What I discovered about New Client Retention…from a Dry Cleaner

Question: What is the one thing that stops a salon from growing rapidly today?

Answer:  Lousy new client retention

I don’t care what size salon…if your sales are flat or barely moving the needle…you have a new client retention problem.  And very likely, it’s between 28% and 35%.

I’ve been looking at salon data for over 25 years and it never fails.  That’s the rate.  And here’s the interesting thing.  When you first open your salon – you can still grow at a pretty healthy clip with that lousy rate of retention.

It actually starts catching up with you when your salon is 3-4 years old.  Now, why is that?  Because, in “established” salons…you’ll start losing regular (base) clients at a rate of between 10-15% a year.  And unless your salon’s marketing efforts are pumping in a ton of new clients every week – you’re going to be flat at the end of the year.

It’s not “rocket science”…it’s just math.

So, you have a choice.  Either double the amount of new clients that you get every week or fix your new client retention problem.  And I don’t know about you…but doubling the amount of new clients that you get every week sounds like a pretty daunting task.

So, let me give you an idea that might help instantly with your new client retention problem.

I actually discovered this by studying a large dry cleaning chain.  Now, if you know anything about the dry cleaning business – you know that the service itself is pretty commoditized.  There’s not a whole lot of difference between dry cleaner one and dry cleaner two.

I mean there are exceptions but for the most part…they clean your clothes and press your shirts.  Well, I was particularly intrigued by this one business because when they entered a new town…it took only a few short years before they dominated the marketplace.  And it wasn’t because suddenly there were new people coming out of the woodwork to get their dry cleaning done.

They were stealing market share from the existing businesses.  And this is how they did it.

They would flood the marketplace with super low coupons to bring in new clients right away.  So, let’s say a shirt is normally $3…they would do it for $1.  But here is the kicker.  They wouldn’t stop there.  That’s what most businesses do.

Nope, they would then give you another coupon for shirts for $1.50.  So, now the client goes back for a second visit.  Then when the client comes in to pick up their clothes again…they get a coupon for $2 shirts.

This process repeated for 5 visits!  And do you know why?

Because that’s how many times a client had to visit the new dry cleaner for the habit to be formed.  Then they just charged regular prices like everybody else.

And guess what – habits are hard to break…right?

Well, think about the salon industry.  How many visits does it take for a new client to become a “regular” (base) client?  I would say at least three visits.  I mean, after they came and saw you three times…the habit should be formed…and the relationship should be established.

And regular clients will come in 7-8 times per year like clockwork.

So, keep that in mind when you simply let a client leave and never come back.  These new clients are searching for their next salon.  And if your new client retention rate is between 25% and 35% today…you’re not blowing them away with the service.

Your HairMax salon software will give you accurate new client retention rates as well as “regular” client retention rates.  If you’re around the 30% level…try this technique out.  If you can lift the rate to 50%…your salon sales will soar.

P.S. In my next blog post, I will explain an automated system that can do everything for you.

As always, aim high…and dream even higher…

Steve Sampson