Another Day Another Coupon Company?


Although we have been supplying the Australian Beauty Industry for fifteen years and seem many ideas come and go, we have not previously witnessed one with such depth and penetration as the Coupon Companies.

It feels like every day that you download your emails there is a new coupon company, offering heavily discounted services from Beauty Salons.

It seems the majority of the deals offer such good value that it is hard for the consumer to resist them.

What is your experience -Post your Comment Below.

A typical deal is a $49 ticket price for services with a menu value of anything from $150 to $500 depending on the short term needs of the individual salon.

The appeal to the salons is that it puts a lump sum into the bank account and brings many new customers who may become regulars or can be up-sold to other full price salon services.

That is how the theory goes………….what about the reality.!!!

We talk to many of our salon clients on a regular basis and almost without exception the feedback is, that  the reality is nothing like the perception and it is not something they would do again.

Already regional press is covering the phenomenon and its effect on the Beauty Industry.

http://www.watoday.com.au/small-business/smallbiz-marketing/businesses-reeling-under-pressure-to-join-daily-deal-craze-20110602-1fi87.html

However, Council of Small Business Organisations chief executive Peter Strong said the idea was all bad for business.

Many companies that offered a deal did so because they already had problems and found themselves drowning after the demand just made the situation worse.

“The model is set up so that the small business gets absolutely nothing except a big loss out of it,” Mr. Radisich said.

This is obviously disappointing for the industry as a whole, as one would think that any service that drives more customers to experience the benefits of Beauty salons and cosmetic Clinics has to be good for the industry.

WIN AN INTERNATIONAL BODY WRAP KIT WORTH  OVER  $3000

 In the next issue we will be conducting a survey to find out what you really feel about coupon companies and the effect on the industry.

If you are genuinely interested in the future of the industry it must be worth a few short minutes of your time to complete the survey. Each completed survey will be entered into a draw to win an International body Wrap Kit worth over $3000

Once the survey results are in we will publish the results, including best Coupon Company, payment terms, commission charges etc.

Full Body Wrap Kit worth $3000 dollars to be won by completing our survey in the next issue.

It must be tempting for many salons when business is slow to participate in one of these deals, but the question is are they just hastening their own demise.

How can you up-sell a client to a full priced menu item when they know there will be 50% 60% or even 70% discounts waiting for them in their email inbox when they get home.

And are these the types of clients who are going to provide repeat business for your salon or clinic.

We heard of one salon who sold 800 $49 dollar coupons which had redemption expiry of six months and had a 2 hour treatment value.

We understand the salon actually only got  $27 after deducting the coupon company commission and GST and while $21600 might have been a welcome boost to the bank account, if we examine the long term implications it does not make such attractive reading.

800 vouchers each with a value of two hours of treatment equates to 1600 hours of staff time and even at low $ 20 per hour you have $32000 of basic wages.

Once you add in holiday pay, super, workers comp etc your $21600 is not looking like such a welcome boost.

Selling circa $50 of staff time for a nett $27 only makes sense if you can convert a lot of the coupon customers to full price paying regular.

Then who pays for the consumables used in a facials, massages etc.

But there is a much bigger problem and a one that is not so obvious.
When calculating a typical working week for a therapist is around 35 hours you would need almost the entire time of two therapists for the entire six month validity of the coupons just to service these bargain hungry customers.

And what about your regulars who are happy to pay full price, how do you fit them in or do you risk losing them to a competitor who does not partake in coupon discounting.

We are sure coupon companies will have a place in the industry but from experience to date it seems for salons to benefit they must take a more active role in dictating the terms of the deal.

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16 Responses to Another Day Another Coupon Company?

  1. Lisa says:

    I agree entirely! It frustrates me the number of salons and spa’s who are de-valuing our industry with “crazy bargains”! These coupon companies are only helping to create a consumer that wants everything for nothing and the only people winning here are the coupon companies! If you choose to use a coupon company, make it work for you, value add to your services, don’t discount the price too much. Aim your price point at the type of client you would like to attract and make sure you cover your costs! I know times are tough but cheapening your brand is not the answer!

  2. not given says:

    I have to strongly agree with the above comments. i was tempted as a business owner to look into these coupons as a deal, but really at the end of the day it is like selling your soul, and not getting any returns. A cash injection up front is eaten away by wages etc, and at the end of the day it is a no win situation. On top of that the people running the coupons really want you to give it away. 60% reduction is not acceptable most times as they want you to discount up to 80%. I would not do it and told the coupon company that i was not that desperate. And it is correct, the people purchasing only follow the specials they do not return to you they go on to the next deal as soon as they can.

  3. Junia Kerr says:

    I am really appalled by these coupon companies, and I simply tell them two things when they call me:
    1. When Merchant Bankers and Lawyers start discounting their professional services I might look at it, but as I know they won’t, I won’t ever be interested. Their standard line is “It’s great to see a business that doesn’t need more business” at which point I just roll my eyes to the heavens and pray for a few brain cells to march their way.
    2. They are destroying small businesses and the only small business gaining is them, there is no give, only take. They ask to reduce our prices by 50% and then they take 40% of each of our sales, leaving 10% for us to pay the bills, staff etc. Ludicrous. I would love to see small businesses band together and ban them. Let’s have a revolution! Of course they don’t like me saying that either.
    Seriously, this truly undermines our professional services and products, and gives us no return – as the people who go on these coupon sites only want the one-off special deal. I have had a client buy a coupon for what she thought, in her rush to buy, was a facial – it turned out to be laser. She then asked for something else and they offered and gave her microdermabrasion. Her skin is extremely sensitive and dry and I could not believe that they suggested it to someone with such compromised skin, never mind her accepting it. But she wanted her deal.
    Tell me what in all of this is good for anyone.

  4. selina says:

    I have been in the beauty Industry for over 14 years. I have worked in some of the most luxurious health retreats and day spas. I now own my own business or should i say i have a slave business! IF you can’t beat em join em so i thought. Things were tight and still are, so thought i would try a deal, to my excitement and then shock almost 200 were sold. It was about 80% off. So great deal for the consumer. The company who sell the deals get a whopping 40%.
    I could now pay my rent for the month, yippee!!! It has been two months and i am still slaving doing massage after massage after facial after pedicure,,,, f#########!!!! I am working my ass off for absolutely nothing, have to pay expenses like the next person and now i am almost bankrupt!! No one comes back and no one buys product!!

    Buy wait theres more, people are rude to me, yes bloody rude!!, because they cannot get in when they want. They have to understand that i am not the Hilton Hotel with ten staff, but no! I had an Arab lady so bloody rude to me, its enough for me to leave an industry that i have loved but no longer as there is no respect!!!! and no money.

    My advice, if you wish to listen to someone on the verge of bankruptcy, DONT DO IT!!!! You will regret it.

  5. Jo says:

    I don’t understand why any salon would see this as a good idea. I feel one by one salons will slowly but surely dissapear due to the fact that they won’t be covering the cost of operating a beauty salon. Anyone who thinks they are going to build their clientele from particapating in these types of advertising fads will be sadly dissappointed as I have spoken with salons that have participated in the past and it simply isn’t what happens. Once the bargain hunter particapates in these deals they will jump on the next one and then the next and so on. We do need to band together and just stop it. It’s hard enough in the industry don’t destroy what’s left by cheapening everything we offer. It will be interesting to see where these bargain jumpers are going to go when there isn’t any quality salons left!!! Just say no, for the sake of the beauty industry.

  6. I totally agree with all of the comments above and feel extremely sad for the plight of Selina. I have been in the beauty industry for over 28years and I am still passionate about our industry. Being of a more mature age I only heard about the coupon business in January of this year and at first thought it would be a ruination of my business and the beauty industry, but since my first initial panic I have found the only clients that have mentioned coupons are clients that I would not consider to be extremely loyal anyway. Instead I decided to work harder on my data base by sending out sms’s on quiet days selecting different criteria each time, remembering to phone new clients, offering extra samples and incentives to regular loyal clients , in other words ‘killing my already loyal clients with kindness’. We are still quieter than normal but I have not devalued our services and have let regular clients know they are appreciated. Lets keep our industry strong.

  7. Les says:

    I was mortified by the idea of coupon deals but when every salon around us was doing them i thought i’ll just try it once and see how it goes, not so much for the cash injection but to see if we could retain any of the ‘ coupon shoppers’ as clients with our outstanding service. We were able to up sell the offer and sell a small amout of retail but for all the blissed out clients that walked out our door and even the ones that emailed to tell us how much they ‘loved their experience’ we have never seen a single one of them again. I should not have undersold my salon and services but i had to see for myself and learnt the hard way. As I originally thought the loser’s in the copoun game are the business providing the service and the industry that has worked so hard to build up it’s reputation. The winners are the coupon providers and the bargain hunters!

  8. Julie-anne says:

    Well, I 100% agree with all my industry counterparts…the ridiculous offers spelt disaster straight away, so true about clients not returning a second time, I have never used them and never will.
    I have had loyal clients come in and almost apologise to me because their families have bought them coupons to use, elswhere of course, they use their coupons and are dissapointed with the service, the comment that stuck in my mind the most, : the therapist seemed almost exhausted during my treatment and not interested in me at all…..: NO SERViCE… My niece worked at a salon where the owner used coupons to get money in because they were struggling, well, the poor girl was booked out, 53 1HR MASSAGES IN TWO 5 DAY WORKING WEEKS…. come on now, that is totally ridiculous, I recomended she leave as she was already burnt out from the previous 2 months of this type of work environment, I would never expect staff to work like this, and not be rewarded for their efforts…..there is so much more I could say, but I see that everyone else here gets the idea… coupons are out of control, I dont know how they can be stopped but something has to give….people listen to your gut feelings and say no to coupons…

  9. Gayle Briggs says:

    Yes I made the mistake of signing on to provide a deal. Here are results
    sold 300 vouchers – looked good on my bank balance! then the calls started!
    – 90% said were only available to come in on Saturday and they wanted appointment at the same time as their friend/s who had also bought one ( there was even 1 client who bought 6 coupons and wanted us to be able to provide 6 treatments all at the same time )
    – Many were from the other side of Melbourne – not local as I had anticipated – I was very shocked at how far people were prepared to travel to get a bargain. Hence 95% of the vouchers for follow up treatments have never been redeemed, I have never seen these clients again and never expect to.
    – Retail sales were particularly low – most did not buy any products or rebook
    – Most of all many were late, did not show up for appointments or frequently rescheduled appointments at short notice.
    – Some of the most rude, unappreciative people I have ever come across. Three of my staff left within the first 6 weeks.
    – Then they post comments that give you a low rating but not on the treatment – things like the parking, too far for them to travel, didn’t like the decor etc etc – obviously they were expecting a 5 star spa experience all for $69!!!
    Not a good experience and one I will never repeat .

  10. Gayle says:

    Yes I also thought I would give it a try like Selina and Les. Here’s what happened. Sold over 300 coupons , bank balance looked good for a while.
    Then the phone started to ring with very inflexible people who could only come on Saturday and also wanted to book their friend in at the same time who also bought a voucher. I even had one who wanted to book herself and 5 friends at the same time!!
    Then they turn up late, or not at all ( even after sms confirmation). Even though they got a voucher for follow up treatment , only 5% redeemed . I don’t expect to ever see the others again as many lived in the outer suburbs and we are on city fringe.
    Some were extremely rude and demanding – hence I had 3 staff leave within 2 months. Upgrades on treatments and retail purchases were very very minimal.
    Then to top it off, a few posted comments on public sites rating us quite low – not because of the treatment but because it was too far for them to travel, parking was difficult or they didn’t like the decor. Unfortunately I feel many expected the 5 star spa experience for $69.

  11. Sharyn says:

    Hi yes i nearly went witha coupon company but thought i would try it myself first and keep all the money. So i did a 3.5 hour package $for $99 plus a return $20 coupon and 15% off product. I did it for one day and sold 60. So i got all the money but it wa sso heavily discounted anyway I really was not making that much after wages etc. Plus the worst part is i had so many guidelines in place but still it didnt stop clients arguing the points all of the time. I have lost afew regular clients because of this even after I got them to sign they understood guidelines. Like others above i am sick of rude clients who expect everything for nothing and they simply expect and dont care we are a small business trying to make a living. Yes shame on the coupon companies and having so many deals at one time is just unfair and ridiculous.

  12. It seems from the comments received to date, the experience with heavy discounting has proved to be a recipe for disaster. With over 30 years experience in marketing , I have seen time and time again how this strategy is ultimately unrewarding. it may bring some short term gain, but in the long term you devalue your business and your product offering, as well as attracting entirely the wrong type of customer.
    The marketing focus needs to be on achieving higher net spend from existing customers, rather than discounting heavily to attract new business. As we have seen from nearly all the comments, the heavy discounting does not bring any rewards and can also alienate the previously loyal regular customer.
    Priceline recently announced that a staggering 40 % of it sales come from loyalty card members and a typical member spends 50% more than a non member. That is a pretty impressive statistic considering how competitive the chemist landscape is.
    Major retail operations like Westfield are constantly promoting Loyalty Schemes of their existing tenants and a list of the top ten is in this link.
    http://blog.westfield.com.au/kids/best-of-the-best-loyalty-programs/
    But by looking at the details the consumer actually only gets around a 2% discount with large retailers like Myers to 15% with some of the smaller retailers.
    Beauty salons in terms of annual sales are comparative with smaller retailers and should be looking to give a minimum of 15 % in added value to loyal customers

  13. Julie says:

    Through the beauty industry being slugged as a result of the GFC and consumer spending in this area particularly is lower than normal, I also decided to do the deals. Had 2 deals running within one week of each other. The phones were running hot and I never expected to sell more than 50-100 vouchers on each deal. The total tally being over 700. I have never come across so many rude, arrogant, and agressive women in my life. I also lost staff because of the constant brow beating and abuse when appointments couldn”t be scheduled to their needs. Stupid statements like… “I work, or I have children” were made with monotonous regularity. Worse, some women brought their unruly children to my business and either expected the receptionist to become nanny for the day or they wished to bring the children in during IPL treatments. Naturally, their services were not conducted until suitable child minding arrangements had been made. What an insurance risk!!!! Then to add another level of non-intelligencia, there were many requests to pass on the test patch, because they had already had a treatment at another salon.

    Then to my horror, the company that sold over 420 vouchers printed incorrect data between itself and its sister company and I was left holding the baby so to speak. That company took a 50% commission and up front they paid 50% of the 50%, i.e. one quarter, and I then had to service the balance of the remaining quarter in order to get paid. It was very difficult to get moneys, but in the end, a quick reference to Consumer Affairs did the trick.

    Now I do the deals with the companies I choose and who take only 30% or less. I choose the treatment that I can make a margin of profit even after the deducted commission. I offer an add-on the minute the client gets on the bed and I begin upselling immediately. Now, after experiencing the lack of loyalty from the deal grabbers, I have absolutely no problem in telling these people what I think is the issue with their skin/anti-aging etc etc. and from the last 2 deals I have gained a 15% return customer with my products in their bathroom.

    Dont let the coupon companies dictate to you your terms and what you should offer and at what price you for which you should sell the package. At the end of the day, you have to pay the rent etc. and they are getting fat on your commission and they do nothing!

  14. Melina says:

    BOMB THREATS, BURN OUTS AND ABUSE TO MY STAFF (Just because they could not get an appointment to suit their requirements and your right Julie (The comments and excuses are endless I work, I have kids and the best yet even a client used that we should give her friend a free treatment because she has cancer…. whats next)
    Its simply called you want a bargin you have to wait……
    what it has created is a much more demanding client expecting everything thrown in including the kitchen sink..
    I do believe however what it has done is made it an even playing feild …. We have done many campaigns in the first 6 mths however, I have made my money now … and happy to walk away from the circus whilst Im on top…
    We have dealt with SCOOPON, JUMP ON IT/ LIVING SOCIAL , DEALS.COM, CUDO AND SPREETS.. they are all the same ( they want to make money off you ) They DONT lose… The Business does

  15. Vanessa says:

    As a Beauty Salon owner I decided to try the deals myself, personally. It’s been a great way to see what’s happening in other salons. I’ve even treated my staff to deals at other salons. I’ve had some great treatments and some very bad experiences. Most of the salons are trying to ‘feed’ treatments to staff that are new to the industry and very young and inexperienced. It’s definitely shaking the industry around but as mentioned above, those salons that are genuinely good businesses will ride through this.

  16. Elaine says:

    We have had the same experience, I have taken over a business that went bankrupt doing these deals and of the huge data base that should have created none have become repeat customers. We now after 5 months have decided to close, you can’t compete with everything for nothing which is what the customers have been taught to expect. I’s very sad but I would rather not be here than have to give service away and not be able to give it in the manner I think a customer deserves. I must say the only one that was sympathetic and didn’t want an arm and a leg for the coupon sales was Ouffer.
    Please all band together and refuse to give your services away and help get the industry back on it’s feet.

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