← Thriving Stylist Podcast
Thriving Stylist Podcast
#383 - Do Pre-Book Incentives & Loyalty Discount Programs Work?
00:19:50
Feeling the pressure of a shifting economy with more client cancellations and stretched-out appointments, many stylists have been tempted to lean on discounts and loyalty programs to keep their chair full. Are these the right strategies to be using,...
Loading summary
Transcript8 lines
- [00:03]
A
Do you feel like you were meant to have a kick ass career as a hairstylist? Like you got into this industry to make big things happen? Maybe you're struggling to build a solid base and want some stability. Maybe you know social media is important, but it feels like a waste of time because you aren't seeing any results. Maybe you've already had some amazing success but are craving more.
- [00:21]
B
Maybe you're ready to truly enjoy the.
- [00:23]
A
Freedom and flexibility this industry has to offer. Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, list it takes business skills and a serious marketing strategy. When you're ready to quit just working in your business and start working on it, Join us here where we share real success stories from real stylists. I'm Brit Siva, social media and marketing strategist just for Hairstylists and this is.
- [00:47]
B
The Thriving Stylist Podcast. What is up? And welcome back to the Thriving Stylist Podcast. I'm your host Brit Siva and today we're talking about pre book incentive programs and loyalty discount programs. So as the economy gets a little bit more unsettled is the word I'm going to use. 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. And widespread across the industry, we're seeing a increase in cancellations, we're seeing clients push their time between appointments out further. So frequency of visit is down and it's starting to feel a little bit harder to capture clientele. We have several podcast episodes on why, so hopefully you're a frequent listener to the show and you've caught a lot of the previous episodes. If not, go back and listen to the last year's worth of episodes when you can. It really paints the picture and tells a story of why clients are reacting the way that they are right now. So assuming that everybody knows that information and has that context, what we're seeing is stylists trying to get creative with how to keep their chair filled. I am so here for that energy. Part of the challenge is almost always when we look at ways to keep our chairs filled, it falls back on discount programs. Almost always. For me personally, whenever I've coached a stylist in good markets and in bad, I coach to increasing your demand, no discounts, and not working more hours to make more money. So instead we streamline and scale the business, which works. And I know it almost sounds impossible. The reason why it's it sounds impossible is because most businesses are currently not built to scale. They they are just not structured in a way that where that would happen. 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. We're double booking, right? It's impossible to make more money. When you look at how to leverage perceived value and demand, it becomes a lot more simple. But that's the side of our industry that people really struggle with is the business management and the marketing side. We just want to show up and do good hair, right? So 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. So there's two specific concepts that have been tossed my way a couple times. One is a pre book incentive program and there's actually a couple that are floating around. I want to break one down. And then there's also loyalty programs, meaning the longer you're with me, the cheaper your prices are. And I actually have another full podcast episode on loyalty discounts, episode 350. Does the loyalty pricing model work or fail? And we math it all the way out in that episode. So if you've not listened to episode 350, go back and listen. That one came out earlier in 2024. We're actually going to talk about a different kind of loyalty program today. But my end all be all after you listen to this episode and hopefully go back and listen to 350 is run the math. Run the math. It's interesting. I started talking about emotional discounting in 2015 is the first year I started talking about it online. It was in Periscope at the time. And then on Facebook Lives they started talking about it. And now the term emotional discounting trends a lot. Let's normalize the word emotional pricing. That's going to be the word I want to really double down on in 2025. So it's 10 years later. 10 years ago I was talking about emotional discounting. I think we've gotten a lot better about that and I don't think that was just a me thing. I think people just became aware of it. Now in 2025, let's talk about emotional pricing because we haven't healed from yet. And I'd love over the next 10 years for that to be able to take place. So both of the things I'm going to talk about right now, I would lean into as emotional pricing. We do it because psychologically, if our chair is more full, we feel like business is going better. There's nothing that makes us panic more than an empty chair or empty books. And so we say, I'd rather have 80% of something than 100% of nothing. Totally get it. So here's one of the pre booking incentives that was tossed my way recently. So this one was 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. You have to pre book them before you left today. And when you come in for that third visit, on that third visit, I'm going to give you a $50 discount. Terms being you cannot cancel or move the appointment. Like you book it, you show up for it. So this could work. But I want to talk it all the way through. The reason why a stylist would like this is if I come in today, let's say today is April 1st. I come in today and then I book another appointment 10 weeks from now and another appointment 10 weeks after that and another appointment 10 weeks after that. Well, now I'm on your books for the next. What does that end up being? 30 weeks. It's great. It's more than half a year. I look like I'm all set. My visit frequency is pretty good. You know, I'm not going to push out to 14 because I want to get that discount. So that feels good. Here's a couple of the issues. One, why do we think people are canceling or pushing their appointments out? I like to say it's because it doesn't feel worth it. Like I'd rather have gray roots a little bit longer or I'd rather go to my kids soccer game or maybe.
- [06:29]
A
Financially, like it's a little bit of.
- [06:30]
B
A pinch for me. When we see that uptick in cancellations and people shifting their appointments out, that's generally the reason why. And those factors will still be there. So you have changed the terms and you've said, you know, I'm going to give you this $50 discount on visit 3. But you have to keep the appointments you set in place. So now a client has to decide do I want to see my kids soccer game or get that $50 discount. And that's up to them. And I think some of them are going to do it and I think some are going to say, nah, it's okay, you know, keep the 50, I'll lose my promotion. I'd rather go see My kids soc game. Okay, so that's fine. So then they move that appointment. So now it's on you to keep track of all the people who move their appointments because now they're out of terms with your promotion. So now you're managing that because a certain amount of people will move their appointments. Like let's say it's even 10%, 90%, keep them, 10% move. You have got to make sure. I don't know how you noted that on the third visit there was going to be a discount. Maybe you entered it in the name or you entered it as additional service, I don't know. But you got to remember to go back and when you get that cancellation notification, hopefully you're getting notifications, or when the person messages you to say, hey, I need to reschedule, hopefully, hopefully you got that notification that they rescheduled. You now have to manually go in, find that third visit, remove their discount because now they no longer qualify. So it's one more thing to manage. So let's say you're like, you know what, that whole like moving thing, changing thing, it's not for me. It sounds too hard to manage. Okay, well then my argument would be, well, what's the point? If you're not going to do all of that management, then what was the point? Because if I pre book three, supposedly every 10 weeks, but the first one I move out to 12 because I decided to book a vacation, that's fine. And then the next one I realized, well, I can't come in at that time because then it's only eight weeks between those two appointments. So now that second appointment that I had pre booked, I have to push out because I don't want an 8 visit frequency, I want a 10 visit frequency. And now because I pushed that first one out, now the second one needs to move, so that one needs to move. So now I'm moving two. Well, the third one also has to move because I want that one to push out also. So now I've moved three, I haven't moved one, I've moved three. And let's say that second one comes up and I book another trip or I have to go to the soccer game or whatever. So now I'm moving that one again. And then the third one again. This could work in like the most perfect scenario that somebody would keep all three and not move them. But just ask yourself if they're moving them anyway. Does having them pre booked and locked in really do you any good? Here's my thing with pre booking. I Think for the stylist who still has a ton of availability, pre booking is fine because it's not locking anything down. It's not making it hard for new clients to get in. You have the time? Yeah. Pre book whoever, as far out as you want to. That's fine. It's not hindering you. It's debatable whether it's helping you or not, but it's probably not hindering you. So go for it. It just is more admin as people's lives change as they need to move appointments. We're living in a time where people's schedules are a little bit more up in the air and it's harder to know what I'm going to be doing 30 weeks from now, which is what you're asking a lot of people to do when they're booking three appointments out. Right. What are you doing 30 weeks from today is kind of the ask. Okay, so let's imagine that somebody does not move anything. They book the three, they come for the three. So now they're getting the $50 discount on that. It. Okay, great. So let's say you're a high producing stylist and you've run this promotion. So your average ticket is 200 bucks a guest. Let's say you work four days a week and you see on average four clients a day. So every appointment's around two hours.
- [09:56]
A
Ish.
- [09:56]
B
Work four days a week, you're seeing four clients a day. So that's 64 clients a month at $200 a ticket. So you'd be a stylist pulling in $12,800 a month. Great, let's work off of that. This is like best case scenario, if I take that average ticket down, it start get really dark in doomsday and I don't want to do that, I'll do it at the end. But this is like best case scenario. So this is a high producing stylist. Average ticket, $200 per guest. Let's see, your average guest does see you every eight to 12 weeks. So assume 1/3 of these redemptions, these $50 redemptions after those third visits. So say it's, you know, six months from now or whatever, you start to get a lot of redemptions. So on that cadence of clients coming in every eight to 12 weeks, every two weeks you're going to have people redeeming and then as time goes on, it's going to start to be weekly redemptions. But every two weeks or so, let's just keep it simple, you're going to have an onslaught of redemptions. Okay, well, let's say only half of your clients took advantage of this promotion. Half did, half didn't. 50% of your clients took you up on that deal. So 10 clients every two weeks are going to be redeeming, okay, that $50 credit. If 50% took you up on that pre booking promotion, six months or so after you start running it, you're going to start to get an onslaught of redemptions. If it went well, this is best case scenario. Okay, every two weeks you're giving $50 discounts to 10 people. So $500 in discounts every other week, $1,000 in discounts every single month, $12,000 in discounts every year. And that's if only half your clients took you up on that. If 100% did, now you're looking at $2,000 in discounts every single month. So if it was the 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. So the argument is like, well, yes, but at least the frequency was better. So maybe it averages out. I don't 100% know how that would work. So what you'd have to be doing is you'd also have to be getting a lot of new clients. But let's say you are getting a lot of new clients. Unless you have dramatically increased your new guest count, getting more than you were before you started running this promotion, or you increase your utilization, or your volume of clients booked, your annual income would still take a dip. Like the way the math. Maths. I can't think of a way that you would do it where you don't end up taking a loss. So let's say you're like, okay, well, I don't want to take a loss, but I want that frequency. I don't want to lose clients. I want to improve my retention. And I feel like this $50 credit on the third visit is the way to do it. Okay, so then maybe you raise your prices. By the way, I'm not recommending this. I'm just brainstorming with you. So let's say you do raise your prices. You'd have to raise them by 8% to break even. So if you did an 8% price increase and you're running this promotion, you would still end the year at around 153 grand. So you wouldn't take a financial Loss, you would have run this promotion, raise your prices by 8%, you'd still be at 153k. However, cost of goods going up is a big concern right now. We know cost of living and doing everything is going up. So honestly, to stay out ahead of the economy, you'd want to raise your prices by around 18%. Right. 8% to cover the discount promotion you're running and then 10% just like to stay current. So your average ticket would now go from 200 to 236. Now if you were to do that, yes, the promotion works and you'd make more money and you'd come out ahead. How do you feel about your average ticket going from 200 to 236 to run this? Now, like I said, this is best case scenario. So let's say you're more like a stylist whose average ticket is $100 per client. So then $100 per client, let's say everything else is the same. You're seeing 64 clients in a month. So $6,400 per month is your average service revenue. So in a year it's 76 grand. So you are still giving away with a promotion like this, $1,000 per month in discounts when people start redeeming. So it takes your annual revenue from 76,000 to 64,000. So now you've lost 15% of your annual revenue to run that promotion. The tricky thing about this is most people don't realize the flaws in promotions like that until it's too late. Because once that six month mark hits, wait till seven months comes around and eight months comes around and nine months comes around and you're still trying to get to these redempt and you're realizing like, oh my gosh, my monthly income is going down. It's too late. You can't bail out of the program. You've already promised those discounts. You're in it. You have to finish out the redemptions. So I understand the thought process of I'd rather have 80% of something than 100% of nothing. If your business is becoming so dismal that you're getting to the point where you're starting to have nothing. For me, as your business coach, I'm like, the issue is not so much that clients don't want to get their hair done, it's that the demand to come in to see you has waned and you're not filling your chair fast enough. Like, I think that we're tackling the wrong issue. Yes, retention is important. But why are people choosing to leave you? We need to fix that issue. Why are people choosing to leave you? If people are stretching their appointments out, what does that mean? We need more clients, not more discounts, more clients. And I think when we do this, we think, well, you know, 50 bucks, 25 bucks, 30 bucks, whatever. But when you look at it at scale, if this works well, you 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. Otherwise it starts to kind of break down. Okay, so let's talk about another one. There was another program I saw that was like a longevity program, similar to longevity in the way that I talked about in episode 350. So in this longevity program, for every year a client sees a stylist, they get a credit on their anniversary, which again, it sounds so beautiful in the. So at your one year anniversary, you get a $25 gift card which could be applied towards your services. At year two, it's a $35 gift card. Year three, it's a $45 gift card. So the idea is, well, the longer somebody stays with you, the bigger that gift card becomes. And by year, I don't know, it ends up being nine. I think by nine you get a hundred dollar gift card. Like in theory, that's great. It breaks down a couple different ways. One, the value of $100 nine years from now is not going to be what it is today. Right? A hundred dollars when I was in high school was like huge money. But minimum wage was also $8 an hour. Right? A hundred dollars now is like decent ish. Dinner with your family. Sometimes it just doesn't go the same way. So a hundred dollars nine years into the future doesn't hold a lot of perceived value. Now you have some clients who have been with you for nine years. So maybe they'd be in that $100 credit right this second. That's fine. But look at how the math pans out with that. So let's say next year you have 100 clients who are in their second year with you, which a lot of you would fall into that boat. You're giving a $35 gift card to every client who's celebrating their second anniversary with you. So that's $3,500 off your total annual revenue. Before the year has even started, you're pre promising $3,500 in discounts. At year three, it's $4,500 off annual revenue. And I understand, I understand the math on this. You are rewarding them for all of their previous loyalty. So again, let's say it's a client who spends $150 every single visit and comes to see you six times a year. Okay, so they're spending $900 a year with you. So you're like, what's 25 bucks? Who cares? You're not looking at the big picture though, and that's why this matters. So let's say the client with the average ticket of 150 comes to see you three times a year. So at the end of year two, they would have spent 900 bucks with you and they'll have received $60 in discounts. At year six, 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. So just know if you do a program like this, you will be making 90% of your advertised prices. Like, go ahead and just bake in a 10% discount. Because when you pan it out, the whole lifetime of a client, that's what it ends up being. And so often when we say, oh, $10 off here, 25 off there, $50 if you do this thing I want you to do, we don't math it all the way out and think about it in volume and think about it in scale and think about it in impact. This, you know, whether you've thought about any kind of pre booking promotion or a loyalty promotion or an incentive of any kind, this is my PSA for you to just always run the math. Math it all the way out, run it all the way through, look at what it would look like long term. Just so you know, does the financial impact make sense for you or are you going to be working hard with a full chair making less money and is that okay? Just good business questions to ask yourself. If you have any additional questions, leave me a rating review on itunes. I'm happy to respond. As I always say, so much love happy business building and I'll see you on the next one.