Tough talk: The easy way out
Karen Lynch has something to get off her chest, and we were happy to give her the space to do so. The target of her wrath – industry leaders heading down the discount route. Why? Because they’re not only devaluing their brand, but also the industry as a whole.
Many years ago Earl Nightingale said, “If more people said what they were thinking, they would be speechless.” While that seems like an odd comment, he explained that most people mistake mental activity with thinking because if they were actually thinking they wouldn’t do half the things they do!
I have a perfect example of this. Leading salons using one day internet deals to get new clients. Quite clearly no real thinking has happened there.
Recently I have seen a number of well-known top New Zealand salons throw themselves into this pit of promised dollars, clearly desperate to create instant cashflow or misguidedly believing it to contain an oasis of loyal clients.
What they haven’t thought of is how far-reaching the consequences of their actions are.
They claim to be “world class”, “highly skilled”, “winners of....”, “top in NZ...” My challenge is this; if they’re that good, why are they dropping their prices by 50 per cent or more? Indeed, if they were thinking, they would realise how irresponsible they were being.
For the unfamiliar; a one day deal is offered on a specific website for a huge discount (50-90 per cent). The salon owner sets a minimum number of deals and once this level is reached, the deal is activated. Buyers are then sent a voucher via email, which they print to redeem their “deal”. If the minimum number is not reached, no deals are sold and credit cards are not charged.
One salon recently advertised a hair deal for just $48. It turned out this salon was quoting a senior stylist price as the full price but unbeknown to the buyer, they would get a trainee to do the $48 deal – the price the trainee usually charged anyway. They probably thought they were being clever but some clients may have seen it as a scam. Not good for the brand.
But here’s also what the client sees. A top New Zealand salon offering a service for almost a 50 per cent discount. There was a question on the deal discussion page from an existing client asking if they could have the deal too? So, not only did the salon lose money on the 224 deals they sold, they even downgraded at least one good client (if not many more) that would have happily paid full price. Worse still they may have helped to convert that client to one-day deals and lost them altogether.
Okay. You’re thinking “wow 224 deals, I could handle that!” Let’s do the math: 224 deals at $48 – GST = $9349 in sales. The deal company will hold back a 20 per cent commission plus a 20 per cent buffer. The salon gets the buffer if a certain percentage of the vouchers are redeemed, normally 80 per cent. There’s a better than even chance this won’t happen, so suddenly $9349 becomes $5609. Not so shiny now.
But wait there’s more. The quoted full cut price was $98. To realise the $5609 with “real” clients who return six-weekly, the salon only needs eight new clients. Sure the money is long term over a year, but most salons average five new clients per week just by opening their doors.
Hopefully the clients think salons like these are just desperate (which they probably are – and seriously, if they want to damage their brand and long earned reputation they can go for it), but here’s the real problem. What damage are they doing to our industry?
Because of what I do, people are quick to volunteer their opinions of our industry to me. Unfortunately, I have had many people tell me that “salons quite clearly overcharge if they’re able to offer such a discount”. Sadly, I know only too well that the majority of salons run on a very small profit, if any at all.
So what effect will this have now?
This is clearly a situation of the salon owner not thinking – simply engaging in mental activity. Had they thought it through, surely they would have realised the impact this could have?
I have one thing to say to these salons: how dare you be so irresponsible? As a leading salon, do you not realise how many other salon owners look up to you? What happened to professionalism? What happened to us all working toward an industry that attracts great people wanting a truly professional career? We’ve worked long and hard to establish ourselves as a true profession. Yes, we’re allowed to make mistakes, goodness knows I’ve made plenty, it’s how we learn. But we seem to have a few slow learners out there.
Feeling despondent over all of this, I decided to get the vibe from the street and make sure I wasn’t over reacting. I interviewed 134 people, 96 of whom were women who have a regular salon cut and colour. Forty-seven of those women unashamedly had either bought or been given a one-day hair deal. A staggering 43 of them said they would not return to the salon: “why pay full price when I can get a deal every time I need my hair done?” But, here’s the best part.
Thirty-six of those women would consider going to a regular salon if they could find something worth staying for, however, they were quick to tell me salons are all the same. “Same old, same old” was their general feeling about salons.
Seth Godin, one of the world’s most forward-thinking marketing gurus, explains this well in his book The Purple Cow. He talks of driving in the countryside, how cows, after you’ve seen them for a while, are boring. There may be cows that are perfect, cows with great personalities, cows lit by a beautiful light … they’re still boring. A purple cow though, now that would be interesting.
In other words, if you’re not remarkable, you’re invisible.
Alternative marketing is not a novelty – it’s all we have left. The traditional approaches have gone, they’re obsolete. Many marketers talk about this but very few do anything about it. They’re still doing the “same old, same old”. It is of my opinion and firsthand experience that many marketing experts wouldn’t have a clue. There is a lot of false information being bandied around out there. I learned that the hard way in my own salons.
Why discount? Do you not think you’re good enough to charge full price? Are you not worth it? Or do you say “but Karen that’s what clients want.” Do they? Sorry, I have to say “rubbish”. That’s simply a story some salon owners tell themselves so they can choose an easy way (at least, seemingly easy) and save having to think. It’s a case of “let’s do what everyone else does” (even though it hasn’t worked long term in the past).
For those of you who still believe discounting is the way to go understand this: consumers will only compare on price when they consider everything else is the same.
One-day deals are not a new way of marketing – it’s discounting dressed up differently. Look beyond the old rulebook – in fact throw it away because it will not serve you any more.
Clients these days have pretty good BS detectors. They ‘re marketed and advertised to from the minute they get out of bed in the morning until the minute they retire for the night. Who’s prepared to stick their neck out and do something a little different? Very precious few. And let me tell you, those precious few are growing, recession or no recession. Their client lists are growing and so are their bank accounts. They have great staff approaching them, because you see, staff are sick of the “same old, same old” too.
One salon owner, in their own defence, said to me “But everyone’s doing one day deals now”. So if they all jumped off a cliff would you too? Pah – leease. Think.
You cannot be inconspicuous and successful. Being successful means standing out from the crowd.
Think. Think of a solution – a long term solution.
I talk about great service and great consultations in a seminar and people will say ‘I do that’ but my challenge is this: Does every member of your team deliver it consistently, every single client, every single visit, every single time? Even that last client at 7.15pm on a Thursday night? Can you honestly say every client gets the very best, every time? Chances are no. Anyone can be great some of the time but very precious few choose to be great all of the time.
Your salon is as good as your worst team member on their worst day.
Those of you who disagree have probably never been a full paying, regular, cut and colour client. Well, I am. And boy has it opened my eyes.
You see, your staff are your product. Every tiny detail in the service you sell is totally dependent upon the way the staff member delivers it. Many salon owners are focused on getting new clients in the door when the level of service is just not up to a consistent standard. Why throw good clients at inconsistent staff so they can just lose them? Then they go back on the sales rollercoaster, needing more new clients to replace the ones they’ve lost. And so the cycle continues.
As I said earlier, most salons get at least five new clients per week. Let’s take a look at that. Getting (and keeping) five new clients per week, who visit six-weekly and pay an average of $98 (as per the deal example above), will add $219,128 in annual sales. Think. Which looks like the better longer-term option?
There has never been a better time for salons as now. Don’t listen to the scaremongers when they say “retail spending is down”. What they don’t tell you is that “online spending is up” (Nielson report) with 1.4 million Kiwis as active online buyers. Just for the record, the retail spend has just had the fastest rise in four years (March quarter, Statistics NZ).
You are responsible for your team’s income. I know they have to be accountable, driven, and all those things, but they need you to lead them. It’s time to step up.
A lack of clients is a symptom of a problem, not the problem itself. Find the cause.
There are a multitude of cost effective ways to get clients into your salon and stay. It’s not one magic thing, but 100 little things. It’s the systems and processes you use in your salon; it’s having high expectations from your team and its having a sound and well thought-out marketing campaign.
If you don’t know where to start (and that’s okay, many don’t) get yourself a coach – but please not one who believes in discounts, expensive advertising or one-day deals. A good coach will be ahead of the game. They’ll know what works firsthand and will totally understand the new rulebook. It is a coach’s job to be everything you’re not and to know the changes and trends that are happening among consumers and have you ready to meet those demands.
Understand that unless you’re making good profit, you don’t have a business, you have a hobby. And a very expensive one at that.
You deserve more. I’m yet to meet a salon owner who doesn’t have huge potential.
For those of you who are prepared step up to the challenge and stop following; I applaud you. We need new leaders as some leaders of the past have sadly proven themselves unworthy of the role.
For those of you who so many others look up to – you know who you are – I ask that you take a good hard look at what you’re doing, not just to your own brand but to the industry as a whole. I ask you to think. You are leaders in our industry so how about you man up and act like them? There are people who will help you if you need direction, I will for starters.
But if you’re not prepared to do that, then do everyone a favour. Get out. Get out now and stop degrading our beloved industry.
If you’re outraged about now, then maybe I’ve hit a nerve. Hopefully I have made you, well, think.
You may not like what Karen has to say, you might agree with her. Either way, leave your comment below. Let’s start a conversation – you never know where it might lead.
Susan Wiltshire - All Salon Owners should read this article - Sep 16, 2011
Thank you Karen Lynch for your article "The Easy Way Out" having come from a retail operations background I fully understand the pitfalls of discounting and applaud you for raising this issue in such a frank and accurate way. I sincerely hope that all salon owners and managers read this and take it on board.