By Grant Miller, salon consultant
Columbia House, the company that was famous for one of the most successful and irresistible offers ever, filed for bankruptcy in 2015. Ending their business was mostly due to the changing of customers’ buying and listening habits. With the advent of digital downloads, traditional music sales have plummeted over the past decade.
Columbia House generated billions of dollars when they launched their record club back in the mid-1950s. Their entire business model was based on the concept of creating an “irresistible offer” so appealing that customers would agree to a continuity membership. Columbia House would draw the customer in, have them agree to the membership in order to receive the offer and then add that additional records needed to be purchased to fulfill the offer. Columbia House understood how valuable new customers were to their company over time.
Their offer was always some version of eight, 10 or 13 CDs, records or tapes for a loss leader price of anywhere from 1 cent to $2.99. Then, the customer would see the appeal and agree to buy more items regularly priced within the year. Even more appealing was the idea that you’d automatically receive a new “item of the month” unless opting out before it shipped.
The concept of a continuity membership program is tailor-made for the tanning industry. My salons and many others have been utilizing this program successfully for years. I have a $387 value free bonus package that I “give” to all new SunClub™ EFT Members. This is my version of 13 CDs for $1.00. I typically break even the first month, but then my average SunClub™ member stays active for 11 months without a commitment.
The 11-month average retention in the SunClub™ is my version of the Columbia House continuity membership. My members will continue to get billed monthly and receive the benefit of their membership until they decide to cancel it.
Whenever I hear of a tanning salon that does not offer an EFT membership, or have one with very few members, I cringe at the amount of money they are losing monthly. Without having a high-performing EFT membership, you are vulnerable to your competition. Essentially, you’re forcing your customers to make a new decision every month about where they should buy their next tanning package when you do not offer an EFT membership. When you don’t offer an EFT membership, you are forcing your customers to make a new decision each month about where to buy their tanning package.
Don’t miss the big lesson here: Create your own irresistible offer that leads your customer into buying your EFT membership.