The Endless Season – Making It Through The Slow Period
Volume III
by Jerry Deveney
The reality of the indoor tanning business is that approximately
70 percent of all gross revenue is generated between January and
June, thus leaving many salons searching for cash and customers
from July to December. However, salons that have used the
Endless Season marketing strategy report dramatic increases in
cash flow, profits and salon traffic on a year-round basis.
The Endless Season marketing program has proven to be one of
the most effective sales strategies ever developed for the tanning industry. The concept
was first introduced to a salon in New Jersey in 1987. Since that time, hundreds of
commercial tanning locations from coast to coast have used this strategy to increase
sales and provide a cash reserve for the slower months of the year.
How The Strategy Works
It's now April. Your salon is packed. You easily could use two or four more tanning units
and another 300 square feet of lobby space. However, as you gaze out over the anxious
crowd of paying customers, you can't help thinking about the not-so-distant future.
Three months from now it will all be over. Tumbleweed will blow through your lobby
and vultures will circle overhead. The electric company will be forced to lay people off as
your power consumption drops below bug-zapper status. Another season will have come
and gone, and once again many will wonder, where have all the tanners gone?
So why is it that people don't pack salons in the summer and fall? Part of the reason is
that people are psychologically conditioned against paying for something that they
believe they can get for free. While most never actually have the time to tan outdoors, the
sight of all that abundantly free sunshine makes them hesitant to pay to tan indoors.
That's the main reason the Endless Season program was created. And for the same
reason, it's crucial that you develop your program now while your salon is packed. When
people are paying top dollar to tan and have to fight for an open unit. While the tanning
frenzy is in full force. Now is the time to introduce a seasonal pricing special that no one
can refuse.
But wait. Slow down. Not so fast. Before you can do anything, we need to do a little
math. Stop groaning ... it's easy.
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Say that your fixed overhead each month is $3,000. This includes rent, labor, insurance,
loan payments, etc. This is the amount of money you need to generate each month to
keep the business going. This figure remains relatively consistent whether you tan 10
people or 10,000 people each month.
Since we all know that salons are busiest from January to June, the goal for your Endless
Season marketing strategy is to generate enough revenue now to pay all your bills from
July to December. For this example, we will create a pricing package designed to quickly
generate an additional $18,000 in gross revenue. Remember, you cannot wait until July to
introduce this program. By then it's too late.
Let's assume that currently you are charging $40 for a 30-day tanning package on your
standard 32-lamp tanning systems. And, the average person purchasing this package will
tan about 10 times. We estimate that the cost to operate a typical 32-lamp low-pressure
tanning system is approximately 35 cents per session for lamp usage and electricity, thus
leaving you with an adjusted gross profit of $36.50 per package. Given your fixed
overhead of $18,000 for July through December, you would need to sell 494 of these 30day packages to break even for the slower months. However, since traffic flow slows so
dramatically during these months, most salons have trouble achieving their goals.
Therefore, you need to elevate your marketing strategy to a higher level.
If you have been in business for at least one year, examine your sales records for July
through December of 1998. Calculate your total sales, including income generated from
lotions and accessories. Then compare this figure to the amount of revenue generated
from January through June. As stated earlier, you probably will discover that 70 percent
of your total sales were generated during the first six months of the year. In most cases,
the last six months of the year account for only 30 percent of total revenue. Obviously, it
makes good business sense to try and generate as much money as possible now while
business is booming and your salon is full of paying customers.
Consider the following Endless Season Special. On May 1, 1999, you introduce a sixmonth tanning package that sells for $149. That's a $91 savings off your regular monthly
pricing. The package must be purchased during the next 30 to 45 days and is effective
from July 1 through January 1, 2000.
If the average person purchasing the package actually uses 60 sessions during the sixmonth program, your equipment operating cost will be approximately $21 (.35 x 60), thus
leaving you with an adjusted gross profit of $128 per package.
Using our example of $18,000, you would need to sell just 141 packages to cover your
fixed overhead from July to December. Obviously, the special you choose to offer must
meet your individual and specific needs. This example, while designed for comparison
only, does provide you with a better understanding of the potential of such a program.
Each year, as more and more salons implement the Endless Season Special, I receive
many calls that testify to the effectiveness of the program.
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Paula Kafitz, owner of Jamaica Me Tan 'N Travel in Asheville, N.C., used the program
last year to generate enough revenue to carry her business through December.
"The best part of the program was that customers kept coming in during the slower
months of the year," says Kafitz. "The steady flow of customers allowed our lotion sales
to remain strong even in August. In addition, the word- of-mouth advertising we received
from the promotion brought in new customers that had never tanned indoors before."
Al Palumbo and Bill Kron, owners of four high-profile salons just outside New York,
tested the waters last year with a scaled-down version of the program.
"We were hesitant at first, but when we calculated how little business we were doing in
the off-season, we figured we would give it a try," says Palumbo. "We offered the special
at just one of our locations and we took in well over $12,000 during a two-week period,"
adds Kron. "This year we're going to promote it heavily."
Using special pricing to encourage sales during the off-season is nothing new. The
airlines, hotels and resorts have been practicing it successfully for years. Perhaps one of
the most obvious examples is in the retail sector which drastically slashes prices the day
after Christmas.
The main consideration to remember with the indoor tanning industry is that timing is
crucial when introducing a special pricing program such as this. We have to strike while
the season is hot and people are paying full price to tan. It has been proven year after year
that people will not flock to salons no matter how much you lower prices in September or
October.
However, as more and more salon owners introduce special seasonal pricing packages in
April, May and June, we are seeing a noticeable increase in salon traffic during the
normally slower months of the year.
According to our 1995 surveys, August was one of the slowest months of the year. Salon
occupancy was just 25 percent of maximum capacity, ranking it 11th, just ahead of
September. However, last year our surveys showed August jumping up to 35 percent of
capacity and tied with December as the 7th busiest month.
The most encouraging statistic was that August's gain was not due to a loss in traffic
during another month. Thus, indicating that more people are now tanning indoors than
ever before.
Well-timed marketing strategies combined with the realities of today's fast-paced
lifestyles are no doubt contributing to the continued growth of our industry. And, while
we may never totally overcome the seasonality of our business, perhaps through the use
of creative marketing techniques we can discover new methods of generating additional
cash flow and better prepare ourselves for the slower months of the year.
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Jerry Deveney is director of marketing for Sun Industries, Inc. He can be contacted
directly at (800) 643-0086, ext. 114. Note: Figures and calculations are for comparison
only and should not be considered a guarantee of income.
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