While there are still factions in certain, nameless, urban cities that like to brag about how much they spend on fashion accessories, the majority prefer to brag about savvy steals. Lately, more and more of these are being found online with deal sites like Groupon and LivingSocial.com; sites that rely on bragging to incite the viral word-of-mouth that up the number of people coming through your doors.
In the hair and beauty world, many people still remain on the fence on whether this is a positive or negative when it comes to the health of the brand (let alone cash flow). Some of this stems from certain positions on discounting in general, while others have just heard too many horror stories to want to jump onboard. The fact of the matter is: it has worked for some and even been attributed to the reason they’ve been able to expand in tough times, not retract. So, we decided to bring the stories of two salon owners who have been successful with these services and hopefully glean some advice from one salon owner to the next.
Focus on the Purpose
To Keith Chandler, owner of Florida salon Box Office Hair, it is a ‘necessary evil’, fuelled by a population that is growing ever more commercially promiscuous.
“Groupon is a necessary evil as the population is growing commercially promiscuous. While this phenomenon shouldn’t be relied on for your only source of new clients, salons can’t ignore it,” urges Keith. “We’ve used this service like all the other businesses out there - to attract new clients – but this service can be dangerous if you don’t realize what it really is. It’s a sampling program, and you are auditioning for them to choose you for the main part in their hair care program.”
Careful management of the whole process has brought new clients to Box Office, with a retention rate of 30 per cent (and don’t forget the number of subscribers who saw the offer but didn’t take it up). Compare that to the industry average retention rate of 28 per cent and suddenly collective buying appears less like a knockdown sale and more like a highly successful sampling exercise.
Be Clear on What it Does (and Doesn’t) Include
There was a slight learning curve. Keith is clear and explicit in the small print these days after a bridal party called in to schedule their whole group for a Saturday of pampering. “That would have blocked the whole salon out on one of our busiest days,” said Keith. “They were understanding on why we couldn’t accommodate them, but now we are very explicit about what we can and cannot do and we make sure those conditions are stated from the beginning to manage expectations.”
Prepare for the Demand Landslide
Keith also prepares his entire staff – front desk, stylists, assistants and management – for what, hopefully, is a flurry of activity. The rule of thumb is that 25 per cent will book almost immediately, but there is also a ‘hockey stick’ effect just before the expiration date, when those still to take up the offer will suddenly start booking appointments.
He also has agreements with his staff on this type of promotion and is very clear on how remuneration works. This is essential for overall buy-in and a successful ‘audition’ for clients that come in from a collective buying deal.
Focus on Retention Strategies
An increase in traffic is good, but you have to make them stick, and that’s the tricky bit. California-based 18|8 also subscribes to this sampling concept and puts its success with daily deals down to ensuring the experience is top-notch, even though the deal chasers are only paying around 50 per cent. “Our experience includes complimentary wine, beer and soda in the salon lounges; neck, scalp and shoulder massages; excellent cuts and relaxing Bay Rum hot towel finishes,” says Dani Armstrong, Marketing Director for 18|8. “Giving all clients an experience is key for ensuring a second and then a third visit.”
18|8 also has a specific service to promote when the client walks in the door as well – a membership program. Its male clientele are presented with the options for the membership program, which has proven successful and appealing to this type of client.
At Box Office, to ensure clients have a satisfying experience, they aren’t automatically put with the most junior stylist. ‘Deal demons’ are screened by the Box Office front desk staff while making their appointment, so they understand their service level experience and price point expectations and they can book them accordingly. “If they are coming from a high-end salon across town, you wouldn’t pair them with a junior stylist as it gives them the wrong impression,” said Keith. “We pair them with a senior stylist, with a higher price point, and they get a comparable service they are used to.”
Keith also gives participants a new client gift, a take-home promotion on the first visit and upgrade vouchers for return visits. This is all part of the grand scheme to keep them coming back. They can also use the deal value on up to three separate visits to encourage them to keep walking through their doors.
“It’s not because I’m particularly generous,” Keith says. “I just want to give my stylists a chance to build a relationship with the client and build my case for why they should become a loyal client.” Clever!
Spread the Love
This craze for sweetening the deal to attract new clients is what many claim has created the deal-chaser phenomenon, but Dani says that her clients are comfortable with their price points within the salon and continue coming for the service they offer. Focusing on all areas of the client lifecycle – from new client to returning client to loyal client - can help to avoid deal jealousy amongst existing clients. Have something that appeals to everyone and perhaps balance out new client promotions with Group-Off with promotions that reward loyal clients who haven’t been drawn away by the tempting offers arriving in their in-box.
Ultimately, taking advantage of collective buying is an opportunity to drive new client traffic through the door rather than a revenue generator in itself. Expecting to make boatloads of cash is setting yourself up for disappointment, but remember that selling your services for 50% and filling all your chairs with new clients is better than running your salon half empty. The likes of Groupon, Livingsocial.com and others can be great for new openings, staff additions, new services, salon expansion – wherever you have a lot of time slots to fill and need a quick boost of exposure to new clients. As long as this matches your salon brand, appeals to your clientele and isn’t misused it can help you build a thriving business.
What lessons have you learned when ‘dealing’ with deal sites?
BOX OFFICE HAIR
Owner: Keith Chandler
Details of Groupon Offer: $45 for $120 worth of services
Groupon Retention: 30%
18|8 FINE MEN'S SALONS
Based in: California
Marketing Director:Dani Armstrong
Details of Groupon Offer: $35 for two executive cuts; $35 for an executive cut and grooming service of own choice (50% off)
Groupon retention: 25-30%