In the world of business, there are only two types of customers: those you create and those you steal.
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Stealing customers from your competitors can be easy, cost efficient and very profitable. After all, these patrons have clearly demonstrated the desire and ability to pay for the same products and services that you offer.
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Creating new customers, that is, attracting people who have never stepped foot inside your facility, or have yet to use the products and services you offer, requires hard work, can be time consuming and expensive.
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I highly recommend that you focus on both!
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It Takes a Thief
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When a new competitor offering indoor tanning opens a facility – salon, health club, spa, etc. – it is estimated that to achieve success, upwards of 90% of their customer base must be “stolen” from the existing businesses in the area. Only a small percentage of their customers will actually be created organically. And here’s how the scenario typically plays out:
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The strong, well-established businesses may initially lose a small percentage of customers to the new competitor, and then eventually, gain them back. However, those businesses that are not prepared to compete may lose upwards of 50% of their customer base – and in some cases, be forced to close.
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Mathematically speaking, it has to be this way. For, if the new business could simply create all the customers it needs, you wouldn’t worry about them and they wouldn’t worry about you. And statistically speaking, there could never be enough new customers to allow each and every business to flourish.
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Caffeine Jitters
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When the first Starbucks appeared on the scene in the 1970s, there were already millions of coffee drinkers in the United States. Ironically however, an industry based on serving liquid caffeine was, at the time, in a state of malaise. Coffee consumption and sales were flat as the well-established brands (think Maxwell House and Chock full o’ Nuts) had been serving up the same-old-same-old products for decades.
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Starbucks, starting with just one coffee shop, disrupted the entire coffee industry by offering high-powered, high-priced, caffeine-enriched concoctions that stole millions of customers away from their competitors. And by offering an expanded menu of products, they also helped to create millions of new coffee drinkers.
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And yes, while Starbucks is the dominant force in the industry today, there is still plenty of room for successful competition on every level of the business.
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Keep Them or Lose Them
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Today, millions of people continue to actively patronize the thousands of commercial facilities that offer UV tanning and spray-tans. And while there has been much consolidation and disruption in the industry, there are still plenty of customers for you to keep, create and steal.
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You probably weren’t the first person to open a salon in your area and you will not be the last. Take a moment to review your customer base and determine how many you truly created – and how many you actually stole.
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Remember that in the jungle that is our industry, the competition is always on the prowl. If a salon is doing things wrong – that is, using 20-year-old equipment, rarely changing lamps, failing to keep the facility clean and employing a lazy staff – that business is ripe for a butt-kicking and will attract the opportunistic eye of a competitor.
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If a business is doing everything right – that is, utilizing the latest equipment, offering the highest quality skin care products, seeing hundreds of customers every week (while the owner’s new sports car is prominently displayed in a reserved parking space for all to see) – that business is attracting the jealous eye of a competitor. And rest-assured, a new competitor will soon be opening nearby.
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The point is that whether you are doing everything right or doing most everything wrong, there will always be competition. And appreciate this or not, it does make us better businesspeople.
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If you build it, they will come. However, only you can guarantee that they will stay.
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A Free Pass to Steal
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Now, analyze your competition and look for areas of strength and weakness. What are they doing right and what are they doing wrong? Being honest and objective, compare their business to yours. What are you doing right and what are you doing wrong?
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To steal customers, all you really have to do is get them inside your salon – just once. And one of the most effective methods of stealing customers from a competitor is to offer a Free One-Week Salon Pass that allows new guests to experience all the fine services your facility has to offer.
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Don’t be stingy. The days of “your first session is free” have long passed. Sure, giving away a free week will attract the usual cast of moochers – but it will also attract many new customers. Even those who have existing memberships or packages at a competing business will find it hard to pass up a free week of tanning at your salon.
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Sealing the Deal
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You aren’t providing all those free passes to lose money. And if your business is truly operating on all cylinders, then experiencing everything your salon has to offer should be sufficient to convince people to become your customers. However, to ensure that you have left nothing to chance, you should also have several effective strategies prepared that will close sales immediately.
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Smiling Example
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Suppose you are in the supermarket to purchase toothpaste. There are two tubes of toothpaste positioned on the shelf side-by-side – one is your favorite brand, the other a new product that features the same active ingredients that you desire in an oral hygiene product. Your keen eye notices that the new product is packaged with a free, ADA approved toothbrush (a $2 value). Your favorite product is not. Which one will you purchase?
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This scene was staged intentionally for several purposes:
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- To create a highly effective buying environment. NOTE: No salespeople were required to close this sale.
- To make customers think that they are smart shoppers and that they are making a wise purchasing decision.
- To steal customers away from the competition.
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In reality, the cost of the “free” toothbrush to the new product company is about 50¢. However, it projects a perceived value of about $2. And by bundling the “free” toothbrush with the toothpaste, the new product company is providing a sizeable discount without lowering the price of their flagship product.
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Now, review all the products and services you have to offer and your net cost for each. Following steps 1-2-3 from above, create your own highly-effective buying environment to ride along with your Free Pass.
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If you build it, they will come. However, only you can guarantee that they will stay.
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To share your thoughts and comments about this article, you can email jerry.d@suddenlink.net
