Finding value: a repeat customer or a new customer?
02 Oct 2013
Written by Alice Smithson
One of the biggest decisions any salon manager will have to make when considering their marketing strategy is to determine what kind of customers they want to promote their spa or salon to. Should they concentrate on bringing in new business, or focus on retaining existing customers instead? In an ideal world, it would be fantastic to cater for both, but although finding the data to help you plan a marketing plan can be done easily with the right salon software, putting the plan to action can be costly, and in order to be effective it needs to be direct, rather than general. So, who should you choose? Let’s take a look at the value of each customer in turn:
According to a recent survey, over a twelve-month period businesses with a 40% level of repeat customers generated 47% more revenue than similar businesses with only a 10% level of repeat customers. This is due to the fact that repeat customers are more likely to become ïbig spenders’. They become familiar with the level of treatment they receive and are willing to pay the extra money for more, because they know that (in their eyes at least) the service is worth it. On average, a repeat customer will return 16 times over two years, varying their treatment at least four times, more likely paying more to do so. Once a customer returns just once, you can be sure they will begin to return again and again, so you really only need focus on taking extra care to impress first-time customers! Ultimately, returning customers could not only save you money, but also help you to build your business. Here are a few tips to ensure they return after their first visit:
-Encourage a relatively expensive first purchase, so you can offer them a cheaper deal the second time around
– Go out of your way to push for the second appointment _ e.g. offer them a free blow dry, or a glass of champagne on arrival
– If they leave without booking their next appointment, invite them back at a later date _ put your text marketing to good use!
– Use software for salons and spas to remind customers of their appointments, and arrange to rebook any that are cancelled.
– Keep a list of customers who may book an appointment at late notice for a reduced cost; discounted treatments will be more profitable than none at all, and your clients may feel more valuable if you send them specific, personalised offers.
It doesn’t take us to tell you that acquiring new customers can be costly. Trying to lure existing customers back for a second round is relatively easy to do as you have shown them what you can do and already have their details to contact them directly. Attracting new customers will require advertising and heavy promotion, and even then, you can’t be sure you’re reaching the right people.
However, the benefits of being able to bring in new custom are clear; the more customers you bring in, the more you can turn into repeat customers. The best way to determine whether it is worth focusing on trying to attract new customers is to calculate the lifetime of a typical customer, and consider how much time, effort and cash you are prepared to invest in acquiring that customer. Here’s what you should consider:
– How much the new customer is likely to spend each year
– The number of years the customer is likely to remain with your salon or spa
– The value of the services the customer will require
– The cost of providing the service – if it’s a simple ïwet cut’ once every three months, is it worth your time?
Considering these points will help you to determine whether campaigning for new customers will generate a worthwhile (enough) return on investment.
While both kinds of customer have the potential to bring you profit, pleasing existing customers can be more beneficial, especially to those salons that perhaps have a lower budget, as they will continue to bring you work, and will also hopefully spread the word, bringing you new custom anyway! In order to be able to better manage the running of your salon and salon appointments, including the promotional and marketing side, you’ll need a software that’s up to the job. i-Salon Software can offer the support you need to be able to spend your time where it matters most. For more information, visit our website or get in touch with a member of the team today.
Why is it more cost-effective to keep existing salon customers than to win new ones?
You may already be familiar with the notion that it’s supposedly more cost-effective to retain an existing customer than to win a new one. It’s a common enough phrase in most retail environments, including the salon and spa industries, but as with most clich_s there’s more than a grain of truth in there. The fact of the matter is, relying on new customers to populate your salon or spa each week is no way to run a business, whereas building up a dependable, regular client base will help you to remain profitable and competitive throughout the working year. So why should this be the case? We’ve compiled a few of the reasons why you should be looking to retain your customers each month rather than replace them with new ones, and we’ve suggested just some of the ways that salon management software can help you to do so…
Marketing is an extremely effective business tool for all salons and spas, but you’ll often find that it’s both cheaper and easier to apply once you’ve already gained some established customers. Basic advertising is the equivalent of baiting a hook with any old thing and hoping someone passing by will take a bite _ you might get some hits, but then again you might not. Once you know your customers by name and have their contact details, however, you can use text marketing to bait that same hook with something you know they’ll love. Rather than competing with other spas and salons, you’ll be able to contact your clients directly with offers and treatments unique to them, as well as reminding them of bookings ahead of time. They’ll be far more likely to take an interest than any old passer-by on the street, and text marketing won’t cost you anything like as much as a print, radio or television adverts, either.
Style or substance?
Attracting people through your door in the first place can be difficult, and it may take a lot of initial investment before you see any major increase in passing trade. Investing in the latest flashy treatments, products and displays may get you noticed, but if people only come in for one session and then never return that’s a lot of money wasted. Instead, work on offering the highest quality treatments you can, perfecting your customer service and using salon booking software to keep your appointments organised and regular. That way, your customers will want to return again and again, rather than popping in for a look and then moving on to one of your competitors.
Dependability and organisation
One of the main reasons why customer retention is more cost-effective than customer attraction is that your returning clients will most likely be organised and dependable. You know that your regular customers aren’t likely to cancel on you at the last minute, and you’ll also know which treatment they’ll usually come in for. That way, you’ll be able to keep your online appointment forms well organised and maximise your appoint slots, and thus, your profits. New customer and passing trade is far less dependable _ there’s no telling how reliable they are, or how long they’re likely to stay.
While it’s important to attract new customers and expand your business, you’ll want your new clients to come back again once you’ve given them what they came for. Repeat customers are the backbone of any successful business, and our salon management software can help you keep them coming back again and again. Why not take a look at the range of salon management software solutions available on our website, or contact us to see how we can help?
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