Last Updated Jan 10, 2011 1:01 PM EST
When I co-founded Birds Barbershop four years ago, I wanted to create a place where people could have a salon-quality experience at an affordable price -- somewhere above SuperCuts, but not as pretentious as a high-end salon. We've got four stores open in Austin, and Elle magazine has ranked us as one of the best salons in Texas for two years running.
When I started, I researched industry benchmarks, and learned that between five and 15 percent of a salon's revenues typically come from selling products as opposed to services. The problem was, no matter what I did, we couldn't get above two percent. The major hair care product lines are just too expensive to fit in with our model of salon-quality service at affordable prices.
My business partner, Michael Portman, and I ultimately decided to take matters into our own hands: We'd develop our own line of products. But the process was far more complicated than we'd ever imagined.
A hard sell
In a salon, your client is a captive audience, so you should be able to gently (or not so gently) encourage him to buy what you're putting in his hair.
But our model is price-sensitive. About 75 percent of our clients are men, who pay about $19 for a haircut. That makes it difficult to push existing salon products, which cost $16 or more plus tax. We're a value concept, but after paying for a haircut, tip and product, the experience could cost $50. That doesn't leave a good taste in our clients' mouths.
So we thought, "What if we could present a great product that was more in line with our value model?" I couldn't find the magic product that was high-quality, yet affordable. That's when we starting asking, "Can we do this ourselves?"
If at first you don't succeed...
I don't have a research and development budget, and I don't have a chemistry lab, so I wasn't sure how to go about designing a product. I could test it with focus groups -- we have 62 stylists across four shops, and they know what works and what doesn't -- but I just couldn't make the stuff.
As it turns out, there are manufacturers out there that will do it for you, based on your specifications and feedback. But we're small, and a lot of the manufacturers have really large minimum orders -- we're talking twice our optimistic order volume. And we certainly weren't ordering enough to get any bulk discounts.
We initially contacted the smaller manufacturers. One agreed to work with us, but a month into the process after a few rounds of testing, they decided that they didn't want our business anymore -- I guess we were too small even for the small fry. So we decided to move on and contact the bigger players anyway. They rejected us, too, though the third manufacturer told us to contact him again when we could place his minimum order quantity.
We were frustrated. Six months in, we had nothing to show for our time and effort, and we were down $750 due to expenditures with the first manufacturer. But I wasn't prepared to give up yet.
...try again with feeling
We regrouped and decided to wow the third manufacturer with a powerful business proposal. We based our pitch on what we are, what we stand for and the press we've generated, and we explained why we wanted to partner with him. It worked. He decided to give us a chance.
We started in March from scratch. Normally, this process takes four to five rounds of testing. But after our seventh round, we still didn't have a finished product we liked -- we couldn't get the texture, feel or holds quite right. So we flew out to visit the company, toured their plant and met with the president face-to-face.
My goal was to convince him that we were committed to this process. Discussing the industry and asking him about the typical mistakes that people in my position make -- namely, underestimating the industry and not planning far enough ahead -- went a long way towards reassuring him that we were on track. And that was a good thing, because it took another three or four rounds of testing before we hit on the final products that pleased our stylists and customers. When we told them how much we were going to charge for it, they wanted to buy it.
Verb Products launched in January, 2011. It's taken ten months with this manufacturer -- a year and a half since we started -- but we achieved our goal of creating a salon-quality product line that retails for $11. Now, we'll see whether our clients will buy it. If they do, we'll broaden the line, eventually replacing all of our existing stock with items from our own line.
Meanwhile, the barbershop business is finally hitting its stride -- our revenue topped $2 million in 2009, and we're on track to beat that by 10 percent this year. We are also starting to get unsolicited calls from people who want to open a Birds Barbershop in their town. With all this momentum, we hope that the new products will finally get our product-related sales closer to the 10 percent mark, and hopefully peaking the interest of nationwide distributors in the process. Once we start selling enough to place orders in bulk, our margins will improve and we'll have a better chance of hitting our profit targets. It may take some time -- but this process has taught us that success is worth waiting for.
-- As told to Peter McDougall
Jayson Rapaport believes that good customers are made not born. In 2003, after working on Wall Street, Jayson moved to Austin where he eventually met up with his friend, Michael Portman. The two created Birds Barbershop to fill a mid-priced niche they felt was under-served in the area.