Airlines, grocery stores, bookstores, pharmacies, restaurants and retailers—today, it seems every business has a loyalty program with an identifying member card.
Since 2005 the Teddie Kossof Salon in Northfi eld, Illinois, has given clients back nearly $150,000 in reward dollars through Millennium’s loyalty module. “We know for a fact this has helped our client retention,” says COO Alan Kossof (on right, pictured with father Teddie). “Based on key growth indicators and other business reports, we exceed the industry standard in retention and have no doubt that if it wasn’t for this program, we wouldn’t be where we are today.” “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.