The Stylist’s Toolbox.com

It happened again today. A client bragged to you that she just picked up a couple of bottles of the shampoo you were trying to sell her at Target. On sale. Wonderful. Diversion is a nasty word in the beauty industry, and the numbers are staggering. Of the $29 billion spent on professional beauty products last year, over $800 million were spent on diverted products. I hear salon owner’s concerns about diversion on a daily basis, so I thought I’d take a minute to discuss what the manufacturers are saying, how diversion really affects your business and give you a couple of strategies to combat it.

The manufacturer’s story – Professional product manufacturers would like us to believe that all diverted product comes from guys in vans who drive around all day collecting case lots of shampoo from unsuspecting salon owners at 10% above cost. While some diversion may occur this way, a much larger chunk comes from some distributors who are selling truckloads out the back door. In an effort to stop this practice, manufacturers have demanded accountability from distributors, including encrypted coding on bottles which can track all bottles back to the distributor that sold them. While they are making some progress, manufacturers have been slow to respond, and the many income channels that diversion has created will make this an almost impossible problem to solve. Manufacturers are now spending millions of dollars fighting diversion, but notable results will be slow to see – it takes 6-9 months for a diverted product to appear on a retail shelf after leaving the manufacturer.  

How Diversion Affects Your Business – For many years the industry fought the proliferation of “Phantom salons”, places like Ulta that have a dusty chair or two in the back so that they can sell professional beauty products like a real salon. Now the greater evil is seeing the lines that you’ve so generously sold your clients on and taught them to use being sold on an endcap at Target. Diversion is clearly a breach of trust between you and the manufacturer that you hitched your horse to – the one who promised that their products would “be sold in professional salons only”.  But an annoying as the problem is, I don’t actually think that diversion hurts your business any more than grocery store haircolor, Pantene or herbal remedies hurt your business. Diversion has created competition for your customer’s dollars, but that competition was always there. Other competitors include other stylists in your own salon, every other salon in town, people who buy a bottle of wine and decide that they are going to color each other’s hair and men who shave their heads. All have the potential to take money out of your pocket. It is your responsibility is to make sure that your clients are leaving your salon with the products that they need to keep their hair looking great. If so, they have no reason to buy shampoo at Safeway, or color their own hair or shave their heads.     

What can you do about it -

1. Many of my salon owners are voting with their dollars and choosing not to do business with manufacturers that don’t keep their lines clean. Simply put, there are companies that have a diversion problem and there are ones who don’t. Investing your money in partnerships with companies who may not be as well known, but whose products can’t be found in every salon in America is a retail strategy that makes sense. Exclusivity gives you an advantage simply because products that are harder to find ensure that clients must return to your salon to continue buying the products they love.
2. Give your clients a reason to stay loyal. Create a rewards program, basing it on total dollars spent or the number of products purchased on a punchcard that lets your clients accumulate points until they get something free. I have one client that offers her customers $1 off each product they purchase if they bring the empty back in. You wouldn’t think that $1 would be much of an incentive, but her retail business is thriving. Be creative and find something that ensures that your clients are buying their retail from you.    

Diversion isn’t going away, but it doesn’t have to hurt your business either. Take a stand and do business with companies that support you and your salon. Your business will thrive and you won’t have to worry about diversion again.    

Photo by Lili Vieira de Carvalho

 How much did it cost you to fill your gas tank this week? Are you feeling the pinch? How about your clients? Are you seeing them as often as you’d like? Are you even seeing them often enough to make your car payment? True, the salons seem quiet and service and retail sales have slowed, but business isn’t as bad as you might think, even with the morning news screaming about $4 a gallon gas causing imminent financial ruin for everyone. 

The reality is much less dire than television might lead you to believe, but it is true that people are not feeling as wealthy as they once were. And while it is always said that beauty salons and liquor stores are recession proof, that doesn’t mean that the coming recession can’t hurt your business. People will always need their hair cut and colored, but when money is tight, they might find less expensive ways to get it done. In fact, service sales at chain and discount salons are at an all time high. Have you noticed all of the new commercials for do-it-yourself home haircoloring? Those commercials make coloring your own hair look easy and inexpensive, with salon quality results. I’m not surprised that people are tempted to try it. Don’t give discount salons and grocery store hair color the opportunity to pick off your clients! You’ve got some extra time on your hands, why not use it to implement a little recession proofing for your business?

1. Start to compile a list of your clients email addresses. You can call them and ask for their addresses, or ask them to fill out an updated client card when they come in, but the time to start communicating with them via email has come. It’s free, it’s easy and it’s a great way to stay in touch with them – by sending appointment reminders, special offers, newsletters (see below), or invitations to salon events. It’s also a wonderful way to touch base with those clients you haven’t seen in a while – send them a special offer to get them back in the chair. Creating an email database is easy to do – open a Yahoo email account and input the addresses as you get them, creating a special folder for your clients. Sending an email to 1 person or your entire list is as easy as pushing a button.    

2. Make a plan to get more $$ out of the people you have coming in. Are you getting 100% of the business from 100% of your clients? What would your day look like if your clients were getting all of their services from you? Do a random poll and ask 10 clients what services they have done at other places. You’ll be shocked at how much money you are allowing to walk out of your salon – for services you offer. Make a plan to capture a larger percentage of the business, through add-on services, free trials, or a new client offer. This alone can make a huge difference in your bottom line.  

3. Start emailing a monthly newsletter. It’s a fabulous way to keep your name in front of your clients, let them know you are thinking about them and provide an extra bit of customer service. Fill your newsletter with interesting tidbits and stories about hair, fashion, salon news, etc. Include tips for treating summer hair, or list 10 ways to make your haircolor last between appointments. Add an offer to the bottom to entice your clients in. You don’t always have to discount your services – sometimes simply alerting your clients to new services is a promotion in itself.

4. Run a promotion to get your clients in the door. Offer some added value to your usual services – free cut with a color, 6 free foils, complimentary brow wax, etc. Maybe they can’t afford to have everything done, but if you can it make it more cost effective to keep coming to you, you have a better chance of keeping them through the financial crunch. They want to keep coming to you – help them afford to do that. 

The good news is that recessions always end. Just by implementing a few small changes you can weather the storm with a strong client base and healthy bottom line.  

The Toolbox has many customizable tools to help you keep your business strong, including client newsletters, referral programs, in-salon signage, email blasts and service promotions. We can even build an email database for you. Click here for examples and more information.