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$90-Million Massage Enterprise, Massage Envy, Makes Play in Employee Benefits Market PDF Print E-mail
Written by John Weeks   

$90-Million Massage Envy Turns to Employee Benefits Market

Subject: The struggle to create successful business models in complementary healthcare appears to have been licked by Scottsdale, Arizona-based Massage Envy. The 5-year-old firm, which offers convenient and inexpensive massages, anticipates generating $90-million in 2007 at its 265 franchises. Some 15-20 more franchises are opening each month. Recently the firm began marketing their memberships as an employee benefit to the 2500 corporate members of Wellness Councils of America (WELCOA). The model has some parallels in cost, convenience and access with the Community Acupuncture Network business model. Is Massage Envy an example of the emergence of a "thriving industry of health creation?"
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CAM business, access to complementary mediicne, massage business
One doesn't typically see complementary and alternative healthcare businesses on lists of most successful entrepreneurial firms. But Enterpreneur magazine recently ranked Scottsdale, Arizona-based Massage Envy #149 in their Franchise 500 list as of January 2007. The 5-year-old firm currently has 265 franchises serving 250,000 members. 
The firm expects to earn $90-million in revenues this year.

While not expanding quite as fast as Starbucks, Massage Envy has 400 franchises "in development," according to Jesse Curry, the firm's vice president for national wellness development. The firm is opening 15-20 new franchises per month and forecasts a market for 1200 in the United States. Curry told the Integrator that Massage Envy anticipates international expansion.

The genius behind the business model was the realization by founder and CEO John Leonesio, formerly a successful health club owner, that many people no longer view massage as a luxury. Rather, an increasing number of people are routinely incorporating massage in their lives. Leonesio developed a business model wherein massage could be both convenient and, relative to prevailing rates, inexpensive. Individuals purchasing memberships receive at least one $49 massage each month* and discounts on additional massages. The franchises often stay open until 10:00 PM weekdays, allowing people ready access to services. The firm employed 1200 massage therapists in 2006.
__________________________________

Massage Envy Growth: At a Glance

Total Franchises           
 2003         27
 2004         49
 2005         109
 2006         268
           
 Total Massages Given
         
 2006         1.5 million
2007 (projected)

      2.9 million


     
Individual Members

     
2006

      121,000
2007 (current)

      201,000
2007 (projected)

      260,000

Data provided by Jesse Curry, vice president, Massage Envy.

__________________________________


A View from the Massage Community

What does the massage community think of the model? I asked Jan Schwartz, LMT, an Integrator adviser. Schwartz is the past chair of the Council on Massage Therapy Accreditation who presently serves as vice president for education with Cortiva Institute, Inc. Cortiva is a venture business which presently owns and manages massage schools in 12 locations across the country. Says Schwartz:
"Massage Envy is a great place for new graduates to work. Some people in the massage schools say Massage Envy doesn't pay their massage therapists enough. But new graduates have a chance to get their hands on lots of people. The Massage Envy operating rules are clear. They offer safe, clean places to work. Also, because they don't charge much, they get some people to get massages that might not otherwise."
Curry notes that while only 33% of health club members use the club facilities in a given month, nearly 90% of Massage Envy members access their massage benefits at a Massage Envy clinic. In fact, the membership agreement allows a person to "bank" their visits. If a person doesn't come one month, he or she can get a "free" visit the next month. High use patterns among members guarantee the massage therapists a constant clientèle.

Now Marketing Directly to Employers as a Value-Added Program


Massage Envy came to my attention via a August 31, 2007 electronic newsletter of the Wellness Councils of America (WELCOA).
WELCOA is a not-for-profit organization with 2500 corporate members which focuses on work-site wellness and employee benefits programs. Subscribers to WELCOA's e-newsletter were greeted with a pitch from Massage Envy about a "unique wellness program."

   
  The employer doesn't
pay anything ...

The value to Massage Envy
in this  give-away is "marketing
access" to the employees.

Massage Envy projects
that 10% of its members
will be through employer
programs.

What are the features? Massage Envy VP Curry positions the program for employers as an "employee volunteer product." Employees of participating companies gain a $5 discount on a membership fee which they "volunteer" to pay. This reduces the cost of the massage by roughly 10% the the employees of participating employers. If employees have health savings accounts (HSAs) and the massage is "to alleviate or prevent" health problems, the employee can use their pre-tax dollars to pay. This effectively reduces the cost to $31-$36 per visit. In addition, Curry notes that employers can achieve some savings on their payroll taxes.

For the employer, the bottom line is not challenging. States Curry: "The employer doesn't pay anything." He quickly adds that Massage Enzy anticipates that some employers may subsidize the memberships that their employees purchase. The value to Massage Envy in this give-away is "marketing access" to the employees. If an employer signs up, Massage Envy offers "turnkey, promotional packages" for the employer to get employees to join. Massage envy provides posters, fliers and even onsite chair massage demonstrations to spark interest.

Curry
reveals that Massage Envy's advertisement, placed via its bronze sponsorship in WELCOA, has now run 3 times. So far, he has received roughly 15 responses from companies "all over the country." The Massage Envy business plan projects eventually bringing in 10% of their individual members through employer programs. At the present time, that number would be nearly 25,000 employees.   

* In what Massage Envy calls "special markets," the basic fee is $59 instead of $49. These are Chicago, New Jersey, Miami, Las Vegas, Seattle and California.

Note; Some of the information in this article was garnered from media accessed from articles listed here.


Comment: Three thoughts. First, look at the parallels between the service model of Massage Envy and that of the community room acupuncture model promoted by the Community Acupuncture Network. While the one is devoutly venture capitalist and the other birthed in a clinic called Working Class Acupuncture, both offer drop-in convenience and low cost services. Each makes care accessible to a broader population due to its lower cost. Each provides a way for practitioners to make a living who may be challenged by the typical entrepreneurial, boutique business models. Meantime, each causes some friction from members of its profession who believe the business model undermines professional pay scales. Fascinating.
_________________________________

Massage Envy and Community Room Acupuncture:
A Look Some Similarities in 2 Emerging Business Models


      Massage
Envy
 

Community
Acupuncture
Network
 Lower than Typical Cost
   
Yes:
$49-$59

Employee:
$44-$54

with HSA:
$31-$36

       
Yes:
$15-$35
sliding scale
               
 Convenient     Drop-in or
same day
      Drop-in or
same day
 
Access: more affordable
to lower income clientele

     Yes        Yes
Opposed by some
inside the discipline
     Yes        Yes
               

_________________________________

Second, I wonder how long it will be until some entrepreneur takes the community room acupuncture model and franchises it nationally as a major, corporate, for-profit roll-out. It will happen. The potential value to employers as an employee benefit is similar.

Finally, I recall work with colleagues in 2000-2002 when we were developing something we called the Design Principals for Healthcare Renewal. Principal #9 ended with the statement that "the renewed healthcare system is a partnership between an expanded commitment to the public health and a thriving industry of health creation." The way that Massage Envy is incentivized to sell massage
to employers, and thus the health benefits of caring for oneself, is exactly what we were imagining when we began thinking about the potential emergence of this industry of health creation.

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for inclusion in a future Your Comments forum.


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