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10 months into running a Lakmé Salon franchise in a Tier-2 city and still struggling to make a profit — what am I doing wrong?

5 Oct 202695 views3 min read
The question

I own a Lakmé Salon franchise in a Tier-2 city in India, and we're almost 1 year into the business. Looking for advice from people who have actually run service businesses.

In 10 months, only 2–3 months were profitable. Most months have been either break-even or a loss.

The biggest issue is repeat customers. People here mostly visit salons when they have a wedding/function coming up, so our revenue is heavily dependent on bridal and occasional event bookings rather than regular customers.

What's confusing is that we're in a prime/high-footfall location in the city, and other salon outlets in the same market that have been running for 6+ years reportedly generate ₹10L+ revenue/month.

I've already tried:

Meta/Instagram/Facebook ads

WhatsApp marketing

Pamphlets/flyers

Offers and packages

Discounts and promotions

But people aren't very interested in prepaid packages, and discount is usually the first thing they ask for.

At this point, I'm trying to figure out whether the problem is pricing, customer behaviour, retention, marketing, or simply the fact that we're still relatively new.

For those who've run salons or other service businesses in Tier-2/3 cities:

What would you focus on to build a regular customer base and make the business consistently profitable? And realistically, how long did it take your business to become profitable?

Answer by AnalytixChamp

I think the issue may not necessarily be the location or even pricing. In Tier-2/3 cities, customer behaviour is just different from what you see in metro cities.

People are often more occasion-driven — weddings, festivals, parties, functions, etc. So if you depend only on walk-ins and new customer acquisition, revenue can become very unpredictable.

If I were running this salon, my biggest focus would be building and managing the customer database.

Every customer who comes in should become a potential repeat customer.

I would maintain data like:

  • What service they took

  • How much they spent

  • When they last visited

  • How frequently they visit

  • Hair/skin/nail preferences

  • Birthday/anniversary

  • Whether they came for bridal/event purposes

  • Customers who haven't visited for 30/60/90+ days

Then I'd start doing proper Customer Lifecycle Management (CLM) through WhatsApp/SMS/push notifications.

But I wouldn't just keep sending "20% OFF" messages. That's a race to the bottom.

For example, someone who took a haircut 2 months ago can get a different message from someone who came for a facial, and a bridal customer should get a completely different follow-up.

You can also use the database for cross-selling.

Someone coming for hair services → hair spa/treatment/colour maintenance.

Someone coming for facial → skincare/maintenance services.

Someone who came for bridal → post-wedding services and eventually regular salon visits.

And customers who haven't visited for 60–90 days can be put into a win-back campaign.

I'd also track one number very closely:

What % of your customers come back within 30/60/90 days?

Because getting 1,000 new customers doesn't mean much if 900 of them never return.

The salons that have been operating for 6+ years also have a huge advantage that isn't immediately visible — they have years of accumulated customers, referrals, relationships and repeat behaviour.

A new salon can't necessarily replicate that in 10 months just by increasing ad spend.

So personally, I'd stop thinking primarily in terms of:

"How do I get more customers?"

and start thinking:

"How do I make every customer I acquire come back again?"

Build the database → segment customers → maintain the relationship → personalise communication → cross-sell → win back inactive customers → measure repeat rate.

Once you have a large enough database, it becomes much easier to create predictable monthly revenue without depending so heavily on bridal/event bookings.

Also, if customers are constantly asking for discounts, I'd look at whether you're attracting the wrong segment through your marketing. Sometimes the solution isn't a bigger discount — it's changing the offer and positioning so customers understand why they should come back to you.

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