Greatlakes-
I think you are doing a wonderful job with this marketing approach. I have given out free 30 minute massages and found they don't always redeem the coupon, but they will definitely remember you and refer a client of the salon to you. It's all about getting them in the door and seeing what you offer.
I to work in a salon and feel that I can't approach other salons locally for the same reasons you have stated. I have taken this approach with local realtors in town. I print up business cards with a 20% discount, compliments of the realtor that I'm targeting. They hand them to new residents or new home buyers as a token of appreciation and allowing them to be their realtor. It has brought in a few new clients and the realtors redeem them for themselves.
I like your approach for all the right reasons. Low marketing costs.
You may be giving out a free 30 minute massage, but the cost is more effective than branding yourself in the local newspaper for $700 a year or more for that matter!
Thanks for tip!
-Grapeseed