Payment for Referral Agreements?

[mandamoon]

I'm just starting out with a Mobile Spray Tanning Business and I had some referral postcards printed up, basically $5.00 off a clients next spray tan for each new customer they bring in. I also decided to approach businesses, hair salons, nail salons etc..Thought I could put a code on the back of each card for each place that passes along my postcards. However, one of the owners in the nail salons told me that I would probably do better if I gave each business owner a cut off of any business they refer to me since he has no interest in getting spray tanned. Does anyone else do this? And if so what would be fair? As it is I already lowered my first trial tan to $20. Also is this even legal? Any help would be appreciated for this newbie..thanks!!

[TanAtCoCoBeach]

Originally Posted by mandamoon

I'm just starting out with a Mobile Spray Tanning Business and I had some referral postcards printed up, basically $5.00 off a clients next spray tan for each new customer they bring in. I also decided to approach businesses, hair salons, nail salons etc..Thought I could put a code on the back of each card for each place that passes along my postcards. However, one of the owners in the nail salons told me that I would probably do better if I gave each business owner a cut off of any business they refer to me since he has no interest in getting spray tanned. Does anyone else do this? And if so what would be fair? As it is I already lowered my first trial tan to $20. Also is this even legal? Any help would be appreciated for this newbie..thanks!!

I do not see why this is illegal. You are commissioning sales agents essentially. Personally I would do a free trial spray on their arms face or legs instead of a $20 spray. Gas costs too much these days to spray a person at their location. That, and my time is far more valuable than that to me.

In my salon this is what we do. Refer two people that purchase a package, get yours free. This probably doesnt work well for single mobile sessions but you can adapt it for tanning parties.

"Get a group of friends together that spray, and your tan is free."

Then offer discounts based on how many people are at the party. Do a single spray for $100. Do a three person party for $50 for two of the tanners and comp the organizer with a free spray. Do a five person party for $40 a person while comping the organizer. And an eight person party do $30 a person and comp the organizer. At 12+ I would charge $20 a person and comp the organizer.

This guarantees you walk away from every tanning session with at least $100. Your time is valuable. Imagine you did a 12+ person tanning party every night. That is at least $220 a night if you comped the organizer. That is over $6600 a month gross if you ran that model. And if you just do one tan a day you still get $100 a day or $3000 a month.

Think about it.

[delany]

I have never had much luck with random salons sending people my way. They usually take your cards and toss them after you leave. I do have a ton of luck with clients that own or work at a salon. For every three people they send, they get a free spray. Pretty good incentive.

[delany]

Oh and def charge more than $20!

Add in cost to get to the location (gas, car insurance, wear and tear on car), your business insurance, COG etc. At $20, I cant imagine you are making much profit. I charge $40 at my salon, and if for some reason someone wants me to travel (which is EXTREMELY rare) I charge $75.

[Dyatesx03]

Very very good information. I have been doing a promotion where everyone gets their first tan for $25, but i am mobile and it is not profiting me! I am afraid to just jump up with the big dogs and charge 40-50$ a tan (average rate here in dallas) because i want people to see that i provide excellent customer service and a great product before hand. Maybe my thinking has been all wrong...

Good input guys.

[TanTessy]

It's a good idea to give a discount as incentive for referring a new costumer but TanAtCocoBeach has a better promo idea. I find group tanning more profitable. Think about the expenses(mentioned by delany) that you would save. I also think $20 is too low. When pricing for a service, make sure it could compensate for all the expenses you'd make (travel, insurance, tax and etc).