According to a post at lifehacker.com, these are the top five social media based coupon/discount programs: Groupon, Living Social, Google Offers, Amazon Local and Facebook Deals. Are they a good idea for your salon?
Here’s the tale of a salon that did everything wrong. If you do everything right (or most everything, at least) you would most likely achieve far different results. If the bottom line is all you want, skip to the Summary below for the recap.
A day spa in a suburb city of Dallas, Texas, got lots of requests for mani/pedi services in addition to the skin care and massage they offered. A space became available across the street, so the massage therapist went to the day spa owner/esthetician and together they opened a nail and hair salon. They hired me as the manager of the nail department and I spent the first 3 weeks I was there setting up the stations with equipment and supplies, overseeing the building of a pedicure platform (2 nail tables, 3 pedicure chairs), hiring and training 3 nail techs to work with me. When I started, they had 1 stylist who begrudgingly did a few mani/pedi services, but no enhancements.
At their grand opening, the first week of September, they had issued a Living Social deal of Buy One, Get One Free, so as we were getting set up, we were honoring those coupons, and all of the staff agreed that we would invest in building a clientele and do the free services without pay–just tips, if any. There were only a couple dozen of these coupons sold, so each of us only had a maximum of 6 free services.
During this opening time frame, the massage therapist owner and her esty silent partner were setting up online booking and talking with me about marketing campaigns. They, of course, touted us to all of their spa clients across the street, and we did get some immediate bookings. Then Groupon called–a very high pressure salesman who wouldn’t take “No” for an answer.
We had more than one meeting where this topic was discussed and I worked hard to convince the owners that October was not the right time–the busy holiday season loomed, we were still setting things up (only had 2 of the 3 pedi stations equipped) and we needed training in the specialty pedicures the owners wanted to offer. (Cosmo, margarita, pina colada, pumpkin spice, hot chocolate–all of which were to be served with a special beverage.) We talked about just getting through the holidays, get the salon equipped, get the team jelled and then when things slowed down in January, we would launch another discount coupon deal. That was on a Friday.
I came in to work on Tuesday to sheer chaos. The phone was ringing, literally non-stop. The harried massage therapist was talking to one person explaining how a deal worked, while the other line blinked. The computer was jammed up so badly that you couldn’t do anything because our booking system was overwhelmed with people trying to book appointments. Remember that scene in Harry Potter where Harry, Ron and Hermione are sneaking through looking for the Sorcerer’s stone and there was a room full of flying keys? They got the door open and quickly slammed it and hundreds of keys darted to the door and rammed into it. That is how our booking system got hit!
When I got a chance to ask what was going on, I found out the following:
They had signed with Groupon, against my best advice.
They signed for a time frame – 5 days with no limits on the number of deals sold.
When I found out there were over 700 deals that had been bought, I begged her to stop it, but she said, “No…we need the capital from these sales to finish paying for furniture and supplies.” She actually said, “The more the merrier…cha-ching, cha-ching.”
The Groupon was based on a 50% discount of our already discounted introductory prices…not on the full price of our services. So the deal was $25 for a Pumpkin Spice mani/pedi combo. (and a couple of similar packages.)
She had activated the online booking and would not agree to turn it off, even temporarily.
The online booking had no restrictions–a person could wedge a mani/pedi into a half hour time slot.
As I said…sheer chaos! You’d be in the middle of booking an appointment and hit “save” only to find that someone else had scooped that time! We had no receptionist, so when she was with clients, it was up to us to answer the phone. If we let it go to voice mail, it quickly filled up. Other callers were furious when they finally got through to us as we emptied the mail box every chance we got, but it wasn’t often enough for some.
And the worst part–the owners expected the staff to eat the cost, as well. They wanted us to work for an hour and a half doing a mani and pedi for our 50% of the $12.50 the salon would receive. Nunh unh. Wasn’t going to happen. To prevent a mass walk out, I negotiated $10 per hour or commission, which ever would be higher for the week. They begrudgingly agreed.
Every single minute of the day got quickly booked! I went out several weeks in advance and booked lunch and personal breaks for everyone, but I would find that the owner would override those if the caller on the other end of the phone line asked. I tried to set blocks of time for training and supply store runs, and grocery shopping for the beverage supplies, but those often got booked.
We ended up selling 1038 Groupon deals for $25 mani/pedis. The owner was scope locked on the $12,975 check she calculated. She didn’t consider that credit card fees are deducted, the payments are parceled out to the business in increments, and there is a hold-back reserve that the business never gets until every deal has been completed. She quickly spent the first check of a couple thousand on labor and supplies…and was desperate for our next installment.
There was a bitter argument about spending $300 at the beauty supply–she informed me my budget was now $50 per week. This was inadequate-in the first 2 weeks we performed 186 services (manis, pedis, nail enhancements–all of which require products and supplies) so I created a “cost-per-service” spreadsheet explaining that each of these Groupon deals was a net loss of $8.31 She didn’t believe me at first, but when she finally realized I wasn’t making up the numbers, she dismissed them! “I don’t need to see your silly little spreadsheet…I just know that we have the chance to get our hands on over 1000 new clients and we need to make them happy and keep them coming back.” Unrealistic?
In fact, to encourage them to come back again, she insisted that we offer each client an opportunity to purchase the same deal directly from us. When I explained that we would be losing money on even more services, she couldn’t understand that. When we failed to do so, she was very angry and chastised us.
By the time clients ended up in our chairs, we were usually running very late, out of at least 2 things they requested and interrupted by people just showing up because they couldn’t get through on the phone. We had no chance of retaining these clients, let alone at full price.
The owner said she had a solution…she’d talked to a nearby beauty school and they would send nail tech students in to help us. I think 4 showed up, but they were totally unable to perform even the simplest request. They simply were not far enough along in their training to perform services, and only of limited use filling and emptying pedicure tubs and fixing beverages. The only time I could squeeze them in for some rudimentary training would be between clients, because my blocks of time kept being annexed. Finally, I convinced her it just wasn’t worth the effort–my time was better spent on other tasks.
Two more weeks went by, and my lead nail tech told me the owner had been asking her what she thought about me…was I doing a good job? Could she do better? Final straw.
I set up a meeting for the two owners and told them unless they turned off online booking and got some kind of control over managing customer relations, quit messing with our lunch breaks and let us buy the supplies we needed to perform the services, it was hopeless. They were not compelled by what I had to say.
I picked my personal things up the following Monday.
“The salon was closed and out of business before Thanksgiving. Around 90 days, start to finish.”
What to do
Do your homework
It’s important that you target your market carefully. Some providers allow you ZIP code targeting. Some have other demographic information they can provide to help you set parameters: age, gender, history with the company, etc. Some are not able to help you, but may have a larger following in your area. Ask lots of questions. And insist on true answers, not replies (“That’s a good question, I’ll tell you more about that later” is not an answer–it’s a reply.)
A good campaign, well planned can be very effective in bringing new souls through your door.
Plan Your Campaign
Before you speak to a sales rep about a coupon discount deal, decide how much you are willing to spend on an advertising campaign. Understand that these deals nearly always create a net loss to the business. In the example above, 1038 deals that created a net loss of $8.31 each meant the salon signed up without realizing they were committing to spending over $8K on advertising. ($8.31 x 1038 = $8,600+)
Understand the dynamics of working with online deal providers–the sales reps are commission sales people, and they only get paid if they sign up businesses. They are skilled at “closing the deal” and will use all the techniques they have at their disposal to get you signed up, as quickly as possible, so they can move on to the next client. Another pressure they are feeling is their manager is pushing them for content. The providers constantly seek fresh new deals to offer their impetuous followers. They will work with you–just be as insistent as they are. Negotiate every aspect: the # of deals, the amount they’ll go for, the % you’ll split with them, when you’ll be paid…every single thing.
Plan Out Guest Services
Once you’ve chosen a deal provider and set up a campaign, make sure you are fully ready to perform. Stock your cupboards. Make sure staff is all on board. Write scripts–talking points–to go over with each client who enters.
Greet and welcome each guest
Be prepared to give each guest a tour of the facility – cross promote other services
Have a sign in sheet harvesting contact information
Mention all the services you provide
Offer a beverage
Perform their services with your very best efforts
Invite them to rebook
Offer an incentive for them to come back
Ask them to refer you to their friends
Give them a promotional item to take with them that’ll remind them of their experience with you
Send a follow up email (per the sign-in sheet)
Things to do:
Plan your campaign – who will you target? How much will you “spend” on marketing?
Limit the number of deals you allow to be sold.
Set the pricing on your FULL top-of-the-line service prices, not on an already discounted package price
Negotiate a greater split % – if your sales person balks, ask to speak with another sales rep.
Insist that you review the copy of the deal before it is published–our campaign talked about “soaking your little piggies”–not the image a day spa wants to convey.
Manage your booking. You have no chance of bringing them back a second time if you make them feel rushed or if you can’t take care of them properly.
Limit the number of “deal” appointments you make each week, leaving enough time for your regular clients and for rebooking those who enjoy their first experience with you.
If you are an owner building clientele for your business, don’t expect your staff to “eat” the cost of performing the services without being paid their full due. Your calculations should include labor costs when you’re figuring out the cost per service.
If you are a booth renter or a sole proprietor, make sure your monthly bills will be covered without the small amount of income created by a campaign.
Make every guest feel welcomed and provide an extraordinary experience for them. You’ve invested a lot to get them there, so make sure they leave with a great impression.
Do adjunct marketing when they are in your salon–give them a tour and explain all that you offer. Give them printed incentives (coupons or referral program cards).
Things to avoid:
Don’t agree to a sales campaign based on a time-frame with no limits on the numbers sold.
Don’t cave in to high pressure–the sales reps are on commission and they are highly motivated to make the most possible commission for the time they spend talking to each business.
Don’t sign the contract immediately. Take the time to sleep on it. The sales rep will create urgency but the only true urgency is their commission check.
Don’t lose control of your schedule. Deal buyers are impulsive. You will hear crazy stories to get you to book them right now–brides (“The wedding is tomorrow!”), birthday gifts, dinner parties, boyfriend coming home from Iraq…and on and on. Stand firm or risk it all.