Turn to TV

Tampa-based Ideal Image is still experimenting with different ways to become a profitable business for its parent company, Steiner Leisure. For the end of 2014 and beginning of 2015, the focus is on finding a cheaper way to acquire new clients.

To achieve this, the company has turned to TV.

Ideal Image, which specializes in laser hair removal, makes up about 15% of the revenues for Steiner Leisure, a publicly traded company based in Nassau, the Bahamas, with $855 million in revenue in 2013 (symbol: STNR; recent price: $43.65).

In the quarter ended Sept. 30, Steiner Leisure reported $12.1 million in net income, or 87 cents earnings per common share, compared with $11.5 million, or 77 cents per share in the same quarter in 2013. Ideal Image's revenues increased 17% in the third quarter compared with the year prior.

However, according to the conference call on third quarter financial results, Steiner Leisure CEO Leonard Fluxman said growth has been a little more sluggish than expected. In the third quarter ended Sept. 30, the company lost nearly $2.5 million. The year prior, it lost $4.37 million. There are only about a dozen stores that are a drag on Ideal Image's revenues, Fluxman mentioned later in the call.
So now the company is focusing on marketing to help bring up those numbers. In October, the company worked with Havas Edge to produce and release a 28.5-minute infomercial and two 120-second television ads, along with a handful of webisodes on its services.

The infomercial was the perfect way to tell people more about laser hair removal and target 22- to 44-year-old women with disposable income, according to President Bruce Fabel. “We wanted to explain in a way people understand why we aren't the cheapest place in town,” Fabel says.

Ideal Image doubled its leads throughout the month of November by adding the television investment to its existing radio ads. The company also released a 120-second spot on anti-aging, targeted to “the slightly more mature woman,” from 30- to 60-year-olds, Fabel says.

As an additional marketing push, Ideal Image invested $100,000 in developing a mobile application where a potential customer can take a picture of his or her face and see what it would look like to have different treatments. The app also allows guests to sign up for promotions if they are in the area on a day when appointments are light.

Earlier this year, the company expanded beyond laser hair removal to include additional services in anti-aging and body sculpting. Fabel says he's encouraged by the results thus far. In the six months since it has started additional services, those services have grown to 10% of total sales with “very little marketing,” Fabel says. Currently between 50% and 60% of sales of these new services are coming from Ideal Image's existing customer base.

Now the company's biggest challenge, outside of finding the secret sauce to profitability, is finding capacity in some centers to accommodate the new services. In 2008 and 2009, the company repurchased some of its franchises. Most of the company's centers contain three to five treatment rooms. But some of the smaller centers only have two rooms. “When you add the other services, it can be a challenge,” Fabel admits. They've tried to make up for tight appointments by extending hours and days open.

“The goal is to fine-tune everything we've started to roll out,” Fabel adds. For example, some services can be done at the same time as another service. The company still needs to iron out how to book those non-conflicting appointments on its software, as well as how best to educate its employees on more upsell techniques.

Fabel has also learned that he needs to put on the brakes on building out too quickly. “I'm a doer,” he says, “my team has pushed back on me a little.” So after expanding 30 centers in 2013 through its largest one-year expansion, the company is taking a break from more centers until the end of next year.