There are new salon marketplaces or directories launching every week. It is easy to see why these sites are attractive to salons as partners because they come with the promise of getting more new clients through your front door.
Today I’m going to deep dive into how these sites work and investigate what impact they have on your salon; explain the client journey across all of these sites and the psychology behind them plus uncover the detrimental impact they are having on the industry.
How Listing Sites and Marketplaces Work:
A Marketplace pitches itself as a salon discovery tool. It does this through a number of marketing techniques including Search Engine Optimisation (SEO).
Basically this means that when a client searches for, e.g. ‘Local salon Kent’ or the name of a beauty treatment, these salon directories rank in the first few results on Google. The client is then brought to a page with a list of salons in the area. They browse, select a salon and make a booking – the company behind the website or app gets a significant margin e.g. Wahanda takes 20% when the client books with that salon. Another example of this type of model would be Ruuby.
From the outside, it seems like there is nothing wrong with some of these sites. In fact, it looks like many of them are promoting retention in a salon because they often lower their costs for people rebooking with the same salon, e.g. 50p instead of 20%.
But retention is not how of most of them make money…
Like most businesses, they are out to maximise profits. Again, there is nothing wrong with making money except when it comes to salon marketplaces, retaining clients goes against their business model. Allow me to explain…
Scenario:‘Janet’ is looking to book a facial. She types ‘facial Nottingham’ into Google search. ‘Salon Directory’ appears as the first result. She clicks in, picks a salon from the list and books a facial. ‘Salon Directory’ gets its 20%, and the salon has a new client. Win-win right?
Not really. It is in the interests of ‘Salon Directory’ to get that person booking with another salon for the next service. Why? So they get the full 20% every time.
There are a couple of subliminal and not so subliminal ways that Janet will be urged to book with a different salon the next time she needs pampering. These include:
1. Discount codes sent to Janet from the website for salons in the area that she has not previously booked with
2. Special offers highlighted on the listing site so it makes a salon stand out and diverts Janet to booking with a new salon
3. Automated premium listings that makes salons Janet has not tried before move to the top of the page increasing the click-through rate and likelihood of her changing salon
4. Advertising specific salons to Janet on Facebook and other social networks
“In fact, even the salon owners and managers that are listed on the site are unconsciously encouraged to get Janet to try a different salon the next time around.”
How? By getting salons to market the websites they are listed on e.g. window stickers that mention the website ‘Find us on…’ and discount cards that are handed to clients. All these do is encourage Janet to go back to the website where all that salon’s competitors are listed, where, yes, you guessed it, she will be presented with a better offer from a competing salon.
That salon has just given Janet 20% off only to never get her back. It’s almost like a daily deal but much more Machiavellian.
The Type of Clients it attracts
Another problem with listing sites is the ‘me-toos’ syndrome. If the salon down the street is on it then it causes fear on what you, as a salon owner, are potentially missing out on by not listing on it. It’s this fear that causes sites like this to succeed in getting sign-ups at break-neck pace.
But here’s the thing. It may get new clients through your door once, and then in turn, you may think ‘You know what, I have a great salon. I can get them back again.’
It’s not that you don’t have a great salon. It is about the type of client these sites attract. When price is the most important factor for a client, going the extra mile and guaranteeing quality in hair or beauty is irrelevant. Deal hunters want deals. These sites get deal hunters.
Quality clients are generated through referrals.
Now, of course there are things you can do to generate referrals e.g. Phorest has a feature called the #salonselfie. Let’s do another scenario…
Scenario: Maria has an appointment in your salon. She gets her hair done. When she is walking back to work an hour later, she gets an email asking her to rate her treatment out-of-five and to leave a comment.
She rates it 5/5 and a camera pops up asking her to a take a selfie of her new hair and she is told that if she shares it on Facebook, she gets extra TreatCard points. She does. Now she has shared it with hundreds of her friends on Facebook.
That is a referral generator created online by the client. Not through discounting, but by showcasing your work. The kind of people who are motivated by this to make a decision are the kind of people who make purchasing decisions based on quality as price isn’t mentioned
(to get a demo of this feature plus Phorest’s software fill out the demo form below. Please note the client can only share reviews that are 4/5 or 5/5).
What these salon directories are doing to our industry…
They have caused a number of problems. The main ones being:
Problem #1: They have caused some quality salons to believe that discounting is a powerful form of marketing.
Reality: Discounting is only a powerful form of marketing if you want to fill slots but make no profit. You will end up bending over backwards for clients who will never come back because they are interested in what you charge, not what you can do.
Discounting to get new clients also alienates long-term loyal clients who have been paying full-price for years. Why should new clients be rewarded over them?
Problem #2: They have placed focus on getting new clients as the ‘best way to grow your salon’.
Reality: The best way to grow your salon is to get existing clients back more often, spending more and generating tons of referrals. If fact we know that some of the best listing sites and daily deals sites have a 3% retention rate i.e. only 3% of clients will ever come back from those deals and pay full price. Remember, it’s in their interest to move clients around, but the real victory for you is to get them back time and time again! It’s a contradiction in terms.
Marketplaces work well for taxis. But taxis work on the nearest fare to their last drop-off. It’s not about retention for them.
Problem #3: They are cheapening the industry at a local level.
Rest assured, there are lots of clients out there who don’t want a discount, they just want to look good and feel great. In fact, with savvy customers who tend to spend more on premium prices can be reassured they will receive a quality service.
As clients search and see dozens of salons locally competing on price, it cheapens what we do. You have trained for years to become great at what you do. Why should you discount when you are the expert!
Why we know all this…
Years ago Phorest had a listing site called ‘Zanadoo’. We set it up with the hope of getting more clients for salons. We charged a nominal flat rate on every booking to pay for the server costs. Naively, we set it up with great intentions.
We thought that the site could get salons some new clients and our software would then help get them back a second time, spending more and generating referrals. Our software absolutely does that, but the listing site only drove clients from one salon to another looking for deals.
We shut it down. However, one positive was it gave us a true understanding of what really grows a salon: retention!
Conclusion:
There is a lesson to be learned here. Online fads will come and go; trends in the industry will change, but there is a large cohort of great clients out there, existing and potential, who just want a quality service and understand, in fact appreciate, why you charge what you do.
You are an expert.
Thanks for reading and as always, let us know your thoughts in the comments below or email me at marketing(at)phorest.com.
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