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Management Practices

10 Technologies: Automated Loyalty Programs

Rosanne Ullman | July 26, 2011 | 12:37 PM

Airlines, grocery stores, bookstores, pharmacies, restaurants and retailers—today, it seems every business has a loyalty program with an identifying member card.

10 Technologies: Automated Loyalty Programs“Loyalty reward programs have become somewhat of an expectation for consumers—they are used to having them,” says John Harms, founder of Millennium Software. “But for a salon to reward points simply for every dollar spent doesn’t make much sense—it doesn’t really change client behavior, it just has the salon giving money away.”

To design the loyalty program for Millennium, Harms instead looked at key growth indicators, such as average ticket, frequency of visit and retention, and looked at rewarding client behaviors that could positively impact for those indicators. Through their software, Millennium users have the flexibility to give their clients reward points for things like prebooking, referring their friends, booking appointments online, purchasing gift cards, trying a new service, completing a certain number of services in a certain timeframe (for example, 12 hair cuts in one year) or purchasing retail above a specified threshold (for example, more than $50 per ticket).

“For example, having a new client prebook her next appointment is very valuable because it’s a good indicator you’ll retain that new client. So some salons structure it to give a lot of points to the new client who prebooks before she leaves. But the beauty in the system is she can’t redeem those points until after she’s returned for that second service,” explains Harms. For example, if Susan refers her friend Julie, Susan doesn’t get her loyalty points until after Julie comes in and purchases a service.

Salon and spa owners not only have control over what behaviors earn points, they also can decide for what clients can redeem their points. But Harms offers some guidelines. “You don’t want them using points to pay for part of a service–they need to purchase whole items,” he says. “I’ve also seen one salon who only allowed points to be redeemed for gift cards in increments of $25.  While the client could turn around and use those for her own salon, the thinking behind this is that she’s also likely to use it as a gift for a friend, which could mean a new client for the salon.

To really make a loyalty program work, you have to build a culture around it, advises Harms. “You need your own branded program, signs around the salon, and a brochure that explains the program, including how points are earned and how they can be redeemed,” he says. “Accumulated points need to show up on receipts, on online booking and staff need to mention them during checkout.”

Another way to execute a loyalty program is to enroll your business in a program like Perkville.com, which helps businesses create and manage online reward systems quickly, easily and inexpensively. Perkville partnered with Mindbody software three months ago, and works by identifying clients via their e-mail address. “Once a client participates, they have an electronic connection to the salon,” says Sunil Saha, CEO.

Perkville.com rewards clients for the money they spend in the salon and the appointments they book. Integrated with social media platforms, Perkville offers bonus points to clients who comment about their salon experiences and recommend the salon to their friends.  One of Mindbody’s clients, Charm City Yoga, attracted 21 new clients and more than 100 Facebook posts just two months after implementing Perkville.

“That’s phase one, but we’re currently working on phase two which will include the ability to add promotions that will offer salons an alternative to Groupon,” says Saha. “For Groupon, the offers go out to anyone—it doesn’t discriminate between new clients and the ones you already have. Perkville will be able to distinguish existing guests, and only offer promotions to new targets.”

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