70% is Not a Good Number

By Bart Foreman | 09/22/2012 2:01:00 PM

 

Bart Foreman Seventy percent of salon guests never come back after a first visit. This is not a good number, but it’s accurate, according to Tom Kuhn, founder of Qnity, the company that founded the 2 to 10 Project that benchmarks the best financial practices of multi-location salons. Overall salon retention isn’t much better either, according to Kuhn.

If he’s right (and we know he is), the business of beauty has a serious marketing problem.

Salon marketing has taken many twists and turns over the last two decades. At Group 3 Marketing, we know all about those shifts because we have been involved with salon marketing for 20 years. We are leaders in marketing the business of beauty, with a client roster that involves manufacturers, distributors, salon chains and independent salons.

But even with our experience, we realized we have all been focusing on the wrong strategies. We talk about loyalty, but most guests are not really loyal to either their stylist or the salon, which is illustrated clearly by the paltry 30 percent guest retention rate.

In our 2010 Beauty for the Ages research project, one of the questions we asked was, “If your stylist left your salon would you follow him or her to a new salon?”

The results surprised almost everyone:

  Gen Y Gen X Boomers Overall, less than 1/3 of Guests would follow their stylist. However, more than half are on the fence across all three demographic age groups. Younger Guests are more likely to stay at the salon. Gen Xers are most likely to be on the fence and older Guests (Boomers) are most likely to leave because of relations they may have built over the years.
Yes 27% 28% 34%
Maybe 52% 56% 52%
No, I like my salon, other stylists are just as good 21% 16% 14%

 

However, when you analyze the results they support the 70% defection rate—which should be disturbing news for every salon owner.

Salons install loyalty programs and some salons use their POS system to dole out rewards with little thought to whether these loyalty programs really drive sales or just drain margins. We brag about our “relationship” marketing programs, but if the defection rate is 70%, do we really have a relationship with our guests? Doubtful.

And, then there is the buzz about social media and how salons now have a tool to engage with guests. We’re not downplaying social media, but we are questioning the impact it really has on driving the business. Sure, it’s low-cost and easy, but is it worth it and is there a real return on investment? Can you show tangible results?

We need a new marketing model because the current model doesn’t deliver results we can take to the bank.

Loyalty is dead. Guests don’t want a relationship; they want fabulous service, fair prices, some added value and always a smile. Engagement isn’t about ‘likes,’ ‘fans,’ or ‘follows.’ It’s what should happen when the guest is in the chair and a follow-up message become critical.

The key takeaway here is that when a guest walks out of your salon, she becomes a Free Agent and can go anywhere she wants—and based on the 70% defection rate, she does.

We operate in the Age of Now. We moved from electronic to digital, and now we are social. In the Age of Now, we feel we need to engage with guests. In the last few years, we have moved from loyalty to relationships to engagement. In the Age of Now, it’s all about being fast and being about me.

For years, most marketing for salons and other retail and service businesses was done in an end-of-month or start-a-new-campaign mode. Data was aggregated in what the techies call ‘batch processing.’ It worked then, but it does not work now. We have to be fast, we have to be NOW, and we have to focus on the money machine—your guests.

Social media is in the Age of Now. Salons try to speed up the connection process using social media but as noted above, the impact is probably marginal at best.

Here’s a new spin on salon marketing—Triggers.

While salons always have to recruit new guests, it is critically important not to lose focus on the current ones. Salon marketing needs to kick into high gear as soon as the guest walks out the door, and we don’t men handing her a bounce-back coupon. Salon marketing needs to leap into the Age of Now, because something is happening every day.

Triggers happen when new guests come in, when others forget to come in, when some walk out without taking home product or having a nail service, and some just need to be thanked and rewarded for their business once in a while. These are important messages that should not wait until the end of the month or the next “marketing campaign.” These triggers need to happen NOW with personalized messages that reinforce the last visit and influence the next one.

Trigger-based marketing will have a game-changing impact on the business of beauty. In the Age of Now, staying connected using triggers that deliver the right message at the right time to the right guest is a critical marketing strategy for retention. Equally important is the need to continually influence the next visit to your salon and not a competitive salon. Together, these turn into powerful growth strategies for every salon. Now is the time to put your POS database to work for your salon.

 

 

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ABOUT THE AUTHOR: Bart Foreman

Bart Foreman Bart Foreman is President of Group 3 Marketing, a boutique-marketing agency providing database driven, marketing focused solutions to all segments of the beauty industry and specialty retailers. He has served as chair of the CRM Council of the Direct Marketing Association and is a frequent speaker at trade associations.
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