Are Your Salon or Spa Marketing Promotions Sending You Broke?

by Pam Stellema

in Business Development, Salon and Spa Marketing

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Read this article carefully to make sure that it doesn’t happen to you!

Right now, salon and spa owners are really feeling the harsh effects of a very tight economic market.  Clients are pulling purse strings tighter than ever, and even more clients are making the decision to forego their monthly salon or spa visit altogether.

This tends to create a feeling of panic for some salon owners, and before long all kinds of crazy, highly unprofitable promotions begin to surface.

Every day, I see salons running promotions that go something like this “$395 worth of treatments for just $99“… and the clients LOVE it!

Your clients will come running from every direction to take advantage of such an amazing offer.  Why wouldn’t they?

Now you may be thinking, “Well, that’s EXACTLY what I want to happen.  More clients in my salon, spending their money and giving my cash flow a much-needed boost.”

However, this seemingly great cash flow boosting strategy has a serious downside.  You are going to make a (not too) long term LOSS and your profitability is going to hit a brick wall.

Let’s face it.  Your clients don’t care about your financial well-being; that is up to you to care about.  Yes, they might be sad for a few minutes when they hear you have gone broke, but there’s always another salon in the area willing and eager to have them as clients, so life will go on pretty smoothly for them.

But what about you?

How will you cope when the quick cash surge runs out and you can no longer meet your bills, or service all those cheap promotions that you thought were such a great idea at the time.

It’s up to you to make sure this NEVER happens to your salon.  It’s nobody else’s responsibility but yours.

Here’s the problem.

Each promotional package that you sell for $99 is most likely costing you in the vicinity of between $300 to $330 dollars to provide (if you are genuinely offering $395 worth of value). That means you are actually making a huge loss with every promotional package you sell.

Did you know that most salons make (at the most) only $15 in every $100 that they take in sales? This is an industry benchmark figure but if you want to check it out for yourself, go and see how much profit you made out of the turnover you generated from your last financial year’s profit and loss report.

When you sell these types of loss generating promotional packages, you will simply end up working until you drop and still have a bill left to pay at the end.  Wages and product costs along with all the other expenses that keep your doors open, cannot be met if the majority of your income is generating a loss.

Ask yourself this question “How many loss incurring packages can you afford to sell before things come tumbling down?”

So what’s the solution?

First, you absolutely must have a clear and accurate understanding of how much your treatments are costing you to provide.  This is absolutely essential.

Next, instead of discounting your services and making less money, try value-adding with secondary services so that you always make full profit on your most important services.

Always keep in mind that when you discount your services you lower their value in the eyes of your clients.  this makes it especially hard to get people to pay full price for them in the future.

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Pam Stellema

Pam is an industry experienced coach, salon owner, speaker, author and copywriter.She works beside salon and spa owners to show them how to effectively grow their profits and remain in business for the long-term.
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