Profit Engineering a Membership Model — The Art of Price Structuring
Ah, the membership model. It’s as ubiquitous to the wellness and beauty industry as coconut oil to a DIY beauty regimen. But it's no 'one-size-fits-all' operation; it requires finesse, deep understanding of your clientele, the right tools, and, of course, a dash of bold innovation.
For our first article in this eye-opening series on Profit Engineering a Membership Model, we'll slice through the layers of price structuring with the help of some of the industry's most accomplished players.
🎙️ This #Innergize session was moderated by David Crisalli, a sage in the wellness industry, founder of multiple wellness ventures, and a leader who understands that business success and Zen can coexist. He also functioned as Chief Executive Officer during a period of expansive growth at Massage Envy.
Panelists:
Cindy Meiskin : The strategic alchemist transforming Customer Experience into gold for Hand & Stone Massage and Facial Spa .
Ryan Rose : The data-driven mastermind behind 600 thriving units and the increasing adoption of med spa for VIO Med Spa , solving the enigma of cross-center redemption one pivot table at a time.
Josh Goodell : The efficiency and innovation guru for Boardroom Styling Lounge who's more particular about membership management than most are about their hair color.
📌 The Theory of Relativity: Price Relativity, That Is
Price relativity is not Einstein’s lesser-known theory; it's about understanding the price point in context. Your membership price isn’t just a number. It’s a value statement. This is why salons, spas, and wellness centers often have multiple membership tiers.
"We used to think of Memberships only as recurring revenue… But recently, we’ve begun thinking about the first contact differently. We're no longer a hair salon or a med spa or a day spa — we're a hospitality company." — Ryan Rose
"Your price is more than a number. It's a statement about the value you bring to the table." — Cindy Meiskin
📌 To Discount or Not To Discount
Offering discounts on memberships seems as natural as mixing cucumber and mint for that ultra-hydrating face mask. But how do you strike the balance between luring in members with discounts and not having to skimp on the quality of your service? The answer, friends, is in understanding what your customers value:
Our members and clients are so loyal to their service provide – they’re our critical resource. Coming out of COVID we began aggressively competing for talent. — Josh Goodell
In the Medspa Industry, acceptance has undergone a huge evolution, but we have a runway of 93% of the population eligible for med spa services that haven’t yet gotten one. Our memberships are basically a banking membership, but in addition to using it dollar for dollar, they also get access to discounted services and products. We’re meeting the customer where they are and investing in creating a value proposition through membership. — Ryan Rose
📌 The Elasticity of Price
Price elasticity, in simple terms, is how sensitive your customers are to changes in price. If you've got a hot commodity service, you might just be able to hike that price up without losing your loyalists. But this requires sophisticated and regular market analysis.
"Our survey program has been critical for us to monitor key metrics with customer experience before, during, and after price increase to see what's the temperature reading on it... The biggest use of technology for me with customer experience has been to drive revenue by making small tweaks to our services based on data." — Cindy Meiskin
Because of our national membership base, we have three tiers depending on the region that you open up in. Boston is more expensive than Cleveland, Seattle is more expensive than Nebraska. And so you choose tier one, tier two, and tier three. — Ryan Rose
📌 Ancillary Services: The Toppings on the Profit Sundae
Memberships often include core services, but it's the ancillary, or add-on services, that can really sweeten the pot and boost profit margins. Think of them as the little extras that make your clients feel like they're getting the VIP treatment, even when they're on a budget.
"A holistic membership program hits all of those value creation levers. Members are loyal, they come more frequently. Our analysis shows that our lifetime value of a member is seven to eight times that of a non-member. If you think about that, and how members engage with the brand and the number of ancillary services that they consume relative to non-members — it's pretty staggering the difference. — Josh Goodell
📌 In a Nutshell
Creating a membership model that sings in harmony with your business needs, while serenading your customers, is not an overnight act. It's an opera. It requires an in-depth understanding of price structuring that complements your brand’s objectives while providing value to the consumer.
"Communication strategy is super important once you get into the membership realm, these are living products and as you navigate the economic climate, communicating price increases to the membership is critical." — David Crisalli
So, whether you're a fledgling wellness center in Omaha or a high-end spa in Manhattan, your membership model can be as unique and sophisticated as a bespoke skincare regimen 🌟
Stay tuned for the next installment in this series where we'll delve into the often-neglected yet crucial realm of customer retention strategies within membership models.
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