Roberta O’Brad doesn’t hang out in chat rooms or bid for baubles on eBay.
Yet when it comes time to book an appointment with her hair stylist or reserve a golf tee time, she logs onto the Internet rather than pick up the phone.
Using the Internet saves time, says the busy, 59-year-old Deloitte & Touche executive. “Otherwise you’re in voice mail hell, where it can take you three days to make an appointment.”
Getting people like O’Brad to schedule appointments online is an important step into an era that proponents say will change the way some services are promoted and priced.
Using Web-based booking and interactive marketing systems, businesses can adjust prices quickly and offer incentives to attract the highest-paying customers at given times–a concept called “yield management” that the airline industry has developed into a fine art. An airline will sell some seats at a discount far in advance of a particular flight, but will charge varying premiums for travelers who book the same flight later if demand is heavy.
In the same way, salons can post higher prices for new customers logging on to book appointments with popular stylists on busy days, or offer incentives to book during slow times. Restaurants can post last-minute openings to fill tables that otherwise would remain empty.
In the golf industry, the practice is known as tee-sheet management.
“Everybody from the individual course owner to the bigger [operators] is interested,” says Andrew D. Weeks, president of EZ Links Golf in Westmont, which sells Internet services to golf course operators.
Much like an empty airline seat at takeoff, “once a tee time is gone you can never get it back,” he says. “The idea is to fill it with the best-paying customers at the time.”
Still, online booking is in its infancy, and experts say widespread yield management is still years away for the service industry.
Some contend it will never work in its most sophisticated form–adjusting prices in real time based on demand–in industries where offerings are complicated and where many mom-and-pop players dominate.
Instead, cruder forms will prevail.
“We’ve had yield management in the restaurant business for years, and it’s called early-bird specials,” says Henry Harteveldt, a senior analyst at Forrester Research in Massachusetts.
Nonetheless, he and others agree the Internet offers yet-to-be exploited potential. And a growing number of locally based Internet firms are working to prove it.
O’Brad booked her last three appointments at Beauty Mark Salon, 1304 W. Washington Blvd., using Web-based services developed by Salon123, a Chicago start-up led by former Helene Curtis Inc. Chairman Ronald Gidwitz.
The 35-employee firm, backed by Trident Capital, sells monthly subscriptions for Web-based software and services to help salons and spa owners manage their businesses.
Salon123’s hand is invisible to patrons like O’Brad. She logs onto a site customized for Beauty Mark (www.beautymarksalon.com), where owner Traci Pucci, a self-described “computer geek hairdresser,” began encouraging her customers to book online in January.
Reducing costs rather than varying prices was her goal.
“We wanted to make the most out of our every dollar,” she says. “That meant deciding not to hire a receptionist. [With online booking], we barely even have to pick up the phone.”
Pucci will pay $49 a month for Salon123’s service when her free period as a test customer ends next year. (There is a one-time setup fee of $300 to $500 as well.)
She says being online enhances, rather than limits, personal service. “The first thing I do in the morning is look to see who put in” messages, Pucci says. “It helps me to think about what I want to do with a customer, rather than getting hit with it when they walk in.”
At Salon Michael in Lincoln Park, owner Michael Cunningham is waiting for an Internet hook-up to begin using services provided by SalonSavvy, another, newer start-up by former Helene Curtis executives. The year-old venture was started with $500,000 from investors, including former Quaker Oats Co. Chairman William Smithburg, who is an adviser.
SalonSavvy aims squarely at the notion that yield-management techniques can increase sales.
“An empty chair is expiring inventory,” says Debbie Hall, vice president of business development. “If you can anticipate that it’ll be empty, you can take control over it.”
The firm has amassed a national database of 50,000 salons, including detailed information on prices and services at several thousand. To encourage visitors to www.salonsavvy.com to book appointments, it offers a loyalty program providing “beauty points” that can be redeemed at participating salons and other retailers.
Salons pay for SalonSavvy’s services only when they get results, by sharing a percentage of the sales the firm generates for them.
Still, getting operators to sign up for Web-based services is a slow process.
There are technical hurdles: Cunningham’s salon, for instance, will use a dial-up Internet connection because speedier, always-on Internet service isn’t yet available in his neighborhood.
More daunting are cultural obstacles. Many salon owners have misgivings about posting sensitive information about availability of appointments. Says Michael Anthony, owner of Michael Anthony Salons in Chicago, who uses non-Web-based appointment scheduling software: “The stylists are worried, `What’s my client going to think if they can look and see I’m not busy?'”
Others may never come around to using the Internet.
“Most service industries still manage their customer lists through a Rolodex or a notepad,” says Forrester analyst Carrie Johnson, author of soon-to-be-released report “Finding and Booking Services Online.”
Adds Johnson, “Consumers are going to want this, and technology providers are trying to make it happen. But it’s extremely hard to link all these businesses together. They’re creating networks of non-networked service providers.”
In the dining industry, firms such as San Francisco’s OpenTable.com are making headway. Among the newest entrants is Chicago’s iDine, a subsidiary of Transmedia Network Inc., a leader in dining loyalty programs.
The start-up (www.idine.com) recently announced a partnership with New York’s SmartRay Network Inc. to offer real-time alerts of openings at top restaurants to diners carrying pagers, mobile phones or Internet devices.
“Frequent diners will be alerted to last-minute availability of hard-to-get reservations at their favorite restaurants, and when they dine there, they’ll earn rewards,” says Greg Robitaille, president and chief executive.
At EZ Links, golf course operators use the firm’s Web-based systems to automate such rudimentary yield-management practices as varying prices by times of day.
The 5-year-old company, backed by Huizenga Capital Management in Oak Brook, started as a telephone reservations center and still provides those services: Eighty-five of its 120 employees work in the call center.
Golf is ripe for yield management because it’s a business with high fixed costs and standardized offerings, Weeks says. “Each new golfer who comes onto the course pretty much drops to the bottom line.”
EZ Links (www.ezlinksgolf.com) has some 445 courses on its network–a fraction of the 15,000 U.S. courses–yet offers one of the larger networks in a crowded niche that includes players such as LinksTime.com and Book4Golf. Locally, Golfserv Online Inc. offers online booking.
Weeks is convinced that it’s only a matter of time until one or two companies sign enough courses and ink enough partnerships to provide golfers with comprehensive national databases.
“Yield management will come,” he says. “The winner will provide the ability to be able to go online and book anywhere in the country. That’s what everybody’s shooting for.”
