Promotions and discounts in your salon business

Sit down and see what's going on with the Queen of Salons. Hair, beauty, and more successful tips for business owners. All on Build Your Salon. Hello, hello, hello, my salon friend. How on earth are you? Phil Jackson, Queen of Salons here, coming in your ears for another episode of the Build Your Salon podcast. How on earth are you? Gosh, you're looking younger by the day. I don't know which devil you sold your soul to, but give him my number. And today, as we're marching through January, gosh, I can't believe how quickly this month's going. We are talking about promotions and discounting, and I'm talking particularly about discount and promotion addiction. I'm going to help you with your addictions, my dears, because I see a lot of salons staggering from promotion to promotion, discount to discount, offer to offer. And I think we need to just take a breath, have a look at our behavior, figure out whether that's actually helping our business progress, whether it might ultimately be destructive to our salon businesses. And I think we're doing a lot more harm than good in some instances. And I understand why it happens. I've been around the block a few times now with plenty of coaching clients who have got themselves into this situation. And I think it comes from a place of fear around cash flow. It's not knowing that there's going to be enough money coming in. So we get a little bit panicky and a little bit warm around the collar and think, oh, gosh, we better quickly do a promotion, get some money in. So we're prizing cash flow over our profits. And I'll explain the impact of discounting on profits in just a second. So let today's episode be a bit of a call to arms for you to start planning a bit further ahead with your promotion. Stop being quite so reactive, but also to maybe think about some different ways of getting some stability in the business. And as you know, as well as being queen of salons, I'm also queen of memberships. And I'm going to give you a good shove in the ribs for 2023 that really we need that stable income. Because I think if you had some predictability in your business, if you knew that most of your costs were being covered, I don't think you would feel quite so prone to throwing in last minute promotions and last minute discounts.

And in fact, we've got my own salon to the stage where our fixed costs were being covered by our membership income. So that's the rent, the rates, the utilities, the fixed part of all of our wages. All of that was covered at the beginning of the month by membership income. So I didn't feel under any pressure to do any last minute discounts. And then we can use our promotions a bit more strategically. And we'll talk about that later in the episode. So what are we doing when we're discounting? Why is there a problem with that? Well, I think there are instances when it's okay to discount and we'll come to that shortly. But the danger is that we're cheapening the brand over time. And we're training our clients to never pay full price for anything. We're training them to wait for the next discount, the next offer. And in a very small way, I saw this one with a promotion that actually I'd put together with some salon owners as part of my simple salon marketing program. And we put together a promotion called the 12 days of Christmas and the 12 days of Christmas. This was about three, four years ago. 12 days of Christmas was a series of 12 promotions each lasting one day. So there was some scarcity around it. So if you were running, say, a beauty salon, you might have a promotion on your luxury facial one day. And then the next day, people could buy a voucher for a lash lift. And the day after that, there might be a retail offer and so on and so on. And the way that we'd staged it was that people didn't know what promotion was coming up next. So it was a nice surprise every morning. And we were contacting clients who had opted in each morning telling them what the offer of the day was. And there was a problem with that because what we found by the end of the promotion and when we were doing the promotional debrief, we found that clients were holding back. They didn't want to buy today's offer. They didn't want to opt in for today's discount or promotion because they didn't know what was coming up tomorrow. There might be something they prefer or a better deal or a better discount. So they didn't do anything at all. So if you're running a whole chain of promotions, a whole chain of discounts in your salon, I wonder whether some of your clients are starting to think, actually, I won't bother booking that. There might be an offer on that in the next few weeks or I won't book my next facial. I'm hoping they're going to run a promo on the luxury one in a couple of weeks anyway. So we start training our clients to not pay full price.

And we did get to this stage in my own business where I looked at the books over a period of about two weeks and it felt like nobody was paying the same as the next person because they'd all come in on different promos, different offers. And certainly nobody was paying full price for anything. And I don't think that's a great place for our business to be. And also it's bloody hard work, darlings, coming up with promotion after promotion after promotion. And I've often said and we can talk about the structure of promotions and promotion planning if you want to. But I've often said that when we get to the debrief stage, really one of the questions in your promotional debrief should be, will we run this promotion again? Because it's hard work coming up with a year's worth of promotional activity. But if you've got a few in your back pocket that worked from last time, brilliant. We just rinse and recycle. So incidentally, if you would find that useful, I'm talking about promotional planning, then please give me a shout. Phil at buildyoursalon.com. You know I love hearing from you gorgeous salon owner friends. And I also, to be honest with you, it would be nice to hear from you. It's been a while since we've had a chat, hasn't it, darling? So, discounting. What's the real cost of discounting? Well, we've cheapened the brand a little bit. We've trained our clients never to pay full price for anything. But also, financially, we have a disproportionate impact on our profits. And I've done blog posts on this before, and I shan't take you through it. It works better as a little spreadsheet demonstration. But a 10% discount can easily mean a 40% drop in profit on those services. Or it can mean having to do 25% more services to make the same profit. And you might well say, well, you know, if I'm discounting, I would expect to see an increase in customers. So that's okay. I don't mind doing more services. But honestly, a 10% discount is not going to lead to 25% more customers. It's just not. Not in our industry. The problem is those small discounts don't work in the hair salon, beauty salon, and aesthetics industry. So we end up doing bigger and bigger discounts. And goodness, if you go down the Groupon route, you're even looking at something like a 70% discount. And I get that the discounted service is not supposed to turn a profit for a Groupon service. But that's only going to work if you've got a really strong back end in place. If you're converting those clients into profitable customers, profitable regular customers very quickly. And I think that's really hard in our industry as well. So these discounts are having a disproportionate effect on our profits, making us work a lot harder for the same money, cheapening our brand, training our clients never to pay full price.

Is there ever an instance, Phil? Uncle Phil, please help us. Is there ever a time when it's okay to offer our clients a discount? And of course, there are times. And the very rough rule of thumb that I would like you to apply is whether we are changing client behaviour. So if you're changing client behaviour, it's okay to discount. If you're asking for a big change in client behaviour, it's okay to offer a big discount. As long as we understand what we're doing. Let me give you a few examples. If we have a brand new service coming into the salon that nobody's had before and we haven't really even had much of a runway. So we haven't really created much of a need for that service yet. As part of the launch of that service, you might well offer a discount to the first few customers. Because we're asking them to try something new they've never had before, never felt the need for. We're changing their spending and buying behaviour and expecting them to become regular clients of this brand new service. So I think it's okay to offer a discount. Or at the other end of the scale, the other end of the client journey, we offer a very generous discount to our lost customers. And the longer they're lost, the bigger the discount gets. And let me explain. Bear in mind, my own salon is a hair salon. If you have somebody you haven't seen for a year, they've probably been going to another salon for 8, 9, 10, maybe 12 visits. If they've been going to another salon for 8 or 9 visits, that salon is not doing a crap job. They're going to be getting something right for someone to go back 8 or 9 times. So for you to tempt that client, to shift that client behaviour, to come back into your salon, I'm sorry, a 10% discount is not going to do it. So we save our biggest discounts for people that are lost clients. And we can talk about lost client marketing if that would interest you as well. They say if you teach a man to fish, he can feed himself for life. But let me tell you, darlings, I've been in the situation during my career where sometimes you just want someone to give you the bloody fish. And that's what my new programme for 2023 8 Weeks Bums On Seats is all about. It's the marketing training that you need to fill up some of the white space in your appointment book and turn you into the salon owner you were always meant to be.

Get more bums on seats, head over to buildyoursalon.com and join the waitlist to be the first to hear and get my special early bird pricing. I want to move the conversation on a bit now away from discounting. But before we leave discounting in the rear view mirror, it's worth pointing out that a discount and a promotion is not the same thing. So I see people that are addicted to discounts and also voucher sales, my dear. My goodness, that's a short term win. Yes, there's a place for them. But do bear in mind, you might be causing problems later in your marketing calendar. So we see people with discount addiction, but they're also addicted to promotions. But a promotion is not a discount. Even an offer is not a discount. An offer is just offering something to the client and that might be at full price. A promotion is just bringing attention to a product or a service or an area of your price card. So a product launches a promotion, but it might not include a discount. Let me give you an example. Let's say our good friends over at Apple and you know that I'm an Apple junkie. If it hasn't got Apple on it, I'm just not interested. But our good friends at Apple, they launch a new iPhone. There will be lots of marketing activity. There will be lots of promotional activity as they bring focus to that particular product. But there's not a discount in sight anywhere. So a promotion or even an offer is not the same as a discount. So when I talk about putting an offer in front of somebody, I'm not saying we're discounting anything. But if we've got this sweaty frenzy of promotional activity going on. Firstly, I've already alluded to the fact that it's bloody exhausting coming up with all these promotions all the time. But also bear in mind that the more promotions you do, the less effective each promotion is going to get. And that's because what we're trying to do in marketing and promotional activity, in fact, is to try and get a customer to the stage where they are making a binary buying decision. What do I mean by that, darlings? Come on, Phil. Clarity in your language, please. Basically, what we're trying to do is get the customer to the stage where they are ready to take something or not. Do you want it or not? Yes or no? And either way, we are fine with the outcome as marketers. But we just want people to make a decision. You will put people off making a decision by giving them more options.

So the decision is, do you want this luxury facial or not? Not do you want this luxury facial or this luxury facial or this massage promotion all at the same time. It's too many decisions and people are fatigued by making decisions in their lives. Good gracious, all day every day we're making decisions. It's exhausting for our poor punters. So we're going to make life easy for them. So when we're putting a promotion together, don't give them options. But also what you're doing if you're running promotion after promotion after promotion and running multiple promotions across a month, you're making people choose between which promotion to get excited about. And you're reducing the excitement for each promo. You're reducing the excitement for each offer and reducing its impact too. Everything just becomes too noisy, too frantic. So it's much better if we can have one promotion that's running, let's say for, I don't know, let's say a week. And then we might have a bit of a runway. We might have a warm up, a teaser campaign for perhaps a week or 10 days before that. So one promotion for a couple of weeks and then take a break. Refresh the palette a little bit. And if you're on my email list, well, I hope you're on my email list. I mean, what are you bloody reading all day if you're not reading my emails? But if you're on my email list, you'll see this happen. So we will run a promotion for a week or two. In fact, we're just at the end of a promotional calendar for eight weeks bums on seats. And then there will be a palette cleansing exercise. So there'll be a couple of weeks where you get some nice blog content. I'm promoting my podcast, just sharing great information with you before we go into the next promotional calendar, because going from promotion to promotion is just grueling and it's off putting for people, in fact. So I would suggest if you're running more than one promotion a month, I would seriously think about going on a promotion diet in 2023. Reduce your promotional calories, darlings. And let's see whether we can slim into that little black number next Christmas. My Salon Owners Retreat is a unique event where you get to create the agenda. This isn't a retreat of boring presentations in conference rooms without windows. The entire program is a mix of group coaching, mastermind sessions and one-to-one coaching with me, your favourite salon coach. There's also time built in for implementation. Yes, you're going to leave the retreat having actually got some important work done on your business with our support. Our spring 2023 retreat is now sold out, but you can be the first to hear about the next Salon Owners Retreat

and get the very best early bird pricing by heading to buildyoursalon.com and joining our wait list. I can't wait to see you on Salon Owners Retreat. Don't forget your speedos. Let's round this discussion off a little bit by figuring out when we do want to run a promotion. Well, I would suggest unless you've got clear targets, don't run a promotion at all because you don't even know what you want that promotion to achieve for you. And there are only a few outcomes that we want from any promotion really. We either want more customers through the door or we want to increase the amount that they're spending on each visit. There are some frilly things we can do around the edge. So we could be increasing the frequency of client visit, but actually that's getting more clients through the door. Or we could be reactivating lost customers, also getting new clients through the door. We could be running a retail promotion. That's to get people to spend more. But broadly under those two umbrellas are pretty much every bit of promotional activity we're going to do. So we need to identify what your target is. And I would have that target broken down over quarters. So Q1, Q2, Q3 and Q4. And let's take a look at Q1 because that's where we are at the moment. And then make an estimate. And that estimate for each month in Q1, Q1, how much do you think we're going to take if we do nothing? What will be the norm? Have a look at what are going to be your busier months, your quieter months. And if nothing happens, if we do no promotional activity, what kind of numbers can we expect to generate? And between that and your target will be a gap. You've identified the gap and the promotions are what are going to fill the gap for you. If there's no gap, then don't do anything. You can either promote to maximize your takings, of course, or think about increasing your target. Or you could just take that palette cleanser, have a break. So if we're looking at Q1 and let's say we've got a gap of, I don't know, $10,000 to fill over Q1. But we know that month two, February is a good one for us because lots of people come in around Valentine's. Don't do anything. Have February as your palette cleanser. So then we've got our target for the quarter. We know what we want to achieve in those quieter months with our promotional activity. Then we can start knuckling down and figuring out what promotions we want to run. So the target decides what the promotion is going to be.

There is, of course, an entire marketing planning process that kicks in after that, which is, in fact, what my new program, 8 Weeks Bums on Seats, is all about. So more details on that for the next intake, which I think is in March. I'm sure that I'll be plugging that away over the next few episodes of the podcast, too. So I hope that's been useful to you. I hope that's encouraged you to go on your promotion diet for 2023. Stop discounting quite so much. Have a real think about what impact those discounts are having. Of course, as ever, if it's been useful to you, please think about giving this podcast a rating. Five is always a wonderful number, I think. And it will be the biggest thrill that I get this week at my age. You know that, pop it. And, of course, if there's a topic that you would like me to cover in future episodes of the Build Your Salon podcast, please reach out phil at buildyoursalon.com. I would love to touch base with you and hear what's going on in your business and how I can serve you best in the rest of 2023. Just seven short days until I'm coming in your ears again, darling. Until we speak again, take care. Sit down and see what's going on with the queen of salons. Hair, beauty, and more successful tips for business owners. All on Build Your Salon.