Why it makes Sense to BUY Clients as Quickly as You Can…

I posed this question to a group of salon owners recently at a marketing presentation.  Here was the question…

What would you be willing to pay for a good cut and color client?

All of a sudden…I got a bevy of answers…

“Nothing…I never want to discount my service!”
“I would pay $5”
“I would pay $15”
“I would pay $2”
“I would give them a free haircut with a color”
“I would give them 10% off”

And on and on it went for about 5 minutes.  Answers were literally all over the board.  And it got me to thinking…most salon owners have never really thought about how to answer that question.  And it’s the most important question you can ask when deciding how much you’re going to “invest” in building your client base.

Now, notice that I said “invest” because that’s what real businesses do every day to build a client base.  They “invest” x amount of dollars to buy x amount of clients.  And in the “salon world” this is like…foreign.

Let me explain…

A salon’s sales are nothing more than a function of how many total clients a salon has.  In other words, if you have 1000 clients…that will generate x dollars per week in sales.  If you increase the total number of “clients” by 250…that will increase the sales per week by 25%.  So, maybe you do $12,500/wk instead of $10,000/wk.

The quicker you increase your client count…the more money you can expect on a weekly basis.  Now, there are a number of factors that affect total client count (like client retention rates, number of new clients per week, etc) but by and large…if you increase your client count…you will increase your sales.

That is because the salon industry follows a pretty dynamic residual income model.  In other words, clients come back every 4-8 weeks (once they become ‘regulars’).  So, the quicker you can get ‘regulars’…the more money you can expect to generate every week.

The problem lies in that most salon owners think that ‘regulars’ can be generated at a fast enough clip thru client referrals and word-of-mouth that they don’t need to “invest” in getting new clients.  Heck most think…“if I do my job right I will get enough new clients to build my business”.  And most times they’re sorely disappointed with the results.

What if I posed the original question a slightly different way.  Instead of asking

“What would you be willing to pay for a good cut and color client?

I instead asked…

“What would you be willing to pay for an additional $500 in service sales every year?”

What would be your answer?  Would you pay up to $50 for that client…knowing that about 40% of that $500 (or $200) was coming to you every year (after payroll and product cost)?  Where else can you invest $50 to get $200 within the first year?  Not many places.

So, let me cut to the chase.  You have to “invest” in your business!  You can’t do your marketing for free and expect to grow at a 10-20% rate every year.  Yes, you can survive and grow a little by not spending money.  But it’s a tough slog.

Instead, take a little bit every week and put it aside for marketing your salon (even if it’s only $100).  Budget in marketing dollars to buy new clients.  The faster you can buy clients…the faster your salon will grow.

For most salons it takes 10 new clients to equal 3 “regular” clients.  That’s the unfortunate reality of having a low new client retention rate (which the salon industry has).  In my next blog post, I will explain a brand new method of increasing this rate in your salon (hint: I found it in a completely different industry).

As always, aim high…and dream even higher…

Steve Sampson