'Would you like fries with that?'
Updated: Jan 13
Retail products offer hair and beauty salons a great opportunity to increase their revenue. But they are notoriously bad at it. So, idResults dug deeper to find out why and to offer solutions.
'Would you like fries with that?'
This question is a sales technique credited to McDonald's Restaurants. In its early days, McDonalds were selling burgers easily enough and lots of them. But their customers were buying little else. To change this, staff were instructed to ask customers that only ordered a burger - ‘Would you like fries with that?’
Overnight the sales of fries as well as soft drinks and sundaes went through the roof. Since then, this sales technique has been successfully adopted by retailers across the world and is often referred to as an ‘add on sale’ or a ‘complementary product sale’.
So, if you purchase a pair of polished leather shoes from a store, you can expect to be asked if you would like shoe polish or spare laces with your purchase. Even online retailers have adopted this principle with pop-ups. These appear before customers check out and suggest related merchandise based on what they are purchasing.
Insight into consumer buying behaviour can explain why this technique is so successful:
The main purchase decision generates the most objections in a customer’s mind. Once this decision is made, additional related items are much easier to sell.
In the heat of the moment, customers often forget to purchase related items they may need or enjoy and will leave without them unless prompted.
But there was another important fact that supports this McDonald's sales directive – it costs significantly less and requires much less effort to sell additional products to an existing customer than it does to gain a new one.
So, what has this got to do with salons?
Well, for a salon, the add on sale is not fries but a conditioner or a cosmeceutical treatment cream; products that help maintain or continue to improve skin/hair condition between salon visits.
According to research published by Mordor Intelligence Pty Ltd in November 2016 - the Australian cosmetics market was worth $ 4.98 billion in 2015 and is projected to grow to
$ 7.76 billion by the end of 2020. Now, that is a lot of products that promote the maintenance or improvement of hair/skin condition. It does not take a rocket scientist to understand the significant opportunity this represents.
So, consumers are buying these products but not from salons. They are purchasing from supermarkets, department stores, from pharmacy and on-line.
How does a salon benefit?
Retail Products provide the opportunity to generate incremental sales and profit for the business.
By selling retail products a salon can increase the $ return per/client or $ return per/hour.
Selling retail products allows a salon to extend the salon experience to the clients’ home.
Retail products create an additional reason for clients to visit/return and provide the means for promotions and client rewards.
The way retail products are merchandise and displayed can make a powerful visual impression. This makes a salon more visible, enhances its appeal and can attract passing traffic and new clients (walk-ins).
Are consumers likely to purchase their products from a salon?
The relationship between salon and client is heavily dependent on trust. A factor that continues to grow with the rising consciousness and obsession with self-image. Clients believe the advice they receive and follow the recommendation made by their beauty therapist/hairdresser/or stylist and do so because they trust them.
In addition, the time between salon visits is typically 4 to 8 weeks which corresponds with the replacement time for most retail products.
Taking these into consideration, the answer to this question is a resounding yes.
What does it take?
The fact is - no matter how beneficial the products are or how attractive the packaging, retail hair and beauty products will not sell themselves. This requires selling skills, product knowledge and confidence together with an understanding of product display and stock management.
Unfortunately, these things are not included in the formal training for hairdressers and beauty therapists. So, it is not something they are passionate about and many are reluctant or uncomfortable with the idea of selling products. Some fear their clients will feel pressured to buy, while others worry the products might replace them.
Addressing such challenges, falls to the suppliers and distributors of salon products. To gain the support and commitment of salons they need to offer a solution that allows a salon to generate retail sales with the least amount of effort and investment in stock.
Yet, from my experience you will be hard pressed to find a supplier or distributor who has figured this out. To have any hope of capitalising on the relationship between a hairdresser/stylist/beauty therapist and their clients, requires understanding and consideration of the trading context for a salon business.
The traditional pathway to salon ownership is through success as a therapist or stylist. Therefore, success depends on technical expertise and skill rather than retail management experience.
Just like the entrepreneurs in any other industry, salon owners have put everything on the line to start their own business. Every spare moment is spent ‘doing’ business with little or no time left to consider ‘how’ they do business.
Most feel uncomfortable with selling – concerned that clients will feel pressured to purchase.
Salon owners typically have strong relationship building skills but lack business acumen and decisions are often made based on emotion and gut feel rather than logic and reasoning.
Consumers are active and frequent purchasers of skincare and hair care product and purchase mostly from department stores, pharmacies, supermarkets or on-line.
Consumers want the best products to suit their individual needs at an affordable price.
Salons need product knowledge training, coaching in effective selling techniques and educating in inventory management.
How to choose a retail brand for your salon?
Put together a short list of the brands you believe best suit your salon and you clients. Before you approach them, here are key things to consider in your decision making:
Check there is a clear strategy for the brand in the market? A brand strategy is evidence that there is a plan in place and that the distributor or supplier is invested in the brands success. It also provides some measure for the level of support you can expect by investing in the brand.
Sales & Stock
Ensure you understand the cost of an opening order, discounts that apply and the payment terms.
Ensure you are given estimated monthly and annual sales for your salon along with actual results from comparative outlets. This will allow you to calculate stock-turn.
The supplier with most likely set budgets for your annual stock purchases. It is in your best interest to know this figure. Remember your purchases in year 2 may be less than year one - that's because of the opening order value.
Retail products do not sell themselves, so when considering your expected sales turnover, you need to examine the brand strategy to ensure you have the necessary tools to achieve it. You should check for the following:
New Product Launches
Print and Digital Advertising
The last thing you need is to put a whole lot of effort into a brand only to find it is suddenly available everywhere. So, if a distribution strategy is not included in the brand strategy, then ask for it and pay attention to the following:
The account criteria
Who makes the final decision?
Current places where the brand is sold? (distribution network and types of retailers)
What geographical rules apply to stockists?
Is there a minimum turnover requirement?
Ensure you understand the stock ordering or inventory management process.
Minimum order criteria plus order value for free delivery
Order supply rates
Stock of best sellers
If there is a sales representative who is responsible for your account, find out how they are remunerated (commission Vs base salary).
If their income depends heavily on commission, then be alert for aggressive sales tactics.
Ensure all returns and credits are processed promptly.
Keep a close eye on the age of your inventory.
Making the final decision
Choosing a brand can be overwhelming. This needs a cool head, pragmatic thinking and an objective view. To help, prepare a score card you can apply to each candidate. Identify the top ten critical factors you want from a brand and give each brand a score each brand out of 10 for each of the criteria you’ve set (1being worst and 10 being best).
Here are some of the issues you might wish to consider.
Point of sale and display material supplied along with the opening order
How and when will product training, sales education be provided
Support provided with inventory management
Price position and level of exclusivity
Return of aged stock/ mark-down subsidy of slow sellers
It's easier to sell the brand of products you use in your salon treatments and services
Finally, do not be afraid to play one brand/supplier off against another and always have a backup option should things change. If you are looking to replace an existing brand, ask the new brand for help clear the remaining stock of the old. It is not uncommon for new brands to purchase what remains of the competitors’ stock or provide financial support to help clear this stock to fast track your opening order.