New salon directories and marketplaces launch every week, and it’s easy to see why these sites are attractive to salons as partners. They come with the promise of getting more new clients through your front door – simple as that. Today, I’m going to deep dive into how these sites work and investigate what impact they have on your salon. I’ll also explain the client journey across all of these sites, the psychology behind them and finally, uncover the detrimental impact they are having on the industry.
How Listing Sites and Marketplaces Work
A marketplace pitches itself as a salon discovery tool. It does this through a number of marketing techniques including Search Engine Optimisation (SEO). Basically, this means that when potential customers search for, e.g. ‘local salon Kent,’ or the name of a beauty treatment, these salon directories rank in the first few results on Google. Clients are then brought to a page with a list of salons in the area. They browse, select a salon and make a booking. The company behind the website or app gets a significant margin – e.g. Wahanda takes 20% when the client books with that salon. Another example of this type of model would be Ruuby.
From the outside, it might seem like there is nothing wrong with some of these sites. In fact, it looks like many of them are promoting retention in a salon because they often lower their costs for people rebooking with the same salon – e.g. 50p instead of 20%. However, what they don’t tell you is…
Retention Is Not How Most Of Them Make Money…
Like most businesses, they are out to maximise profits. Again, there is nothing wrong with making money. However, when it comes to salon marketplaces, retaining clients goes against their business model. Allow me to explain.
Janet – a fictional character – is looking to book a facial. She types ‘facial Nottingham’ into Google’s search bar. ‘Salon Directory’ appears as the first result. She clicks in, picks a salon from the list and books a facial. ‘Salon Directory’ gets its 20%, and the salon has a new client.
Win-win right? Not really. It’s in the interest of ‘Salon Directory’ to get that person booking with another salon for the next service. Why? So they get their full 20% cut every time.
There are a couple of subliminal – and not so subliminal – ways that Janet will be urged to book with a different salon the next time she needs pampering. These include:
- Discount codes
They’ll be sent to Janet from the website and for salons in the area that she has not previously booked with.
- Special offers
Which will be highlighted on the listing site, making a salon Janet hasn’t previously booked with stand out.
- Automated premium listings
They will make salons Janet has not tried before move to the top of the page, increasing the click-through rate and likelihood of her changing salons.
- Targeted advertising
Directories and marketplaces will advertise specific salons to Janet on Facebook and other social networks.
When you dig deep, even the salon owners and managers that are listed on the site are unconsciously encouraged to get Janet to try a different salon the next time around.
How? By getting salons to market the websites they are listed on – e.g. window stickers that mention the website ‘Find us on…’ – and discount cards that are handed to clients. All these do is encourage Janet to go back to the website where all the salon’s competitors are listed, where – yes, you guessed it – she will be presented with a better offer from a competing salon.
In the end, that salon has given Janet 20% off, only to never get her back. It’s almost like a daily deal but much more Machiavellian.
The Type Of Clients It Attracts
Another problem with listing sites is the ‘me-too’ syndrome. If the salon down the street is one of the many salon directories out there, then it causes fear on what you, as a salon owner, are potentially missing out by not being listed on it. It’s this fear that causes sites like this to succeed in getting sign-ups at a breakneck pace. But here’s the thing; while it may get new clients through your door once, you’re suddenly attracting the wrong type of clients.
When pricing is the most important factor for a client, going the extra mile and guaranteeing quality in hair or beauty is irrelevant. Deal hunters want deals. Salon directories and marketplaces get deal hunters. Quality clients are generated through referrals. And of course, there are things you can do to generate referrals – e.g. Phorest has a feature called the #salonselfie. Let’s do another scenario…
Maria – another fictional character – has an appointment in your salon. She gets her hair done. When she is walking back to work an hour later, she gets an email asking her to rate her treatment out-of-five and to leave a comment. She rates it 5/5, and a camera pops up asking her to a take a selfie of her new hair. She is also told that if she shares it on Facebook, she gets extra TreatCard points. Naturally, she does. Now, it’s been shared it with hundreds of her friends on Facebook.
That is a referral generator, created online, and by the client. Not through discounting, but by showcasing your work. The kind of people who will book based on that recommendation are the ones who make purchasing decisions based on quality, not price.
What Salon Directories Are Doing To Our Industry
They have caused quality salons to believe that discounting is a powerful form of marketing.
Reality: Discounting is only a powerful form of marketing if you want to fill slots without making any profit. You will end up bending over backwards for clients who will never come back solely because they are interested in what you charge, not what you can do. Discounting to get new clients also alienates long-term loyal clients who have been paying full-price for years. Why should new clients be rewarded over them?
They have placed focus on getting new clients as the ‘best way to grow your salon’.
Reality: The best way to grow your salon is to get existing clients back more often, spending more and generating tons of referrals. In fact, we know that some of the best listing sites and daily deals sites have a 3% retention rate. This means that only 3% of clients will ever come back from those deals and pay full price. Remember, it’s in their best interest to move clients around, while the real victory for you is to get them back time and time again! It’s a contradiction in terms. Marketplaces work well for taxis. But taxis work on the nearest fare to their last drop-off. It’s not about retention for them.
They are cheapening the industry at a local level.
As clients search and see dozens of salons locally competing on price, it cheapens what we do. You have trained for years to become great at what you do. Rest assured, there are lots of clients out there who don’t want a discount. Many just want to look good and feel great. In fact, paying premium prices can even feel reassuring for some savvy customers who are looking to receive a quality service. Why should you discount when you are the expert!
Why We Know All Of This…
Years ago, Phorest Salon Software had a listing site called ‘Zanadoo’. Naively, we set it up with great intentions, the hope of getting more clients for salons. We charged a nominal flat rate on every booking to pay for the server costs.
While we thought that the site could get salons some new clients and our software would then help get them back a second time, spending more and generating referrals. Our software absolutely does that, but the listing site only drove clients from one salon to another looking for deals. We shut it down. However, one positive was it gave us a true understanding of what really grows a salon: retention!
There is a lesson to be learned here: online fads will come and go. Trends in the industry will change, but there is a large cohort of great clients out there, existing and potential, who just want a quality service and understand – in fact, appreciate – why you charge what you do. You are an expert!
Thanks for reading and as always, let us know your thoughts in the comments below or tweet us at @ThePhorestWord!