Why is the CEO of Australia’s largest massage company down on “innovation”?
Andrew is actively involved in shaping the debate on Crowdfunding and has created a community website www.csef-Australia.com.au to help stimulate discussion and formulate a submission for the Australian Crowdfunding Legislation review.
To answer the headline question, I’m not your average masseuse. I’m a seasoned entrepreneur and am immersed in crowd-sourced equity funding within Australia.
The risk of vanity when telling your own story is high, but I will try to be brutally honest with my assessment, and in doing so demonstrate something even better than “innovation”, it’s called: “a better service”.
It could be the key to successful start-ups.
It’s concepts like “provide a better service” that matter to a start-ups long term survival and not just “innovation”, which unless they are able to be patented and defended will matter only briefly, if at all.
Almost every start-up business has some level of innovation – so innovation is not in itself useful. If it were then more would succeed.
The same was true when I stumbled into the massage industry. Massage professionals have a similar or worse failure rate than start-ups – less than 10% of people with a massage qualification are earning their living from massage 2-years after graduating.
The massage industry constantly promoted “health” as it’s benefit. People would advertise the “health benefits” in marketing, masseuses would try and be seen as quasi physiotherapists or “healers” – it was definitely all about “health”.
Now I have a confession to make. I run the biggest massage company in Australia, but I’m not a qualified masseuse. So, I had none of the typically held beliefs about what massage stood for and we just started.
So, we launched a massage business in pubs and clubs. By targeting bars we didn’t have to compete with traditional masseuses and the customers were spending time and money in that environment . This was convenience – one key to “a better service” – and not “health”. (ED: I remember using the 3 Minute Angels in the early days, drinking beer with your mates and getting a massage, fantastic)
We made an innovative pricing policy of letting the customer determine the value of payment after the massage. We found more people said “yes” if not confronted with a fixed price and because its an instant gratification product we always got paid well.
This was considered “innovative” and 3 Minute Angels got its start. (Ed: this pay what you think its worth model was very innovative 13 years ago, long before this was experimented with by Rock Stars and Writers)
It wasn’t all that bad. In fact it was a blast, we had a great team and loads of fun. We had the classic hockey stick growth you expect of a digital business but we were a tactile, real-world business.
By bringing massage mobile – into pubs, airports and shopping centres – we had created “a better service” and were rewarded for it with growth.
But growth did not equate to profitability and after 6 years in the business-to-consumer massage market we found ourselves with high-visibility, low-margins and no profits.
By that stage however, we had made inroads with corporate Australia and provided them with massages in a new business-to-business model. We leveraged technology to allow us to manage the supply chain of masseuses across Australia and then integrated a lower-cost management team from Manila.
Profitable despite the GFC we had started to lose revenues and sought to expand our product offerings. We opened a new brand called “Workplace Incentives” convinced that businesses spending money with us on massage would also want to buy one of the now 178 other products we stocked.
We stuck with this ill-conceived strategy for too long and sales were now below $1m per annum, which was a third of it’s peak. We had tried “innovating” with the Workplace Incentives brand and business model and we had got it wrong. We had invested hundreds of thousands in this innovative idea.
This was a bit of ‘black’ time for me as a business owner and entrepreneur because I had listened to the keynotes, read the books and drunk the “kool aid” on “Innovation” and yet it wasn’t paying off. I was trying to innovate and serve up to my existing database new products that rationally they should have wanted.
I wasn’t the masseuse selling “health” but I was the entrepreneur selling “innovation” and it had the same result.
The breakthrough came as a “slow hunch” – as these things so often do. It occurred to me that “innovation” is nothing but a weasel word. It’s used as a “can’t think of another word filler”. And when you can’t think of that other word and you use the “innovation” word, it probably means you don’t have a real value proposition.
I had been addicted to innovation and now like any good addict had to admit my problem before I could get over it.
It took a few months as recovering innovator to get to grips with the more meaningful side of business like “a better service” or “easier”, “more convenient”, “trusted”.
But, we started small when we worked out that we could no longer go on with this “innovation” ruse. We started to use an iPad and web-application to improve the massage consent, insurance and legalities that come with our business.
This new “digital worksheet” in turn would provide us with a new type of interaction with recipients and add their email addresses to our database. But the final piece of the puzzle fell into place when watching a TED Talk by Jane Magonigal:
This fantastic talk taught me the value of games and of building resilience. With the iPad in the hands of recipients during their massage we could actually, with a scientific straight face, claim to add 7.5minutes extra life expectancy per massage that we performed.
Our interaction with each person we massaged (we do 5-minute massages even though we’re called 3 Minute Angels) was ‘life generating’. This was “innovation” again, but being wise the innovation trap I was still looking at what else could be done that took this “innovation” and make it more enduring.
The answer was elegantly simple. Granted, it could only meaningfully be applied when we introduced the technology of the “digital worksheet”.
By simply asking the person whom we massaged how they felt before the massage and then asking them again how they felt after the massage we were able to generate a customer-by-customer assessment of the service quality we deliver.
It sounds simple because it is. We asked people to assess themselves on a mood scale.
In aggregate these self-assessments tell a picture of the mood of the office prior to the massage and tell a great story about the difference the massage has made to the mood of the office.
In the hands of a switched on HR or Office Managers, this sort information becomes gold…
This finally has made us “a better service” we could offer to clients. Thanks to the use of technology like the iPad and innovation such as the multi-media presentation we provide during the massage, we now had something to start with – but the thing that is working (again) is “a better service”.
Better Service is something clients prefer compared to the “innovation” they didn’t ask for.
The corporate and event clients that book 3 Minute Angels now receive a Key Contact Report that details the pre and post mood scale, person-by-person and provides useful metrics like how these data points relate to previous visits.
Clients and teams that use our service are buzzing off the visibility Angels get into the staff via self-assessment, when compared with the visibility management gets when assessing staff and culture.
Would you tell your boss how stressed you are?
All this buzzing is paying off too with re-bookings and referrals going through the roof. December now looks to be a bigger month than November and that has never happened in the 13 years of this business.
The 3 Minute Angels business is probably more tech-savvy than most massage companies and we will happily take the moniker of being “different”, but what really is going on for us in the massage industry is the same as goes on in every industry.
You see, what works for our 13-year-old company is the same as what will work for your start-up, that is provide “a better service”.
If your business plan contains the words “innovation” but not “better service” then I fear that your business will be the one that becomes one of the statistics of “failed” tech start ups that by far and away make up the majority of all start ups.
If your business offers “a better service”, then you stand every chance of making it.