a membership model instead of using discount websites such as Groupon and Wowcher because it breeds customer loyalty. People who use those sites are unlikely to return to your business, even if the service was outstanding, because they want a bargain.”
The salon started its membership model in 2012 after seeing the success of the concept in other businesses including budget gyms and online beauty subscription services such as Glossybox. “We went for it because we knew it would allow our relatively new business to grow,” explains Edward. “By having a steady monthly income we knew the minimum the salon would make, allowing us to account for staffing costs, rent and marketing. It helped us get on our feet.”
Initially the duo implemented a tier-based system, where members could choose what they paid each month in relation to the amount of benefits, but clients “found it confusing and the message got lost”, says Monique. After six months, they changed to the unlimited service they offer today and since then have seen an increase of clients year on year, with members booking themselves in, on average, every seven to 14 days.
The biggest challenge for the pair during set-up was getting a merchant to process members’ reoccurring payments. “The banks weren’t willing to process direct debit payments for us because of the size of our business – they didn’t consider us a corporate entity as we needed to be taking £750,000 a year, which we weren’t,” says Edward.
The salon finally settled for online payment system Paypal because “it’s a recognised brand and gives customers a sense of security because they are in complete control of the payments. They can cancel the membership as and when they want to but we work on a courtesy and respect model of one month’s notice for cancellation,” explains Monique.
However, Paypal’s processing service comes at a cost. “The percentage they take from us is pretty high, around 20%, but we need the service because it takes a lot of the admin hassle away. If the banks would do it for us then our revenue would dramatically increase and we could grow a lot faster, but we’re happy to take the loss for now,” adds Edward.
Moving forward, the pair plan to open more salons to extend their reach, “so clients can use their membership at any of our locations,” says Edward. “I think the subscription model is going to revolutionise the industry and those that don’t get on board soon are going to be playing catch up in the future.”
THE VIP CLUB
SLEEPING BEAUTY SALON
Launched memberships: 2007
Price: £50 a month, £285 for six months or £550 per year
Number of members: 180
When director Lilac Miller launched her Platinum Membership at Sleeping Beauty Salon in Inverness 10 years ago she created it to encourage loyalty among her clients. “Customers tend to go to one salon for a massage and another for nails, but I knew if they were part of a membership scheme then they would be more likely to have multiple services at the one place. It was going to be my salon’s point of difference,” says Miller.
Membership can be bought on a monthly, six-month or annual basis, with clients having £50 per month – the standard hourly rate for the salon – on their account to spend. Members receive a complimentary 30-minute Elemis facial for joining, 20% off all treatments, 10% off retail, a birthday present, invitations to members only salon events and access to exclusive offers that walk-in clients don’t get.
The £50 credit can be used on any treatments and can be rolled over, which is what Miller thinks is part of the subscription’s appeal, helping to maintain high retention levels: “A lot of people save their money up to book themselves in for more expensive treatments such as IPL. For everyone else, the treatment is £120 but for members it’s £96 with the 20% discount, which is paid for after two months of membership. Many members use it to book courses of Caci treatments too.”
Now, the scheme boasts a private member feel with a cap of 300 people allowed to join and reap the benefits. To keep its exclusive feel, Miller hasn’t been advertising the scheme for the past few years. However, membership has continued to grow organically via word-of-mouth recommendations, increasing by around 20 to 30 people each year.
“We froze the membership about a year ago for a short period because we felt like we couldn’t control it. We had a waiting list and when someone left, we contacted those who wanted to join on a first-come-first-served basis,” says Miller. “It was a real challenge. Membership subscriptions are about being able to provide agreed benefits to a set number of people – so you have to know your limits. Capping it keeps it exclusive and makes sure we’re not shooting ourselves in the foot by offering what we can’t afford.”
Despite using third-party company Go Cardless to take the direct debit payments on the salon’s behalf, for a 1% fee, the admin side of the scheme is a continual challenge. “It’s quite an upkeep. You need someone who manages it as part of their job on a daily basis, updating clients’ accounts and organising the salon events,” says Miller. “You also have to be really clear about what your terms and conditions are because people can be quite sceptical. Many thought our money rollover was too good to be true.”
Although the scheme brings in £7,500 per month to the salon, Miller’s not sure how much it has benefited the business’s bottom line. “It has definitely helped our reputation and customer loyalty but I can’t say if it has boosted our profits as it’s discounted. We’re obviously going to make less money from our members than we do from other clients. It’s something we continually weigh up,” she says.
“For us, 20% off treatments was the max we could offer members but I’ve seen some salons offering halfprice discounts, which I doubt is feasible. If you’re going to launch a scheme in your salon, set discounts for your future set-up as much as for what you’re doing now.”
THE WELLBEING CLUB
BALI HEALTH LOUNGE
Launched memberships: 2015
Price: From £43 per month
Number of members: 348
Newer to the beauty membership model game are entrepreneurs and brothers Andrew (pictured left) and James Pitayanukul, who opened day spa Bali Health Lounge in Manchester in 2015 after seeing the success of membership schemes in the US. However, despite spotting a gap in the market, the duo found it difficult to adapt the scheme for the UK because of a lack of consumer understanding of subscription models in beauty.
“It was a substantial challenge getting people to understand how it works. The concept of regular treatments is still a bit foreign here whereas in the US it’s widely accepted,” says Andrew Pitayanukul. “My brother and I put a lot of effort into getting the message out that regular treatments are clinically proven to be good for you and marketed it to those who would incorporate the service as part of a healthy lifestyle.”
Membership starts from £43 per month, which gets clients either a 60-minute facial or massage, but members can upgrade the service to 90 minutes for an extra £15 per month (£58 in total). Treatments can only be booked on week days, but for an extra £10 a month the service can include weekend appointments. Pitayanukul says the different upgrades available and flexible nature of the model means “there’s a subscription in there for everyone”.
Wellness is the key theme in the rest of the subscription perks, which include members-only events such as talks with local nutritionists and tai chi or couples massage workshops, as well as free yoga classes and a wide array of benefits with the spa’s 20 membership partners.
“We work with local businesses to offer special promotions to our members – discounts at places like hairdresser Toni & Guy, taxi company Uber, chocolatier Hotel Chocolat and car park company NCP,” explains Pitayanukul. “We want to give a rounded offering. It’s not just about the treatments.”
The spa also offers something which Pitayanukul believes has helped its members become “ambassadors” for the brand – the ability to gift their treatment to a partner, family or friend, on as many occasions as they want. “Sometimes people struggle to find the time for these treatments due to work or family commitments, so they have the choice to gift it to someone. It’s one of our biggest USPs.”
Currently, the spa has 348 members, with hopes to grow by an extra 100–150 this year. “Since we launched the scheme, revenue has almost doubled, the team has grown to 17 therapists and we’ve won prestigious titles including Spa Traveller’s Best City Day Spa in Manchester 2015 Award,” says Pitayanukul.
And the entrepreneur believes membership models could potentially change the face of the beauty industry, as long as salons and spas understand the intricacies of them. “Some businesses will be apprehensive but membership subscription models are a win-win situation for everyone,” says Pitayanukul.
“For customers, memberships are about convenience and saving money, while for salons and spas it makes commercial sense because you effectively have contracted, repeat customers, who become your predictable cash flow. But before embarking, you have to know your market and understand what your clients want.”