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Have You Been Thinking About Customer Loyalty the Wrong Way?
CEO Sudheer Koneru offers key strategies for building customer loyalty in the spa and salon industry.
It’s a common problem: Salons and spas carefully track customer retention and assume strong retention rates mean their brand has strong customer loyalty. But when a popular provider leaves, so do many of their customers. Their customers are loyal to their employees, not their brand. So how do you know whether your customers are loyal to your employees or your brand? And if your customers are loyal to your employees, how can you turn employee loyalty into brand loyalty? It starts by changing the way you think about customer loyalty.
Redefining customer loyalty
Retention rates are only the beginning. To paint an accurate picture of your customer loyalty, you need to dig deeper. Rather than simply tracking customer retention rates over time, explore retention rates by location and by individual employees. You might be surprised to discover that what you thought was a solid retention rate hinges on the performance of a handful of key employees. Another way to surface loyalty to employees instead of your brand is to track how often your customers request services from specific employees. If the majority of your repeat customers don’t request services from specific providers, they’re coming back for your brand not your employees. But if the inverse is true, your brand is at risk if those employees leave. I recently sat down with one of our customers, owners of a multi-location salon, and walked them through their customer retention rates by location and employee. They were stunned to see that one of their highest performers was an employee they’d recently let go. If they’d known how critical that employee was to their business, they would’ve attempted to work through the performance issues rather than firing them. That’s just one example of how examining employee performance as part of your analysis around customer loyalty can be key to identifying risk and proactively managing it.
Building provider loyalty is a good thing
With customer loyalty so intricately tied to employee loyalty, it’s not surprising that many spa and salon owners have become leery of encouraging customers to become loyal to their service providers — especially if they’ve watched their customers leave alongside a popular employee before. It’s tempting to view your customers’ loyalty to your employees with fear. But in an industry where consumer brand turnover can be as high as 50 percent per year, it’s dangerous to neglect the retention opportunity of strong customer-service provider relationships.
It’s dangerous to neglect the retention opportunity of strong customer-service provider relationships.
Most brands don’t begin conversations about customer loyalty by discussing their employee satisfaction — but they should. Employees make or break the customer experience, and like it or not employee loyalty is intricately linked to customer loyalty. Spas and salons are plagued by poor staff retention and high employee turnover so implementing comprehensive employee retention strategies is the foundation of successful customer loyalty initiatives. Some of these strategies include creating a brand mission and values, offering clear career paths and training and development opportunities for employees, and conducting thorough employee exit interviews to identify areas of improvement.
Brand loyalty building begins before a customer walks in the door
No matter how much you value your employees and how well you treat them, you’ll always lose at least some: people move, pursue different career paths or leave the workforce entirely. That’s why the most successful brands have strategies in place to foster customer loyalty to their brand long before a favorite service provider ever gives notice. A stylist might be the face of the brand to a client but they’re still only one facet of a larger strategy to attract and retain customers. Offering a variety of loyalty programs and membership offerings makes your brand attractive to your customers — not just their favorite stylist or service provider. No matter how much a client enjoys a specific massage therapist or clinician, monthly recurring membership packages make them less likely to leave when their provider does. Online and mobile booking and payment options offer flexibility and convenience that customers come to appreciate — and will miss if they decide to follow their stylist to a new salon when they leave. Likewise, clients who use multiple services at the same spa or salon are less likely to abandon the business entirely if one provider leaves. Incentivizing chair-side bookings to other service providers can grow brand loyalty while increasing revenue.
Proactive customer engagement makes or breaks retention
Being proactive instead of reactive can also be the difference between retaining a client or losing them when an employee leaves. You should have multifaceted strategies in place for retaining clients when employees gives notice. Some of these strategies revolve around protecting client data; for example, by only giving service providers and stylists access to purchase and service history rather than client contact information. But in today’s social media age, it’s easy for employees to find their most loyal clients without accessing their records. That’s why you need to proactively engage with clients before they’re lost. Exit procedures for stylists and service providers should include an attempt to pre-book the client with a new recommended provider for their next visit. If possible, departing employees should personally introduce the client to the employee who will be taking on the majority of their clients. Clients who opt not to pre-book should be targeted with marketing campaigns that offer them personalized offers to try a new provider at a discount.
Don’t give up on customers too soon
Of course, no matter how proactive you are, some clients will still follow their favorite stylists and service providers. But that doesn’t mean those customers are lost for good. All too often, brands make the mistake of giving up on a customer too soon. Some clients will follow their favorite providers when they leave, but don’t assume they won’t come back. Automated marketing efforts that target clients at regular intervals after their favorite provider leaves — with increasing discounts on services through time — can be an effective way to re-engage customers who may have followed a provider to a new location. To be successful in today’s on-demand market, you have to change the way you think about customer retention. Giving up too soon on “lost” clients can cost spas and salons valuable customer relationships. To learn more about how salons and spas can rethink customer retention, look for part two of this series — “When Is A Customer Lost? Customer Retention Strategies For Modern Spas And Salons” — early next month.