The Big Deal About Loyalty
“Loyalty” is one of the most overused words by marketers, but salon owners love to talk about loyal guests and how important they are to the business. Salon software vendors picked up on this theme and created “loyalty modules” in their packages that automatically generate loyalty points. Once enough points are earned, they can be used at the next visit.
The big deal about loyalty is that it is a sham. This is difficult for me to write since we created our company 24 years ago as a “Loyalty Marketing Company.” Twenty-four years later, we are still here but something happened: we had an epiphany: Guests are not loyal. Salons can create loyalists based on 5-star services, smiles, and ambiance but it does not mean the Guests are “loyal.” They will still bolt for a variety of reasons so your job is to keep them coming back.
Our epiphany led us to believe that marketing was all about “Relationships.” Our mission changed to, “We build marketing programs that create lasting customer relationships.” Then we had another epiphany: your Guests don’t want a relationship with you. They want 5-star service, value, a fair price, and all the other things that go into the salon and spa experience. You, the salon, desperately want a relationship and thus miss the critical point of how to market to your Guests.
Rewards, when done wrong, are nothing more than a margin drainer. Those rewards generated out of your POS system that are redeemed when the Guest is checking out do nothing to foster loyalty; they are a discount taken at the close of the sale. Rewards are the bait to influence the next sale. The key word in the previous sentence is INFLUENCE. Marketing is what we do to influence the next visit, the next sale. This is as basic as it gets. Remember, your marketing campaign starts the minute the Guest walks out of your salon. Instead of first concerning yourself about finding and capturing new Guests, focus on your most important and valuable asset – your current Guests.
Those periodic e-mails you finally sit down to write and send to all your Guests (one size fits all) are another waste of time and money because they are not personal and do not address individual Guest opportunities.
So, if the big deal about loyalty is not so big, what should be your salon’s focus?
To grow your business, you need to focus on three critical focus elements. These elements are a take-off from what Tom Kuhn from QNITY calls “The Two Number Growth Model.” Kuhn simplifies the process by explaining that growth comes from a combination of increasing the salon’s number of transactions (not Guests) and increasing the salon’s average transaction. It is a delicate balance. You can waste a lot of valuable financial resources chasing new Guests when a more productive resource just walked out of your salon. Our three focus elements are:
1. RETENTION – first, new Guests and second, regular Guests. With less than 30 percent of new Guests coming back to a salon, collectively we have a huge problem. It seems that most owners don’t seem to care because they focus on the next Guest rather than the one they have.
2. WIN-BACKS – by using your POS, you can track activity and get a good idea when guests are stretching appointments and reducing services. Here is your opportunity to re-engage and re-capture them.
3. UNDERPERFORMING GUESTS – You see and talk to underperforming guests every day and you still let them get away. The Guests who pass up add-on services are prime targets to increase the average transaction and get extra visits. Don’t just let them walk out the door.
If you are waiting for the economy to get better and expecting your old business models to improve your bottom line, you may be waiting a long time. Understand the new realities of the marketplace and refocus your marketing energies on your current Guests because that’s where your growth begins
To learn more about Group 3 Marketing, visit www.group3marketing.com.
Originally posted on Salon Today.