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Discounting salon services. A good or bad idea?
Date Added: 2009-04-30
Salon promotions, discounts and special seasonal offers. When they’re good, they are very, very good. But when they’re bad – they are awful! Martyn Wady explains.
Q: “What are your thoughts about discounting? I’m thinking of introducing some special offers into the salon, but I’m not quite sure how to best go about it.”
Snippits, Skegness
A: Discounting can be a bit of a minefield so you’re sensible in seeking some advice.
Because just as good promotions will improve your business, bad promotions can have a very negative effect. It’s important to look very carefully at what you want to achieve and how discounting could affect your turnover, both short and long term.
For example, in quiet times, many salons go for reduced price promotions to draw people into the salon, which helps make the salon look busy, especially early in the week. But just putting bums on seats does not necessarily improve your business.
The thinking is that a cheaper price will tempt new clients to try out the salon and a percentage will be retained as regulars. This is rarely the case. Generally ‘Two for One’ or ‘25% Off Tuesdays’ will attract either bargain hunters or regular clients taking advantage of the cheaper price. And every regular taking advantage of such a promotion represents money you’ve lost – not gained.
There are three keys to successful discounting:-
One: Never discount your core business. Only target the goods and services that make up smaller percentages of your income.
Two: Activities are ‘promotions’ or ‘offers’ – not discounts and never ever ‘sales’.
Three: Accountability. You must collate all promotion results so you can accurately review their success.
Many salons make the mistake of offering discounts on core business services like cutting and blow-drying. This is false economy as it may increase footfall, but it doesn’t increase turnover. It’s far better to offer cut price or even free ‘bolt-on’ services such as treatments, colour services or products. These improve both client experience and perception of value. At the same time, it introduces them to new goods and services while maintaining your regular cash flow.
The terminology of your promotions is also important. Descriptors such as ‘Sale’, ‘Discount’ and ‘Money Off’ devalue your service menu and can have negative connotations. Remember you’ve spent time calculating your price list to reflect your brand and to attract your target clientele, so be careful not to devalue yourself by appealing to
lower spenders.
Always have a positive reason for a promotion. ‘Celebrating 10 Years’ or ‘Introducing our New…product, service, team member etc’. Or try seasonal promotions relative to a particular event or occasion; a Mothers’ Day Gift Pack, Holiday Hair Product Offers or an Autumn Colour Promotion for example.
And heed this advice. The most crucial factor by far regarding salon promotions is analysis. You must be able to see and be able to analyse the actual profit and loss any promotions generate. Most cash register or software systems will allow you to use a promotional code and give you a print out review. Income must be analysed against costs and overheads; there is no point in generating turnover without profit.
You also need to examine long-term client spend as some clients may be taking advantage of a number of offers at the same time via loyalty schemes, family discounts etc. By doing this, one salon discovered that some clients were getting up to 60% discount, meaning after taking account of salaries and overheads, it
was actually costing the salon money to do their hair.
Finally, be sure to discuss discount orientated promotions with your team, especially if salaries are commission based. If well responded to, promotions require staff to work harder for the same (or even less) which may be resented and can cause conflict.
A good, well thought out promotion should reach its objective of attracting new clients, increasing business and have positive, long-term result.
Want to talk to Martyn about your marketing issues? Contact The Wady
Company: call 01234 709 333 email enquire@thewadycompany.com or visit www.thewadycompany.com
