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RIDICULOUSLY discounted services, how are you meant to compete with THAT?!?

Written by Jana Elston on January 27th, 2015.      0 comments

There is nothing more alarming than seeing your competitor offer a similar service for next to nothing. I have seen some crazy pricing out there, and wonder in amazement how on earth do they plan to survive when they are practically giving away the services? And, in most cases, loosing a great deal of money as well?

What is happening to our industry? 

Today, more then ever, the competition in the beauty services industry is fierce. I have been in this industry since 1991 and I have never seen as many beauty salons as there are today. 
The traditional beauty salon is being affected from many angles, not only by other beauty salons (there used to be on average one or two salon in a suburb, now there is double that).
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In addition to more beauty salons per area, there are now nail bars offering nail and waxing services, brow bars, laser clinics, skin rejuvenation clinics, hairdressers introducing beauty services, massage practices, home salons, small single operator boutiques, and not directly related to, but certainly impacting on, pharmacies and department stores giving away free treatments with product purchases. Sadly, most small beauty service businesses are run by people with very little experience or formal training in business. Inevitably, the only way they know to attract clients is through discounting. Often they are advised by friends, family or sales people from discount websites with no experience in running a business. 
Heavily discounted promotions don't work!
Offering a cheap service in the hope of gaining new clients rarely works. Bargain hunters are loyal to only one thing. A bargain. They rarely spend more than what is advertised. I have seen many businesses extremely disappointed when they put a lot of hard work and effort into a cheap service offer only to find these clients do not re-book, because they are always looking for a bargain price. They rarely upgrade to other services and almost never purchase professional products. Most of these promotions cost more than the service, so the salon is giving away these services for free, and when you do the sums, it's actually costing them money to do these treatments.  In the hope of attracting new clients with a cheap service promotion, salons end up loosing a great deal of money and I have personally seen businesses go broke as they cannot ever recover. It is really heartbreaking. 
Businesses that offer cheap services, will always be seen as cheap. Once they go down this road, it's very difficult to recover from this. 
Just crunch the numbers, it's business suicide! 
This weekend I've had a look at some discount sites offering treatments. There was one selling a 3 hour spa package  (body massage, facial, mani and pedi) for $89. After the salon is charged 50% commission on the sale of this service by the website they only get $44.50 for 3 hours of work!!! Let's say if they use very cheap, basic products and it costs them $15 in total. That leaves $30, and that's $10 per hour gross. Tax has to be paid, wages, insurance, rent, repurchase of products and materials etc etc. and they sold over 100 of these!!!  
That is 300 hours they have committed themselves to working for nothing. And it only gets worse. Once the promotion is sold, they will be inundated with calls to book in these clients, leaving no room to book in their regular and full paying clients. Now it's easy to see how people go broke doing these type of offers. So why would they do it?!?
To be frank, most I have seen do this from ignorance, not understanding the huge financial investment of this promotion, and mostly out of desperation. Sadly they just end up getting themselves into a deeper hole, unable to pay their utility and supplier bills, wages and rent, and end up suffering from a great deal of stress. 
So how will this affect your business?
At first, I can understand why I would be worried if I saw my competitor do crazy discount pricing on similar services. Will my clients see the advertisement (whether it is on a website, local paper or flyers handed out)? What will they think, and most importantly, will they be tempted to buy the discounted service from my competitor? 
If you are doing things right, you have nothing to worry about. Sure, there may be one or two that will be tempted, but it will never last. 
Just think about what I have discussed above, bargain hunters are loyal only to one thing. A bargain! These are not your clients, and these are not the clients you even want! They will just keep on salon hopping, chasing the latest sale. No matter how well you treat them, they will always expect a great service, for a bargain. 
Competition is great! 
Competition forces you to look at your businesses critically, to see what you are doing right and what you need to improve on. If you find your competitor is advertising a ridiculously cheap service, that's great! This is a terrific opportunity to reinforce to your customers what you have always done, and your superior standards of service and quality of treatments with your clients. And if you are not already doing this, it's time to make it so! 
Quality trumps discounts, always!!! 
Making your customers feel extra special, there is nothing like it. Products that deliver better results, but are delivered with contemptuous, arrogant or inferior service, guarantees your customers will shop elsewhere. Give them a fantastic treatment. 
So, Here are the tips, THAT WILL MAKE A HUGE DIFFERENCE TO YOUR INCOME, if you choose to implement them. 
Look at all aspect where you are superior (or wish to be) to your competition:
  • All treatments are delivered by highly skilled, trained, and experienced therapists. Therapists are sent to all available training by suppliers. They are regularly updated by the latest in technology and invest their own time and money in ongoing professional development. Employ only staff that are willing to invest in their professional skills and knowledge. Support your claims of expertise by clearly displaying qualifications, licenses, and experience in the business and your marketing material to your clients. YOUR STAFF ARE YOUR BUSINESS. It's an old lesson I learned very early on.
  • Use only the highest quality products and the latest in skin treatments technology. Back your business with strong supportive product brands. Brands that take training and business seriously. Brands that have the resources and human expertise to take your business to the next level, and beyond. Talk about these in your marketing material to educate your clients why you are using SUPERIOR quality products that deliver real results.
  • Make your business a beautiful, warm and inviting place to visit, make sure your decor is professional, up to date and modern, tidy and clean, everything is in good repair, and working well. De-clutter, and rotate your merchandising regularly. Make sure you are fully and well stocked, you can't sell it if it's not on the shelf! Empty shelves excite no one! Great merchandising stimulates impulse buys (that people will LOVE), you just need the know how! 
  • Ensure everyone is thoroughly trained in superior customer service, interpersonal and communication skills. Ensure staff are IMMACULATE at all times. If they want to be taken seriously, they need to look like professionals.  In college, I used to train my therapists to imagine they were going to be on TV. Cameras will be  filming them and later will broadcast them on TV. I told them to imagine, they were going to treat top celebrities, so how would they interact with them? How would they present themselves to them, what would they say, and how would they behave? It's a whole different mindset. 
  • Add value to every treatment. This is a different concept to value added promotions, where you offer packages of treatment that complement each other and offer a value deal to your clients. These are great for promotions, but other than that, you should always add value to your treatments. What does this mean? 
Think about why your client would have a facial with you rather than someone else. How can you make your treatment more enjoyable and valuable to the client? How do you present the treatment that has that WOW factor? Think about the extra little touches you can do to make the experience exceed their expectations. Sometimes this means you need to reasses the environment, the atmosphere you create. Sometimes it's the way you interact with your client, other time is the post treatment service you offer. 
Each business will have their own personality and expertise, what is yours? 
Customers LOVE being treated special. They love to be acknowledged, remembered, treated with curtesy, calmly and with elegance and style. This is why your business will be fine. This is why your long term clients will always prefer quality over a bargain, if you were in their shoes, wouldn't you too? 
In contrast, think about the other business that just sold 100 of the 3 hour packages for $44.50. Imagine how frazzled they will be when they have to turn down their regular clients, to make room for the bargain hunters (here is an opportunity for you to pick up some new clients). 
Imagine how exhausted they will be working day in and day out for nothing. Imagine the stress, the resentment they will feel being used like this. This is not very appealing to any customer, I'm sure. 
So take advantage of this opportunity to differentiate and elevate your business. Counteract their discount promotion with a value added promotion of your own that highlights expertise, quality and sophistication. We all agree, there is no better advertising than word of mouth. Work on your existing clients to gain new clients. People talk, after all. Clients that value quality over price are the clients you wish to attract and retain. These are the clients that will support your business in the long term. 

This article was supplied by Jana Elston from The Beauty Business.
To get in touch with Jana, please see her details in her Bio.
Join Jana's Blog HERE.




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