The Ultimate Guide to Building a Successful Salon Loyalty Program
Did you know that it is five times more expensive to win a new client than retain an existing one? What is even more interesting is that returning clients spend 67% more than new customers.
So, are you wondering how to retain and engage your existing clients for the long term? Well, we have the perfect solution for you – loyalty programs.
Loyalty programs are a surefire way to grow and nurture a strong base of repeat customers on whom small businesses like salons are heavily reliant. Rewarding your clients with compelling discounts, freebies, and other perks is a great way to stand out from competitors, get your customers to visit your salon more frequently, and spend more money on the services and products provided by your salon. In addition, since your happy clients are your brand ambassadors, you will also gain new clients through word-of-mouth marketing.
Therefore, an effective client loyalty program can work wonders for your salon business. So, how do you build one such salon loyalty program that actually works?
To help you out, we have come up with a step-by-step guide to designing and running an outstanding loyalty program that boosts your salon’s revenue and keeps customers coming back.
So, the following are the 8 steps covered in this blog. You can jump directly to a particular section by clicking on it.
- Understand your customer base
- Set objectives before designing the loyalty program
- Choose your loyalty program type
- Come up with attractive rewards
- Add a personal touch
- Make the loyalty program fun for customers
- Actively promote the loyalty program
- Evaluate the performance of the loyalty program
Read on to find out more about this!
1. Understand your customer base
You can collect personal details of customers like their age, gender etc., in addition to insights like their preferences and spending habits. You can then use the customer data to understand your customers better and know what kind of rewards and services they expect from you.
Figure out whether they are looking for:
- Discounts or money-back offers
- Free add on products or services
- Premium customer service
- Personalized customer experience
- Priority while booking appointments
- Donations in their name to charities etc.
Ensure that your salon rewards program will be able to target both regular and one-time/ infrequent customers. For example:
- In the case of regular customers (who have already joined the loyalty program) , you can focus on incentivizing them to increase the amount they spend every time they visit your salon, and you can also come up with personalized rewards to strengthen their relationship with your salon.
- In the case of one-time/infrequent customers, you can convert them into frequent visitors by providing them with top-quality service and make them join your loyalty program by offering attractive rewards just for signing up.
Also, don’t forget to offer rewards that can attract people from all walks of life. Take factors like age and gender into account while designing the rewards. For example:
- If you offer a discount on anti-aging products/ treatments, it won’t appeal to your teenage customers and therefore, try to include an offer on treatments like facials or manicures & pedicures that are relevant to teenagers as well.
Therefore, it is crucial to come up with relevant marketing campaigns and tailored rewards that can appeal to all groups of customers visiting your salon.
2. Set objectives before designing the loyalty program
First of all, you need to clearly define what you expect to achieve through your loyalty program.
Therefore, before designing the salon rewards program, you can zero in on your end goal. For example, are you:
- Simply aiming to delight your customers and build their trust? If so, you can set gaining at least ten positive reviews and 25 five-star ratings every month as your target.
- Trying to increase the frequency of their visits? Then, you can set a target of getting each customer to visit the salon at least five times within a period of five months.
- Trying to increase the amount they spend during each visit to your salon? In this case, you can set a target of getting each customer to spend at least a certain amount, say $100, every visit.
- Aiming to increase the number of new customers every month? If so, for example, you can set a target of gaining at least ten new customers through referrals every month.
Having a clear objective in mind will help you determine what value you need to provide through the rewards and how.
The best option would be to start with a basic loyalty program focusing on achieving your primary goals. For example, you can start with 1-2 strategically planned reward campaigns to avoid giving away more than you gain:
- If your primary goal is to increase the frequency of visits of clients to your salon, you can incentivize them by awarding points for re-booking within a stipulated amount of time. For instance, you can award 500 points on a total of 5 facials within a period of 5 months.
- Similarly, to encourage them to spend more, reward them with a free add-on if they spend more than a specific amount, say $100, in a single transaction.
Once your basic program is successful in achieving your primary goals, you can expand the loyalty program as your business grows.
3. Choose your loyalty program type
A carefully structured salon rewards program is vital since it is the rewards that lure in customers. Therefore, you can adopt one of the below-listed salon loyalty program ideas depending on your targets and the feasibility of offering them :
- Point-based loyalty program: This is one of the most popular salon loyalty programs. They’re the simplest because points are easy to earn and easy to redeem. Every time a customer makes a transaction, they get a certain amount of points depending on their spending. These points are translated into some reward and customers get to redeem their reward once they’ve collected a certain amount of points. Then they start over from zero points again.
- Punch card loyalty program: This is another simple rewards system. You can hand out a salon loyalty card to your customers and then for every purchase made, salon staff can punch a hole through its surface. When all the punches are filled, you can reward the customer with a targeted gift or discount. One major drawback of this system is that customers might often forget to carry their punch cards whenever they visit the salon for an appointment.
- Tiered loyalty program: In such tiered systems, customers are presented with small rewards as base offerings for being members of the program. It encourages repeat customers by increasing the value of the rewards as they climb the loyalty ladder. A loyalty program based on tiers is synonymous with status and will generate long-term investment in addition to preventing top-spending customers from churning. For example:
- You can set at least three tiers, such as Silver, Gold, and Platinum
- At the Silver level, customers need to spend $75 per month in the salon to qualify
- The Gold tier starts at $150 per month, the Platinum starts at $300 per month, and so on.
- Sephora’s Beauty Insider program is an excellent example of tiered loyalty programs.
- Paid loyalty program: These are VIP programs and paid salon membership programs. You can hand out your salon membership card and offer exclusive rewards, special perks, and unique opportunities in return for a nominal one-time (or monthly/ annual) fee. You can even come up with enticing rewards like out-of-store service, house calls, etc. only for your VIP customers.
- Coalition loyalty program: You can also enter into strategic partnerships to offer your clients a wider range of rewards. The best option would be to partner with businesses that offer services that you don’t provide yet intrinsically linked to the salon services or businesses with a shared demographic of customers. For example:
- You can partner with local businesses, specifically for services you don’t offer, such as massage parlors, yoga & fitness studios, gyms, or even bakeries and coffee shops.
4. Come up with attractive rewards
Listed below are some key tips to consider while deciding on the rewards for your salon loyalty program:
- Don’t forget to do the math behind the offered rewards to ensure profitability.
- Most businesses spend less than five percent of their annual budgets on their customer rewards programs.
- It would be best to decide the rewards based on the loyalty program structure, salon pricing, revenue, etc.
- Always ensure that you stand to collect a healthy Return on Investment (ROI) on the loyalty program.
- For instance, if you’re designing a loyalty program for a hair salon, you can offer a monthly paid salon membership with a subscription fee of around $70 to $85 per month for a blow-dry service in addition to a complimentary keratin treatment as well as a 10 percent off on add-on salon products. If the client needs another blow-dry per month, you can charge an additional fee of just $5.
- You can reward customers with services they’ve never tried before to introduce them to something new, and if they like the new service, they will surely pay for it in the future, thereby leading to more business. For example, you can give a 30 percent discount to customers on services they’ve never tried before.
- In addition, you can bring in more revenue by driving traffic to the higher-priced packages and then encouraging the customers to use the points earned from these packages to redeem other services or products as add-ons.
- You can also reward your clients with salon gift certificates for special occasions so that they can gift your services to their loved ones. This can help you gain new clients as well if you market your gift certificates correctly. Don’t forget to make the most of festivals and holiday seasons by offering exciting deals and discount coupons to your loyal customers.
- You can also reward non-purchasing customer actions. For example:
- Offer an enticing upfront reward (say, 50 loyalty points) to customers just for signing up.
- Offer rewards to those who pre-book the next appointment (e.g. 25 loyalty points) or refer new customers (e.g. 50 loyalty points)
- Reward those who use the salon’s hashtag or tag the salon in their posts with 15 points.
- Offer 10 points to customers who check in on Facebook when they are in for their appointments.
- Offering rewards to customers who share the loyalty program announcements on their own social media pages is also a wonderful idea.
Delivering what is promised is crucial to the success of your salon since your loyalty program might fail if customers are disappointed by the rewards offered by your salon.
5. Add a personal touch
Personalized customer experience goes a long way in increasing customer satisfaction. Given below are some factors that could lead to increased personalization:
- You can implement highly personalized marketing by replacing generic communications sent out to an entire customer base with tailored offers to increase engagement with loyal customers.
- Always address customers by their first name in all communications and send automated email/SMS thanking them for every appointment.
- Don’t forget to send push notifications when they haven’t been in for an appointment for months.
- You can also use customer data to determine what service each customer might consider trying in addition to their usual services and send them such recommendations. This will encourage customers to try out those services and boost your revenue.
- It is important to acknowledge each milestone in the customers’ journey by offering freebies and discounts. For example, you can offer your customers a 35 percent discount on services when they complete an entire year as your loyalty program members.
- Sending messages on special occasions like birthdays and anniversaries offering free services/discounts will also go a long way in strengthening your relationship with your customers.
6. Make the loyalty program fun for customers
The following techniques can come in handy when you are trying to keep your customers hooked by increasing the entertainment and engagement quotient of the salon rewards program:
I. Gamify the loyalty program
- Gamifying the salon loyalty program through interactive features like Scratch & Win offers, Shake & Reveal discounts, prize wheels, prize machines, gamified quizzes, other social media challenges, etc., is key to the success of the program.
- You can incentivize and encourage customers to create user-generated content such as blog reviews, videos, and more that promotes the loyalty program and increases the credibility of your salon.
- You can also implement some fun and engaging social media campaigns to provide “thrills”. For example, you could post questions like “Summer has officially begun! What will be the summer haircut of your choice?” that encourage the customers to share their opinions.
II. Surprise and delight your customers
- You can strengthen the customers’ emotional connection to the salon by surprising & delighting them with spontaneous rewards at random moments in the customer journey.
- Ensure that the customers are treated to something of value, completely out of the blue, with no strings attached.
- You can also reward your clients on holidays such as Thanksgiving and Valentine’s Day. Since customers don’t expect it, and it stands out more. For example, on New Year’s Day, you could surprise your favorite (frequent) customers by offering them free services without any terms and conditions.
7. Actively promote the loyalty program
Putting effort into letting the customers know about the various offers is as important as introducing such rewards. It is important to:
- Include loyalty program invitation cards or pamphlets with customers’ receipts
- Create a dedicated webpage or blogpost for the loyalty program
- Email and SMS the salon’s subscribers to let them know about current special offers/discounts
In addition, don’t forget to take these factors into account while promoting your loyalty program:
- Ensure active social media presence
- Maintaining an active account on both Instagram and Facebook is important.
- You can create interactive stories, reels, and videos to promote your loyalty program announcements and build hype around the program with signup competitions and social media challenges.
- Regularly sharing the photos of rewards (as customers receive them) on social media is also a good idea.
- Try to get clients to talk about the program’s benefits in a video and use this testimonial to attract new clients.
- You can implement in-store promotion by placing posters and brochures in windows, tables, etc.
- It is also important to train & incentivize your salon staff to actively promote the program by offering internal prizes – whoever signs up the most customers this month wins a free lunch, for example.
8. Evaluate the performance of the loyalty program
Evaluating the performance of your salon loyalty program and making amends based on the review is key to its success. Listed below are factors that can help you while doing so:
I. Review effectiveness at regular intervals
- Reviewing the performance of your salon loyalty program quarterly, bi-annually, or annually is crucial to determine its effectiveness.
- It is important to analyze the salon’s KPIs (key performance indicators). Such growth indicators include:
- customer count
- repeat customer count
- customer visit frequency
- the inflow of new clients every month
- pre-booking percentage
- average service ticket size
- salon occupancy ratio
- Try to analyze the customer data collected by applying relevant business metrics to gain more insights.
- Asking for feedback from customers who are loyalty program members can also help in reviewing the performance of the program.
II. Identify the hurdles
- You have to identify the hurdles:
- Is the program not getting enough signups?
- Even after getting plenty of signups is it failing to turn a profit?
- Even if the engagement is high among newly registered members, is their interest tapering off quickly?
- After figuring out the hurdles, try to determine the reason behind these problems. The following could be some of the potential reasons:
- The rewards are either unappealing or unattainable
- Customer data isn’t being used effectively
- Customers aren’t fully aware of what the loyalty program offers
- Failure to stay ahead of emerging trends and techniques in loyalty
- Lack of fun and engaging elements to provide “thrills”
- Poor program promotion and loyalty marketing campaigns
III. Come up with effective solutions
- After figuring out the underlying reasons for the existing loyalty program not taking off, develop strategies to tackle the specific problem
- Some of the tips given in the earlier steps can come in handy if you’re hunting for solutions to a particular problem
- Then, you have to incorporate these strategies to restructure the loyalty program to suit your salon’s needs and increase customer loyalty
For example, suppose you have identified that the program isn’t getting enough signups because of the customers not being aware of what is being offered. In that case, you can hand out pamphlets explaining the rewards offered and your staff can describe the working of your program to each customer visiting your salon, and you can also email the details to your customers. You can also use various social media promotion strategies to remedy this problem.
It’s no easy feat to turn your customers into loyal ambassadors of your salon business.
But, by understanding your clients and setting achievable goals, you can design an extraordinary customer loyalty program with enticing rewards that can appeal to your customers’ hearts, minds, and wallets.
Increased personalization and inclusion of fun elements and thrills are also key to the success of your salon rewards program. To make the salon loyalty program successful, you must also promote it aggressively and review its performance regularly.
Now that you know how to build a successful salon loyalty program, you can launch one that fits your needs best to make your salon stand out from competitors, gain more footfall and boost your revenue.
Before shaping your salon loyalty program, it is important to get a salon scheduling software with inbuilt Customer Relationship Management (CRM) like Appointy that provides data and powerful insights about your customers’ spending habits and preferences, helps in segmenting your clients, and also ensures hassle-free management of all appointments, transactions, and rewards.
How was your experience creating a loyalty program for your salon? Do let us know in the comments! 🤗
We at Appointy, help business owners grow and run their businesses with our online scheduling software. This blog was a part of our ‘Manage your Business’ category, where we provide expert tips, and resources, or simply talk about the challenges that small and medium businesses face every day.
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