When I speak at a Four Seasons educational seminar, one of my favorite questions to pose to the attendees is:
When an aggressive, new salon opens in town – what percentage of its customer base will be tanners stolen from competing salons?
Immediately, answers are shouted out ranging from 10 percent to 40 percent.
The answer: Up to 90 percent will be stolen from existing salons in the area!
Mathematically speaking, it has to be that way. Think about it. If someone were able to come to your town and open a brand new salon and after its first year in business, almost its entire customer base consisted of brand new tanners, then you wouldn’t worry about them and they wouldn’t worry about you. (It would also mean that you weren’t maximizing the opportunities in your marketplace.)
The reality is that when the aggressive new salon opens, the businesses that suffer most are those that have not taken steps to prepare for the challenge. They typically have not updated their equipment in years and often run shoddy operations.
The salons that will feel the least pain are those that are doing things correctly – such as providing their guests with professional, first class services, competitive pricing and incentives to remain loyal.
Since competition is inevitable (you probably weren’t the first to open a salon in your area and you won’t be the last), there are several vital steps that you need to consider immediately. These steps will help strengthen your business while also providing you with a better understanding of your marketplace.
Best of all, they won’t cost you a dime – just a few minutes of your time.
Step 1: Analyze Your Existing Customer Base
Divide your existing database into categories by zip codes. Next, review which zip codes have the highest concentrations of tanners. Using a zip code map of your target market (easily downloaded from the Internet for free), plot on the map the areas where your customers live in relation to your salon. In doing so, you’ll be able to calculate your areas of strongest and weakest market penetration. You will also be able to judge just how far people are willing – or not willing to travel – to reach your business.
Step 2: Analyze Your Competition
On the same map, plot the locations of your competitors. This will allow you to see first-hand how many of your customers travel past your competitors to reach you. If you discover that a large percentage of your customers pass by the competition to reach your salon, you have to ask yourself “why are they willing to do so?” What is it that you are doing right? And/or what is it that the other salons are failing to do?
At the same time, if the majority of your guests live just within your immediate geographic area, then you have to ask “are they simply patronizing my business because it’s located closest to them? And, “what would happen if a new salon opened in our backyard?” These are hard questions that require honest answers.
Step 3: Where Are You Vulnerable to Attack?
After you’ve plotted your database together with your competitors’ locations on the map, you now need to look for areas where you may be vulnerable to attack.
Look for areas from where you currently draw customers, and yet neither you nor your competitors have a location that conveniently services these pools of tanners.
This exercise may expose areas within your target market where a competitor could move in and potentially steal your existing customers. If you discover that such conditions exist, you may consider opening another facility in the exposed area. At the very least, you need to develop incentive programs to keep these tanners loyal to you.
Summary
Evaluating your existing customer base in this way will help you to better understand your marketplace, as well as identify areas for growth. You can also use this info to develop marketing strategies that focus on customer-rich areas. If you’d like additional information on how to conduct this analysis and interpret the results, please email jerry.deveney@fstanning.com
