There are many reasons for salon owners to build loyalty programs. It can help engage clients, grow revenue, and increase customer retention. But you can't just randomly assign points and launch without a plan in place.
For your salon loyalty program to actually work and help grow your business, invest the time to set it up strategically.
SET YOUR GOALS
Beyond loyal customers, what do you want to achieve through your rewards program? Start building your program with a goal in mind. This will help ensure that you are not throwing away profit but rather investing it to grow your salon.
A few possible goals include:
- acquiring customer contact information
- increasing the number of repeat clients or frequency of visits
- raising average transaction size
- growing retail sales
MOTIVATE & REWARD
With your goals in mind, consider what actions you want clients to take. How will you reward clients for those behaviors?
The most popular way to run a loyalty program is to reward clients with 1 point for each dollar spent on products and services. Although it may work well for many businesses, it could also be a missed opportunity. It does not motivate clients to change their existing purchase patterns. They will have no motivation to buy products, try new services, or spend more money.
Instead, look at your objective and find ways to achieve it. Let's say your goal is to increase retail sales. You could give clients 2 points per dollar spent on products rather than the 1 point for services.
Or if your goal is to raise the transaction amount, you can offer points in increments of $5 or $10. By doing this, you can upsell a product or an add-on service to get them to the next level.
To provide a more concrete example, let’s say that you award clients 50 points for every $10 spent. Someone with an invoice of $47 may choose to spend an extra $3 (or more) to get those 50 points.
In some situations, you may choose to not even reward points based on their purchase amount. If your goal is to increase the client’s frequency of visit, it would be wise to reward customers for each visit. Thus, the more often they visit your salon, the quicker they will rack up the points.
Clients who book their next appointment before leaving the salon tend to visit more often. Consider rewarding them by offering bonus points for pre-booked appointments.
If your salon has a waiting list during peak hours, use your loyalty program to help spread out appointments throughout the day. Offer special promotions like “Happy Hours” or “Double Point Tuesdays” to encourage clients with a more flexible schedule to come in during the slower periods. That way, the peak appointment times will be available to more customers who can only make it at those times.
You can also use loyalty points as an incentive for clients to fulfill your secondary goals. Motivate them to bring a friend, try a new service, buy a gift card, book online, post on social media or share a positive review.
DESIGN THE PROGRAM
When deciding how many points to award clients, consider what the action is worth to you.
You may want to give 5 loyalty reward points to clients who book online because it means answering fewer phone calls. But be careful if you also give 5 points for referring a new client. A new client could potentially bring hundreds of dollars each year. Is that of equal value to an existing client booking an appointment online?
Also, consider if the point value is enough to make it worth taking the action. If the redemption value for writing an online review is only a few cents, they may not find it worth their time or effort.
Every salon, spa, or barbershop will have different valuations. A walk-in business may put a higher value on capturing email addresses for their for marketing lists. You could ask clients to sign up for a newsletter and offer a welcome bonus equivalent to $5 for them to use on their next visit.
On the flip side, a salon who only accepts appointments may find it pretty easy to collect contact details when sending a confirmation SMS or email. For this reason, it may not make financial sense to award any points simply for signing up.
For a loyalty program to succeed, clients must feel that they are benefiting from the program. Are they receiving a reasonable amount back within a fair amount of time?
If they need to spend $1,000 to get $1 off a product, the reward may not be enough to interest them. However, if they receive a 10% discount every 6th visit or $5 off for every $200 spent, they may see the value of the program.
Further, are they able to use redeem the points towards something they actually want? Some businesses may set up restrictions on what the client can redeem the points for.
While it may make sense in some circumstances, like encouraging retail sales by only allowing points to be redeemed on products. Having too many restrictions can cause clients to lose interest. If they can only use points towards one product line, it may be one they are not even interested in. They will have no motivation to spend more or change their behavior to earn points in the first place.
When determining the redemption value of points, remember that the perceived value is not equal to your cost. A $5 reward does not actually cost you $5 as that value includes your profit margin. So if you give away a free product that you sell for $5, it will only cost you the price you paid to acquire it.
A few months after launching your client loyalty program, take a look at some of your business reports. Are you achieving your goals? Have you seen an increase in client retention, appointments, retail sales, and/or referrals? Have you seen a greater rise in revenue than what the program is costing you?
If you aren’t seeing the desired results, investigate why the program isn’t working the way you want it to. Be willing to fine tune the program to make it work for your business.
A loyalty program is a great way to boost business and motivate clients to spend and visit more. However, slow down to think through your strategy to ensure that it will help your salon and spa to grow.
Many salons still use physical loyalty cards but consider using software like Insight to make managing your loyalty program easier. It can help you determine point value and redemption, set expiration dates, create loyalty levels, and run reports.
Download a free trial or call 1-888-919-5841 to learn more.