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Part 2: Keep’em coming back with rewards

June 6, 2011

So what kind of incentives will motivate your clients to recommend your services and entice new clients to return again? Here are some pros and cons of the standard offering.

Offer a percentage or dollar discount on the next service

discountDiscounting is always dangerous; it creates a precedent, reduces the value of your services, and the higher the discount the more damage you do, the lower the discount the less the response. If the discount is extended to the new client, you may attract someone that has no intention of ever paying the full price and you have just thrown good money after bad. On the other hand, this type of reward can be useful for a business that is really cash strapped and needs a very low cost tool.

Offer a “coupon” to be used to offset retail purchases or other department services

This incentive allows you to funnel some action towards departments that are not doing so well or are being built up. If the “coupon” is for retail products only, this pushes your employees into conducting a consultation and product recommendation (which is always a good thing); if it is for a new service, it opens up some extra spending. The only draw back is that very often the people who are referring new clients usually belong to the top 20% of your clientele and are most likely already buying retail and using other services, so once again this reward becomes just another form of discounting.

Offer gift items

You want to think like a marketer here, not like an accountant. A referred client has come to you at virtually no cost, and she already has a positive attitude towards your business so she is more likely to become a repeat client than the average walk-in. She will add somewhere between $400 and $1000 a year to your business, and will stay with you for a period of 3 to 6 years on average. Somewhere between $1200 and $6000 of new business has just come your way. Surely you can afford to reward the referral with much more than a 20-minute free blow-dry! Consider spending up to $50 to reward your advocate (as a finder’s fee) and the same amount to encourage your new client to return again (with a first visit gift). High quality promotional tools such as a handbag with your salon logo (subtlety displayed) or home decorative items can build a lot of goodwill and attachment even though they do not have a direct influence on sales.

 accessorybag

Of course creating a buzz, building your reputation, promoting your business’ visibility in the community, networking and just about any activity that will generate goodwill and attract local press will help draw clients into your salon/spa. Social marketing, and nowadays social media, are also major forces to be reckoned with. Ultimately, word of mouth is always the most powerful and the cheapest method available to acquire new clients.

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