Spa Intelligence

In this month’s article I would like to look again at the subject of Business Intelligence. The term Business Intelligence is now no longer a new buzz word but rather a fairly commonly used term in the business world, including small and medium businesses.

To recap, the term Business Intelligence means gathering data, converting it into meaningful information, interpreting this information and taking positive action in response to the interpretation.

Using Business Intelligence to support your decision making process stands opposed to making decisions based on gut feeling. Rather you give up what you think you know about your business and take a neutral stand point in order to let the facts speak for themselves. This is often very hard for spa (and other business) owners to do as they are often so intricately involved in the day to day running of their businesses they that they find it hard to accept that they can still learn something new about their businesses.

Business intelligence gives an objective point of view rather than a subjective point of view. The ideal scenario is for the objective point of view created by Business Intelligence to be supplemented by the subjective experience that the owner has of their business to add value to the information offered by Business Intelligence. The problem, however, is that the neutral facts presented by Business Intelligence are often rejected in favour of subjective experience and gut feeling. You’ll usually find that the more removed the owner is from the day to day operations of the business the more objective they will be when interpreting Business Intelligence.

What distinguishes Business Intelligence

The difference between Business Intelligence and Management Reporting is that Business Intelligence is meant to be “living information” that should really be referred to on a daily basis and action should be taken almost daily to correct performance that is not in line with the target requirements.

Business Intelligence gives greater insight into why your business is performing the way it is. Rather than simply highlighting the turnover figures, it  tells a detailed story, enlivening the bland report figures into full colour. It is therefore not one dimensional but rather a multi-dimensional tool,offering different insights depending on which perspective you look at it from.

Business Intelligence therefore needs to be a working tool that not only gives you information about your business but also assists you in doing staff appraisals on a regular basis so that they are part of the overall objectives for your spa so that staff can benchmark themselves against the performance of the spa on the whole, as well as other therapists if necessary. Therapists need to feel empowered by the feedback that is given to them through the Business Intelligence Cycle so that they not only get a reflection of their performance but also the kind of input they need in order to grow their performance.

Where to start

In my opinion starting with a top down view is critical. This helps to prevent you from getting lost in a sea of information and not knowing what to do with it. This is known as information overload.

Therefore you should start with a very simple entry point, like “Is my turnover up or down compared to a comparable previous period?” This is about as simple as you can get and is meaningful Business Intelligence as it is making a comparison with another relevant period in order to show you if you are growing or not.

It then begs the next question of “Why is my turnover up or down compared to a previous comparable period?” This is a simple but “intelligent” question because if you can find the answer then you can do something about it, which is the fundamental application of Business Intelligence.

Drilling Down

The ability to answer a question like “why is my turnover up or down?” will depend on your ability to make sense of the sales information that you generate on a daily basis. Every question that you are able to answer will usually lead to another question. The more questions you answer,  the closer you will get to the core of the Business Intelligence  solution.

The cornerstone of Business Intelligence  is that your information is a journey and is not random. It must all form part of the same picture otherwise it will be meaningless. At the point where you stop answering questions you should be in a position to take action that will deal with the specific cause of what is affecting your turnover. The process will be a little like pealing layers off an onion. Each layer removed will reveal better quality information and better ability to deliver the result you require.

The bottom line

The goal of Business Intelligence is not only to increase turnover but ultimately to improve your profitability. Therefore, you need to be working towards not only operating at full capacity, but also to be maximising returns once you have reached capacity. For example if all your therapists are fully booked all of the time, you may decide that your only choice is to expand by either opening another branch or extending the size of your spa. However, by using Business Intelligence to pinpoint your situation, you realise that you need to be get a higher return per client visit, which should yield greater returns without the capital outlay (and imminent overheads) of expansion.

Conclusion

All of the above can be summed up as creating a culture of accurate measurement. This measurement will be cyclical (on-going) and will be consistent. It is this culture that will result in the setting of goals for your business and staff, in order for consistency to be achieved in the simplest way possible that is sustainable long into your business’ future.