Keeping Clients Committed With Loyalty Programs

“Thank you.” words mean so much to clients when you show them through actions as well as words, says Patty Elzinga of Heidi Christine’s Salon, Day Spa & Wellness Center in Ada, Mich. Ten years ago, Elzinga decided to turn the salon’s slowest business day of the year—the day after Thanksgiving — into a customer appreciation party. She mailed existing clients a letter thanking them for their business and inviting them to book a complimentary manicure, mini-pedicure, mini-massage, mini-facial, or makeup application for that day. She also encouraged them to bring a friend, who receives a complimentary shampoo and style. (The letter also mentioned that clients were welcome to book other services — at full price — around their complimentary appointment.)

Ever since, the traditionally slowest day of the year has become Heidi Christine’s busiest and most profitable. “We have 12-14 stylists, six nail techs, three massage therapists, and two estheticians booked solid,” she says. The day is so busy, in fact, that employees must agree in writing to work that day as a condition of employment.

Clients and their friends are quite vocal in their appreciation of the free services, but their actions speak even louder than their words — Elzinga documented a jump in client retention, and each year a number of the new faces seen at the event become familiar sightings in the salon year-round. “It also reminds clients who haven’t been here in awhile,” she adds. “We get people back again.”

Elzinga’s findings don’t surprise Larry Oskin, president of Marketing Solutions (Fairfax, Va.). “It’s been proven over and over that seven out of 10 customers leave a business because of a feeling of indifference,” he observes. “To grow your business, you have to keep your current clients and attract new ones.” To keep people, he adds, you need to show them that you value them.

Done properly, customer loyalty programs benefit the salon and service providers as much as the clients. For example, you can use your customer loyalty program to expose your best nail care clients to other salon services and introduce them to retail products. And you don’t necessarily have to discount your services to cultivate loyalty. You can also show your salon’s appreciation by holding a customer appreciation party one or more times a year or give out thank-you gifts such as sample-size products or gift certificates to other local businesses. (A lot of people in this industry barter certificates with other local businesses, Oskin notes.)

“You can do a gift-with-purchase or purchase-with-purchase,” he adds. “There are lots of different ways to set it up.” The important thing, he emphasizes, is to do it. “There’s not one way to do it right,” he says, “Network with other local businesses to find out what they’ve had success with.”

Deliver the Value

As these owners illustrate, customer loyalty programs vary depending on salon sizes and resources, as well as the overall marketing emphasis. Bottom line, a unique appeal and relevant benefits are most important aspects of a customer loyalty program.

“Women today are bombarded with loyalty programs,” emphasizes Lori Watson, vice president of marketing of Ulta, which has more than two million members enrolled in the Club at Ulta. “If they don’t see the value, they may sign up but they may not be loyal. Consequently, you won’t have a loyalty program.”

At the same time, remember to keep your own interests in mind. While your core goal is to develop a strong base of loyal, long-term clients, the best loyalty programs are those that convert high-value customers to a wider array of services.

“The trick is to turn a hair customer into a massage customer and a hair and massage customer into a nail customer, but in such a way that they feel the rewards are good for them,” emphasizes Jill Griffin, president of The Griffin Group in Austin, Texas, and the author of the business best-seller, Customer Loyalty: How to Earn It, How to Keep It.

Griffin urges salon owners to keep the program simple for everyone’s sake. “Look hard at how you’re going to structure the program and administer it. How are you going to track people’s points and inform them what they’ve earned?” she asks.

“You can do a lot of damage [to customer loyalty] by starting a customer loyalty program then discontinuing it because you’ve not only set expectations, but people have adopted certain behaviours with the expectation they’ll get something in the end,” says Griffin, whose latest book, Customer Winback: How to Recapture Lost Customers — and Keep Them Loyal, came out this May.

Finally, she says, loyalty programs aren’t a quick-fix to customer attrition caused by high staff turnover or customer service issues. “Loyalty programs are only going to work when other things in the salon are right,” she points out.

Membership Has Its Privileges

Early last year; Steven and Lisa Brooks, owners of two Diva Studios in Las Vegas, found a business inspiration on a grocery store receipt Actually it was a number of receipts, because it took them a while to realize they were spending more at their local grocery store on all the great specials they enjoyed as members of its loyalty program. “If you belong to this club you get access to specials such as broccoli for 89 cents rather than $ 89,” Steven explains.

They decided to adapt the loyalty program to the salon’s business model, and they borrowed a few concepts from American Express, as well. Last summer they introduced a multi-level customer loyalty program At the basic level, any salon client can pay $50 for the Advantage card, which gives them access to bimonthly promotions across five categories — hair, skin, nails, retail, and seasonal packages. In total, clients can save as much as $ 1,500 each promotional period. (Brooks emphasizes that the salon wouldn’t lose $ 1,500. “If you really look at the program, we’re not discounting,” he insists “It’s all value-added — buy a pedicure and the manicure is free”)

At the higher levels — Gold and Platinum — the loyalty program transforms into a pre-pay discount program for $500, clients could buy the Gold Advantage card, which gives them a $600 credit at the salon plus access to 12 months of promotions. For $ 1, 000 they get a $ 1, 250 credit plus promotional discounts.

The Brookses had a great response to the Gold and Platinum levels, collecting $50,000 upfront for services. However; no one bought into the Advantage card. “Where we blew it was that there wasn’t enough value in people’s view to lay down the $50.” Steven notes.

They scrapped the Advantage card and conceived the Club@DivaStudio. The $12 annual membership fee is much more palatable to clients, and is offset by a thank-you promotional offer Plus, in addition to the bimonthly promotions, club members earn a $12 certificate good on any retail products for every $240 they spend at either Diva Studio location. The $12 goes to the company that administers the loyalty program and covers all of Diva’s costs — membership cards, promotional mailings, marketing materials such as salon banners, and counter and station cards.

Based on feedback so far, Brooks expects many clients to join just to earn the retail rebates — which is fine with him. “Its a no-load loyalty program delivered at no cost to me other than the 5% discount clients earn on retail,” he says.

As for the bonus card values Gold and Platinum customers earn, Brooks admits they work only for salons with strong retail sales. ‘We’re great at selling retail,” he says. “If the $250 for the Platinum goes mostly to product, you’re really giving away only half of that And anyone who spends $1,000 on services better be spending $250 on retail.”

His goal is to have 1,000 members per location. In addition to promoting the program with counter cards and banners throughout the salon, Brooks says it’s part of his front desk staff’s job to promote the service. And if his staff doesn’t volunteer the information, Brooks makes sure clients ask for it with signs at each station that say, “Ask me how your services today could be free.”

Make the little Things Count

Over the years, Currie Hair Skin Nails in Glen Mills, Pa., has focused on the little things to engender customer loyalty, ranging from handing out boxed orchids around Mother’s Day to listing all 10-year-plus clients in the newsletter.

One of Currie’s favourite customer appreciation tactics is to have employees reward their best customers. “We tell them that if they have a good, loyal customer, they have the leeway to give them a gift of a bottle of shampoo or polish,” he explains. “We’re big on that. We have little folding cards with out name and logo just for that purpose. Let’s say someone has a manicure client who doesn’t come here for haircuts. The nail tech can write a certificate on that card for a free haircut.”

This year, though, Currie has decided to add another layer of recognition for those VIP clients who spend a lot of time and money in the salon and spa.” I got the idea from Neiman Marcus, which has an Inner Circle Rewards program,” he explains “I think it’s in any business where clients who spend an exceptional amount of money like to be recognized”

Currie’s idea is to mail those top clients a personalized letter thanking them for their business and inviting them to use the enclosed VIP gift card to try a new service ‘We’re going to try to do it so that we’re introducing them to new services they’re not using,” he adds.

By the same token, he doesn’t foresee discounted or free services as the lynchpin of his customer loyalty program “If you tie it to money too often, I think people will focus on it,” he observes “If someone comes in regularly it’s because they’re benefiting from the services they receive.”

He also cautions against tying rewards to already popular services. “We do a booming business in manicures and pedicures,” he says. “People have asked if we’ve thought about packaging those services, but it doesn’t make sense because there’s already so much demand.”

Make Them the Guests of Honor

Even when – or perhaps because—she worked alone in her salon Maisie Dunbar believed in rewarding her loyal customers. When it was just the in the business, she kept the program simple by inviting clients to upgrade their services for free three times a year. “They were appreciative of the chance to try something new even when they were services they left they couldn’t afford,” she says.

Dunbar emphasizes she offered the occasional upgrade purely as a token of appreciation, but she soon discovered that some clients enjoyed the upgrade so much they were willing to pay for it. For example, she says a number of regular manicure clients began booking monthly spa manicure services after sampling it.

This past May, Dunbar celebrated the grand opening of M&M Nails and Wellness Center in Silver Spring, Md. With an expanded service menu and staff, she’s decided to streamline the program by promoting “Customer Appreciation Month” during slow periods. During January and September –M&M’s traditionally lighter months–clients receive invitations to sample any service on the salon’s menu for the price of their regular service. Pedicure clients for example, will be able to enjoy a $70 spa pedicure for $55. Dunbar also plans to stock up throughout the year on manufacturer specials to use as clients giveaways during the events.

Get Five to 15 for Spending Habits

As Diane Fisher expands her three Virginia-based Eclips Salons into day spas, building a spa clientele has become a primary focus. She’s experimented with points-based client loyalty programs in the past, and this time opted for a variation on the same theme. This past spring, she worked with Oskin to design VIP membership cards for the salons’ existing hair clientele. She’s structured the program levels based on clients’ current spending habits—haircut clients qualify for silver, cut and color clients get gold, and highlight clients enjoy platinum status. Depending on their membership level, those clients will enjoy 5%-15% discounts on all spa services.

“We don’t normally discount services or give out coupons, but we want to start the spa off busy,” Fisher says, adding that she plans to re-valuate the program in 12 months. Nor would it be the first time Previously, Eclips’ customer loyalty program entitled clients to earn points they could save for future free services.

“They earned points for hair services they could redeem for, say, a pedicure.” She explains. Clients loved the program, but the staff members doing the free service didn’t. This new program will replace the old one. Depending on client response as well as how quickly the spas attract new clients, Fisher says she may distribute the cards only for a few months. Similarly, she remains open on how long she’ll continue the program or how quickly she’ll evolve it.

Like Currie, Fisher emphasizes that clients place a high value on the small touches and individualized attention. “Statistically, client retention goes down after every visit,” she says. When the salon receives free products or samples and other extras from manufacturers or distributors, Fisher gives them to staff members to pass out to long-term clients. She also encourages new staff members to give coupons for free services to other staff members to distribute to their valued clients.