Recession-busting strategies
by Cape Business staffCape Business recently sat with a very experienced businesswoman – Lee Anne Sullivan of Cosmetique Salon – to learn how she is building her recession-busting strategies.
Throughout 2009 – in our magazine, on the Web and via workshops – Cape Business Publishing Group will be helping our readers and customers with the best advice and examples to follow in your efforts not only to survive but eventually to thrive through this challenging period.
We are a strong business community that will weather the storm better together than in isolation. Cape Business, Health & Wealth, capebusiness.net, businessconnector.biz and our weekly e-mail newsletter bring together more than 10,000 individual owners and managers almost on a 24/7 basis.
But maybe nothing can be more valuable than the advice and experience of your fellow business owners. We will be bringing to you scores of them throughout the year – beginning this edition with Sullivan.
Visit capebusiness.net for more such profiles and other advice; and join the network at businessconnector.biz for a powerful suite of business-generating and promotional tools that is more valuable than ever.
Lee Anne Sullivan has successfully endured through three recessions. She’s steeled to do so once again, relying on all the experience, guile and imagination it will take.
Her Cosmetique Salon on North Street in Hyannis – in business nearly three decades – serves some of the wealthiest and busiest clientele on Cape Cod, focusing on what our marketing consultant Marti Barletta calls Prime Time Women – 40- to 65-year-old professionals, business owners and recent retirees.
Like so many companies across the Cape, Sullivan was experiencing one of her best years until October 2008 – with revenues up about 18 percent – when the ever-growing mortgage crisis truly infected Wall Street and rapidly spread to Main Street. She has a powerful ear to the ground, as customers constantly talk about dropping portfolios, declining business, even layoffs.
As a result, Sullivan is watching pennies very carefully, scrutinizing every bill – and focusing on cash flow. If she sees invoices that are still carrying a fuel surcharge, she is on the phone immediately to point out that fuel prices have declined by half in the last three months.
Sullivan recognizes that this downturn is different – potentially deeper and longer than any she has experienced. “But the last thing you should do is put a blanket over your head,” she says. “This is the time you invest in your customers and seek to gain new ones.”
Outgoing and generous with advice to colleagues, she also believes it has never been more critical for companies to look out for each other – from creative partnerships to networking to referring business – even to competitors sometimes.
Most of all, it is wrapping your product and service with extra value at the very best price – embellished with a tangible thank you.
Sullivan is not a hairstylist. She never has been. She is a lifetime businesswoman who also has a real estate license. She focuses on hiring and training, quality control, finances, customer service and marketing.
Here are some of her strategies, in her own words:
Focus on retention – both of customers and staff
While all you hear about are layoffs, this actually is a time for small service businesses to embrace their employees. Retaining them – especially if they are highly trained and have relationships with your customers – is paramount. You don’t have to love your staff, but you do have to like and respect them. And in this environment, be transparent and communicate to avoid unnecessary insecurity.
I have had most of my staff for 15 years and more, through the best of times and during some rough patches. I frequently do special things for them. Sometimes, we all go out together; other times, I take one or two to lunch. Recently, I took them all on a Sunday brunch on the Cape Cod Railway. It cost $1,400; a lot of money anytime, no less during a recession. But it builds teamwork and they know I really appreciate them.
Be positive with your customers and staff – exude confidence
This is the time that you have to exude an upbeat and positive attitude – not only for your staff, but for your customers. They are nervous. They want hugs when they come in here, sometimes literally. Think how nice it is to go to your favorite restaurant and be greeted warmly by the owner.
During tough economic times, your place of business should be an oasis from the stress.
When your services aren’t necessities, it is especially important to wrap them around both value and a warm – even fun – experience. We work extra hard, for example, to offer up a beautiful environment, especially with artwork and gorgeous fresh flowers, so our customers feel beautiful. We have 12 types of coffee – including cappuccino – and fresh biscotti all day long.
Survey your best customers to learn how they plan to use your product or service in 2009
For 2009, I have designed a questionnaire for our clients. We are not asking too many questions. They include: How often do you plan to come to Cosmetique over the year? If the economy remains challenging, what are you willing to pay for your service in 2009 without changing your lifestyle?
We have cards so staff can collect information about our customers: an anniversary; a child’s acceptance to college; a death in the family. If a client comes in and says, “I have lost my job and don’t think I can keep my Christmas appointment,” I want to know.
The information is left with me, and I will either call, send a note or sometimes a gift. Over the years, I have developed a huge computerized database of my customers’ preferences and life stages.
Our receptionist/concierge fills out cards for any new customer. I make sure to pick up the phone and call them within seven working days. “How did everything go?” “Were you treated with total respect?” “Will you be coming back?”
If they say we are a little expensive, I will send them a series of coupons to make it worthwhile for them to revisit.
Bring extra value to your product and service without charging more
You always should go above and beyond a customer’s expectations. But in this environment, value is critical. I don’t believe in discounting my prices. I do believe in rewarding customers who pay for our service. So we are inclined to give them gift cards when they come in so they can apply them to their next visit or maybe a manicure while they get a shampoo this time.
I watch every penny coming in and going out. But I also spend a lot of money continually filling gift bags with shampoos, conditioners, hand creams and beautiful tissue paper. Each bag can cost $40, but it shows my customers that I appreciate them. And it creates buzz for those being introduced to Cosmetique. Our average client spends $1,500 to $2,000 a year, so the investment is worth it.
In addition, I am a member of the Hyannis Area Chamber of Commerce’s membership committee, and every new member gets a gift bag from Cosmetique.
Get out of the office or store – network, network, network
You have to network. You have to find kindred businesses you trust that you can refer customers to – and who will refer customers to you.
Networking is very important. I spend a great deal of time in business groups. I even paid $430 for one of my staff to join a networking group. Many first-time clients will try Comestique because they feel comfortable meeting me. Beauty salons essentially sell a commodity service, so a relationship is a very important differentiator. It helps that I don’t cut hair and devote all my time to the business side.
Partner with other businesses to promote each other and provide greater value to common customers
We are partnering with other companies we respect that wish to reach our clientele. We refer clients to Dowling & O’Neil Insurance Agency; Century 21 Real Estate in Hyannis; a mortgage lending company; a fine caterer; even a home maintenance service. Their promotional products are often included in our gift bag that includes hair and facial products from our salon. We have fresh flowers every day from Lily’s Flowers and Gifts and the owner gets to promote his business with signage.
Now I am selling our gift bags to other businesses who give them as thank-you gifts to their customers. One lawyer gives them to clients after he closes a home sale. He’s very pleased and it’s great lead generation for us.
Listen more carefully than ever to your customers and your employees – and thank them
I constantly exchange ideas with staff and gather information about their customers. “Give me some feedback,” I say.
This has been very successful for me.
Every week, I ask my staff: “Is there anybody you need to say ‘Thank you’ to? Do you need someone to empathize or share with?” It may be a customer or a fellow hairdresser.
It’s all about embracing your clients and fellow staff.
Empower your staff to go beyond average
Marketing is about more than image and branding. Staff must be built into your marketing because they are the ones that touch the customer first.
They should eat, sleep and think like the owner.
I have brainstorming sessions with them. I say, “Come to the table with what the clients want.” My staff recently encouraged me to begin offering up a hair smoothing and treatment service that costs $400. They insisted we would have clientele for it. I was skeptical given the cost, but they already have done three of them in the first week for $1,200.
I also do role playing with my hairdressers so they are better prepared for different circumstances.
While I am always available, it is essential to empower my staff – especially my receptionist/concierge. She will often have to make decisions to address customer needs or complaints that may cost money. I want her to feel comfortable making them in a way that will immediately please the client.
Market as aggressively as ever – but do so efficiently
Know who your key customer is and focus a great deal of resources and attention on them. Mine is prime time women, those 40 to 65 years of age.
We cater to working women and active retirees. So we ask ourselves: What is important to them? It often is time. They don’t want to spend a day in the salon. We have more and more laptops being used here at 1 p.m. while they wait or even as they are under the dryer.
Think outside the box – but be careful not to exclude your core customers
Our large flat-screen television is now used to highlight high-end real estate for sale or rent by Shoreland Century 21. I went to the owner with the idea. Clients come in and say, “What is that?” It creates buzz. I am a licensed real estate broker, so I can actually refer clients to Century 21. I keep listing sheets of their property in the credenza under the television. And I will get a lead fee or commission if they eventually purchase property.
In turn, I want to see banners or pictures of my salon in the lobby of my marketing partners.
Plan ahead – don’t get so wrapped up in surviving today that you lose sight of your company’s long-term goals and core mission
This means constantly reviewing your business plan and marketing plan; it is thinking about what you will do when the economy improves to stay ahead of the competition.
It also means keeping your staff pointing forward by how they treat their customers.
Clients are feeling more pressure than ever. They may not always be polite, or they might be late. We can’t cop an attitude. “We understand if you are in a bad mood.” “It is no shame if you are late; we’ll find a slot for you. In the meantime, would you like a complimentary pedicure while you wait?”
That client will be critical to you down the road.
If you stay up at night, do so thinking of new ideas rather than fretting about the moment
Times like this require perspective. Fortunately, we are on Cape Cod and not in Palm Beach or California, where the housing market has collapsed. In other words, it could be worse.
For someone like me, who has experienced many downturns over 30 years of business, it may be easier than for younger business owners. But, in my late 50’s, I realize that life is short. I have lots of friends and colleagues getting sick and some are dying. When I wake up in the morning, I don’t want to waste the day.
Tough economic times require extraordinary strategies and new ideas – but, most importantly, don’t forget to carry them forward in the ensuing good times
We tend to be most resourceful in tough times. Imagine what happens when you go the extra mile when things are going well. Chances are you will grow your business far faster with better business practices and customer service.
Published in Cape Business January/February 2009
