Client Retention – The Hidden Secret to Success

Client retention

by Pam Stellema

in Customer Management, News

Research tells us that it’s up to 91% cheaper to retain a client than to gain a new one.

If that’s the case, then why do salon owners focus so much of their valuable time, money and energy on continually trying to find new clients, instead of looking for better ways to keep the ones they already have?

The client retention rate for new salon clients after their first salon visit can be as low as 25%.  That means that only 1 in every 4 new clients actually returns to your salon to give you another try.  What is scary is that if you’re not monitoring and measuring this important part of your business, your salon might just be falling into this category.

Just think, with only a 25% client retention rate, that means your salon could be losing 3 out of every 4 valuable clients that walk through your door.  That’s an enormous amount of potential business income simply vanishing before your very eyes.

When asked, many salon owners have told me that their retention rate is great…fantastic even.  That is until we actually measure it!

One salon I worked with told me their client retention rate was around 75%, and they were shocked when it turned out to be a very poor 32 % instead.  They had simply been assuming that all was okay, and didn’t bother to measure their client retention properly.

What can client retention mean to your salon?

Let’s take a look at the value of a client who has a $70 service every 6 weeks.  In one year, that client is worth a little over $600 dollars to your business.  I hear you saying, yeah, well…..so what! $600 is no biggie.

But, let’s take a look at the full picture.  By retaining that client for 5 years, their value to your salon jumps to $3000.  That $70 client now has a lifetime value of $3000.  That’s worth thinking about seriously.

Add in a few retail purchases that the client would make over 5 years and we can add another $1000 dollars to the figure.

Now we’ve hit $4000 in lost revenue if she leaves.

What about the clients that she would have recommended to your salon?  It isn’t too much to expect that she would have introduced another 2 friends to your salon over that time.  Let’s add on another $8000 for those lost clients.

WOW!  Before you know it, that $70 client is actually worth $12000 in potential income over a 5 year period.

To top it all off, we can multiply that figure by all the clients that visit your salon just once or maybe twice and never come back.  Now we are talking BIG dollars!

I think you are probably getting my drift here.  Every client that does not come back to your salon is costing you plenty in lost income.  Even at just $600 per year in value, 100 lost clients is equal to $60,000 in lost revenue in just one year.  Multiply that by their lifetime value (5 years) and you’re looking at serious money – around $300,000 and that’s not to be sneezed at.

Client retention is vital to the long-term health of your business and is a strategy you should focus a great deal on.

While it’s important to gain new clients in any salon to make up for those who leave, it’s even more important that you make sure that you’re also focusing on retaining the clients who are already coming through your front doors.

Pam Stellema
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Pam Stellema

Pam is an industry experienced coach, salon owner, speaker, author and copywriter.She works beside salon and spa owners to show them how to effectively grow their profits and remain in business for the long-term.
Pam Stellema
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{ 2 comments… read them below or add one }

Norma

Great Points…you have to look at the big picture!!! In addition, you want to make sure you know what your client is thinking about your salon’s performance on an on going basis!!!

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Pam

So true Norma. I don’t know if I am the norm, but most salons I have patronised and left have no idea what happened. I just get up and leave because something isn’t making me happy. Why don’t they know I’m not happy? Because I don’t tell them and they don’t ask. Funny thing is that I normally never hear from that salon again as they don’t try to lure me back to give them another go. In some instances I would do just that if they asked me to.

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