Management Practices

Someone Like You

Stacey Soble | July 10, 2011 | 3:09 PM

 Someone Like You
While many salons cite the grapevine as their greatest source of new clients, few have learned to harness its marketing power and measure the impact. In 2008, Roberta and Patrick Heaney, owners of Mango Salon in Richmond, Virginia, engineered their marketing efforts to focus on relationship marketing and eliciting the support of their existing guests. 

The most successful of the campaigns is the salon's primary referral programs, "Someone Like You!"  and "Hand Him Over." The programs revolve around two business card-sized coupons, one encouraging clients to send in their friends and one encouraging clients to send in their boyfriends and spouses.

The cards are relatively easy and inexpensive to produce, says the salon's marketing manager Lynsey Glasco. To design the cards, Glasco accesses images from a marketing library hosted by one of the lines the salon carries. "It costs about $94 to print 1,000 of these double-sided, color cards," she shares. "We change the images every six months or so to keep track of circulation--that helps tell us how long people hang on to these cards before using them."

The cards give the new visitors $10 off their first appointment.When they are redeemed, Mango mails the referring friend a $20 giftcard. "Our hair and nail designers keep a small stack of these cards attheir stations and hand them out to every loyal guest," says Glasco.

The program is easy for service providers to talk about with their guests, and Mango guest have been very responsive.

Someone Like You
Mango's popular referral cards are responsible for 80 percent of the salon's new clients.
"Infact, we have a few guests who rarely have to pay for their servicesbecause they have taken advantage of this program," she reports.

The salon averages about 200 clients permonth, and Patrick Heaney reports 80 percent of those clients are adirect result of the two referral programs. "This was one of two initiatives we began focusing on to thrwart the tough economic environment we began facing in 2008," he says. "It really helped create a buzz."

New clients are encouraged to arrive 15 minutes before their scheduled appointment. "We give them a brief salon tour welcoming them and explaining our services," says Heaney. "We give them a New Guest Gift Bag with complimentary products and a coupon for their next visit.

The owners measure all customer service and marketing investments by assessing the lifetime value of the guest. For example, the New Guest Gift Bag costs about $15, including $5 in product and $10 in coupon costs. If a client visits six times per year at an average ticket sale of $100, that client is worth $600 in annual sales.

Using a 10 percent profit margin per guest, Mango calculates the guest is worth $60 in profit. If the salon attracts 200 new guests per month to the salon and the salon's new client retention is 55 percent, then the salon retains 110 of each month's new guests. The profit from those guests is then $6,600 (110 retained guests X $60 profit).

The cost of 200 gift bags is $3,000 (200 X $15), so the return on investment on a month's worth of gift bags is $3,600 ($6,600-$3,000) or about 110 percent.

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