Why discounting is a race to the gutter

It’s common for larger salons, particularly franchises, to heavily discount services, like laser hair removal, to attract customers.

But how can smaller salons ensure they receive a good return on their investment when they purchase a piece of equipment, especially when they can’t afford to compete on price?

This dilemma was mulled over by eight industry experts at the fifth Professional Beauty Industry Roundtable.

Sharing their thoughts on the key considerations toward introducing technology and equipment into a salon, clinic or spa were Mandy Gray from True Solutions, Karen Austin from Skin & Laser, Farshad Kazazi (Kaz) from Eden Laser Clinics, Daniel Clifford from ClinicalPRO, Bruce Byers from Cynosure, Metro-Dora Clifford from Beauty Thru Nature Skin & Laser Clinic, Mathew Green from Syneron Candela and Meredith Langley from The Beauty Room Cosmetic Clinic.

Almost all agreed that discounting was a race to the gutter, and it was crucial to remember that quality always prevailed over quantity.

Karen said research was extremely important, while Daniel said discounting created an expectation from clients.

Metro said once a client knew the value of the treatment, then the price didn’t come into it, while Bruce said working on the ‘wow’ factor was mandatory.

Kaz said if you were a stand-alone salon, you had the time to focus on quality of service, while Mathew said a business development team was crucial to identify each business’s unique needs.

Meredith said having great staff quality treatments worked for her clinic while Mandy said you had to make sensible purchasing decisions and that you never lost out with quality.

Watch the video below for the full discussion.

 

Karen:
“Receiving return on investment really comes down to a few things. You really need to do your research. You need to make sure you invest in the technology that’s going to give you that return on investment from the start. You need to have an excellent marketing plan. That’s crucial to a business. If you don’t have a marketing plan, you’re not going to go anywhere. And that should be created before you invest in the technology that you choose. You need to clearly articulate your unique selling position as well. What value you can do beyond your competitors in the market? Never discount. Discounting is the road to disaster. Offer bundles, offer packages, offer more value to the clients. With the marketing, don’t rely on the suppliers, you need to have your own marketing plan. The supplier’s marketing is a bonus. You must really control your own destiny in terms of return on investment. You need to have a good website. Chat for me on my website provides me with 80 percent of my leads.”

Daniel:
“Discounting definitely takes away from your hard effort. You can’t cover that cost, that’s going to be covered in a certain percentage of the treatment. As you start discounting, there’s an expectation from your clients to always do it. It’s best the clinic knows their clients and communicates that service need to their clients with the level of understanding that helps build a reputation is. To get your return on investment, you need to know what it’s meant to do, you really need to understand what it is you want to treat, what it is you want to provide. Making a plan and sticking to it critical. Having that focus is key to making sure you keep on track and keep working with it.”

Metro:
“Price is only a problem when they don’t know the value of it. Once they know the value of the treatment that you’re offering, then the price doesn’t come into it. Rather than discount, we would do a small treatment on one hand. Then they’ve got two hands to compare it with. You can’t do half a face, so you’ve always got a hand to show them. Once they realise, see the results, realise that you can make a difference. Disrupting the market is another thing. Price is not the only way to disrupt the market. Results can do that too. Knowing what is it that the client wants. You give them what they want, they will pay for it. The worst thing that could have happened to the market is the Groupon sort of deals. We really like to encourage people not to rely on them. Once you do a good consultation, price never comes into it. Doctors and dentists and people like that don’t discount. Why should we?”

Bruce:
“The clinics that don’t have to discount, the ones that do the best is when you go in there you get the ‘wow’ factor. They make the lady feel like a queen. They make the man feel like a king. And they want to come back again because it was such a great experience. Having the right technology obviously is the foundation to build upon. But then you’ve got to take care of that customer, that patient. So it was such a great experience that they want to come back again. That seems to me, you don’t have to discount if you do that.”

Kaz:
“If you’re a stand-alone salon, you have the time to focus on quality of service, rather than quantity of clients. The bigger franchises capitalise on their traffic. So they have the buying power, they get the equipment at the right price, they get their consumables at the right price. So they can afford to discount. But for that, they need the volume. So there’s a clear distinction between quality of service and quantity of clients that you get through. That’s the basic difference between those two ways of doing the business.”

Matt:
“It isn’t one of those one-size-fits-all situations. Some businesses are very much a volume driven business. They’re in high traffic flows, they have very high overheads. They’re in shopping centres etc. So they have a price competitive, high volume model. But how does a small site compete with those types of businesses if they’re around the corner? If you have a look at the treatment offerings of most businesses, you can broadly categorise them into energy device treatments which covers a lot, skincare based treatments and injectables. We find the best strategy is to use our business development team to work with our smaller customers and have a look at everything they’re doing in their clinic and to roll that together into a single offering and a single price point. Bundling is one thing, but I’m talking about where you design a complete treatment plan for someone involving every one of the income streams within your business. And you tailor it to a single price point, and you sell them one thing. One of the things we hear a lot from our customers is that their staff struggles to sell treatments. And they find that their professionalism as therapists is compromised when they’re put in a sales environment. If you give them one thing to sell, rather than saying ‘Sell the treatment’ and then ‘Here’s your line to upsell to this’, and then, ‘When you get to the counter, try to sell some skin care’. If you have everything split up like that, it becomes very challenging. Whereas if you roll it all together, it’s a very effective strategy. And it’s a perfect way to compete against discounting.”

Meredith:
“I’ve been in business for 30 years as small businesses. The thing that’s made me successful and our company successful is having great staff. Making it an experience so the clients just love coming to you, they weren’t thinking about going anywhere else. And I believe that quality always has a market and always will. Give them quality treatments and they’ll never want to go to a place where they’re getting it cheaper. We offer loyalty programmes and lots of different ways to keep our clients coming back and feeling rewarded and they feel appreciated for the service and our business. That works really well with our clinics.”

Mandy:
“Be sensible. You can see certain pieces of equipment are commanding a premium. Why would you go for other pieces of equipment? Like LED, we’re getting $80 to $100 plus. And there are LEDs where you only get $29. So you’ve got a choice. But you’ve got to work out why have you made that choice to go for a device that people are only getting $29 for. It has to do with quality. People want that choice. But quality never loses. If you’re going to do pricing, all you do is drive the market down and it’s never going to be low enough. But the one good thing is that big groups have driven the price down, and they have made people aware of things like laser hair removal. I say thankyou for that. The time has come to drive up the market. Just do the best of the best, work with the best of the best.”

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