|
Will You Add? - Why Coupons are BAD for Your Business
Career Challenge; Franchise Agreements and Time to Open LocationHave you considered a franchise business as your next potential career choice? Many people leave Corporate America or secure paychecks to start their own businesses. Does this make sense? If you start a small business how long will it take to open the business? What if you start a franchise how long until you get the doors open and start making money? Good question indeed.The UFOC or Uniform Franchise Offering C ting discounts. There is another way. You can still attract new clients with promotions that do not require you to pay them money when they receive a service. Upgrades and add-ons are great solutions here as they don't have to add time to the service, or much cost. Some examples:
- Free skin or hair consultation with first service
- Free deep conditioning with hair coloring
- Free eye creme with Botox injections
- Free lip or eye treatment with facial
- Free brow wax with your high-end facial
- Free shoulder massage with mani/pedi
Conflict - Workplace Warning SignsSeemingly insignificant issues in the workplace can, if left to fester, evolve into debilitating conflicts that affect teams, departments, even the whole organization. Is impending crisis looming in your workplace? Here are some warning signs:The same issues keep coming up. If you thought you resolved the problem but it keeps resurfacing, be careful. This just may be the tip of the iceberg.When a c Offering coupons are a common and easy way to attract new or old clients to your salon, day spa or medical spa. But what kind of client are you really attracting? And are you profitably providing that service once the coupon is redeemed?Your ideal client is not a coupon-cutter. While everyone loves a great deal, those that ONLY come to your spa or salon because of your promotional coupon are not likely to come around the second time. Sure, you tell yourself that you provide an outstanding service and if they like you, they'll come back. And that is logical thinking -- but it is a tad flawed. And doesn't often come true, sadly. If you are retaining more than 10% the clients that first see you with a coupon, you are way ahead of the rest of us. [To calculate this percentage, divide then number of clients who came back a second time to pay full-price by the total number of clients who used that coupon.] If you don't track your retention rates, or how many coupons are being redeemed, you should be. Measuring the impact of your marketing is the only way to can be sure that money spent on marketing is growing [and not hurting] your business. Every single service you do should be profitable. If you are offering a 20% or 30% off coupon, do you make any money? My guess is no. While offering a $10 or $20 coupon might seem like a better choice, they too need to be calculated whether you are profitable. The simplified calculation for service profitability is PRICE minus LABOR COST minus SERVICE COST minus OVERHEAD equals NET PROFIT BEFORE TAXES. Labor cost is what you pay your staff (or you) to perform that service. Service cost is the cost of the products used in that service [your product supplier should be able to help you with this.] Overhead is everything else like rent, utilities, insurance, marketing expenses, etc. that you have to pay even if you don't do any services. To calculate the overhead by service, you could simply guesstimate it as 40% of your price. But to a bit more accurate, you would total your average monthly overhead costs and divide it by the average number of services you provide in a month to reach your average overhead cost per service. You'll probably find that your profit margin is 10% or less for your services -- which doesn't give you much if any wiggle room on offering motivating discounts. There is another way. You can still attract new clients with promotions that do not require you to pay them money when they receive a service. Upgrades and add-ons are great solutions here as they don't have to add time to the service, or much cost. Some examples:
- Free skin or hair consultation with first service
- Free deep conditioning with hair coloring
- Free eye creme with Botox injections
- Free lip or eye treatment with facial
- Free brow wax with your high-end facial
- Free shoulder massage with mani/pedi
- F
How to Save Money as You Leverage the Power of Great Copy, Marketing and Brand BuildingLike any budget-conscious business owner, you may feel uneasy about spending money on marketing. A few hundred here for website tweaks, a few hundred there for articles... it doesn't take much to swing the other way, from marketing optimist to doubtful, stingy, money-hoarding pessimist... does it!Scrimping on the marketing, cutting back on the copywriting. Failing to keep pushing your name out there. Losing the but it is a tad flawed. And doesn't often come true, sadly. If you are retaining more than 10% the clients that first see you with a coupon, you are way ahead of the rest of us. [To calculate this percentage, divide then number of clients who came back a second time to pay full-price by the total number of clients who used that coupon.] If you don't track your retention rates, or how many coupons are being redeemed, you should be. Measuring the impact of your marketing is the only way to can be sure that money spent on marketing is growing [and not hurting] your business.Every single service you do should be profitable. If you are offering a 20% or 30% off coupon, do you make any money? My guess is no. While offering a $10 or $20 coupon might seem like a better choice, they too need to be calculated whether you are profitable. The simplified calculation for service profitability is PRICE minus LABOR COST minus SERVICE COST minus OVERHEAD equals NET PROFIT BEFORE TAXES. Labor cost is what you pay your staff (or you) to perform that service. Service cost is the cost of the products used in that service [your product supplier should be able to help you with this.] Overhead is everything else like rent, utilities, insurance, marketing expenses, etc. that you have to pay even if you don't do any services. To calculate the overhead by service, you could simply guesstimate it as 40% of your price. But to a bit more accurate, you would total your average monthly overhead costs and divide it by the average number of services you provide in a month to reach your average overhead cost per service. You'll probably find that your profit margin is 10% or less for your services -- which doesn't give you much if any wiggle room on offering motivating discounts. There is another way. You can still attract new clients with promotions that do not require you to pay them money when they receive a service. Upgrades and add-ons are great solutions here as they don't have to add time to the service, or much cost. Some examples:
HTTP = HTML link (for blogs, profiles,phorums):
<a href="http://www.atriclecheck.com/article/25528/atriclecheck-Why-Coupons-are-BAD-for-Your-Business.html">Why Coupons are BAD for Your Business</a>
BB link (for phorums):
[url=http://www.atriclecheck.com/article/25528/atriclecheck-Why-Coupons-are-BAD-for-Your-Business.html]Why Coupons are BAD for Your Business[/url]
Related Articles:
Too Busy Earning a Living to Make a Life?
Do you want to change careers but find you are too busy to take action? Here are some tips and strategies to help you start planning your ideal career.
Best Entry Level Telecommuting Jobs
Getting started in the work at home field is not easy. Often times one has to start with entry level work such as customer service while waiting for their ideal job to come available.
Don't Forget Where You Came from - Why the Past is Important in Implementing Business Change
Much of the literature and advice on implementing business change focuses on knowing where you are going and making sure that you understand and communicate a consistent vision of the future. Indeed, I have looked at the importance of this in an earlier article in this series. This article, however, looks at the past and its often under-estimated importance in implementing change.
|