Thriving Stylist Podcast - Episode #383: Do Pre-Book Incentives & Loyalty Discount Programs Work?
Release Date: April 28, 2025
Host: Britt Seva
Introduction
In Episode #383 of the Thriving Stylist Podcast, host Britt Seva delves into the effectiveness of pre-book incentive programs and loyalty discount programs within the beauty industry. As the landscape of hairstyling evolves, Britt examines whether these promotional strategies truly benefit stylists or inadvertently undermine their revenue.
Current Industry Landscape
Britt begins by contextualizing the current state of the beauty industry:
"As the economy gets a little bit more unsettled... we're actually not seeing a downturn in the economy. Spending hasn't slowed, but people are starting to get definitely more particular about where they spend their money."
— Britt Seva, [00:47]
Despite steady spending, clients are increasingly selective, leading to heightened cancellations and extended intervals between appointments. This shift poses a significant challenge for stylists striving to maintain a consistent clientele.
Common Responses: Reliance on Discounts
To address these challenges, many stylists turn to discount programs to keep their chairs occupied. Britt critiques this approach, emphasizing the pitfalls of such strategies:
"When we're in that position where we just want to show up and do good hair, the quickest, fastest way to stand out is discounts, loyalty programs, incentives, blah blah blah."
— Britt Seva, [02:15]
Britt's Coaching Philosophy: Increasing Demand Over Discounts
Contrary to the prevalent trend, Britt advocates for increasing demand without resorting to discounts or extending work hours. She emphasizes the importance of streamlining and scaling the business to enhance perceived value and demand.
"Most salons and stylists have built businesses where unless they are taking more clients or raising their prices or working more hours, it is impossible to make more money."
— Britt Seva, [02:50]
Deep Dive into Pre-Book Incentive Programs
Britt examines a specific pre-book incentive model: Pre-booking three appointments with a $50 discount on the third visit. She dissects its mechanics and inherent challenges.
Structure of the Program:
"Pre book three appointments and if you come to all three on your third visit, you get $50 off. So the first two visits you pay full price."
— Britt Seva, [03:30]
Potential Benefits:
- Locks in client commitment over a six-month period.
- Encourages consistent visit frequency.
Challenges Identified:
-
Client Flexibility: Clients may prioritize personal commitments over the discount, leading to missed appointments.
"You have changed the terms and you've said... you have to keep the appointments you set in place."
— Britt Seva, [05:15] -
Administrative Burden: Managing reschedules and ensuring discounts are only applied when terms are met adds complexity.
"You now have to manage that because a certain amount of people will move their appointments."
— Britt Seva, [05:45] -
Financial Implications: Britt illustrates the potential revenue loss through detailed calculations.
Mathematical Analysis of Pre-Book Incentive Programs
Britt provides a comprehensive breakdown of how pre-book incentives can impact a stylist's finances.
Example Scenario:
- Average Ticket: $200 per client
- Clients per Day: 4
- Working Days per Week: 4
- Monthly Revenue: 64 clients × $200 = $12,800
Impact of Promotion:
- Redemptions: 50% of clients redeem the $50 discount every two weeks.
- Monthly Discount Cost: $1,000 (from $500 every other week)
- Annual Revenue Reduction: 8% loss, dropping from $153k to $141k
"If it's a stylist whose average ticket was 200 a guest, their average annual revenue before was 153k. Now it's 141k. So it's an 8% loss in revenue overall because of running that pre booking promotion."
— Britt Seva, [07:30]
Critical Insights:
- The promotion could lead to significant revenue losses unless offset by increased client acquisition or higher service prices.
- Scaling discounts can quickly erode profits, especially for stylists with lower average ticket prices.
Exploring Loyalty Discount Programs
Britt shifts focus to longevity-based loyalty programs, where clients receive incremental discounts based on their tenure.
Example Structure:
- Year 1: $25 gift card
- Year 2: $35 gift card
- ...
- Year 9: $100 gift card
Analysis:
"At year three, they'll have spent $2,700 with you and received $300 in discounts. So essentially it works out to be about a 10% discount off your price point overall."
— Britt Seva, [10:00]
Financial Implications:
- High Volume Discounting: For 100 clients in their second year, a $35 discount totals $3,500 in lost revenue annually.
- Cumulative Effect: Over multiple years, these discounts can substantially reduce overall earnings.
Recommendations and Best Practices
Britt underscores the necessity of thorough financial analysis before implementing any promotional programs:
"This is my PSA for you to just always run the math. Math it all the way out... whether you're going to be working hard with a full chair making less money and is that okay?"
— Britt Seva, [12:30]
Key Takeaways:
- Avoid Reliance on Discounts: Focus on building demand and enhancing perceived value instead of defaulting to discount strategies.
- Comprehensive Financial Planning: Understand the long-term financial impact of any promotional program through detailed calculations.
- Client Acquisition Over Retention Discounts: Prioritize attracting new clients to compensate for any potential loss from discount offerings.
Conclusion
In this episode, Britt Seva critically evaluates pre-book incentive and loyalty discount programs, highlighting their potential to undermine a stylist's financial stability. She advocates for strategic business scaling and demand generation as more sustainable solutions for growing a successful hairstyling career.
"We are giving away thousands of dollars. You just have to make sure that you can afford that. And for you, the psychological safety of having a full chair has to be worth that amount of money."
— Britt Seva, [14:00]
Britt concludes by urging stylists to prioritize sound business strategies over quick-fix discount programs, ensuring long-term profitability and success in the competitive beauty industry.
Additional Resources:
- Episode #350: Does the Loyalty Pricing Model Work or Fail? – An in-depth exploration of loyalty discount programs with mathematical analysis.
Engage with Britt:
Have questions or need further clarification? Leave a rating or review on iTunes, and Britt will be happy to respond.
"So much love happy business building and I'll see you on the next one."
— Britt Seva, [14:30]
Thank you for tuning into the Thriving Stylist Podcast. Stay informed, stay strategic, and continue building a wealthy life as a stylist.