Industry • Best Practice
Why Salons Should Focus on Client Loyalty as a Top KPI
Apr.21.2021By Boulevard Staff
Loyalty isn’t intangible when you can measure its long-term impact on your salon revenue.
Your salon cannot survive on walk-ins alone — you need regular clients who connect with your brand, drive long-term revenue, and ultimately recommend it to others. But how do you know if your beauty business is making these connections? It’s not enough to do a headcount of your regulars; there are ways to measure client loyalty and track its impact on your bottom line.
In this article, we’ll argue that client loyalty is a key performance indicator (KPI) for salon enterprises, and we’ll provide techniques for measuring its growth.
Measure loyalty with an eye for value
Loyalty is not the same thing as client satisfaction. (Although you should aim for both!) Loyalty is a particular type of client goodwill that encourages them to continue booking appointments. Some may even follow your newsletter or sing your praises on social media, but for our purposes, we want to highlight loyalty with measurable financial benefits.
So how can we quantify something as intangible as client loyalty? Having long-term rewards memberships is a great start, but we can use the following metrics for richer insights:
Retention rate: How many clients are rebooking as a percentage of unique customers? This metric provides a big-picture view of loyalty and creates an opportunity to track progress over time.
Customer lifetime value (LTV): What is the total monetary value of a client? LTV is more challenging to analyze than retention rate but well worth tracking. It adds up the total revenue a client will bring to your salon over the course of their relationship with you, including service fees and product purchases, then subtracts the amount it costs to deliver those services and purchase those products from a wholesaler. LTV is useful when looking at specific clients, while retention rate is applicable as an aggregate metric.
Net promoter score: Clients have value to your salon beyond LTV. Particularly loyal customers will recommend your salon to friends and family, even sharing your social media posts. If they are parents, they might even bring their children — potentially introducing another lifetime client!
Cultivate loyalty at the enterprise level
The next question is, can we cultivate loyalty? Absolutely! While running a salon that meets client beauty needs is a great start, there are ways to optimize the process further. A loyalty program that offers rewards points, discounted products, or free services enhances your brand’s value in the customer’s eyes. What’s more, loyalty programs measurably impact retention, LTV, and your bottom line.
Enterprises stand to gain additional benefits from a well-crafted loyalty program. Most notably, owners can share points and other rewards across their entire salon chain. This capability lets clients redeem loyalty points across multiple locations — which is useful when moving, while on vacation, or if their home chain is fully booked.
Finally, emphasizing loyalty is a cost-effective way to grow your business. Research consistently shows that new customers are five to ten times more expensive to acquire than a retained client. Loyalty pays, so focusing your efforts on loyalty can drive revenue and reduce costs over the long haul.
Just remember — building loyalty takes time. You can’t build an effective rewards program overnight, and retention-based revenue accrues over months and years. That’s why it’s essential to leverage tools that keep clients engaged and help owners work towards long-term goals. Boulevard’s salon management platform can help by customizing and personalizing rewards while highlighting your loyalty ROI.
For an effective salon-centric solution, get in touch with Boulevard for a preview of our loyalty services.
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