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What Client Retention Rates Say About Your Salon or Spa
November 5, 2018 | By Neil Ducoff | No Comments
It doesn’t matter how busy, big or beautiful your salon/spa is, if you want to know just how good your business is, take a hard look at your client retention rates.
FACT: Client retention rate tells the truth about the quality and consistency of the technical skills and customer service experiences your salon/spa delivers.
First-Time Client Retention Rate: The number and percentage of first-time clients serviced in one month that return within 90 days.
- The conversion rate of first-time clients to a second vision is the true acid test on the level of quality your salon/spa delivers.
- First-time client retention rate shows the number and percent of clients added to your existing client data base.
Existing Client Retention Rate: The number and percentage of existing clients serviced in one month that return within 90 days.
- Existing client retention rate shows the number and percent of existing clients that return within 90 days.
- The number and percent that DO NOT return is your company’s client attrition rate.
- KEY: If your first-time retention rate is not adding enough clients to offset attrition, it’s a major red flag that needs a solution.
Here are my SEVEN No-Compromise Leadership reality checks on Client Retention Rates:
- If First-Time Retention Rate is below 30%: It means that every month, 70% of first-time clients do not return. If your monthly first-time client counts are low (example: 25 or less), you’re not adding clients to your base to grow or to offset attrition. If you’re attracting 75+ first-time clients a month, you’re squandering your growth opportunity.
- If Existing Client Retention Rate is below 80%: It means that your salon/spa is losing 20% of its monthly client base. Regard this as a wake-up warning. If it goes below 75%, immediate action is required to find the source of the attrition. It is most likely a flaw in your customer service systems — or lack of systems.
- First-time client is your acid test: The conversion rate of first-time clients to a second visit within 90 days speaks volumes about your salon/spa. Many software systems measure retention based on three or more return visits. That’s a long time to wait to discover that your company is blowing its growth opportunity. FACT: If a first-time client doesn’t return for a second visit — there’s nothing positive to measure.
- It’s a Quality/Systems/Culture measurement: Both first-time and existing client retention rates are a direct measurement of how effective and consistent your company is operating. The lower the rates, the more leaks and deficiencies exist in your salon/spa. The higher your retention rates, the better and more consistently your company operates.
- Pay based on client retention: It doesn’t make sense to pay any service provider a commission or hourly rate on low first-time client retention. Doing so means you’re paying, and enabling, the wrong performance and behavior. First-time client retention rate should be a key factor for any pay advancement.
- First-time retention rates 50% or higher: A 50% first-time retention rate is good. 60% is excellent. A first-time retention rate of 70% or higher is absolutely impressive. It is impossible for a salon/spa to achieve these high client retention rates without being a systematized, team-based, high trust, high accountability company.
- This is NOT about “request rate”: Request rate is about individual clientele building. You know, those clienteles and cash flow that leave with the service provider. Client retention rates are about building a company that can take extraordinary care of its clients and employees.
Here’s my challenge to you: Listen to, and understand, what your first-time and existing client retention rates are telling you about your salon/spa. If they’re not where you want them to be, own it. If they’re impressive as hell, protect and celebrate them.
Never say to an employee, “You need to get your retention rates up,” without a plan for coaching and training in technical and customer service skills. All that does is place the burden on the employee. Leaders lead their teams to higher retention rates.
It’s going to take time and hard work on everyone’s part to move retention rate numbers in the right direction. Be patient, persistent and consistent.
When all is said and done, client retention rates are all about a commitment to excellence, systems and consistency.
Categories: Client Loyalty