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.”