Salon loyalty programs: How customer loyalty programs work and help to increase salon customer retention
Oct 1, 2019 · 11 min read
If you don’t need more clients for your salon or spa, if you don’t need more locations for your beauty salon, if you don’t want to increase the revenue, if you hate the idea of returning the loyal clients, and if you don’t want to be #1 in your city, stop reading right now.
When there is no loyalty it means that salons and SPA need a good way of attracting new clients to be in business. But attracting new ones is much harder than retaining existing because marketing costs are high.
The loyal client base is at the heart of any salon business, as they provide a significant part of the income. According to Gartner Group, 20% of the existing customers generate the company’s 80% of revenue.
This makes them a valuable asset for any salon owner, and smart salon owners have already started thinking of loyalty schemes to keep them happy and returning.
This article is for those smart and innovative salon owners who value their clients and want to grow their business.
If you think that building salon customer loyalty is complicated and you can not do it, we are here to help and show how engaging it can be.
The loyalty program is a win-win for the salon owner and the salon clients. The importance of loyalty programs for salon and SPA owners is clear: they have loyal clients who provide the greatest part of revenue, they easily and artfully engage and retain their clients, thus creating those vital emotional ties necessary for every salon development and client retention.
One of the key features in client loyalty-building strategy is the reward program.
We live in times when cashbacks, points, miles, giveaways and coupons are an inherent part of everyday product consuming process. The clients want to be rewarded for using the same service regularly and for being loyal.
When you think about the salon rewards program, the first thing that comes into mind is loyalty cards.
Which one is preferable? Paper Loyalty Cards or digital Loyalty apps. Let’s find out by comparing the pros and cons of each type.
They are most often made of plastic, sometimes from paper, or metal. Usually, they have either barcode or magstripe which is scanned at the front desk to accumulate points.
They are familiar
Easy to use, everybody knows how to use them
The client just needs to pass on the card at the counter, then take it and put it in the wallet.
They are often lost, damaged or left at home.
The clients don’t know how many points they have collected. In some cases, they need to send a text message to get information about the points or wait for the cashier to print the receipt. They are not interactive and in most cases don’t foster emotional bonding.
And the last, but not the, least important, they are not eco-friendly. Over 300 million tons of plastic are produced every year and the plastic loyalty cards are not the smallest part of this number.
Technology has the power to keep all your digital cards on your smartphone. They can be kept either in a digital wallet together with other loyalty cards from different brands, or it can be a loyalty app, where the clients see their purchase history, accumulated points, possible rewards and other promotions.
First of all, they are eco-friendly. The salon owners don’t need to replace or reprint the cards anymore.
One of the most important features of digital loyalty apps is the personal touch. The loyalty apps show the name of the owner and the amount of the points.
According to Statista, there are 2.71 billion smartphone users in the world today, and digital loyalty market has already matured for a transition to digital versions of physical cards to digital.
Another benefit of digital loyalty is versatility. While physical cards need to be reprinted for changes, digital options are more flexible for new offers and promotions.
While the millennials are more digital-oriented, the majority of older generations don’t consider them very convenient for everyday use.
The next, they depend on the devices. Is this familiar to you? Has this ever happened to you right in front of the cashier?
When you have definitely decided to integrate cards in your loyalty program, you will have to choose between a stamp card and point-based cards.
Stamp cards can be both digital and physical. Nearly everyone is familiar with old good punch cards when you have let’s say two more circles on the way to a new haircut.
Punch cards are easy to fake. Some cards need special custom-made stamps or writing some initials each time, however, there are a lot of simple punch cards that are easy to duplicate.
The effectiveness of punch cards as a loyalty program is difficult to measure. You don’t have any sort of data to improve or optimize your loyalty marketing efforts. The switching cost of stamp cards is low, so the clients are less loyal, don’t have an emotional bond with the salon and therefore are more prone to changing salons.
Physical stamp cards are often lost or damaged. And when the card is lost, the visit history is also erased, as the punch cards are not tracked by any other means.
Point-based loyalty cards are based on the simplest idea: Spend more and earn more. Customers spend money on services like haircut or blowout and receive points which can be converted into service at that salon.
Pros: With point-based loyalty programs you usually give less revenue while the perceived value can be much higher Let us explain how. Usually, punch cards are for 9 visits maximum, and the tenth is free. In that case, the owners “Cashback” is approximately 11%, while the point-based programs typically have 1–5% cashback. Point-based programs, especially when paired with tiered systems, have a higher switching cost, which increases brand loyalty and customer retention.
Cons: Launching a point-based loyalty card requires some technical solution and are harder to implement.
If the card points system is not set-up or balanced well, or the points accumulation is performed based on complex calculations and the client does not understand the system, they may fail.
Point-based loyalty programs are the most effective when they are tiered. They segment the client base and encourage the clients to obtain a higher and better status with more privileges. Each loyalty tier is defined by specific benefits and rewards. As a result, clients strive to spend more not only for redeemable points but also for status, privileges and extra values.
VIP status in the loyalty programs makes the clients feel more important, valued and special. They stay loyal to your brand, begin to spend more, become your brand ambassadors.
There is another very interesting thing about client loyalty: Loyal clients with higher tier status are more tolerant of bad experience than usual clients. And in case of bad experience VIP clients are more inclined to accept excuses.
Each rewards program points are calculated differently and the value of the points depends mainly on services or products sold. Determining how much the points are worth is completely up to the salon owner. But before making the decision, salon owners need to conduct market research. If the average per cent for rewards points is, let’s say 2.5%, 3–5% would be perfect and will move your salon ahead of the competitors.
But one thing is clear: The calculations should not be too complicated. Points-based rewards systems are for engaging, delighting and retaining the client, and not for making them do complex calculations.
The clients should clearly understand how their points are accumulated and the value of the points should be visual for them.
Most often the salons choose point-based loyalty cards for rewarding their loyal clients. For more effectiveness and added value, we suggest you implementing tiers to make the program more comprehensive, more appealing and engaging. For the beauty and fashion industry, earn&burn points+tier systems work best.
Tiers make the common process of “spend more and get more” personalized and give the clients the feeling of being special. They become incentivized to visit the salon more frequently, love your brand and spend more to gain a higher rank. Each tier should include benefits and rewards, and the benefits should increase with every next level.
Our experience shows that three-tiered systems are perfect for salons and SPA. For example, Sephora has three tiers for its customers:
Salon owners should be careful while determining the thresholds of the tiers. Higher ranks should be more difficult to enter and have more complex requirements. Actually, the ideal customer base distribution should be 60%/ 35%/ 5%.
The most valuable clients are in that 5% tier. They should be in the spotlight of the salon and have very special privileges and benefits. This VIP tier should also be the rank other clients strive to reach.
An average client should be able to enter the second tier in 6–8 months, and the third tier in 2 years. Ideally, reaching the specific tier should not be enough for the client to sit, relax and enjoy the benefits. They should also have to keep that rank by fulfilling certain requirements and have certain spending minimums.
Oooh, that sweet moment of having something as a reward, and that tickling feeling of specialty!
Here are some ideas that will make your salon clients happy and increase customer retention.
The most common, but maybe the most favourite one is offering a free beverage. It is especially pleasant when you have to stay at the salon for a long time, and sipping from a cocktail in summer or enjoying a hot tea while having a pedicure is always so relaxing.
Make your salon clients grateful by offering them a parking spot. We assure you, they will beam with happiness.
Reserved slots at the best salon stylist. This is perfect for VIP tier clients, and this is that particular reward that will make them return again and again.
Discount coupons are the most awaited giveaways for salon clients. They work best as a birthday special or a win-back gift when the client has not used your salon services for a long time.
**Free service offers **can be a birthday special for clients in the second or third tiers. Your VIP client will be delighted to receive a free manicure or blowout as a birthday gift.
The modern world is more and more up to personalization, which is considered a key element of any marketing strategy. Salon marketing is of no exception.
As we have already stated, salon loyalty programs are the key element of salon growth, and a great loyalty program name can help it to stand out and succeed. Naming your loyalty program will arouse emotions, making it more recognizable and special.
Big brands have adopted the idea and usually name their loyalty programs, like oVertone’s The Color Club, Lancôme Elite Rewards, Glow Recipe’s Glow Miles Program or The Beauty Circle by Moroccanoil.
Messenger based loyalty apps like RetentionForce make the whole process of rewarding the clients fun and engaging. Its most important benefit is that it’s interactive. Customers receive and answer the messages, give feedback, get points and redeem them, transfer from one tier to another.
Salon owners get happy and returning customers who don’t have to download third-party apps. They neither need any advanced tech knowledge to configure and use the program. All the schemes and automations are easy to set up and ready to use.
As the program also tracks customer behaviour data and is extremely personalized, it is possible to tailor the client rewards based on prior purchase behaviour and client needs.
As a result, you have a comprehensive customer base and can build your salon loyalty program based on data-driven insights.
As you have read up to this point, you already know for sure that establishing a loyalty program for the salon or SPA is of utmost importance for growth and development. And customers want and should be rewarded for being loyal.
As stated in this article, rewarding customers is vital. But what is more important, the rewarding programs should impact positively on the building of long-term loyalty program and sustainability.
Remember, the rival companies have already understood the importance of loyalty programs, and higher benefits and rewards can attract the clients you considered loyal. That is why it is also important to keep the finger on the pulse and follow the market trends. This is the reason that loyalty programs like RetentionForce are the right choice. Based on observations, market trends and client behaviour data, RetentionForce is improving constantly, and if your salon is a RetentionForce partner you’re the winner.
Digital Marketing Specialist, Strategist, Content Writer at RetentionForce.