Do not fall into this trap. Rewards programs can be a powerful tool if executed correctly. Your POS system is a powerful marketing tool if you use it to your advantage. We offer these three tips:
Keep your program simple, affordable for you, meaningful for your guest, and easy for everyone to understand. For every dollar you spend, you earn a point. When you earn 300 points, we’ll send you a $15 Reward to spend any way you want. That’s a 5% reward, which we believe is the optimum level.
Put your POS database to work for you. As part of the rewards program, find guests who have not tried a service or bought retail at-home care products and offer them extra points to try whatever it is you are promoting. This is a powerful win-win strategy. The salon gets trial and the guest gets a deal. It’s not a discount, it’s a trial.
Create a sustaining communications plan to stay connected with your guests through e-mail and postal mailings. Send the guest’s reward to them; don’t wait for the guest to come in. That is an instant discount strategy that we call a margin drainer.
Stop and ask yourself why you want to have a loyalty program. If it is just because you want to say thank you, that’s a weak strategy. If you want to get your guests to do what YOU want THEM to do, that’s an even weaker strategy. We believe the strategy is to thank them and in the process strengthen retention, especially among first time guests, where the defection rate is about 70%. Then add to your strategy with special offers that reward sales performance – not referrals, prebooking or Facebook postings. This is a proven marketing strategy that works.
In these difficult economic times, be smart about how you craft your marketing initiatives. Keep them simple and focused on the customer and not on what you want. No one knows what the economic and political landscape will be like in the next few years – but we are sure it will be rocky. Smooth the path between you and your guest and build retention and organic growth the old fashioned way – by earning it.