The Costliest Mistakes in the Cryotherapy Business (and How to Avoid)

@cryoprosunited May 04, 2020
 

This is a summary of exchange of information and opinions in Cryotherapy Professionals Group on Facebook between April 27 and May 3. Two of the topics, choosing the right equipment for the business and insurance challenges, will be covered in separate more in-depth articles following this publication.

This article explores 2 aspects of the cryotherapy business that have long-term implications and can “make it or break it” - choice of the location and equipment purchases. Exactly the same principles apply to the holistic wellness field, in general, although the examples provided are cryotherapy related.

At the end, we also address a few marketing decisions – another topic that definitely deserves a separate deep-dive.

Location

There is no one right answer to what a good cryotherapy location is. We have seen an extremely busy cryotherapy center hidden deep inside a multi-office building without even a sign on the facade, a mainly empty beautiful-looking storefront wellness spa in the middle of a busy parking lot and surrounded by several popular restaurants, and a few bitter failures of cryo spots based in shopping malls.

A few universal principles to follow:

1. It is the target audience that determines the location choice.

 Services like whole body cryotherapy that take only a few minutes but require multiple or regular visits need to be placed where the target audience lives, works, or plays. A cryotherapy business has a potential to appeal to athletic performance and recovery-oriented crowd, people seeking alternative health solutions and pain relief and, increasingly so, to those in need for help with weight loss, body definition and skin care.

There is a choice to make, as each group needs to be approached differently. Your strengths, expertise and contacts as a business owner will determine where you should be located.

 

 2. Our services are more convenience than destination.

This is related to the 1st principle yet not the same. Due to the nature of the services and how little time many of them take versus the number of visits required for results, people’s willingness to come and return will depend on the distance which they need to travel, the traffic, availability of parking (preferably, free), and other things they can do in the same area.

With regular clients being the bread and butter of the business, it is the convenience for them, not the absolute number of people in vicinity that matters. This is the reason why shopping malls are rarely good for a cryotherapy center – the traffic may be busy, but it is extremely time consuming to find parking and to walk through endless rows of shops to get to the place for repeated visits. Besides, the cost per sq. ft. in a shopping mall is usually much higher than in most other places.

3. Do not expect that being next to a busy business will automatically bring you clients.

Although traffic and visibility matter and most franchisors only pick locations close to a major anchor, like Whole Foods or 24-hour Fitness, it is unreasonable to think that it will automatically bring you more clients.

People will only come in if they understand your offer and it falls into their thought zone. We usually overestimate how much the public knows about cryotherapy – they do not! And even those who have heard of it rarely connect the dots without help.

For example, being next to Jenny Craig is potentially a great opportunity to attract people who would appreciate some extra help with weight loss or tightening the skin after they’ve achieved it, but they need to be clearly presented with the opportunity and the extra benefits of combining diet with metabolism stimulating, fat destroying or toning treatments. The best way here would be seeking joint events and other win-win approaches. Without such effort, the strategically good location simply fails to measure up to its potential.

4. Do not lock yourself out of opportunities.

This applies to building too close ties with another business, like a chiropractic or a gym. People who are chiropractic clients or gym-goers are usually loyal to their service provider and will not go to a competitor’s place to receive a service like whole body cryotherapy.

There clearly is an opportunity in sharing clients, but it needs to be played out right, so that people feel free to come without “betraying” their own doctor or favorite workout place.

If you own a chiropractic and want to add cryotherapy or other holistic wellness services, the best approach would be to have 2 SEPARATE businesses under the same ownership - next to each other, but not integrated. This way, the loyalty issue gets resolved while the added value and extra revenue potential remains, in line with the opportunity to have less overhead.

Victory Cryo & Recovery, as well as Chillout Charleston/Charleston REDBED provided examples of doing just that – having separate websites and booking, even separate legal entities to protect one business from harming the other:

“Separating the two enough to have the benefits of combining services while not appealing to only a very specific audience seems to be a key to success, as well as added protections from any liability. This way, nothing from cryo can roll into our other entities.” (Tiffany Milroy Jimerson who owns the building in which they have a chiropractic, as well as a cryotherapy center).

If you don’t own a chiropractic, teaming up with a doctor can still be a winning idea, provided that there is no confusion. Texas Cryoworks & Wellness Center just moved. The owner John Zabojnik:

“We are teaming up with a local chiropractor in a brand-new facility. We have developed a great working/business relationship over the last year, and mutual clients love it. They are about to bring in a 3rd chiro and will average about 100 patients a day. There is no amount of $$ I could spend on marketing to have 100 people a day to come to my door. We will keep the businesses separate and feed off each other.”

5. Seek lease agreements that give you flexibility.

Although building out a center takes effort and investment, locking a brand-new business into a long-term lease relationship is hardly a good idea. The lease terms should be one of the criteria evaluated when choosing a location. Think of scenarios of the business failing, the environment around it changing, or being extremely successful and willing to grow.

Taking time to negotiate and hiring a professional to help you do that is worth the effort and even an extra investment, as the terms of your lease agreement can be the line between survival and devastating financial failure.  

Equipment

Although entry barriers into the cryotherapy business are relatively low in comparison to many other businesses, the cost of the equipment is significant for many start-up entrepreneurs. Similarly to a location choice, this is a decision with long-term consequences. We will address the equipment-related options separately in more depth, but let’s review the fundamentals.

1. Before buying ANY equipment, do the homework.

Like in cars or electronic devices, brand matters. You want it to be established and reputable. And you want to buy from a trusted source (manufacturer or its authorized distributor), not a street vendor, as the purchase is going to be just the beginning of your relationship. You will need professional handling, installation, training, parts and service. You may want or need to sell later; so, the re-sell value also matters. So, do due diligence, ask for proof of origin, and double-check with independent sources, such as lenders or insurance providers. Contact some other users and ask for their experiences. Once you transfer the money, it may be too late.

 

Equipment price is just the tip of the iceberg. You also need to know how much it will cost to own it, run it, maintain it and repair it. There are many aspects to consider, but some of the most important ones include:

  • If the equipment is nitrogen-cooled, will you be able to find a supplier in your area, and how much will it cost? Some nitrogen suppliers have stopped serving cryotherapy centers all together, some require huge liability coverage before they approve you, some only deliver once a week.
  • How much will it cost to install? And will you be able to obtain the necessary permissions or permits? Your landlord may not be OK with the build-out required, or it may add extra expense and extra liability.
  • How much will it cost to insure? With the insurance data base growing, some brands or older models may be difficult or very expensive to get covered. With no regulation of the industry in place, insurance companies are filling the gap by imposing their own requirements. If you don’t proactively figure them out, the liability insurance bill may end up being a nasty surprise.
  • What coverage are you getting with your equipment purchase in terms of warranty and service? Warranty is an agreement. It may have certain expenses excluded. For example, if your supplier is in a different country, you may be responsible for shipping of the faulty parts and their replacements which can cost more than the part itself. If you buy used, the warranty often doesn’t automatically transfer to the new owner.
  • What is the turn-around time going to be if you need help? Manufacturers or well-established distributors may have it all covered, while unauthorized resellers or current owners may leave it all to you.

Never buy a “pig in a poke”, whether the equipment is new or used. Request photos and videos. Have the equipment tested. Ideally, try it yourself to make sure that it works. Open the back door to see what’s behind it. There have been materials in use, like plywood and some plastic, that deteriorate over time. If the equipment has been sitting idle in somebody’s garage for a long time or heavily used, it may be rotten inside. You may even see something like this:

Last, but not least, get the purchase paperwork ready, carefully reviewed and signed. And, if possible, use a payment method that offers some protection.

2. Look into the effectiveness metrics.

Not all equipment is created equal. For example, in whole body cryotherapy the efficacy depends on the skin temperature drop during the session, not the temperature on the temperature panel (which may be measured in a wrong place or even purposefully tempered with). The decrease must be 30 - 40°F (15-20° C), measured on the left (heart) side of the upper body.

Some cryosaunas have nitrogen injection placed too low. Due to nitrogen vapor being heavier than air, it sinks, overcooling the lower body, yet never achieving the upper body temperature drop required. So, such equipment, regardless of its looks, is faulty by design.

Some electric chambers don’t get cold enough to achieve sufficient cooling of the skin in 3-4 minutes of the session, potentially having a negative impact on the results your clients will be able to achieve.

3. Look into the safety features.

To avoid frostbites, homogeneous temperature distribution inside the cryosauna/ cryochamber is essential. It is easier to achieve in equipment that does not directly inject nitrogen vapor into the cabin, as the vapor is heavy and falls to the cabin floor. To outweigh this shortcoming, a proper temperature regimen needs to be combined with sensors that help prevent overcooling and also maintain sufficient oxygen level in the ambient air.

Automatic or one-touch emergency shut down also needs to be part of the system.

4. Do not overspend on gadgets.

Wellness business will always be service (people and relationships) centered more than it is equipment centered. Provided that the equipment chosen is effective in delivering the benefit promised, its looks and being packed with non-essential for the service gadgets matter less than one may think. The price you can charge for a session is largely dictated by the market, and the value is established by the results you are able to achieve for the client. Those who overspend on technology-packed equipment usually don’t achieve higher perceived value in the eyes of the clients but end up having significantly lower return on investment.

One example of a feature that matters is remote performance monitoring and troubleshooting, as it minimizes the response time and allows for resolving any technical issues fast.

One example of a feature that does not help make more money is built in speaker system, especially in a cryosauna, as the session is short, and music can easily be played from an external source.

With so many used equipment options on the market, you may be able to save a considerable amount of money by choosing a device that’s 1-2 years old instead of brand new, making sure that it is in perfect working order, comes from a trustworthy source and meets the above requirements. Many businesses begin undercapitalized and spend too much money on set-up, leaving too little cushion for the business to break even, as well as no reserve for a “rainy day”.

5. Take into account trends and don’t put yourself in a chasing position.

In wellness equipment, new modalities come out all the time and improvements get made fast. The cryotherapy equipment that was around even as little as 5 years ago, before the lethal accident in Las Vegas, can hardly be compared with the equipment that is available now. It applies to anything from materials used to design, capacity, efficiency and safety. With the speed of change in mind, it’s wise to balance between the latest model that was just released and is priced at a premium and the equipment with a manufacturing date going too far back, even if it’s in pristine condition and perfect working order. The “sweet spot” maybe somewhere between 1 and 3 years in use. Like in cars, the price goes down dramatically as soon as it is off the lot.

2 unquestionable trends that we are seeing in cryotherapy equipment is whole body vs partial body experience (head immersed) and, due to the cost of operation and unpredictability in nitrogen services, electric vs nitrogen cooled. The price gap between the two has been shrinking, while the performance of the electric systems has been going up.  

A few comments from experienced service providers who have been using open-top cryosaunas in their centers:

“My advice is: go electric. If you don’t have the funds for electric, make sure you figure out your nitrogen situation before buying any equipment.” (Marcus Metcalf, the owner of Recover).

“I can’t believe some of the prices I hear people paying for 230 l nitrogen tanks. What looks easy from the outside is actually very complex. I could talk for hours about nitrogen, session counts, and pressure. Definitely the biggest learning curve for newbies entering the industry.” (Skyler Scarlett, the founder of Glace Cryotherapy).

“I am glad I implemented daily checklist for my staff and I to go through quality control and equipment function.” (Bradley Materne, the owner of Lake Charles Cryotherapy, about building and relieving nitrogen pressure in order to optimize consumption).

Marketing

Although this is a huge topic that requires much more attention and detailed review, a few valuable points were made in the discussion about (not) making costly mistakes.

1. Not all marketing costs money.

In wellness business, success depends on building and nurturing relationships with clients more than anything else. Many businesses concentrate too much on lead generation and too little on what happens after the new client has entered the center for the first time – building perceived value and maintaining contact via means that are free, such as e-mail and social media.

On the first day of re-opening after Covid-19 lockdown, Marcus Metcalf reported seeing 60 clients. No marketing tricks, ads, or specials. Just letting the already established client base know through e-mail and social media.

2. There are things that cannot be bought.

This refers to authority and reputation. While there are many companies offering authority or reputation building services through putting out articles, press releases or social media posts, usually at about $1,000 per month, all it can do in the best-case scenario is create some extra awareness which may result in a visit, or two.

Authority can ONLY be built by showing up, day by day, and demonstrating knowledge and care, whether it is through involvement with the community, educational activities, providing real value, overdelivering on promises and helping people answer their questions and solve their problems. Without this genuine and continuous effort, most of the marketing money will end up being wasted.

3. Devil is in the details.

There is a saying that people will always remember how you made them feel.

In the discussion, we got to compare results of two very similar marketing experiments – offering clients to come in and establish their own price for the services they received. One was a true success story, the other left the owner disappointed.

The success:

“We presented the opportunity as “name your price cryo” and added that it is a great way to support local business.

We decided to start the promo on Saturday morning. By Saturday afternoon, there was a 1.5-hour wait list for cryo (with social distancing rules in effect). Saturday turned out to be the busiest day we have ever had. The same thing happened on Monday and we beat Saturday. Tuesday was the same, and the schedule is filling up quickly today. We have had some people pay 50-75% of the regular price, most have paid full price, and a handful have paid over full price. We had a female fireman come in. She put a $100 bill on the counter and left. We messaged her later and told her we were going to use it to create a “pay it forward” first responder account… She was thrilled and very appreciative. This has definitely been an interesting psychological marketing experiment. We didn’t lose a dime. In fact, we had 4 record-setting days with customer count and cryo revenue. Also gained about 70 new customers without spending a marketing cent.” (it happened at Texas Bodyworks).

Another business commented: “We did a pay what you can day and had almost no one show even after sending out an e-mail blast to nearly 10K people and Facebook events.”

The difference between the two may be in the relationship between the center and its community, but it’s also in the message. “Name your price cryo” makes people feel in control while also supporting a local business. “Pay what you can” sounds more like a pity gift to people experiencing hardship. Definitely an interesting example to think about and to learn from.

Thank you for contributing to this content goes to all business owners who shared and commented: Marcus Metcalf, Bradley Materne, Skyler Scarlett, John Zabojnik, Natasha Noel Prybyla, Tiffany Milroy Jimerson, Shane Thompson, Stanfielf Fam, Rivanna Cryotherapy & Recovery Center, Cictory Cryo & Recovery, Tara Mechaley, Rob Tregidga, Julie Cichocki, Amir Amirsadeghi, Kristian Catalano and Matthew Iglesias.

JOIN THE CONVERSATION. We address industry-specific topics weekly. Cryotherapy Professionals Group on LinkedIn and Facebook.

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You can also find this summary and other guidance, research articles, case studies and success stories, best treatment regimen recommendations, as well as DIY action guides for business improvement and ready-to-use visuals for your social media posts in the CryoProsUnited library of FREE RESOURCES. Request your login info.

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