In my lifelong pursuit of safe and solid investments, I have subscribed to several online business and financial sites that offer valuable analytical tools. While these sites appeal to a select demographic of people who like to consider themselves business-savvy, I am often amused by the relatively simplistic marketing methods they systematically employ to entice their readership into purchasing long-term subscriptions.
[gap height=”15″]
Here is an example of an actual offer from a leading on-line financial publication:
[gap height=”15″]
• 1-year subscription $40
• 2-year subscription $80
• 3-year subscription $89
[gap height=”15″]
Now, I ask you: what clear-thinking person would purchase the two-year subscription? (By the way, if you find yourself leaning toward Door No. 2, I have a sweet time-share in the Poconos that I would like to unload on you.)[gap height=”15″][gap height=”15″]
Every moment of every day in your business, you are in control of what happens.
[gap height=”15″]
All kidding aside, ask yourself why the subscription offers were packaged in this way – did someone in accounting make a mistake? Why would anyone purchase two years for $80 when for just $9 more, you could get another full year?
[gap height=”15″]
That’s exactly the point. This “no-brainer” offer was intentionally designed to steer purchasers into choosing the longer-term package. At the same time, it was presented in such a way as to make you feel “intelligent” about your purchasing decision.
[gap height=”15″]
Sure, you might consider purchasing the one-year deal just to test the waters. But that three-year deal is pretty hard to pass up (especially for a smart businessperson like you). And regardless of which subscription plan you purchase, the publisher wins.
[gap height=”15″]
This is the type of steering mechanism you should incorporate into your salon business model. Structured effectively, it can help you attract new customers while increasing sales of everything from tanning and spa packages to lotions, accessories, flip-flops and sunglasses.
[gap height=”15″]
Let’s begin by testing your knowledge of your own business with two simple questions:
[gap height=”15″]
1. What is your best-selling lotion?
[gap height=”15″]
2. What is your best-selling tanning package?
[gap height=”15″]
The answer to both questions should always be: “Whatever I WANT it to be!”
[gap height=”15″]
It really is that simple. Every moment of every day in your business, YOU are in control of what happens. And you should be taking full advantage of your captive audience by creating promotions that steer customers toward the products and packages you WANT them to buy.
[gap height=”15″]
While holding an on-location salon sales training session, I asked the owner if I could conduct an experiment on the next customer who walked through the door. I assured the owner that she would not lose any money and that the customer would be thrilled with the offer.
[gap height=”15″]
I then selected a popular bottle of lotion that retailed for $75 and had an approximate cost to the salon of $25. I placed the bottle in plain sight, right next to the cash register.
[gap height=”15″]
As the customer was checking in for her session, I enthusiastically informed her that the salon was running an incredible special: “With the purchase of this bottle of lotion, you receive five free sessions on any tanning unit in the salon!”
[gap height=”15″]
“ANY tanning unit?” the customer questioned with a slight air of suspicion in her voice, “including the Level-5 unit?”
[gap height=”15″]
“Why, of course it includes Level-5” I replied, “and you can use one of your free sessions today!”
[gap height=”15″]
When the salon owner regained consciousness, I handed her the $75 and explained the underlying details of the transaction. The luxury-infused, Level-5 tanning system had an operating cost of about $1.50 per session for lamp use and electrical consumption. At the same time, a package of five sessions was priced at $75. The customer was quick to understand that she was basically getting the $75 bottle of lotion for FREE – or vice versa.
[gap height=”15″]
After adding the cost of the lotion and the operating cost of the five Level-5 sessions ($25 + $7.50 = $32.50), the salon owner reaped an adjusted gross profit of $42.50 on the transaction ($75 – $32.50).
[gap height=”15″]
Later, I discussed the dynamics of the sales transaction with the salon owner. “Well, anyone could have done that,” she casually stated! “Even my worst salesperson could sell a $75 bottle of lotion if she’s giving away $75 in free tanning sessions to make the sale!”
[gap height=”15″]
So shines a good deed in a weary world . . .
[gap height=”15″]
Upon further review of the customer’s year-to-date spending, we found that she had spent a total of $63 over the past nine months. So, in one transaction, we exceeded the customer’s spending for the entire year. And to accomplish this amazing feat, the only thing we really gave away was TIME.
[gap height=”15″]
Furthermore, to exercise the full value of her discount, the customer must now patronize the business four more times. That’s four more selling opportunities and a huge boost to the salon’s new word-of-mouth advertising campaign.
[gap height=”15″]
Some might argue that the special free-tanning offer was too generous. However, based on my review of thousands of salons nationwide, we know that the typical customer spends about $100-$150 per year. Making a $75 sale that nets you $42.50 by giving away a smidgen of TIME is an effective and profitable trade any time you can make it.
[gap height=”15″]
Please understand that I am not suggesting you radically revamp your entire pricing structure. I am simply demonstrating ways of persuasively steering customers toward what you WANT them to buy. Any bottle of lotion and any tanning package can become your best seller. All you have to do is create effective promotions that stimulate the sales process!
[gap height=”15″]
Using an unbiased and open mind, review your existing pricing and promotional structure and then ask yourself:
[gap height=”15″]
• Is your pricing model easy to understand – or does it require several minutes of explanation?
• Is there a logical “value-added” path that steers customers toward the packages and products you want them to buy – or is it haphazard and random?
[gap height=”15″]
Following are a few suggestions to help sell more EFTs and Monthly Membership Programs [EFT/MMP] and clear your path to profitability:
[gap height=”15″]
1. Every 6th Month is Free!
[gap height=”15″]
Understanding that the life of a typical membership program is about five months, consider offering a free month as an incentive to keep customers active.
[gap height=”15″]
For example: Customers who purchase five consecutive months of an EFT/MMP receive the sixth month free. This is an excellent sales tool that discourages customers from ever quitting as they become conditioned to realizing that they would be giving away valuable free months of tanning. In effect, it’s about a 16% discount; however, it offers a tremendous perceived value – and builds loyalty.
[gap height=”15″]
As the cycle of the tan biz flows, at any given time, most customers will typically be just a few months shy of receiving their free month. So, when a customer informs you that she wants to terminate her membership, you can respond with, “Oh, you don’t want to do that now – as your next month is actually free!”
[gap height=”15″]
Obviously, you need to analyze your existing membership program and customize offers that meet the needs of your unique business model. However, you get the point.
[gap height=”15″]
2. Cash-Back e-Gift Cards – Instead of Cash Discounts
[gap height=”15″]
Customers are numb to seeing %-Off sales signs, etc. And, when you lower your prices via cash discounts, they take their savings and spend them at the coffee shop next door. Instead, reward loyal customers by giving them up to 50% of the value of their monthly membership rebated as a “salon credit” they can use to purchase lotions, skin care products, spa services and tanning upgrades. For example, if the customer is paying you $40 per month for tanning, you reward her with a $20 salon credit to spend anyway she likes on your products and services. (e-card credits cannot be accumulated, must be used monthly, and may not be used for sales tax.) The e-Gift Card is much more effective and psychologically stimulating than providing cash discounts or Bonus Bucks, etc.
[gap height=”15″]
Using monthly e-Gift Cards instead of lowering your prices is an excellent way to keep customers on your membership programs, stimulate product sales and compete with the deepest discounters – wherever and whoever they may be.
[gap height=”15″]
Do the math. What does giving a $20 e-gift card that can only be spent on your products and services actually cost you: $7.50? $5? And, that $20 e-card should also provide you with the perfect opportunity to upsell – thus, completely negating any cost associated with it.
[gap height=”15″]
3. Cross-Promote Equipment & Services
[gap height=”15″]
One of the cleverest advertisements and most effective marketing strategies ever developed in the history of sales is:
[gap height=”15″]
Buy 3 Tires – Get the 4th Tire Free!
[gap height=”15″]
No one ever buys three tires. You may buy one, two or four – but never three. In reality, this offer is no different (mathematically) than giving 25% off the full purchase price. However, the “psychological effect” is so much more powerful than stating 25% off.
[gap height=”15″]
This strategy also preserves price integrity. If the tires sold for $100 each and were offered for $75 each (25% off), most people would respond with a conditioned yawn. However, when a $100 tire is included free – people are quick to do the math and take notice.
[gap height=”15″]
When you cross-promote using your higher levels of equipment and spa services as incentives to purchase, you provide the perceived value of the discount without actually lowering your prices.
[gap height=”15″]
For example: Let’s say that you offer a membership for $40 per month and you also include the $20 e-Gift Card as previously discussed. You can further incentivize customers to purchase the membership by also including one free session on any level tanning system or one free spa service – every month. NOTE: Use the term “Free Session.” Do not use “upgrade” as this tends to lower the perceived value of the free single session price. That free session on the highest-level system may have a value of $20 in itself.
[gap height=”15″]
Avoid lowering your prices. Simply provide more products or services.
[gap height=”15″]
Take Baby Steps
[gap height=”15″]
I always advise salon owners to introduce a new pricing structure or special by testing the waters first on a handful of select customers to see how they respond. Practice your sales presentation and explanation of the new pricing structure or specials with your staff and with people who will provide you with honest feedback.
[gap height=”15″]
The process should be streamlined and simplified so that everyone and anyone can understand the new program immediately. Now start steering profits your way!
[gap height=”15″]
If you would like a FREE copy of my excel-based Equipment Operating Cost Calculator, which will help you to determine the cost per session to operate every UV system, spray-tan system, red-light device, sauna pod, etc., email jerrydeveney@yahoo.com.
[gap height=”15″]
