We love to talk about guest and client “loyalty.” Software companies are tripping over each other to build points based loyalty programs that keep track of “points” and when the guest comes in for the next visit, the points will be waiting for them. Salon owners love it when all they have to do is nothing and marketing just happens.
Here’s a rude awakening – your guests are not loyal. You do have guest loyalists but that’s not the same as loyal guests. Even loyal guests will bolt for a penny, bolt if the stylist doesn’t smile and bolt if they have to wait to pay at the front desk.
What guests want most of all is a simple, seamless experience in your salon or day spa. They want to be rewarded and thanked and they want the program to be easy to understand. Given this simplistic approach, why do salons make it so difficult to do business with them? Here’s my case in point:
Last week I got an e-mail from a salon introducing their new rewards program. The e-mail said, “For every $1 dollar a guest spends at our salon, they will receive 10 points for every 1000 points accumulated they will receive $1 back.” Now, QUICKLY do the math on this (poorly written) statement and figure out what the guest gets. It’s not easy and that’s my point. If the guest does not get it right away, your staff will struggle to explain it, everyone will lose interest and the program is doomed from the outset.
If I figured the math correctly, if I spend $100, I earn 1,000 points and I GET A BUCK BACK for spending $100. That’s not a very rewarding “Thank You.” And there’s more. Since the salon wants you to help them do their marketing, you, the guest, can get extra points if you:
After you accumulate 45,000 points you can get a blow dry. 25,000 points lets you get a retail product of your choice or a conditioning treatment, and 150,000 points lets you get a haircut by the owner.
Doing more math, if I am a new guest, spend $100, refer a friend, prebook, bring in a copy of my Facebook post, I earn 22,025 points and that gets me absolutely nothing. I completed three marketing efforts for the salon and I got nothing. This reward is below minimum wage standards.
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.
To learn more about Group 3 Marketing, visit www.group3marketing.com.