Five Strategies To Make More Money Without Continually Running Promotions
Driving profit up and driving revenue up are two completely different things. it’s important to understand this.
Both driving of sales and driving of profit require structured strategies – goals and milestones. This is really hard in small businesses where we are trying to be all things. if you simply don’t have time to set up strategies, or you just don’t know how – get help!
In the Beauty Industry, you are dealing with a higher cost structure than in most, a relatively low barrier to entry and a proliferation of businesses that are often not clearly defined in their positioning, so they copy each other. Almost all are running regular promotions, so it’s a crowded market! It is hard to succeed – many do not. Be in the top quartile – make smart decisions….
We are in business to make money, so let’s focus on that – below are what I believe are the most effective strategies in the Beauty Industry to optimise your earnings:
Strategy One: examine every single cost regularly and optimise continually
Let’s take a look at waxing for example. A skilled therapist is able to wax with pretty much any product. There are so many waxes available – some are almost twice the price of others. Understand that if you prefer a more expensive wax, you MUST increase your price to your customer to make the same as a therapist waxing with a less expensive product – putting your competitor in a stronger business position than you! Even blending in a cheaper wax with your top of the range one will bring your costs down. So, if you are paying $30 per kilo for your hot wax for example – and your competitor is paying $25, she is making $1 more for every wax conducted in her salon before any other cost savings are pulled back. Multiply that by the number of waxes you do per annum – heaps, right? – that’s how much more she will make than you – and that’s just the beginning.
One exercise that should be done at least once a year is to list all treatments and retail products on an excel spreadsheet – ranked in order of profitability. You will soon see that suppliers load product into facial protocols to benefit their own margins – not for yours. Lovely facials are definitely required, but make sure you know exactly how much you are making from each treatment.
Our own profitability changed dramatically in the Terra Nova Clinics when we introduced the Ultra Labs Conductive Gel – it was around $2 per kg cheaper than the previous gel we were using. We used mountains of it (literally!)
Re-examine all consumable prices twice yearly. Query increases above CPI (consumer price index). Shop around. ots of products are available from multiple sources at different prices.
Strategy Two: portion control your facial cupboard/salon stock
How many facials should come in a bottle of lactic acid, or in a bottle of spray tan? It is shocking how much product disappears or is overused – and even more shocking is how it affects your bottom line. My team (seniors included) told me it was not possible to complete a spray tan with just 50ml of product, so I got the trainer in to show them that it is, then I held them accountable for delivering 20 tans from each 1L bottle. Once they saw that it was possible, I started making money from the tanning. Correctly measuring product is difficult, so I bought pots and portioned the facials accordingly. It saved me thousands of dollars. Do it.
Strategy Three: Figure out the gross profit from it before you run a promotion! If it’s low, don’t run it.
Too many deals are run with the sole objective of bringing in revenue to pay bill tax or wages. Without there being sufficient profit in the pricing structure, you will be absolutely no better off, and client will be expecting repeated deals at the same level. This is really a waste of your effort.
As a rule of thumb, you need promotions that add value – not discounts. Add more treatments on to a hero treatment, at a fractionally higher price. Break the cycle and get your margins up. See Strategy One for more information on working out your gross profit – how many cleanses are you expecting to get from that 500ml bottle…. One pump is 5ml – 2 cleanses are required: 10ml per facial and 50 facials per bottle. Make sure that is how many you get!
Strategy Four: use mailing lists & smart SEO before paid advertising
The customers who know you will appreciate you more than those who don’t. Any customer who appears not to be pushing you further than you wish to be pushed on price, punctuality, tone or manner can simply be taken from your mailing list. Larger mailing lists can be segmented by spend level, service category, age, gender – use your segmentation options to send your promotions to people who are the most likely to take up and appreciate your (profitable) deals. You will not need to continually pull in new customers on promotions is you have your basic marketing sorted. it is fundamental of course, that you collect email addresses and cellphone numbers from EVERY client who comes into your business.
The same goes for SEO – write your website using rich keyword content – especially in headings and the first paragraph on each page of your website and your organic searches will soar. If you don’t know how to do this, find someone who does.
Strategy Five: Google and Facebook remarketing
So cost effective – once you have sorted out your SEO, have the Facebook tracking pixel and Google tracking code entered into your website header and target those who have visited specific pages on your website – that’s like shooting fish in a barrel. Budgets are tiny. It’s much easier and cost-effective to market to people to whom you are known than to strangers. Get started on remarketing today – it’s magic!
There are just five things you can do to start making more money, with minimal extra effort. If you don’t have your costs per treatment tables, you need time to do that urgently. Have fun, get control, make more money.
If you need help with any of the above – buzz or text me on 022 3539576. I am only too happy to help (overseas until 30 April though)..