How Lewis Shender built a new future for Hollywood Tans Featured

8:01pm EDT June 30, 2012
Lewis Shender Lewis Shender

Laboratories with tanning booths?

That’s what Lewis Shender sees. The president and CEO of Sewell, N.J.-based Hollywood Tans sees his chain of tanning salon franchises as a nationwide collection of 140 labs conducting experiments in marketing and customer service.

“Each of our locations does things a little differently,” Shender says. “Ultimately, the stuff that does work, the stuff that does not work, people find out about that. It sort of reaches its own level at some point. I think insisting on rigid compliance to certain corporate standards can create an ivory tower. You develop a bureaucratic style of leadership, and it becomes more like checking-the-box leadership, as opposed to managing the business to really work at a particular location, with a particular set of customers and a particular staff.”

Shender speaks from experience. Previously, Hollywood Tans — officially known as Hollywood Tans Group LLC — was governed by a highly structured and compliance-oriented model. Like many franchise systems, the corporate leadership at Hollywood Tans was focused on driving uniform standards across its entire chain, so that a customer who walked into a location in Pennsylvania would have the exact same experience as a customer walking into a location in California, or anywhere in between.

But then the recession hit, and Shender quickly realized rigid adherence to a corporate rule book was not going to help his company weather the storm.

“The dramatic freezing up of the credit markets and the loss of employment was a real game changer,” Shender says “It super-accelerated what we needed to do to respond to the crisis. It really was an existential threat. Many companies did not make it through that patch.”

Hollywood Tans reshaped itself. The company got out of the tanning accessory manufacturing business, it revised its franchise model from a royalty-based system to a flat fee-based system, lowering the startup costs for franchisees in the process, and the company revised its culture to put more power in the hands of the store owners and managers.

“We moved from the compliance-oriented model to more of ‘Here is our way, but if you have a better way that works for you in your location, if you feel you need to do something unique to beat a competitive threat, you’re free to do that,’” Shender says. “It is much more flexible, and it is interesting to see how that is playing out in a positive way for so many people.”

Attack the market

Like just about every business, Hollywood Tans has tried to develop market separators — unique advantages that customers can’t obtain from the competition. Hollywood Tans’ market separators, including stand-up tanning booths and proprietary tanning lotions and skin care products, have played a big role in the company’s growth to $60 million in revenue during 2011.

But if the separators stopped there, the competition would have caught up and surpassed Shender’s company. With the ability to offer variations and add-ons to only a single service, Shender and his leadership team had to get creative as the economy hit the skids.

More specifically, he had to let everyone else under the Hollywood Tans umbrella get creative.

“We have salons in affluent communities in Southern California, in college towns in the Northeast, in urban areas in the central Atlantic states,” Shender says. “Those are very different types of customers, so if we try a one-size-fits-all approach, it just won’t work.”

The trick for Shender and the corporate team has been to allow local salon owners the latitude to tailor their approach to the needs of their respective markets while still maintaining a well-defined vision and set of values for the company’s brand. Shender’s team answered that challenge by providing some basic, systemwide marketing materials to all locations while still allowing salon operators to sit in the driver’s seat on marketing initiatives in the community.

“We try to give some structure in terms of coherent, timely and current marketing initiatives,” Shender says. “We have posters for salons, and there is always marketing collateral that goes along with that. Then there is online-based initiatives and other complementary creative projects that go along with that, so hopefully we are all communicating with the public in a unified way, with a single voice.”

Beyond that, it is up to the salon owner to crunch the numbers and decide how to best spend his or her marketing dollars.

“For instance, in Philadelphia, if our salon owners want to put commercials on the radio, and that works for them, that is great,” Shender says. “But it might not necessarily work for the guys in Birmingham or Nashville. So those are the types of situations where we try to get them to the right vendors who can help them make the decision about which path to take. We look at our data and give them our best judgment on it. But ultimately the decision for how they want to address the consumer is up to them.”

Shender looks at local marketing through two lenses — creative and media. In other words, what form the advertisement takes, and through which medium it is delivered. When the recession hit, everyone at Hollywood Tans had to place a newfound emphasis on creativity and discovering new ways to utilize various media outlets.

“In our old model, owners were required to contribute a certain percentage of their revenue toward an advertising fund,” Shender says. “Those funds were used to advertise in our various markets, and that worked particularly well in areas like Philadelphia, where we are highly penetrated. Philadelphia is our densest urban market in terms of coverage. But when the recession hit, the money dried up and the contributions began to sink. We were making more calls for collections, more owners were worried about paying their mortgages ahead of paying for advertising. So we had to rethink the whole strategy at that point.”

Utilize new media

Shender and his team came up with a plan that took advantage of new media. Hollywood Tans’ primary customer demographic is 18- to 32-year-olds — a majority are women, but with an increasing number of male customers. Younger customers are more apt to use social media platforms to interface with businesses.

Radio, TV and billboards weren’t completely kicked to the curb, but for franchises to survive, they needed the tools to connect with new customers in the target demographic.

“Our new customers don’t listen to the radio like I did when I was younger,” Shender says. “They don’t focus on billboards like I did, and they might not read the newspaper at all. So at a time when we were losing resources for advertising because our owners couldn’t contribute as much to our advertising fund, we found better and more focused ways to advertise online, targeted demographically and geographically.”

Needing to reach a younger customer base, Shender has helped spearhead social media initiatives, utilizing platforms such as Facebook and Twitter to allow individuals stores to connect with potential customers without any mediation from the corporate level.

“As an example, we have a graphic package every month or season, in order to promote salons and refresh what we are marketing to consumers,” Shender says. “There are icons that people can use on Facebook or Twitter, so that every month, whenever there is a change in our marketing campaign, we go online with locations that haven’t picked up on the new icon and connect with them. We don’t force them to change their icon, but we say ‘Have you seen this icon, we think it goes well with everything else we are doing, is this something you could think about?’ Most salon owners are happy to participate when it is in a constructive, partnership kind of way.”

The company’s online marketing efforts are styled in a way that attempts to relate to many different types of tanning customers. It’s something Shender says the rest of the industry can tend to ignore, in the name of selling out for celebrity endorsements.

“The ‘Jersey Shore’ TV show has really captured the attention of a lot of people in our marketplace, and many businesses in the market are using affiliations with ‘Jersey Shore’ stars to promote themselves,” he says. “We are going in another direction for a variety of reasons, one of which is recognizing that our customers tan for a variety of reasons, and might not identify with ‘Jersey Shore.’

“You need to embrace what you believe is a relatable and reliable method of reaching out to people. For us, we want to recognize that people don’t just tan to look hot for the weekend. Some people tan because it makes them feel better. Some tan because it’s a nice break in the week. People in sales might tan because they believe it gives them a competitive advantage. We love New Jersey, our home is in South Jersey, but you sometimes really need to question the mentality of the herd. We want to move beyond the stereotype of the fist-pumping ‘Jersey Shore’ guy, because we’re a lot more than that. If you try to identify too closely with one thing from a marketing standpoint, you sell yourself short.”

Shender has found that the Internet can be more forgiving than traditional media when it comes to marketing. Your business can alter or terminate media campaigns and online ads more readily than ads on TV, radio or billboards, which could involve a contract that lasts several months or longer.

“We have found that the newer forms of media are shorter term and come with less risk,” Shender says. “When it’s online, if you find something isn’t working the way you wanted it to, you can turn it off. It’s very easy to make changes on the run.”

Recognize your role

In Hollywood Tans’ new organizational setup, Shender sees himself as a promoter of his vision and a facilitator who can help everyone else in the organization realize the vision. In order to maintain every customer interface point as a laboratory, each experimenting with new ways to reach and maintain customers, you need to pay constant attention to what is happening on the front lines of your business, what is working and not working. The ideas that aren’t working might need an adjustment, or in some cases, might need to be altogether abandoned. The ideas that are working need the type of support and systemwide publicity that only upper management can provide.

“I have the bully pulpit as the CEO of the company, and I can see broadly what is occurring in the different markets, beyond what an individual salon owner could see,” Shender says. “With that kind of vantage point, you can be helpful in trying to move the entire organization toward what is working best for everybody. That is why we let go of our compliance-oriented culture to build more of a laboratory atmosphere.”

The people who interact directly with your customers have a great deal of power in your organizational structure. They might be on the bottom rungs of the organization, but they are the face of your company to outsiders. They build the relationships that drive sales. By putting more power in their hands, you deliver the message that you trust them, and over time, everyone in the company develops a more collaborative mindset.

“If people trust you, you trust them more, and it becomes a better overall environment,” Shender says. “For us, it is much less adversarial between the company and salon owners. It is much more open, and people are going in the same direction.”

How to reach: Hollywood Tans Group LLC, (856) 716-2150 or www.hollywoodtans.com

The Shender file

Company background: We have approximately 44 salons in the Philadelphia area and approximately 140 salons nationwide. So Philadelphia is a big part of our business. It is our hometown, so it is sort of the heart of our business. Most of our employees are in South Jersey; we have a distribution center in South Jersey, our accounting and finance teams are there, our internal sales teams are there. We have a very small office on the West Coast for marketing and administration.

Shender on setting his company apart: Our salons are generally based on a stand-up (tanning) model, which is a faster way for people to tan, which sets us apart. But it is not like walking into McDonald's, which is exactly the same no matter where you go. Here, there is a lot of opportunity for store owners to customize their situation to better address their competitive challenges, and operate the way they want to operate.

More from Shender on developing a marketing strategy: You have to understand if you are the market, because everything we look at, we look at through our own lens. One of the hardest things for me to realize is that I am not the target market. Just because I happen to watch a certain TV show or listen to a certain radio station, or read a certain paper, doesn't mean my consumers do. It's not that they might just watch a different TV show or read a different newspaper, they might not watch TV or read the papers at all.

I think particularly with the rapid changes in technology, we have to be very humble about what we know and maybe not so much rely on experts, but get good input from some solid vendors on how to reach the market you want to reach, and then just test the hypothesis to see if it is working or not. We can market so much more efficiently now, it is just stunning to me.