What’s the big deal?

Offering special deals is nothing new, but a new range of websites are offering salons a channel to get these deals out to a much larger audience in a very short timeframe. Is it just another scam or an opportunity to get your salon on the map? Karen Lynch finds out.

A year ago most people wouldn’t have known what a one-day deal site was, but the speed at which they are growing is mind blowing. Popular Australian site Spreets has launched into New Zealand and just sold for a cool $40 Million – not bad for less than two years’ work. The most popular site in New Zealand, www.GrabOne.co.nz, has only been operating since July 2010 and has already expanded into Australia.

The hype these one-day internet deals generate, as well as the mere hint of masses of new clients rushing in the door has many New Zealand salons reaching for their pen saying “where can I sign?”

So just how do they work from a supplier point of view?

One deal per day is offered at a huge discount, generally a minimum of 50 per cent, and that deal is up on the site for only 24 hours. The salon owner sets a minimum number of deals (kind of like your reserve price in an auction) and once this level is reached the deal is activated. Buyers are then sent a voucher via email, which they print out to redeem their “deal”. If the minimum number is not reached, no deals are sold and credit cards are not charged.

The deal is loaded up on the site for all to see, emailed out to all its members (no printing costs) and voila! You’re in the money ... or are you?

A number of salon owners I spoke with felt that the one-day deal is a “fast way of getting a response, much faster than the traditional newspaper, radio or email marketing, and used with other methods of marketing could fill a new senior’s book.”

So I took a good look at nine deals from salons across New Zealand. Six salon owners felt the deals were not so much an opportunity to get money in the door, but to get new clients in the door. Two of them had not reached the minimum level. They all agreed that the system only works if the staff are completely “on to it”, completing client histories and up selling. Each salon owner I spoke with was disappointed that their staff members had not consistently recorded details nor successfully rebooked. Most of the staff had a negative response to the “cheap service” (i.e. I won't get my commission) instead of seeing the big picture of gaining a potential client.

Sadly, five salon owners did not measure how many clients they retained from the deals and it was too early to know these results from the other two.

Some owners thought they were just paying 20 per cent commission to their chosen one-day deal site. And this is where things get a little grey. It took me a few phone calls and quite a bit of reading to really get the gist of the websites’ charges but they say they pay an initial 80 per cent payment when in fact it seemed to me it was actually an initial payment of 60 per cent. They retain 20 per cent commission plus another 20 per cent retainer that they pay out only once 80 per cent of vouchers are redeemed. This is also the company’s back-up plan if people demand a refund. You can also choose to opt for a straight 35 per cent commission. Most salons I spoke with who had completed more than one deal preferred this option.

The way the deal is put together is very important. One salon offered a treatment, blowdry and a product for just $35. They sold 134 in 24 hours. Another salon put together a $99 package (normally $185) and sold 60. However because only 40 were redeemed they didn’t get the final 20 per cent payment.

I spoke with a Spreets representative who recommended you make your deals attractive with a “wow” component so you get maximum voucher redemption. Even he understood that rebooking was the number one key and that staff need to understand exactly what the salon wants to achieve out of it and what their role is in making sure it happens. His biggest advice was not to repeat your deals, or offer deals too often. He saw 8 to 12 weeks as the earliest to be “seen” again otherwise you’d risk being labelled a “discount salon” and cheapen your brand.

With all this information it was time to get the vibe from the street. Out of 28 women who had bought at least one hair “deal” all 28 said “it’s fabulous getting so much for such a low price!” Two commented that “it shows that salons obviously overcharge if they can do those sorts of deals” – I think I visibly winced at that.

Twenty-two of those women use a deal for every hairdo and have not been back to the same salon twice – “Why would I when I can get the exact same thing somewhere else for half the price?" I inwardly groaned ... what are we doing to our industry?

Only two women said they would consider staying with a salon but so far hadn’t really had any reason to. The other four said they “didn't know.”

Whether you choose to offer one day deals or not, some things are glaringly obvious. Stay true to your vision and your target market. Know your outcome. Test and measure ... are they your target market? Do they return?

As always, it comes back to the basics. Being innovative will only help you when you've got the basics right. It’s about training your team to give great consultations and service, every single client, every single time. Then, and only then, will any marketing practice give you long-term results.