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Old 07-21-2005, 05:49 PM   #1 (permalink)
 
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In 2003, we conducted a study of 19 competitors’ salon databases in the Detroit market to find out the answers to some burning questions for the industry. Each salon agreed to the study, no one got a copy of anyone else’s database (naturally!), and each received the results.

We compared each salon’s database to one another, and of course, they were all in very close proximity to each other.

In the polling part of the study:

All 19 salons were considered themselves “very” to “extremely” competitive. Salon owners felt that over 50% of their customers had visited the competition. And that over 30% moved every year.

The results?

Only 14% moved every year. Only 5.9% had visited a competitor!

This left over 80% who hadn’t moved or been tanning at the competition. So where were they? Inactive. Over 1,000 different distractions compete for people’s money, time, and attention every day and tanning…well, quite frankly, is just forgotten about as people fall out of the habit of tanning. Even salon owners we know don’t tan and have fallen out of the habit.

OK, now fast forward to this week. I got a call from a salon owner in New Jersey (he and his competitor agreed I could say that here) who was concerned that his competitor had gotten his database list…from a dishonest employee, or Grip had snafu-ed his competitors mailing somehow (Grip does mailings for both competitors)…or dumpster diving, or and so on… ran the dark thoughts that typically appear in the private conversation we all have in our heads.

What led him to this concern? Two customers brought in a birthday card mailing Grip had done for his competitor one mile away. One customer who brought in the card, didn’t remember that he was in the wrong salon, and when the salon pro pointed that out, he asked would they honor the offer? They did. The salon employee asked how this customer, their customer, got on the other salon’s mailing list…had this customer ever visited the other salon? The customer said ‘no’.

I checked and assured him and myself that there was no Grip snafu. In all the years of mailing and with over 10 billion mailpieces mailed, we have only ever had one snafu many years ago, and it was two different businesses located in two different regions of the country. Since that snafu, we have over 10 processes in place to ensure the highest quality standards and it is impossible to occur today.

Now back to the two owners. An unplanned case study was done on the spot. To address his concern I suggested that I could send the two databases to any attorney of his choice, with a contract that read the attorney could only compare the two and report to him the percentage or raw number of shared customers and that should the attorney divulge anymore information than that, a bond with a bank and formal consent decree signed and filed with a court of competent jurisdiction, would turn over $1 mil cash to the wronged competitor. I assured him that I thought I could get the competitor to agree to this. (The competitor said, Oh yeah! Just send me the cash!)

Or… I could just get consent from the other owner and we could do a case study on the two databases as both were here on file. Both agreed and wanted to know the information. This is rarified air they were able to breathe! When polled, both said they were “extremely” competitive with each other and that both salons were only a mile apart. What did the case study show?

Only 7.1% of their customers were shared! The remaining 92.9% had never visited the other competitor! The results were in line with the Detroit study of 5.7% of two years ago.

As I told them both, if one salon marked a lotion $20, and the other marked the same lotion $18, only 7.1% of their customers were ever exposed to this small difference, and most likely only a very small percentage of that 7.1% would even remember it!

So, it’s not as competitive as you think. So who is #1 competitor?

YOU!

Do you reach out and touch your customers every month? Inactivity is your biggest competitor.

So what about the customer who was in the wrong salon? Was he brilliant and just went to the salon he liked better and faked his way into getting them to match the birthday card offer? Or was he simply forgetful as he was driving to the birthday card salon his car accidentally arrived at the competitor? And then did he cover his disloyalty with a little white lie that he hadn’t visited the competitor?

Grip and the two salon owners voted for door number two! And one salon owner went on to tell us how he gets customers all the time who bring in competitors coupons and don’t know they are in the wrong salon. Of course, this is routine.

But what isn’t routine is that one owner wasn’t mailing birthday cards and one owner was reaching out and touching his database monthly. Wanna guess if his sales have been consistently up? I can’t say, and will leave that part up to you!
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Old 07-21-2005, 05:58 PM   #2 (permalink)
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Join Date: Apr 22 2004
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Great post! It is easy to have weird conversations with yourself! I know how important it is to talk to our database, and I am excited to really develop our database soon!
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