Guest Article by Gloria Murray, Accountant And Business Growth Specialist
Salon discounts can play havoc with your profit. They’re easy to give away, but they’re tricky. The problem is that most salon and spa owners don’t realise just how much damage it’s doing to their business. In an industry where the competition is fierce, the last thing you want is to resort to discounting. How bad can it get though?
Bad For Business
Some of my clients, who at the time were already really busy, have used discount websites to drive new customers into their salon only to reap less than pleasing results. Take for instance one of these salons. The site they were using didn’t have access to their diary. Very much so a cause for concern because this meant they were opening themselves to double-bookings. Not only that but it also meant they had no control over when the appointments were generated. As if it weren’t enough, that’s even before we get to the fact that the site underpriced them. Bad customer service and horrific overall results from the get-go, although it wasn’t their fault.
The salon put itself under a huge amount of pressure when they didn’t need to. After we spoke about this, they stopped discounting and they also increased their pricing. Since, they’ve had their best four months ever!
You see, how are you supposed to serve your existing clients – who are paying full price – when you are double-booked? New clients who book at a discount don’t see the best of the salon as they have to wait to be seen by a therapist busy prioritising full-paying loyal clients. Unfortunately, the reality is that this new customer is unlikely to come back.
4 Tips To Avoid Resorting To Salon Discounts
If you want to encourage new clients to visit your salon, then look beyond discounting. Instead, add value to your services. It could be a specific treatment you know is very popular. Perhaps you could include it into your service for a short period of time. Or, even simpler, it might be enough to provide great coffee or a little glass of fizz. The key here is to understand your clients and what part of the market you’re aiming for.
1. Understand Your Value
Make sure you and your team understand how valuable your services are and how you differ from your competition. If you don’t know what makes you different – and/or you don’t value it – how do you expect your clients to understand or value what you do? Ask members of your team why they think the prices are at the level they’re at. If you get answers such as ‘That’s the going rate…’, then probe and try to make them understand the prices reflect their precious time along with their specific and sought after skill set.
2. Don’t Budge
Just because someone asks for a discount, it doesn’t mean you have to give it out to them. My husband’s default position is to always ask for a discount. He doesn’t care if he gets it – for him, it’s just a game. However, 90% of the time he asks, he gets one! Don’t think along the lines of ‘Any business is good business.’ Remember, the potential clients you will lose are deal hunters. There will always be a cheaper salon, but there isn’t always a better one. That’s why sticking to your guns in terms of prices portrays quality and exclusivity.
3. Get Creative
Get creative with your marketing and think ahead: get those special dates in the diary. The traditional days like Valentine’s Day, Mother’s Day or Easter can really make a difference in your revenue when marketed well. You could run mini-campaigns around all those dates. And if the inspiration isn’t there, The Phorest Blog puts together Monthly Marketing Toolkits to help you out. In fact, download your June Salon Marketing Toolkit & Ideas just here.
4. Value The Right Type Of Customers
If you’re using your salon discounts as a way of attracting clients, bear in mind you will be chasing the wrong people. There is a small percentage of the population that only buys on price. Meaning that as soon as someone starts offering a cheaper deal they’ll go there. Unfortunately, they rarely have much loyalty.
Don’t fall into the salon discounts trap just for the sake of it. At a recent event I ran on pricing, I met a salon owner who was really busy, but was continually discounting. She was finding it difficult to make enough profit, even though she was fully booked. It may seem like a harsh reality, but you don’t ask your doctor for a discount, right? Why should it be any different for your business?
Thanks for reading!
Gloria Murray is an award-winning accountant and business growth specialist, working with micro and small business owners to help them get a handle on their numbers.