Daily Deal Websites – The ugly truth behind the newest Salon Marketing Fad

Sep 26, 2011 1 Comment by

This morning I received yet another email from a daily deal website asking me to sign up for massively discounted offers from Spa’s and Salons. A few months ago there were only 2 of these websites, now in South Africa there are more than 20.

For years now I have been teaching my customers that discounting is the worst form of marketing. Every Salon Owner hates to discount but most do it because they don’t know any other way of competing with the Salon down the road. In fact, discounting is the number one marketing strategy used by Spa’s and Salons all over South Africa. Click here to download a 4 page report called “How to avoid the biggest marketing mistake made by Salon Owners.” It explains in detail why discounting doesn’t work.

Here are just a few reasons why discounting doesn’t work;

  • Discounting is unsustainable. Sooner rather than later one of your competitors will undercut your discount even further.
  • A 10% discount does not equal a 10% increase in volume of customers.
  • Discounting means you work longer and harder for less money.
  • Discounting communicates the wrong message about your business and attracts the wrong type of customer – customers who care about price, not value or quality.

So then why is it that so many Spa’s and Salons are falling prey to Daily Deal websites? These websites can be good for getting you customers fast and giving you a quick cash injection, but they have some seriously negative consequences. For example, a friend recently ran a daily deal promotion and picked up more than 500 customers through the deal. You might be thinking, “Wow that’s awesome her business must be booming!” But here’s what happened in reality.

Firstly, she had to give a 60% discount on her selected service – a full body massage. I recently spoke to the Marketing Director of a prominent daily deal website who told me that in order to qualify for a deal, a Salon has to give away a minimum of a 60% discount. She actually recommended giving more than a 60% discount if you want to ‘succeed.’

So instead of selling her massage for R400, it was sold to consumers for only R160. But then she had to give away 50% of the sale price (R160) to the daily deal website for every client who bought. In other words, she picked up 500 new clients but only made R80 per sale. It gets worse. With the massive influx of customers her staff couldn’t cope so she had to hire temporary staff. These people had to be paid. Now she is running at a serious loss. On top of this, her regular loyal customers couldn’t get their usual appointment because the salon was so busy, so now most of them go somewhere else.

But here lies the real problem behind attracting customers through low prices. The type of clients who bought the deal are only interested in low prices. Ninety eight percent of the people who bought the deal never came back to buy anything from the Salon at full price!

Now let me surprise you. What drives these daily deal websites? It is simple – it is nothing more than email marketing! These companies have a list of qualified prospects (i.e. people who are interested in particular products and services) All they do is send the right promotion to the right person at the right time – and they take most of your profit for the privilege of sending out an email about your Salon.

Less than 38% of Beauty Businesses in South Africa have an accurate database that they regularly and consistently contact. Most Salons don’t have a database or they have random customer details stored on disorganised client cards that they never refer to after the client’s first visit. Your customer database is your businesses greatest asset. That’s why we provide our clients with software that automatically profiles customers according to age, gender, marital status, ethnicity, language, purchase preference and purchase history. This way you can quickly and easily send the right email to the right person at the right time.

Most Salon Owners don’t realize how quick and easy it is to do for themselves what Daily Deal websites do. You can send out your own value added (not discounted) special offers to your customer database while keeping the profit in your back pocket! In fact, we want to take away the hard work of marketing your Spa or Salon by providing you with the tools and training to quickly and easily…

  • Download and create special offers that work
  • Send targeted emails and sms’s to your customers
  • Place the promotion on your website
  • Place the promotion on your Salons Facebook page with just a few clicks of your mouse button.

So keep a lookout for future emails from Salon Management Studio and we will show you how to find new customers, how to get existing customers to come back more often and how to get everyone spending more!

P.S. I recently spoke at a large Skincare Company’s Conference, and I sensed a lot of resentment from Salon Owners in the audience who had marketed their Salon on a daily deal website.  Have you run a promotion with a daily deal website? If you have we would love to hear from you. Tell us about your experience, whether good or bad by commenting on this blog post or visiting our Facebook page by clicking here.


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One Response to “Daily Deal Websites – The ugly truth behind the newest Salon Marketing Fad”

  1. Vanyah Bhayt says:

    I ran a deal with groupon…another problem you did not mention is that there is NO cash injection as the vouchers clients receive are valid for 6 months and I only got paid 5-7 days after the client had come for their treatment. I had to make an arrangement with my suppliers to get credit as I needed more stock and had no extra cashf;ow to pay for it. There are so many chancers…people that signd the terms and conditions that they would purchase three products, simply just said they had no money or called us crooks.
    Think very carefully before you do it!!!!!

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