It always surprises me how little so many salon owners know about their own businesses. Particularly, some absolutely crucial numbers. In more than a decade of consulting to salons, I almost always get a bemused silence when I ask a salon owner for one vital piece of information.
“How much is an average customer worth to you in say, a year?”
It’s a question that goes back to an old saying in marketing: “Most business owners see the purpose of getting a customer is to make a sale. Smart business owners realise the purpose of making a sale is to get a customer.”
Most salon owners fall into the former category. They can, with reasonable accuracy, deduce the size of a per-visit spend by an average client, but few seem to have made the connection between the one-off sale, and the concept of “Lifetime Client Value.”
Do you know what an average customer is worth to you in a year? Do ya? Really??? Because if you don’t, you’re fighting a losing battle wearing a blindfold, with both arms tied behind your back.
My question about ‘lifetime value’ versus one-off sale value is usually met with a blank silence because most seem to look no further than next week’s appointments, let alone next year. Yet, when you know such a crucial business ‘key performance indicator’, you can see your database of client records in a completely different light.
Looking at your list of ‘missing in action’ clients suddenly becomes an exercise lit by flashing dollar signs. Imagine this: of your entire database of say 1,000 client records, you discover that only 300 of them are so-called ‘active’ customers. That is, with a reasonable degree of accuracy, you can be pretty confident that in any two month period you’ll see all of them.
Here’s where many owners of service businesses tie themselves up in an ever-tightening knot. Instead of ‘mining’ that database for gold nuggets, they ignore it, and focus frantically on the acquisition of ‘new’ clients – an expensive, time-consuming and often frustrating exercise.
So let’s do some numbers. Say you have 500 clients you haven’t seen for three months or more. In all honesty, if you haven’t seen someone in three months or more, they’re either dead – there’s not much you can do about that – or they’re so ‘cold’ as to be barely registering a pulse. But…and here’s the major difference between these people and all the brand new clients you spend every waking hour trying to attract – you have their contact details. (Well, you do, don’t you…don’t you???)
Even the most haphazardly-organised salon collects mobile numbers. Some might even have email addresses (although the value of email as a first-strike marketing media has been so degraded in recent years that as a stand-alone method of delivering a message it is almost useless.)
And the really serious business owners, those who treat their salon as a proper business, rather than a mere job – or worse, a hobby – have meticulously built a comprehensive database containing not only phone numbers and emails, but real, actual, old-fashioned physical mailing addresses.
Back to the numbers.
Let’s say you’ve done your numbers – if you’ve read this far, your fingers should have been dancing over your calculator well before now – and you’ve worked out that a regular, long-term client is worth $1,000 to you in a year. If you were to send a compelling offer to those 500 former or one-time-only clients, using a combination of media (phone, email, hard-copy letter), and that offer resulted in say, 30 of those 500 re-visiting the salon to redeem that offer…and you were able to turn 20 of those 30 into regular, long-term clients, guess what? By that single, well-executed marketing campaign, you’ve just given your business an annual income injection of…
And what if you were to repeat this exercise say, three times a year?
(And here’s a thought: next time a new customer walks through your front door, are you going to see $150 stamped on her forehead…or $1,000 stamped on her forehead? Makes a big difference in how you view and treat each new visitor, don’t it!)
There is overwhelming evidence that this process produces results. For years, our Member salons have been using a famous sequence of client letters now known as the “Rupert the Dog” series, in combination with SMS and email follow-up, to ‘Raise the Dead’ from among their lost-client database.
In the UK, Hannah McEnteggart is a typical example: