25. How to compete with online retailers

Hi everyone, this is the weekly Build Your Salon podcast with me, Phil Jackson. I'm here with the tools you need to generate the profits you deserve so that you can lead a fuller life. Welcome, and today we're talking about how salons can compete with online retailers. Again and again, when I'm coaching or mentoring salons, the online retailers are brought up as a reason why the salon isn't selling more in the way of professional products. So today what I've got for you is seven strategies that I think can give your salon a fighting chance. First up, we need to remove the ability to make a comparison. Online retailing only works if the customer is able to make a direct and immediate comparison with the product that you're selling in salon. So she needs to be able to come into the salon, pick up a product, have a quick look on her smartphone and see if she can get it cheaper online. If we can remove that ability to make a comparison, then the online retailers don't stand a chance. And let me tell you how we do this in practice in my own salon. So my salon is a hair salon and we used to offer all new customers coming to us a discount on their first visit. What we do now is we've built a new client package and the new client package is £13 more expensive than our regular cut and finish price. So it actually costs more. Now it includes a cut and finish. It also includes a deep conditioning treatment in salon because we want our customers to get into the habit of having that as part of their regular visit. It includes a money off voucher for their next visit and it also includes a professional styling product as recommended by their stylist. What that means is that the customer is no longer able to make a price comparison as far as that retail product is concerned. She can't disentangle it from the rest of the package. Take away that ability to compare and she happily takes the product not really knowing what she's paid for it. Strategy number two is to take away the choice for the customer. Now I'm not talking about narrowing her choice. What I'm talking about is reducing her ability to say no to taking a product. Let me give you another example. It's quite normal in a hair salon for colour correction services to be priced by quotation because the price can vary enormously depending on the amount of work that's going to be involved in the correction. What we do in my salon is include in the price a professional care shampoo and a professional care conditioner.

Two reasons. Firstly, it increases our retail turnover and secondly, it helps us increase the lifespan of that colour correction because the customer is then looking after hair properly when she gets home. So she's not allowed to have a colour correction in my salon unless she's also taking the shampoo and conditioner as part of the package. Point number three is to take away the choice as far as your staff are concerned. Now, I expect you are an excellent salon manager and owner. I expect all of your team are consistently offering the correct retail products to every single customer who comes through the door all day, every day. And if that's the case, you are a much better manager than me because we had to put something in place to get that to happen. You know that by consistently offering product to every single customer, you sell more. What we did in my salon is brought in a salon guarantee. So this is advertised to our customers. We promise them that if we don't tell them about every single product we use on their hair that day, they get to take the whole lot home with them for nothing. Since we brought that promise in, our increase in retail turnover has been quite impressive. But moreover, we haven't given away any products at all. So my team now know they have to consistently talk about retail products. Point number four is to see retail products as an overall project. What do I mean by this? Well, let me use an example again. So every Christmas, we used to buy in the OPI little gift collections that they brought out. So the seasonal collection would be brought in about six weeks before Christmas. We would sell as many as we could. Usually we'd shift about two thirds of the products. And then after Christmas, we'd be left with these products hanging around. And then you might sell one or two over New Year. And then I might be able to persuade my team members to take one or two as well. When you're seeing the product as an overall project, it gives you a lot more flexibility as far as pricing is concerned. So let's say the retail price of an OPI set is $12. As long as I sell most of those products at $12, it doesn't actually matter what I sell the last few products for. As long as the overall project was profitable, I could sell those last few sets for a dollar each.

As long as I'm making a profit overall, it was still a worthwhile project to bring into the salon. And that brings me neatly onto point number five, which is that RRP is just a recommendation. So RRP, or recommended retail price, is not something the manufacturer can insist on you charging. At least not normally. Check your contracts. I've never seen it from a big manufacturer. And I'll tell you why. It's because they know that they can't insist on you charging a price if the online retailers are undercutting you. So that gives you the flexibility in your salon to charge less than the RRP if that's what you want to do. You can even charge more than the RRP if you want to. I've even seen one salon. In fact, it was a training academy. And in that academy, they'd identified the reason they weren't selling more products as confusion over pricing. So basically, the stylist would be talking to a customer about a styling product. The customer would say, okay, how much is it? The stylist wouldn't know, so she'd have to go down to reception, check the price, come back to a customer. It was all very unprofessional, and there wasn't a lot of flow to it, and the stylist didn't like doing it, so they just stopped retailing. What they brought into place there was a fixed price for all products. So some of the products were cheaper than RRP, some of them were more expensive than RRP. But all products cost exactly the same. You have the freedom to charge whatever you want to in your salon, as long as your account is in good standing. Point number six is your ability to take pre-orders online. Now, I'm not talking about setting up an online retail outlet. What I'm talking about, and it won't work for all products either. What I'm talking about is a specific product brought in for a limited amount of time. So, we don't sell electrical items in my salon anymore. I found it was a bit of a faff, to be honest with you, and also tied up a lot of money in stock. But when we did, we did very well out of the GHD limited edition Christmas packs. So when we were buying them in, I would have the meeting with the rep, I would immediately go onto our social media. And I would pre-sell, at a discount, as many of those GHD sets as I could. So if I'd agreed with the rep that I was going to sell 12 sets, then I would immediately try and sell 12 sets online.

Because what I could do is offer, say, a $15, $20 discount on that. It meant that most of the money was in before the products had even been delivered to the salon. So you have the ability to pre-sell online. It does rely on you having some standing as far as social media is concerned. And the final strategy I have for you today is to make offers work harder for you. So, we get these all the time in the salon. A rep comes in breathless with excitement because she has this fantastic promotion for you, where if you buy 24 bottles of shampoo and 24 bottles of conditioner, you get 24 sun care packs, something like that, for a limited time only. And the idea is that if somebody comes in and buys a shampoo and conditioner, they get the sun care pack free. I very rarely, if ever, carry out the offer in the way that the manufacturer recommends. Here's what I would do. Chances are she's decided whether she's going to buy that shampoo and conditioner or not anyway. So I put that to one side. I also put to the other side my sun care packs and I would run a separate promotion. So what we did with our sets this year was we ran a blonde promotion. So if you added some extra blonde to your do over the summer, you got one of these sun care packs free. So you get a lot more bang for your buck. Similarly, on three for twos, you don't have to offer three products for the price of two just because your manufacturer says so. You could use that extra profit margin to change your recommended retail price to something that suits your salon a lot better or even give those products away as part of a package with something else. So I hope these strategies bring you some success. If they do, please get in touch with me, phil at buildyoursalon.uk. I love hearing about how well salon owners are doing. Don't forget to subscribe if you haven't already because I'm sharing fantastic content with you every single Monday and I would hate you to miss out. I will see you next week. Hey everyone, it's Phil again. I hope you enjoyed the episode. If you did, please subscribe and be sure to tell your friends. For more help and information on running your salon and your life, head over to buildyoursalon.com. I'll see you there.