Now that we’ve brought up the G word, let’s take a closer look at the collective couponing phenonmenon—is it a good strategy for salons or a bad strategy? While we acknowledge there are many players in this segment, Groupon still leads the pack. We invited two salons to debate the issue, and a third to weigh-in with an industry alternative:
Developed as an alternative to Groupon, Salon Week follows on the heels of the successful Restaurant Week and Spa Week to help participating salons attract new clients by offering discounts on services twice a year.
The case against, presented by Matt Borsuck, Studio 9 Salon, Sterling Heights, Michigan:
“Groupon is great for a cupcake store. Buy six cupcakes, and get six free. But in a labor-intensive industry like ours, it boggles my mind to see salons lining up for Groupon when there are so many problems with it.
“High client recruitment cost. Let’s say you’re offering a $100 service for $50. Groupon takes half, leaving you $25. Some owners are asking their stylists to do that service for $12. Subtract the cost of the product and Groupon’s 3 percent credit card fee, and you could be spending $700 to keep each of the 20 percent of those new clients you retain—if you retain that many.
“Wrong market. The discount allows high-end salons to offer a budget salon price and, therefore, attract budget salon clients who come for the treat. You’ll never pull that client away from the budget salon.
“Customer service slippage. Are you staffing up? If you cannot service these new clients, your word-of-mouth advertising goes downhill, especially if you’re inconveniencing your current clientele in order to make room for the new people. If the offer is good only for new clients, your current clients may not appreciate that they’re still paying full price. But if you do try Groupon, at least choose your slowest months of the year.
“I know of one salon that allowed clients with preexisting appointments to apply the discount to a wedding party. The bride bought $100 Groupons for each of her bridesmaids. For an $85 updo and $15 manicure, the salon received $25 minus Groupon’s 3 percent credit card fee. That left about $23 for the salon to split with the stylist and manicurist. Weddings are generally held on Friday or Saturday—so the bridal party filled half of the salon, on the normally busiest day of the week, with 16 services that originally had been booked at full price!”