Gains and Lossesby DJ Victory-Franceschelli, co-owner of Enzo's Salon & Spa
While I recognize that spending money on advertising is essential to the health of my salon, I also know that, despite my best efforts, some things work and some things don’t.
I understand the stated objective of Groupon, Living Social and similar sites: Potential customers buy deeply discounted coupons to experience new salons, restaurants or even inns.
It’s a great deal for them, but from a salon perspective, it’s rife with potential pitfalls. Here are just a few cautions:
● You sign a contract for 50% discounted services. For every coupon sold, you must give half of the remaining 50% to the coupon site, which leaves you with 25% of your regular service fee.
● Some coupon sites do not allow you to put a cap on the number of coupons you’re willing to offer. A cap is important for several reasons, including controlling your costs, managing traffic and having available appointments for your existing clients.
● You have no control over who buys your coupon, hence you’re spending advertising dollars on something that isn’t specifically geared toward your target market.
● Expect some of your steady clients to be involved with social coupon sites. When they see your deal, they’ll expect to pay for their services with coupons they bought for 50% off the regular price.
● Because many group coupon sites and some states don’t allow coupons to expire, you could be honoring these discounts for years to come.
● Be prepared for hustlers, bargain shoppers and rude clients. Not every group coupon client will be guilty of poor behavior, but you should expect the percentage of negative interactions to rise exponentially.
● The crush of coupon clients can be overwhelming for the first week and barely tolerable the second week. This sudden surge in business makes it difficult to maintain your customer service standards and could force you to hire temporary staff members.
● While you’re likely to retain some coupon clients, the majority of people that redeem group-type coupons have already pledged their allegiance to the deal. They like their hair; they love your salon. Next!
Know the True Cost of the Program
In terms of controlling costs, or more accurately losses, it’s vital to know what it takes to run your business every hour of the day and to deliver the discounted service.
If you only receive $25 for a $100 service (remember, you have to split it with the group coupon site) and your cost is $40, you’re out $15 on each coupon redeemed at your salon.
If you put a cap of 500 coupons in your contract, you could be spending as much as $7,500. If you don’t include a cap, the expense of running a single group coupon program could be financially crushing.
You should also be careful when asking other salon owners how successful they were with their group coupon efforts.
I say this because not only do you need to accurately know the immediate cost of each coupon, but also what the true cost is over a 12-month period.
How many coupon clients are still frequenting your salon? How many retued for another discounted service before going elsewhere?
How many coupons were purchased and never redeemed?
Are you asking someone that tracks responses this carefully and accurately?
If not, what they tell you should be disregarded.
Don’t Allow Desire to Overrule Logic
Nearly all salon owners would love to have more clients and have all of their chairs produce income every hour of the business day.
I’ve tried group coupon programs with different companies for that very reason and, each time, I sought the advice of “experts” on how to make my marketing efforts pay off: We rolled out the red carpet; delivered superlative services; suggested add-on services; talked about retail products; and gave our coupon clients discount incentives for their next visit to our salon.
We also requested their email addresses (you can’t require them to do this; it’s against the law) and romanced them for months via the Inteet. The most common reply we received, “Loved your salon! Please alert me when your next group coupon offer is underway.”
Our participation in these discount programs also changed the vibe of our salon, at least while the coupon program was active.
We were suddenly taking care of clients who wanted to talk about their many coupon adventures, publicly tried to negotiate deep discounts on additional services and even haggled over product prices in front of other clients at our checkout station.
SEEK TRUTH BUSINESS GROWTH
I recognize that when business is slow, it’s tempting to reach out to a group coupon site to raise shop morale, keep new stylists busy and even bring in some much needed cash.
In my opinion and experience, what actually happens can be equated to hiring warm bodies to fill your chairs.
It’s quality and not quantity that counts; it’s retention of clients and staff members that matters most.
There’s no magic bullet when it comes to growing your salon.
It takes hard work, consistently high standards and the ability to attract staff members and clients that embrace your values.