Campaign: Global keratin hair treatment via Scoopon

Client: Urchin Studio1

Agency: Next Marketing

 

Background

Urchin Studio1is a hairdressing salon based in Prahran, in inner city Melbourne. January is a quiet time for hairdressers and slow periods put significant cash flow pressure on salons with high fixed costs. This was the case for Urchin Studio1.

The start of the New Year presented some challenges and opportunities for this business. The salon had moved location in 2010 and several clients did not make the move with them. The salon also had a staff member, a final year apprentice, who was ready to build up a client base of her own. Being able to launch some alternative marketing activities to attract new clients during a time when cash flow was very tight was a major challenge.

Given the hype around the ‘Groupon’ type promotions, Next Marketing felt that a promotion of this type would be appropriate for Urchin Studio1.

The reasons included:

• instant new clients
• immediate cash flow
• ability to fill extra capacity, and
• no financial outlay required by Urchin Studio1.

The key long-term success to this campaign was to select a ‘deal’ that maintained the premium positioning of the salon and also covered costs. It was very important that the salon was not perceived as a bargain basement hairdresser.

In fact, this is another reason why a third party was chosen to run the campaign. The heavily discounted deal was not marketed and sold under the business name and it was a transaction via a third party. A degree of separation was important for the long-term health of the Urchin Studio1 brand.

Objectives

The objectives of the campaign were as follows:

• attract new clients and grow the client database
• grow sales (short- and medium-term)
• staff training
• negotiate better pricing with key supplier
• position the salon as a premium supplier, and
• instant cash flow.

 

Strategy

The first step was to select a ‘daily deals’ supplier that had experience in hairdressing offers and was able to respond to this opportunity in a speedy manner. In this case, Scoopon was chosen.

From a small business perspective, the deals market can be very seductive, providing lots of new customers, cash upfront and the entire marketing campaign paid for by the supplier. At the end of the day, however, the deal could, based on what we now know, make or break a business. We certainly felt the allure of the process at the time, but with a solid strategy in place, we were able to keep focus.

Next Marketing worked through a number of deal scenarios with Urchin Studio1 and also reviewed the suggested offers that Scoopon presented. In the end, the deal was a Global keratin treatment, which in simple terms is the ‘Rolls-Royce’ of hair treatments and retails at approximately $500 RRP (recommended retail price). Keratin treatments are also relatively new to the market in Australia; therefore, are positioned as a premium service. The Urchin Studio1 Global keratin deal was sold via Scoopon at $149 including GST and was valid for six months.

Global keratin treatments last up to four months; however, some clients have indicated that the treatment has lasted closer to five months. The best success is achieved if clients use the keratin shampoo, conditioners and the other treatment products in the months following the initial treatment. As such, this provided upselling opportunities for the salon.

At the time, the Scoopon offered two deal opportunities – the main deal of the day and then smaller side deals, which did not feature as prominently on the email campaign and on the Scoopon website. Given the size of the Urchin Studio1 business, it was decided to use the side deal campaign. Side deals run for 48 hours.

Execution

In preparation for the launch of the deal on Scoopon, Urchin Studio1 created a special landing page in its website, which explained in more detail about the keratin treatment. Why was this important? All up, the treatment takes approximately four hours in salon and this would be a barrier for clients, who are time poor or just very busy. The salon also wanted to give people the ‘heads up’ about the need to buy special shampoo and conditioners.

Once the deal went live, Urchin Studio1 embarked on an email marketing campaign to lapsed clients and in particular to those clients who had not made the journey to the new salon. One of the challenges with this promotion was to ensure it did not detract from current clients who were prepared to pay full RRP for the treatment. Therefore, the email database for this campaign was a selected, hand-picked list.

Results

The short summary is that the promotion has been an overwhelming success for the business. Here are some of the results.

• 158 deals were sold during the campaign period. This was almost double what was expected. In truth, this did create some immediate challenges, as the campaign strategy was built around selling no more than 80 deals. Urchin Studio1 had the capacity to deal with these extra clients, so in the end it wasn’t an issue at all.
• The phone ‘went crazy’ for a solid two weeks and, while this was challenging at the time, the owner had set aside sufficient time to respond to calls, which meant that most people were booked in during that time, so the salon could then switch over to business as usual.
• Due to the large volume of deals sold, Urchin Studio1 was able to negotiate better pricing with the product supplier, which will improve profitability in the long-term.
• Staff training – the salon has become much quicker at applying these treatments and now completes the process in closer to three hours, rather than four.
• The deal clients have been a good fit for the salon. There was some ‘fear’ that the Scoopon clients would be bargain hunters, but that has proven not to be the case.
• Two out of three clients have bought product, which has resulted in over $3000 worth of sales.
• One in five of the Scoopon clients has booked in for additional services at full retail.

Challenges

Although the Scoopon campaign was an outstanding success, it did present a few challenges. Some of these were:

• Profitability– it can be very easy to say ‘yes’ to a deal price without really thinking about the profitability per client, that is sale amount minus commission and GST.
• Copy– each deal provider has a particular style of writing and personality, so we needed to make sure that the copy of the deal was still technically correct within the ‘marketing speak’.
• Pictures– each deal provider has a library of images that they like using. In the Urchin Studio1 case, it took some additional time to source ‘appropriate’ images from the product supplier.
• Number of deals sold– while it was OK for Urchin Studio1 to have more deals sold then what we originally strategised, it would no doubt prove to be extremely challenging for a business that really couldn’t cope with the extra capacity. Based on this, we would highly recommend spending enough time prior to the deal going live really determining what the ‘deal’ capacity is in the business.