Is it time to start making a real profit in your salon?
Many salon owners run promotions almost non-stop, with the mistaken belief that quantity, rather than quality, is what will make them more profit.
Anyone can be busy – just lower your prices enough and you will achieve “busy-ness” in a heartbeat. However, this type of promotion will not make you any profit.
Some marketing gurus would have you believe that any promotion is a good promotion.
However, poorly designed promotions can cost you a great deal of money and often end up hurting, rather than helping your business.
Here are five simple rules that you can follow to help you make more profit from your promotions.
Rule # 1 Begin with the end in mind.
This is the essential starting point for every good promotion.
It’s important to have a clear idea of what you are trying to achieve with each promotion you run. Is your goal to:
- attract new clients;
- re-activate lost clients;
- get regular clients to spend more money;
- promote something new to existing clients; or
- compete with the salon down the road?
Perhaps you’re not quite sure why you do them?
Whatever your reason, a hastily constructed promotion that does not serve a purpose, will generally cost you more than it will make you.
Once you know why you are doing your promotion, you need to determine how you are going to measure your results.
This is the only way you are going to know if your promotion has achieved the desired outcome.
Rule # 2 Good promotions should focus on profit, not just turnover.
Profit and turnover are different creatures, and many salon owners are not focusing on the right thing when planning their promotion, which of course is the profit.
Turnover is all the money you make from all your sales and it always looks good because you have not yet paid your associated expenses, whereas profit is what you have left after expenses; it’s what stays in your bank, and keeps you in business.
It is easy to believe that by increasing your turnover, you will also increase your profit but this is not always the case.
A hastily constructed promotion can easily result in generating a financial loss.
A great example of this is the current coupon craze.
Many salons have fallen foul of this new marketing strategy because they believed that having more people come into their business would automatically mean extra profit.
When you create a promotion, you must calculate what it is going to cost you to provide in both labour and product costs, so that you will see a healthy profit at the end.
You will also need to factor in the cost of advertising your promotion to ensure that this cost does not end up eating deeply into your profit.
Rule #3 Stop discounting and start value adding.
Discounting may seem like an easy way to build your clientele, especially when you see all those appointment times filling up on your bookings page.
However, the reality is, if you give your services away too cheaply, you will often end up losing money as well as damaging the long term integrity of your services.
It may feel good to have your salon jam-packed every day, but you could simply end up exhausted with not much to show for all your hard work.
Discounted services will always be attractive to a certain type of client; those that seldom return to pay full price in the future, rarely buy additional services and products and are almost impossible to retain.
Instead, these clients are much more likely to continue to search out other salons that are making the same mistake of discounting their services.
Avoid this happening in your salon by value adding instead when creating your promotions.
The important word to remember here is “value”. This is what clients are looking for at present – more value for their money.
Rule # 4 Focus on the promoting the right services.
Choosing the right services to offer in your promotion is important.
You need to choose a combination of services that provide the most profitable result for you and represent value to your clients.
A good promotion will allow you to still charge full price for your primary services, but the value comes from including secondary services free of charge or for not much extra.
Your primary services are those that are both popular with your clients and form the basis of your business.
They may differ from salon to salon depending on the kind of services you offer to your clientele.
Your secondary services should be treatments that will:
- complement your primary service;
- be reasonably inexpensive to provide in both time and money, and
- preferably a service you would like clients to have more often.
Avoid the temptation to use less popular services as your main offer.
Yes, you may boost their sales by doing this, however, if your goal is to double your sales of a particular service, isn’t it better to double something you are already doing lots of, rather than double a service which is much less popular? (see box)
Use your HERO services (these are the services that your clients love and are your best sellers) for your promotions and you will sell more and reap the rewards.
Rule # 5 Target the clients most likely to respond.
Have you ever heard the term “shotgun marketing”?
Like shooting a shotgun, it involves sending out many pellets of promotional material to a very wide audience in the hope that some of those pellets may hit an interested party.
It generally results in a very poor return on investment.
If your goal is to do more anti-aging facials, there would be very limited opportunities to increase your sales by promoting them to a young market that suffers mainly from acne skin and hairy bikini lines!
Therefore, you need to target a receptive market.
Once you understand the “who” in your promotion, you also need to think about how you are going to reach your best audience.
Will it be with a newspaper ad, email blast, local magazine advertisement, on radio, a letterbox drop, or perhaps a Facebook and twitter campaign?
Which of the many options available to you is going to get your message to the right people?
How will you reach those who will be most likely to purchase?
By choosing wisely, you will not only save money on useless and costly advertising, but you will enjoy a better result for the time and money invested in your promotion.
So before you create a new promotion for your salon, review these five rules that will help you to understand what you are trying to achieve, who you are trying to reach, how you will get your message effectively to them, and most importantly how you will make your promotion a profitable venture.
Here’s an example of a good promotion
Goal: Increase the number of Signature Facials provided and introduce facial clients to Hot Stone Massage therapy
Promotion Price $129 (same as primary service charge)
Value to client $169 Primary service you wish to promote to clients: Signature Facial valued at $129 Secondary service – Hot Stone Back Massage valued at $40
Time taken – 20 minutes
Additional product cost $1
Additional Labour Cost $9
The fact is, you don’t need to give everything away for zero profit.
You’re in business to make a healthy and happy life and making a profit is part of that formula. So next time you put together a promotion for your salon or spa, think about how you can make it a win-win situation for both you and your clients.