Discounts and referrals: What works now

June 12, 2009: 3:10 PM ET

How to stand out in a crowded field without spending loads of money on advertising.

Jenny, Deer Park, N.Y.
I own a small beauty shop in a mid-sized town on Long Island, New York. The problem for me is the competition: In the past five years, three more beauty shops opened around the five-mile area, and my business started to sink two years ago. How do I stand out from a crowded field without spending tons of money on advertising?


By Lenora Chu
, CNNMoney.com contributor
Start off by giving some serious thought to what really differentiates you from the competition.

Develop an "elevator speech," says Willis Turner of the Richmond, Va.-based marketing consulting firm Huntsinger & Jeffer. That's a 30-second answer to the question, "Why should I come to your shop instead of your competitors?"

Do you have highly trained stylists with more experience? Do you specialize in certain types of service? Are you better on service details like remembering names and birthdays?

Once you've identified a few key points, Turner says, focus on them again and again with your customers.

"Repetition is the key to success," Turner says. "Remember, just when you start to get tired of your message, that's when your customers and prospects are really beginning to notice it."

The goal is to jumpstart a word-of-mouth campaign. No form of advertising is more effective, so make sure every client leaves your shop with a reason to tell her friends how great you are, Turner says.

Then give your customers an incentive to keep coming back -- and to refer their friends.

For example, you could offer a referral program and print special discount cards for clients to give to acquaintances. Both the new customer and the referring client would be eligible for the discount.
You could also borrow tried-and-true methods of inspiring customer loyalty from other service industries, suggests Steve Winston, a South Florida marketing and communications consultant.

Start a frequent-visitor rewards system, much like the airlines' frequent flyer programs, suggests Winston. Customers can earn a set number of points for each treatment, then win free services when they reach a certain threshold.

Like restaurants, you could post daily or weekly specials on a blackboard in the window to draw in traffic.

Or you could distribute discount coupons in your local area, like many home furnishings stores or take-out restaurants do. Try hand-delivering coupons to a targeted group of people, Winston says, such as teachers at a nearby school.

Lastly, make sure you have a brochure that lists your services and your strong points relative to your competitors.

It may cost a little money to produce, Winston says, but if done right, it will stand as a record of what makes you different in a crowded field.

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