Let's Make a Deal: Offering Discounts

DO be strategic.
Offering discounts willy-nilly is how salon owners and techs can get into trouble and actually lose money. Discounts will only yield more profit if they are used strategically and with restraint. Professional development manager for Milady, Steve Gomez, suggests offering discounts in conjunction with an in-salon event, as part of a seasonal promotion such as breast cancer awareness month, Mother’s Day weekend, etc. “You can also offer a discount if you are participating in a local event in your community such as a fair or having a booth at an expo to build a specific part of your business,” says Gomez. “All of these examples are quick-hit programs, which is what you want.”
It’s also important to put some thought behind setting up your promotions correctly. “If the discount is set too high, it creates low or no profit,” says Kristi Valenzuela, Director of the Front Desk Division for Summit Salon Business Center. “In the long term, this will be demotivating to the employee or self-employed technician. An example of this might be ‘buy one pedicure, get the next pedicure free.’  If you set it too low, however, (receive $5 off on your 10th visit), it won’t motivate the client to participate.”

DON’T offer an ongoing discount over a long period of time.
Always remember that you are worth the price you charge for the services you provide, so only discount a service that you are introducing for the first time or as part of a temporary promotion. It is not wise to offer an ongoing discount for a service over a long period of time. “If you’re going to discount a service, offer it for a maximum four-to six-week time period as part of a marketing promotion,” Gomez suggests.  “If you are going to offer a discount on products, it should only be as part of an introduction of the product in your business, as part of a promotion for something seasonal like a holiday promotion, or if you are not selling the item and are putting it into a final sale discount to move the product off the shelves for good. It should never be done on an ongoing basis.”
Ultimately, the message is to be strategic, think it through, and offer discounts when it makes sense. “If discounts are offered on a continual basis it lessens the value of what is offered; it’s a way of hoping to get extra sales but it may just attract people looking for deals,” Gomez adds. By eliminating a discount-seeking client, you make room for a client who will gladly pay for good experience and service.

DON'T Neglect To Plan Ahead And Set Goals.
Most salons and nail technicians experience high/low revenue, which historically reoccurs the same time each year. In colder months, for example, women start wearing boots and closed-toe shoes, and neglect the maintenance and beauty of their feet.  This causes downturns in pedicure business and personal income, so it’s vital to create and plan exciting service promotions to counteract the slow time and fill your appointment book. Valenzuela suggests offering a “Purchase three, get one free” service and having it go on sale prior to slow season.  “Make sure to upsell additional treatments or retail on the fourth visit,” she says. “Consumers tend to splurge on themselves with these extra amenities when they are receiving something free — but you have to make the offer.”

Summit Salon Business Center consultant Jill Wilson sends cards during the holidays to thank her clients for their business. “I also include a pre-made postcard with a January and February offer,” says Wilson. “This discount can be for $10 off an upgraded pedicure, $15 off a manicure and pedicure, or as simple as a complimentary paraffin treatment with any nail service. This discounted offer is only valid in January and February. By doing this, Wilson plans for the slow months and does something to get clients back in the salon.

Creating a personal plan and setting goals will help you keep an eye on the bigger picture. Valenzuela says the simplest way to do this is to begin by deciding by what percentage you want to grow your yearly business. Write down your service and retail income for each month of the last 12 months.  Multiply last year’s monthly revenue number by the percentage you want to grow in both service and retail. Divide that monthly number by the number of days you work per month.  Now ask yourself, what specials or promotions do I need to excite and engage my clients to try new services, come back more often, or purchase my home-care recommendations?

Tracking success (or failure) is just as important as creating a daily/monthly sales plan.  “It’s important to track what worked and what didn’t work,” says Valenzuela. “Keep a file of your projections and your results of each promotion.  For the specials that worked, repeat them.  For the ideas that didn’t, adjust and tweak them or simply don’t do them again.”

DO reward loyalty.
It pays to reward loyal clients with VIP discounts, frequent buyer points, loyalty programs, and referral rewards, and these programs are gaining popularity since most salons are now computerized. Many software companies have a built-in program you can customize with the point/reward-based loyalty programs. Your salon client can earn points per purchase or action (for example, earn one point for each $1 spent on services or products). You can also set your system up to earn points for rebooking, referrals, and more.  “Just like airline companies, gas stations, and other businesses, you need to make sure you set your point redemption at a rate that will excite your salon client, but not break your bank,” cautions Valenzuela.

A frequent buyer club is a great way to reward your salon clients for purchasing services or products (or both) from your salon. You determine the reward, and what it takes to achieve the reward. “If you don’t have the ability to track this in a computer, you can gain the same effect by utilizing a nicely branded punch card,” Valenzuela suggests. “The size of a business card works nicely, as it’s easy to carry and keep in a wallet or purse. Example: Earn one punch for each product purchased. After 10 punches, earn one product FREE – up to a $15 value.”

VIP discounts also reward loyal clients and keep them coming back. It’s up to you to determine what constitutes a VIP — it could be a salon client who has spent $1,000 or more in your salon; a client who has made eight visits or more, etc. Once the salon client has earned VIP status, she can qualify for VIP rewards or discounts, such as a complimentary hand paraffin dip with every manicure/pedicure combination, or 10% off all retail items.

Valenzuela says the most popular program working right now is either the 20/20 Referral Reward Program, or the 10/10 Referral Reward Program.  With the 20/20 program, the referring client receives $20 salon credit toward any $75 service (or more). The client being referred receives $20 off a $75 service (or more). With the 10/10 program, the referring client receives $10 salon credit toward any $45 service (or more), and the client being referred receives $10 off a $45 service (or more).

DO create a call to action.
Offering discounts only works if clients use them. The best way to motivate clients to use them is to create a call to action — a sense of urgency.  Wilson uses hand-written missed client cards and new client cards to accomplish this. Here’s an example:

Dear Lillian,
I haven’t seen you in a while — you’ve been missed! Come back and receive 50% off an Ultimate Pedicure with me.
I look forward to seeing you. Call to make your appointment today!
Jill

Wilson emphasizes hand-writing the card, as it’s a personal touch and shows clients you noticed they have been absent and missed. She suggests including your business card and an expiration date of six weeks. If you make an expiration date longer than six weeks, she says, it gets lost and forgotten. There is no hurry to use it; six weeks, however, creates a sense of urgency. “When I offered 50% off, notice it was on an upgraded service,” Wilson says. “This gets my clients to try a service they have not had before and allows me to recoup more of my money post-discount. By upgrading the service, this can create new buyers. Offering 50% off means I’m serious: It will bring back more of my missed clients quickly. I offered 50% off to spark interest, speak volumes, and get clients back fast. Offering $5 off or 10% off isn’t enough to get clients to return.”
Handwritten new client thank-you cards with a discounted offer or bounce-back service can create repeat business. Send a card telling the client how much you enjoyed meeting her, and invite her back to enjoy a complimentary paraffin wax treatment with a pedicure. Include an expiration date of six weeks. “This too, will create a call to action, is a personal touch, shows you enjoyed meeting them, and that they were memorable,” says Wilson.  “I already gave her a manicure, now I’m marketing to her to get her in for a pedicure.  Remember, it can take up to three visits for a client to become comfortable and to build rapport. I feel if a client comes back three times, she’s yours!”

DON'T do programs like Groupon or Living Social unless you are prepared.
Be wary of programs like Groupon or Living Social unless your business is prepared to handle the immediate influx of hundreds of new clients at the same time. “Keep in mind that these programs do work and can help you build your business quickly,” says Gomez. “ But if your business does not have adequate front desk support to cover the volume of phone calls and if there are not enough openings in the schedule for these new clients, you could be setting yourself up for a nightmare scenario of frustrated staff and would-be clients.”

Valenzuela points out that these programs, while typically yielding low profit, can nevertheless have some upsides if used only occasionally and purposefully. For example, they can be great for building experience. “During the first year after receiving your license, it’s important to practice your service skills, timing, desired results, people skills, customer service, rebooking offerings, additional service offerings, etc.,” she says. Likewise, these programs can be great for exposure; if your salon is new to the community, this is a fast way to get the word out.  They can also work for filling in the slow season, but don’t implement these programs when you know you are entering high season. These programs attract coupon seekers who are more interested in chasing deals than in becoming loyal clients.

DO educate your employees.
Your front desk team is not only the first impression of your entire salon brand and team, they are also your sales team, so educate them. Your sales team can only be as good as they’ve been trained.  “Make sure each person at your front desk has experienced each service and has been trained on the features and benefits, the correct terminology, and has a supporting ‘script’ that has been written for them,” says Valenzuela. “This will create confidence and consistency in making successful offerings and upgrades when clients call in or check in for their scheduled service.”
Wilson says that techs should always offer a retail item for home care and an add-on for an in-salon treatment to every client. This is especially important when performing a discounted service, as it will offset some of the discount.  An educated staff can help make these offerings to your clients.

DO try these discounting ideas:

From Steve Gomez:
> Here’s a specific example of a four-to six-week marketing promotion where a discount can be used in a way that increases sales and loyalty: Roll the Dice and Win. When a client rebooks her next appointment she gets a chance to roll two dice and receive anywhere from two to 12% off of her retail purchase on that visit. This promotion builds client loyalty by having clients rebook and use retail while having fun and offering a minimal discount in dollar and cents.

From Jill Wilson:
> Buy three, get one free pedicure or manicure and pedicure packages: The client pays for three pedicures or three manicures and three pedicures up front.  By pre-paying for their services they will receive a free service, which is also equal to a 25% discount. I know some of you are saying, “They get a free service?” Yes they do; the package price will be divided by four, (the number of pedicures they will receive) you will be paid for each service. Example: Buy three pedicures at $45, get one free. The package cost is $135. I will get paid $33.75 for each pedicure. Here is what I have learned about my clients who purchase this discounted package: Because my client has prepaid, I have guaranteed my paycheck. She will return and I have secured three more visits with this client.  I have found clients who purchase the package come in more frequently and use up their services quickly. These clients purchase more add-ons and retail products when they use their package. I think this has something to do with their psyche. They feel that the services is ‘free’ because they already paid for it, thus they are more apt to spend money on an add-on service or retail items. They also tell everyone about the package. “My nail tech Jill offers buy three, get one free pedicures.” We all need referrals and fresh faces!

From Kristi Valenzuela:
> One of the main keys to a higher average service ticket is upgrading the service the salon client asked for by upselling an additional service. Many salons have an extensive list of additional services that clients would enjoy, unfortunately, rarely are these options offered! Create a specialty menu with your wonderful options.  This menu should be accessible on your website, included in your printed salon menu, or offered as a specialty menu for the salon client to look at when she comes in for her service.  When specialty menus are printed nicely with your salon brand, interesting service titles, and intriguing descriptions, your salon clients will be impressed, and many will say yes! Have fun with creative titles and themes for your services.  Many salons have been extremely successful by creating specialty pedicures and manicures according to the season. Use scented lotions and scrubs to customize your themed service.
> Create service bundles to generate a higher service ticket average.  Price the bundle price slightly lower than if purchased separately.  Here are a couple of examples:  A Retreat for your Feet — Enjoy a pedicure/mask or paraffin treatment/polish to take home.  Heavenly Healthy Hands — Enjoy a manicure/ hand and arm scrub with lotion massage /cuticle oil to take home.
> For more retail sales: Create a trio of products that would be a nice maintenance package for a client to take home and keep her hands and/or feet in great shape in between her salon visits. Here are a couple of retail bundle ideas: Sweet Sandal-Ready Feet!  Heel Therapy lotion, Foot file, polish of their choice. Give yourself a Hand! Lotion, cuticle oil or treatment, polish of their choice.
> Client Contests: Clients love to have a chance to win. Here are some ideas: Buy any two nail products, enter a drawing to win a $50 Salon Gift Card. Try a new service today: Enter  a drawing to win a $50 Salon Gift Card. Purchase any retail item, spin to win! (Every space on wheel is a winner.)

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