hether there’s one salon or in your backyard
or 100, there are plenty of ways to remain competitive.
Statistically, there hasn’t been a huge explosion in the number of new
tanning salons nationwide; but there have been more such businesses opening
in certain key markets across the country. And, the people coming into
the industry during the past five years have seemed to be more business
savvy. Some veteran salon pros who’ve been doing business in these saturated
markets might feel threatened by the increased rivalry, thinking that
the only way to compete is by lowering their prices; but that’s not the
answer. As smart salon pros and other experienced businesspeople know,
a 20 percent drop in prices requires at least a 40 percent increase in
sales just to break even. Simply put, this means that if you offer unlimited
tanning for a ridiculously low monthly rate, you’ll need to sell twice
as many memberships or more than you did last year just to pay the bills!
The good news is there are other, more effective ways to remain competitive
in a saturated market that won’t put you in the poor house.
Saturation = Opportunity
Robbie Segler’s Texas-based Darque Tan salon chain and its licensees are
succeeding in saturated markets in several states. This might make some
wonder what’s the secret to Darque Tan’s success; but Robbie insists that
there is no secret. He says it’s all a matter of starting out on the right
foot. “Before we opened our first salon, we worked extremely hard on what
we believe is the best business plan we could come up with,” he commented.
“We knew that if we had a strong business plan, it would succeed anywhere,
but especially in a saturated market.” A good business plan, Robbie says,
clearly outlines everything about a salon – prices, equipment offerings,
upgrade policy, lotions, etc. “When you have a business plan that has
solid pricing, equipment and service, you can succeed in any market in
the country,” he added.
Avoid the “Price Wars!”
Here’s the scenario: a new salon or salons move into town and offer monthly
tanning at a ridiculously low price. To compete against this, you drop
your monthly rates to match or beat theirs, right? “Wrong!” says Dave
Unvert, owner of four Always Tan Tanning Resorts in San Diego. “Getting
into ‘price wars’ with your competition is the worst thing you can do.
When you lower your prices to the point where you’re operating at a loss,
you’ll be lucky to break even during the busy season. Chances are, you’ll
be broke during the off-peak months.” As Unvert explains, what many salon
pros might not understand is that there is often “more to the deal” at
successful salons that offer low monthly rates. For example, tanners might
be able to get unlimited sessions for $15 a month, but only if they sign
up for a year on an electronic funds transfer (EFT) program. “In order
to get the deal, tanners often have to make a large commitment,” he added.
“Therefore, just offering the low monthly price as the entire deal can
hurt a salon owner.”
If a “price-busting” salon comes to your area, don’t worry. Unvert offers
some solid ways to compete against bargain basement tanning. “Honor your
competitors’ coupons from new clients; but only do this once,” he said.
“After that, it’s important to sell your salon on its cleanliness, equipment
and service. If you show your clients why your salon is truly worth the
extra $5 or $10, they’ll be willing to pay it to tan with you because
they know that your salon offers them a better value.” And if you’re planning
on competing with other salons’ prices, Unvert recommends tying it into
a larger offer, such as an EFT program, upgrade sessions or anything else
that will generate additional revenue and develop long-term clients.
Customer
Service is Key
There’s an old saying: “You don’t know what you’ve got until it’s gone.”
This could definitely be applied to salon pros who focus their marketing
efforts solely toward attracting new clients. “Whether you’re a big salon
chain or a one-location store, one of the best things a salon pro can
do is reward their loyal tanners,” said Ralph Venuto, Jr., President of
Hollywood Tanning Systems, Inc. “In their rush to attract new tanners,
some salon pros might forget about maintaining the relationships they’ve
built with their best clients. In many ways, it’s far better to reward
loyal clients with things such as free tanning sessions or upgrades than
it is to give away freebies to attract new people.” Venuto says this approach
can also attract new tanners if salon pros offer incentives – such as
free tans and upgrades – to their good customers every time they refer
a new tanner to the salon. He recommends using referral cards to facilitate
such a promotion.
Use Your Database!
For many salon owners, the answer to succeeding in a saturated market
is right in front of their eyes – their computer database. This has been
the key to the success of No Tanlines in Streamwood, IL, owned by Bruce
Wood. “There is more than one large tanning salon franchise in my immediate
area and both have several locations, so I need to remain competitive
if I want to succeed,” said Wood. “To do that, I went back to the basics
of what’s known as ‘guerilla marketing,’ and we utilize our database to
the extreme. After all, indoor tanning is one of the few industries where
we get our clients’ names, addresses and birth dates all in our computer
system.” Bruce targeted all the good customers in his database – those
who’ve made substantial purchases – and sent them various e-mails notifying
them of the latest specials at his salon. He’s also mailed birthday cards
to clients throughout the year. “Using this approach also benefits a salon
owner because it helps you keep your database current,” he added.
Strategic Advertising
Advertising is an important way to stay competitive in a saturated market,
especially if salon pros advertise when it truly counts, says Wayne Smeal,
CEO/Founder of Colorado-based Executive Tans. “When it comes to radio
and TV advertising, the best time to advertise is just before peak season,”
he commented. “The media people refer to this as the first quarter of
the year, and this is when ad rates typically are at their lowest because
all of the big advertisers spent most of their budget during the holidays.”
Smeal says this is perfect timing for salons, especially those competing
in a saturated market, because it gets people thinking about tanning right
before the season and puts the advertising salon’s name foremost in their
minds. He also recommends continuing the ad campaign into the beginning
of the season, so as not to lose the momentum they’ve gained.
It doesn’t really matter if there’s one other tanning salon on your block
or 10 – a savvy tanning pro will find ways to stay ahead of the competition.
And it can be done without dropping your prices so low that you lose profit.
As the salon owners in this article will attest, with some research, determination
and a little careful planning, you can soak up your share of the market!
IST thanks the tanning pros who contributed to this article.
-Original art by Laura Rapcka
