Posted this with the permission of my friend Bill in Chicago who sent this to me a few months ago. Bill’s a sales and marketing genius. Last year, he outsold everyone else in his home office combined.
Here’s his recap of this strip mall merchant’s success story — quick and concise the way all effective marketing and sales should be.
Lawrence,
Thought you would appreciate hearing this success story.
Tonight I took my daughter to get her hair cut and colored.
Went to a new place, and ended up talking with the owner for 2-and-a-half hours about business, marketing and life in general.
Check this out.
He opened his salon 17 weeks ago with zero clients.
Now he is seeing, on average, 55 clients a week, with an average $100 unit of sale. That’s $5,500 a week or $22,000 a month, or $264,000 annualized.
Guess what? The local market did not need another hair salon. I’ll bet you the existing salon owners are all moaning about how ‘bad’ business is in ‘this’ economy.
But Carlo had a different idea. He set up shop and is thriving.
How did he do it?
Carlo opened up and shared with me three marketing strategies he’s used. They are all brain-dead easy. The first one obvious (but I bet most start up owners don’t really get it). The other two are not as obvious, but are working like magic.
- He smartly opened shop in a strip mall across the street from a 700 home sub-division where the average home is worth more than $1 million. Classic Dan Kennedy strategy: target people with MONEY. 700 women with money to burn, who all want their hair to look better than anyone else’s, live across the street.
- He has a killer offer: 50% off your first visit. How can anyone resist HALF-OFF a service you were going to buy anyway? This offer is in every single one of his ads (and unlike most business owners he didn’t stop using it after the first 30 days. It worked, so he’s still using it 17 weeks later).
- Carlo has the best referral strategy I’ve ever seen anyone ACTUALLY USE. Here’s what he tells EVERY customer: For each friend you send to me, you get $25 off your next service. Send me two friends, you get $50 off your next visit, send me four friends and your next color or highlight is FREE. And he tracks this on a super high-tech system: 3 x 5″ cards.
Three simple strategies THAT WORK LIKE MAGIC.
There’s more to the story, and he is a smart guy who’s doing lots of things right… but those three strategies are the key marketing approaches he’s focused on so far.
Zero to $264,000 in year one. Not bad for a guy cutting hair.
wow, this “word of mouth” strategy is fantastic ! two benefits actually by applying this smart strategy 1) you’ll have a flood of loyal customers 2) your brand spreads like wildfire 😀 Thanks Lawrence for sharing this !
You got it Ash.
Couple things.
I wonder if his strategies would work for the other tenants in that same Strip Mall. After all, they already have Step 1 DONE FOR THEM.
Nah! Prolly not.
I forgot about the other things. This should do.
so simple. A consistent referral generating strategy is essential. Real estate agents don’t do much of it. the big dogs do.
I have a list of about 600 women in our local town looking for a type of hair straightening. I wans’t doing anything with the list. I then decided to send an email for my hair guy that does this type of straightening.
Instantly – phone ringing off the hook.
I told the list to say one thing to John the hair dresser, “Tell John that ‘Alex’ sent you”
I told John to say one thing when they said that, “Oh you know Alex, great! On your first visit you’ll get $50 off. When would you like to come in?”
Booked 8 appts the first day, 6 the next.
Cool, Chris — thanks for sharing.
Been by your blog a couple of times.
Great stuff.
This should inspire anyone in a similar position. Many times I see new local retail oulets pop up and expect them to be gone within 15 months – just enough time for their accountants to tell them they are losing money big time. Unfortunately most of those business owners think that just opening a shop is enough and it isn’t. It takes time and or money to build a customer base and most shop owners are too short sighted to give a good discount to get a new customer through the door. Every business owner should focus on the lifetime value of every customer. Any discount that brings you a new customer will be a tiny fraction of their lifetime business value if you keep them happy and coming back again and again.
@Lawrence Bernstein:
thanks Lawrence. Need to be posting a bit more, “top of mind” things. get too caught up in the details. Great blog here. I’m always pringint out the files. highting…
Referral Strategies are the best strategies to increase number of customers or clients. But again it depends on how smart we apply these strategies.
Online you get to forget about location, location, location (except in regards to where you’re advertising…)
You can also ditch the 3×5 cards!
Definitely great strategies to start out and spread the word. I’m curious what percentage of his 55 clients a week are returning customers, and how many are new from referrals and advertising. As long as he continues to see larger percentages of returning customers, he should be good to go.
If the returning customer % of total customer base doesn’t rise, he might just be spending a lot of money to get people in the door and not retaining them. Between advertising, initial discounts, and referral discounts, he’s probably paying over $100 for each customer acquisition. Not bad, as long as they keep coming back.
Sounds like he’s getting it right though, and it’s great to hear small startups are still viable.
Great post Lawrence, as always.
Amazing how such a simple, simple system can generate such a return. What’s even more amazing is why more of us don’t use them.
Guilty as charged.
Most people will continue to come back month after month, year after year, to a business like this. As long as he delivers quality cuts and styling, he has got an excellent money making machine.
The question is, will people copy and paste his ideas…or continue to look for that shiny newobject that promises even great riches? I like simple andproven…this has both. Thanks again. Troy
Hey Troy, how are you!?
I know this small biz optimization stuff is right up your alley.
Easy does it.
Lawrence
Wow, what an inspiring story. Kudos to the guy – it goes to show that sometimes the simplest strategies are the best.
Eric raises an interesting point when he asks how many clients are returning and how many are new. As long as he’s retaining the clients after initial contact, his marketing strategy is excellent 🙂
Dan
Very cool post. Those ideas are awesome. I have to assume his overhead for each client is well below the value of the 50% off or the $25 discount.
But obviously they are and obviously they worked.
~Johnny