Tuesday, 30 June 2015 16:38

Is the Internet Eating Away at Your Retail Sales?

Written by   Aaron Sonnenschein

Today’s purchasing environment is very different than it was 10 years ago. Not only is competition is greater, but social media has also changed the way the consumer shops. Big box stores are becoming more aggressive with skin care specials and different service chains have entered the picture. If you have not changed the way you are doing business, your sales will slip and you will be left wondering where your business and your customers went.

While some owners and aestheticians complain that everyone is stealing their business, others have thought outside the box, taken advantage of increased brand awareness, and are extremely successful. Developing an exclusive, private label brand can be a form of protection, but generally makes it twice as difficult to prescribe a product to the consumer who is more familiar with major professional name brands.

Face it, the Internet is here to stay, becoming more powerful every day. In fact, Internet sales have increased steadily from four to 16 percent in just about each quarter since 2005. The U.S. Census Bureau of the Department of Commerce reported third quarter of 2014, adjusted for seasonal variation, but not for price changes, was $78.1 billion, an increase of four percent from the second quarter of 2014. You can purchase almost anything online, from Girl Scout cookies to luxury cars, but the solution to this dilemma is not to quit. Now is the time to push back using anything that makes you different from the competition.

So what makes you different? What do you have that all of the websites offering price competition, convenience, and appeal of purchasing from home (or on the go) does not? What is your one big strength that the Internet cannot provide? The answer: the incredible ability to actually touch the client and deliver many different kinds of skin treatments, at multiple strengths of efficacy. This ability is a powerful advantage that you have even over many of the big box outlets. So rather than worry, complain, or give up, use that advantage to build your business and beat the competition at their own game! Let us look at one opportunity available to you to build your business.

Do you have a loyalty program? If not, you should consider starting one. Almost every successful business integrates a loyalty program for their clientele. If you look into the wallets of your customers, they have a plethora of loyalty cards from coffee shops, restaurants, and more. Since everyone is now competing to make their loyalty program better than the next one with levels that give the consumer greater benefits, not having a loyalty program puts you behind. Now, for those of you who have a program in place and want to pull your retail customers back in for the sale, offer an incentive to make customers think twice about purchasing somewhere else.

For example, Mrs. Jones is at home and just ran out of her moisturizer. Her first thought is to go online, find someone who can ship it to her, place the order, and wait for it to arrive. As she sits at her computer screen getting ready to make her purchase, your voice pops into her head, telling her that when she is ready to purchase a refill she will benefit from your loyalty program. Not only will she be rewarded with double points, but she is also close to reaching the Bronze level which will give her free upgrades on all of her skin treatments for the remainder of the year. Now she is thinking, “But if I go to the spa tomorrow and purchase my moisturizer and eye cream, I will be closer to the Silver level, and then I can get an invitation to a quarterly closed door party with free mini treatments, refreshments, and free gift wrapping on all purchases for the holidays.” Mrs. Jones now is thinking, “If I can only reach the Gold level, I will get a free $50 service every quarter all of next year. Why would I shop on the Internet or anywhere else and miss out on all those opportunities?” If your client has to reach a certain level on your loyalty program every year to maintain her status, you will not lose her the following year.

Or how about tying your loyalty program in with other vendors in your market area to make the program special and unique? So, for example, if Mrs. Jones reaches the Silver level she not only gets extra perks from you, but she automatically becomes Silver at the Friendly Flowers and receives a free birthday floral bouquet, becomes Silver at Max and Wilma’s Steak House and receives a free appetizer with any meal purchase, and also becomes Silver at My Favorite Clothing Shop and receives all their perks. Why would Mrs. Jones ever shop anywhere else again?

You can also assign points to certain things that will drive client behavior in a manner that will benefit your business. For example, offer points if they rebook after their service (if your rebook rate is low), if they recommend a client (if you are trying to build a larger client base), if they book a second service on the same day (if you are trying to build other areas in your spa, such as nails or pedicures). You can also offer points if they come into the spa to make a retail purchase or book a service during a slow day or month, if they give you their e-mail address for special communications, or if they attend an event.

Your loyalty program can be set up to give different perks once certain levels are attained and/or it can be set up to where a client can spend the points based on the value you assign to them. For example, on a spending program you can assign one dollar to each point that can be redeemed for services only. That is a perk that the Internet cannot compete with, as they are unable to provide services.

If a customer tries to intimidate you with Internet discounts, do not back down. Get the exact information she is talking about, as far as how much she is going to save. For example, if she tells you she will save $10 on her moisturizer, come back with a reply such as, “I know the savings sounds good, but stop and think about the points you will lose. You are almost to a level where you can get a free $75 treatment, are you going to sacrifice that?” You and your staff have to know your loyalty program and be confident that it provides valuable incentives to your customers.

Now you have some homework because developing a strong loyalty program, with levels that encourages your customers to consistently come back to you for all their retail and service needs, requires great thought and planning. The program has to be enticing to the clients, so you might want to do a survey to find out what incentives will excite them the most. The program also has to be profitable for your business, so you are going to have to do some number-crunching to see if the cost of what you are giving away will be covered by the business that you will receive. Put together a great program, and Internet and big box stores will be much less of a threat to your business growth, or maybe even no threat at all.

aaron headshot buisness columnBorn and raised in Chicago, Ill., Aaron Sonnenschein began his career in the professional salon industry at the age of 16 working at Hart Beauty Supply Company, which he later purchased with his wife, Jamie. A degree in management and marketing from De Paul University excelled Sonnenschein’s entrepreneurial spirit leading to the launch of JAS International, an import and visual merchandising company. This company was responsible for creating the industry’s first acrylic movable signage and display items for windows, walls, and shelves. After working for Mid City/Salon Centric, a division of L’Oreal USA, Sonnenschein is now district manager for Dermalogica, an international skin care and educational company based in Carson, Calif.

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