BSN450 Assignment 2_Dawe_McGregor_Christensen_Kerr

table of contents 3 Executive Summary Summary: KAILO in a snapshot 1 Introduction to KAILO Vision Value Proposition Business Model Canvas 2 KAILO’s Industry Performance The State of the Wellness Industry Insights on Data Provided Recommendations 3 KAILO’s Team Member Performance Overall Performance The Current Environment Insights on Data Provided & Acquired Recommendations 4 KAILO’s Social Impact The Current Environment Insights on Data Provided & Acquired Recommendations SWOT & PESTEL 5 Conclusion & Business Model Recommendations 6 Table of Figures 7 References 4 5 6 6 7 8 9 10 12 15 16 16 17 20 25 31 32 33 35 36 37 40 41

1 Introduction to kailo vision KAILO is a wellness brand operating primarily from the Calile Hotel in Brisbane. The brand is based on wellness aesthetic trends and offers a wide range of services, from massages and skin therapies to cosmetic medical treatments. KAILO also offers various self-care products designed for at-home use to complement the services provided including their own skincare and supplements range. b u s i n e s s c a s e r e p o r t 6

In understanding how KAILO Medispa has performed over the period, individually and in an industry context it is crucial to examine how the organisation’s services have performed over time, particularly when considering the advent of the COVID-19 pandemic. To this end, we have analysed the wellness industry globally, domestically, and within the Asia-Pacific region to put KAILO’s revenue into perspective. By cross-examining the Medispa to its peers over the time provided, we can better understand how KAILO’s business model compares to its competitors. 2 KAILO’S industry performance

2.2 Insights on Data Provided & Acquired The data provided indicates that KAILO’s business is seasonal, with profit peaking around the November/December period and experiencing lulls in the mid-year winter season. The 2023 Christmas period starting in November saw an increase in Gift Card Sales with 116.38% growth compared to November 2022. Compared to the global market and Australia’s Wellness industry post-pandemic bouncing back, KAILO has only grown by 3.9% between 2022/2023 vs 2023/2024 financial year (Figure 3). Skin treatments and massage have been the most profitable services. Product sales have been decreasing post- Christmas 2023 and saw a spike in sales during July 2023. The reason why this spike occurred in July 2023 has not been determined due to the limited data provided. Service sales dropped post-Christmas 2022 and slowly increased but have not reached the same levels as Christmas 2023. The figures compared to the industry within Australia show that the company has experienced little growth in comparison. Figure 4 Kailo Gift Card Sales Trends 12 b u s i n e s s c a s e r e p o r t

Recommendations for future-planning for KAILO have been analysed using the Three Horizon Strategy (Mufida & Mirzanti, 2023, p. 3716). Horizon 1 Refining their offerings to concentrate on their most profitable products and services. KAILO is a young business and should increase their market share within the highly saturated wellness industry, by focussing on cementing their brand in consumers’ minds through skincare treatments and massage. Horizon 2 Partnering with The Cailie Hotel to increase brand awareness and capture the Wellness Tourism market (Halliwell, 2024; Mufida & Mirzanti, 2023, p. 3715). KAILO should take advantage of their location within the James Street precinct and partner with The Cailie Hotel, to attract proponents of Wellness Tourism. A partnership with The Cailie including placing KAILO skincare products in the common area bathrooms, in the mini-bar and offering Spa & Stay packages could drive growth for both businesses through cross-promotion as a wellness destination. Horizon 3 Transforming into an Eco spa with refillable products available for purchase and a recycling initiative. Consumers are now expecting brands to meet their personal preferences of ethical and sustainable production due to ongoing environmental concerns (Bom et al, 2019). KAILO has the opportunity to transform into a green business, that benefits the environment to meet consumers' needs and meet social responsibility. Figure 7 Three Horizons strategy for KAILO b u s i n e s s c a s e r e p o r t 15 2.3 Recommendations

Service Sales While Service revenue has remained steady, growing slightly over the recorded period, the number of service sales have been reducing as uncovered in section 3, this is likely due to an aforementioned paradox of choice, rather than team member performance. As shown, in the graph below, service revenue has increased over the last ten months compared to service sales volumes, with the average service value in May 2023 of $177 growing to $198 in February 2024. This is further highlighted when we compare the first 8 months of FY2022/23 and against FY2023/24. Service revenue has increased by 1.5% while sales has reduced by 8.2%. b u s i n e s s c a s e r e p o r t Figure 11 Service sales vs Service revenue 18

b u s i n e s s c a s e r e p o r t Figure 14 Allocation of 'Generalised position' and 'Contract type'. 21

Identify key positions Analysing service and product sales data reveals that only a portion of the 19 positions contributed significantly to revenue generation. Service sales revenue was the primary revenue source accounting for nearly $4.5m or 82% with massage therapists and skin therapist generating sales above $1m. . b u s i n e s s c a s e r e p o r t Figure 15 Service sales and Product sales by generalised position 22

Exclude positions This analysis was limited by the data from KAILO. While future assessments could include more structured and unstructured data, we focused on detailed analysis of "data-rich" positions. The table below summarises the historic employee structure within the business and the positions chosen (not shaded grey) for detailed performance analysis based on the position's contribution to sales of product and services. . b u s i n e s s c a s e r e p o r t Figure 16 Staff profile - Over the data period 23

The graph below shows the average monthly sales (based on invoice count) of employees by generalised position. This approach adjusts for employees that have not registered data in all months across the recorded data period, demonstrating that; There are high performing outlier employees in the skin therapists, front desk and nurse positions Massage therapists have varying contributions Massage therapists and skin therapists contribute the most to volume of sales . b u s i n e s s c a s e r e p o r t Figure 17 Key generalised positions - spread of monthly 24

Limitations Note that the process of generalising positions would benefit from input from the ‘Job’ data authors and that: Jobs have been allocated from name only and may have been over generalised Lack understanding of the operating roles and responsibilities within the business Lack understanding of the contractual arrangements between the business and its staff. To help reduce the chances of errors in our allocation of ‘Jobs’ to generalised positions, we assessed (and removed where we thought appropriate) outliers within the data. Additionally, KPI data containing the value zero was removed from performance analysis if values were contained in the previous or following month; assuming the employee in question was not available to work (e.g. personal leave etc.). 3.5 Recommendations KPIs included in analysis that will help inform business growth: Number of monthly appointments and invoices. Average monthly invoice value. Monthly new guests Identify which employees are growing the business through new clients. Rebooked Identify employees who are growing the business through repeated work. ·Addon % Identify employees who grow business through the sale of ‘extra’ products or services. . b u s i n e s s c a s e r e p o r t 25

Skin Therapists Only two employees drive average monthly sales, with employee 612413124 averaging 77 monthly sales or 69% above the company wide average. Four of the nine skin therapists that had a below-average maximum result commenced their employment in July 2023 or later and have less experience than other employees. The comparable performance of each employee with the percentage value indicating how far above (or below) they performed against the skin therapist average is outlined in Table 5. This table includes ‘active months’ to highlight the performance of employee codes that have not been ‘active’ in the data. b u s i n e s s c a s e r e p o r t Figure 18 Skin therapists by KPIs and monthly averages. 26

Employees that have less than 10 months experience performed below the average in appointments and sales; possibly indicating that these employees are in a training position where they do not record their own appointments. We recommend KAILO use a new metric with their CRM system tracking the months of service a particular employee has so they can better identify the effect of having so many trainees and how those trainees are growing in relation to their ability to make sales. b u s i n e s s c a s e r e p o r t Figure 19 Skin therapists – employee performance against the mean. 27

Massage Therapist As shown in the table below, massage therapists had four employees that scored well across the KPIs with employee ‘1176796857’ scoring above the average in all KPIs. Employee ‘1176796857’ scored well across every KPI including the KPIs aligned with growing the business through re bookings and add on sales. Employees ‘1207420848’, ‘152739027’ and ’51’ scored well across the core business KPIs but may benefit from some training in add on sales. Like other positions, employees with less active months performed below average, with employee 51 being the exception. b u s i n e s s c a s e r e p o r t Figure 20 Massage therapist - KPIs - monthly averages. Figure 21 Massage therapist - KPIs - employee performance against the average 28

Guest services Guest services recorded no data in some KPI areas with no recordings in rebooked or add on (%). Only one employee recorded data in appointments, however as expected, there was recorded data in the number of invoices issued. Average invoice value was comparatively high with other positions indicating this value may include commissions. As mentioned in the third section, this suggests suboptimal cooperation with The Calile Hotel. A more integrated approach would see KAILO’s brand and staff installed within The Calile’s existing business structure. As shown in the table below employee ‘1021733190’ bucked the trend by performing well in all KPIs (that had recorded data) while being one of the employees with less active months. b u s i n e s s c a s e r e p o r t Figure 22 Guest services - KPIs - Monthly averages Figure 23 Guest services - KPIs - employee performance against the average 29

Manager The Manager position had limited available data against the created KPIs with only one strong performer (relative) in the group. Improved assessment of manager performance would be enabled by assessing Kailo’s overall performance during the managers working period and to collect new data assessing performance (e.g. customer feedback surveys). The table below contains active months where employee codes recorded values other than 0. b u s i n e s s c a s e r e p o r t Figure 24 Managers - KPI - monthly averages Figure 25 Manager - KPI - employee performance against the average 30

According to a 2022 American Med Spa Association report, men constitute only 12% of the medical aesthetic clientele in the USA market (Moeller, 2023)  . Given the predominantly female clientele in the medispa industry globally KAILO has acted on what may seem to be a shared values-alignment by focusing on women's empowerment through donations to charities benefiting women. Their chosen charities, 'Live Like Her Challenge' and 'Forgotten Women,' are both aimed at positively impacting women's causes. 4 KAILO’S SOCIAL IMPACT A The Theory of Change model has been applied to KAILO’s business practices to ensure that its social impacts are measurable, authentic and aligned with their clientele.

4.1 The Current Environment KAILO's community impact is currently limited and poses reputational risks by fundraising for women's equality and homelessness charities. This approach exposes KAILO to a key vulnerability: socioeconomic imbalance, which can lead to perceptions of 'femwashing.' Femwashing occurs when a company claims to prioritise women's rights but merely uses these issues to boost profits or enhance its reputation, without genuine commitment. (TechRound Team, 2021). The misalignment between KAILO's high-end services and charities supporting homeless and marginalised women may be perceived as tokenistic, insensitive, or as exploitation of women's issues. KAILO is targeted at a privileged few with an entry-level, non-invasive spa treatment priced at an averaging of $304 for a session lasting an average of 70 minutes (KAILO Medispa Brisbane, 2024). For context, the average Queensland grocery spend per household is $165 per week (Heckscher, 2023). Encouraging clients to bring homeless and disadvantaged women to mind whilst enjoying a self-care luxury purchase may cause cognitive dissonance; discomfort arising from the tension between indulging in luxury services intended for escape and relaxation, and being confronted with serious social issues. The economic pressures identified in the PESTEL analysis exacerbate the impact of this disconnect, as households prioritise essential needs over luxury purchases like those offered by KAILO (Table 15 PESTEL Analysis). 32

4.2 Insights on Data Provided & Acquired To address these challenges, KAILO can develop an authentic initiative from the ground up, aligning with the core values of the business and industry. We recommended that KAILO establish a social impact strategy that aligns with its brand, business principles, and client values. Community benefit is increased by migrating a solution that is; Connecting with a key social trend identified in the PESTEL analysis—the growing popularity of ethical and sustainable practices (Table 15 PESTEL Analysis)—KAILO can authentically broaden its social impact across the customer journey. By integrating environmentally responsible measures into its core operations, KAILO can achieve Small Enterprise-level B Corp certification for organisations ‘that meet high standards of social and environmental performance, accountability, and transparency’ (B Lab Australia & New Zealand, 2024). By implementing genuine sustainability practices, KAILO can create a healthier workplace, add value for clients, enhance its brand, and significantly reduce its environmental impact. 33 b u s i n e s s c a s e r e p o r t

Activities, Inputs and Outputs KAILO's Strategic, Staged Implementation Plan To develop a staged implementation plan for an ethical and sustainable medispa, KAILO will; By effectively managing these inputs and outputs, KAILO can develop and implement a strategic plan that aligns with ethical and sustainable medispa practices, enhancing its brand and reducing environmental impact. Figure 26 KAILO sustainability implementation plan. 34 b u s i n e s s c a s e r e p o r t

4.3 RECOMMENDATIONS KAILO can measure the effectiveness of their social impact program through 3 KPIs; To ensure progress in achieving these KPIs, we recommended that KAILO implement systems for monitoring and evaluating the progress of sustainability initiatives. Suitable information collection may include data on client satisfaction levels, outcomes achieved, as well as conducting regular qualitative and quantitative assessments to refresh the SWOT analysis and identify opportunities for improvement. (Table 16 SWOT Analysis). Through a new approach to their social impact ambitions, KAILO can embed an authentic, internally managed, and measurable sustainability program to deliver real and enduring community benefit. Figure 27 KAILO recommended social impact KPIs.. 35

Figure 29 PESTEL analysis 4.4 PESTEL & SWOT ANALYSIS Figure 28 SWOT analysis 36

In this report, we explored KAILO’s business and its operating environment. Whilst the analysis was often based on incomplete data our market comparison has found that KAILO's performance has plateaued. Employee performance varies significantly, with a few dominating. Additionally, the clinic's reputation suffers from a poor understanding of its audience and the impact of its partnerships on its messaging. However, by taking advantage of its location in the trendy James Street precinct and pursuing a mutually beneficial partnership with the Cailie, KAILO can profit from the growing wellness tourism industry. By implementing more environmentally friendly suppliers and policies, KAILO can also take advantage of a Small Enterprise-level B Corp certification, enabling them to showcase their sustainable relationships with suppliers. KAILO’s extensive product range has resulted in needless complexity. Analysis of the data demonstrates that paradox of choice clouds their consumers’ minds. By focusing on a select few profitable services such as skincare and massages, KAILO can carve a name in a competitive industry and strengthen its brand. 5 CONCLUSION BUSINESS MODEL RECOMMENDATIONS

Figure 30 Future BMC 38

To improve the performance of management and the clinic more effectively, new customer-centric ways of gathering data and information can be implemented, such as a post-service feedback survey gathered at the end of a session. Additional training in add-on sales would also help boost potential profit as staff grow and take on more clientele. Applying new metrics to track staff training and managers’ working periods can assist in improved staffing decisions and allow for more accurate attribution of sales and business activity. KAILO can enable further profitability by installing its staff and brand within the Calile for customers to access its services. Finally, KAILO should modify its value proposition and increase its social impact by including more environmentally sound products and services including refillable bottles and implementing a recycling initiative. By collecting more data and leveraging more strategic insights, the business can increase its revenue generation and strengthen the KAILO brand. Meeting growing customer demand for a socially responsible product offering, will fortify the financial sustainability of the business into the future. 39

6 Table of figures Figure 27 KAILO recommended social impact KPIs ................................................................................................................................ 33 Figure 26 KAILO sustainability implementation plan ............................................................................................................................ 32 Figure 24 Managers - KPI - monthly averages ......................................................................................................................................... 28 Figure 25 Manager - KPI - employee performance against the average ............................................................................. 28 Figure 22 Guest services - KPIs - Monthly averages ............................................................................................................................. 27 Figure 21 Massage therapist - KPIs - employee performance against the average ..................................................... 26 Figure 20 Massage therapist - KPIs - monthly averages .................................................................................................................. 26 Figure 14 Allocation of 'Generalised position' and 'Contract type'’ ............................................................................................... 19 Figure 19 Skin therapists – employee performance against the mean .................................................................................. 25 Figure 18 Skin therapists by KPIs and monthly averages ................................................................................................................... 24 Figure 17 Key generalised positions - spread of monthly .................................................................................................................. 22 Figure 16 Staff profile - Over the data period ............................................................................................................................................. 21 Figure 15 Service sales and Product sales by generalised position ........................................................................................... 20 Figure 1 KAILO's Business Model Canvas .......................................................................................................................................................... 6 Figure 2 Growth in global consumer spending on wellness services in 2021-2022 by country ................................ 8 Figure 3 Map view of the Asia-Pacific Market by country in US Dollars ..................................................................................... 9 Figure 4 Kailo Gift Card Sales Trends ................................................................................................................................................................ 10 Figure 7 Three Horizons strategy for KAILO .................................................................................................................................................... 13 Figure 8 Total revenue ................................................................................................................................................................................................. 14 Figure 9 First 8 months of revenue by Product and Service ............................................................................................................. 15 Figure 10 KAILO total revenue vs Industry growth benchmark ........................................................................................................ 15 Figure 11 Service sales vs Service revenue ..................................................................................................................................................... 16 Figure 12 Product revenue vs Average product value per invoice ................................................................................................ 17 Figure 13 Our 4-step process for assessing team member performance ............................................................................. 18 Figure 5 Kailo Product Sales Trends .................................................................................................................................................................... 11 Figure 6 Kailo Service Sales Trends ..................................................................................................................................................................... 11 Figure 23 Guest services - KPIs - employee performance against the average ............................................................. 27 Figure 28 SWOT analysis .......................................................................................................................................................................................... 36 Figure 29 PESTEL analysis .......................................................................................................................................................................................... 37 40 Figure 30 Future BMC ................................................................................................................................................................................................. 39

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