Case Study: How a Nashville Salon Retains Daily Deal Customers

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Julie Marler is the owner of J. Bangs Salon, a hairstyling studio in Nashville that has had great success running deals with Groupon and LivingSocial. Marler estimates that she’s retained 50% of her daily deal customers by preparing her staff ahead of time and increasing stylists in the weeks following each deal. She’s already thinking of ways her salon can use Groupon Now when the service makes its way to Nashville.

As a salon owner, what initially attracted you to group buying deals?
Well, we were a new salon. We’ve been open for two-and-a-half years. After our first year of being open, we were approached by Groupon to be one of the first salons in the area to run a deal. Being a new salon, it was all about getting the name out there — name recognition — and I had new stylists that had room to grow. It just seemed like the timing was perfect for us to run our first one.

Since you’ve run deals with Groupon and LivingSocial, I was wondering if you’ve noticed any differences between the two companies?
It sounds funny to say this — and you may have already heard other people say the same thing — but the Groupon clientele was a little bit more high-end. They weren’t necessarily all about the coupon itself. But we seem to have retained a little bit more of the LivingSocial clients than the Groupon clients.

We did well because of the timing, we had enough stylists to be able to take all the clients at once, and just being prepared.

What were the two companies’ sales pitches like?
When Groupon first came out they were pretty basic. Fifty percent is what you retain from whatever deal you get. Our first deal was $50 for $120 worth of services for the consumer. Groupon retains $25, which is 50 percent plus a 2 percent credit card charge. But by the time we did our third deal — we’ve done Groupon twice and LivingSocial — we got a little smarter. Because of the competition with Groupon and all these other deals, we could negotiate better on our side and drop the credit card charges.

It sounds like you had positive experiences, so why do you think so many other businesses haven’t had the same success with group coupons?
Well, it is basically make or break for a salon — or any business — because it’s so much business at once. You know, we did well because of the timing, we had enough stylists to be able to take all the clients at once, and just being prepared.

How did you prepare?
It’s just the customer service we’d give to the clients. That’s what sets us apart from the other salons is giving exceptional customer service and the opportunity to retain these clients is what’s huge. We knew that. A lot of the staff members work four days a week, so I had a lot of them pick up a couple extra days. They knew this was a great opportunity for them to gain new clients. Mainly having the staff on board is what was huge for us, versus maybe some other businesses that don’t know that.

Were you able to retain many of the customers who came in from the Groupon or LivingSocial deals?
We retained 50 percent of the customers. You know, nowadays it seems like Groupon branded themselves. So after we did the LivingSocial deal, we’d still get people that were like, “Hey, I just bought your Groupon … I mean Living Social.” That was kind of interesting. But, you know, I do have friends out there that say, “I’m sorry, I just buy Groupons to get my hair done. I just hop around to other salons,” and stuff like that. I guess in retaining the clients the only thing we can do is to give exceptional customer service.

Now that you’ve tried Groupon and LivingSocial, would you run a deal with any of the other daily deals sites?
We did another one locally. Nashville has the one called The Big Deal. Their database just isn’t that big. I think we sold like three. It’s not about what coupon I put out there. It’s just how I can, as a salon, stand out differently from all the other salons that have saturated this market. So, I’m trying to do something different and I have to have the staff to back it up. If I can get all that and get creative with something new, that would make me do it. It’s not about the money, it’s not about the number we sell; it’s just about creating a nice relaxing atmosphere in the salon for potential new customers.

Generally speaking, how well do daily deals work for salons compared to local businesses in other industries?
I think it can be big for salons. It just — it has its pros and cons and it’s basically what the deal is they’re putting out. It seems like every salon in America put out a keratin deal and it just got over-saturated. I think it has just as many pros and cons for salons, but I believe salons will keep doing it.

Groupon is getting ready to come out with something new called Groupon Now. It may not be the best thing for us, but if I had a couple new stylists that just wanted to get their names out there I would do a Groupon Now if they were slow for a day. Why not throw it out there? You’ve got nothing to lose if you can produce something good.

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Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.