If you drink coffee in the morning or hit IKEA in the afternoons, you’ve probably encountered a customer loyalty program.
That “buy 10 green juice, get one free” punch card in your wallet? Customer loyalty program. That Sephora VIB account that gets you birthday gifts and extra annual discounts? Yep, that’s a loyalty program, too.
They’re prolific because — as both customer retention and marketing tools — they work. That’s why today we’re breaking down how to an epic customer loyalty program of your own — with some special notes on how to start a spa or salon loyalty program for the hair and beauty industry professionals among us.
In this article:
- What is a customer loyalty program or salon loyalty program?
- How does it help with customer retention?
- How customer loyalty programs work
- Common types of customer loyalty programs
- How to create a successful program of your own
What Is a Customer or Salon Loyalty Program?
Customer loyalty programs (sometimes referred to as salon loyalty programs) are a marketing technique aimed at client retention. They offer special perks or rewards to a business’ repeat customers or clients with the end goal of keeping them coming back for more.
It makes sense: according to research conducted by the reward program platform, Smile, if you can get a customer or client to return to your business a second and third time, there’s a 54% they’ll purchase a product or service again. Repeat, loyal customers also spend more money on average each time they checkout. This is why we often say that a single, repeat client is “better than a book full of maybes.”
Customer loyalty programs work because they focus on turning new clients into repeat clients. In fact, marketing experts have found that they wind up paying for themselves.
How Loyalty Programs Help with Customer Retention
But how do they do it? By some simple, honest psychology. Think of the last time someone thanked you for what you do. How did you feel? What about when someone gave you a discount for helping them out with a project or sending a client their way? Feels great, right?
Customer loyalty programs are an automated version of the personalized thank you. They reward the clients that love you hardest and love you longest by giving them discounts on the products and services they’re already buying and booking.
Because there’s a clear discount or reward ahead, they’re more likely to keep on coming. But even better: loyal customers are more likely to recommend you to family and friends. And in this business (and every business really) word-of-mouth marketing is everything.
How Customer Loyalty Programs Work
Customer loyalty programs vary in terms of format, but here’s the basic premise: you track a repeat customer’s purchases, then reward them after a certain dollar amount or number of transactions occurs.
This process can be done through a variety of formats that vary from simple to complex. Think about the paper punch card at your mom-and-pop café versus Starbucks’ rewards app. Both customer loyalty programs for coffee guzzlers but with very different approaches.
With that in mind, let’s break them down into the most common culprits.
Most Common Types of Loyalty Programs (With Real Examples)
Here are just a few of the most common customer loyalty programs for customer retention along with some common examples you may have encountered. We’ve also outlined how this could apply as a service-based or salon loyalty program.
We’ve mentioned punch cards a few times now because it’s the ideal customer loyalty program for beginners. You hand a customer a punch card (feel free to go hard on the design and definitely consider laminating them), and they bring it with them each time they book a service. When the punch card is full, presto! They receive a free service or a discount or a special freebie product. Your business, your rules.
The main appeal of punch card loyalty programs? You don’t have to keep track of anything. You’re already juggling a busy schedule and your studio or salon’s appointment calendar — using a punch card system puts the tracking responsibility on your clients.
Salon Loyalty Program Idea(s): After five cuts, give your client a free service of equal or lesser value. Need to move some product? Offer repeat customers a free shampoo and conditioner after spending $300 on services (or whatever dollar amount feels reasonable).
Referral Bonuses / BOGO Rewards
While referral programs aren’t typically considered customer loyalty programs in other industries, we’re including them here because they’re essential to the service industry. The premise is simple: Every time a loyal client brings you a new client, you give them a reward as a thank you.
Salon Loyalty Program Ideas: Offer a free service or discount to a client whenever they refer a new person to you. When the new client tells you who referred them, add a note to that person’s client profile, so you remember to discount them the next time they book. If you teach classes, you could also consider setting up a discounted buy-one-get-one (BOGO) package for clients who sign up for it with a friend. By the way, you can set up custom discounts and service packages through Schedulicity.
If you spend as much as we do at Sephora, you’ve witnessed a points system firsthand. These customer loyalty programs offer increasing rewards as repeat customers spend more money. While they’re more complex than the punch card system, there’s a huge benefit: Increasing rewards keeps customers incentivized — sort of like a mildly addictive game — versus punch cards, which can often lose momentum. (Think of all the punch cards sitting in a forgotten drawer at your place. )
Salon Loyalty Program Ideas: Offer increasing deals on your services over time. If someone books with you five times, offer them a 10% discount on their service. At 10 times, offer them a free cut. At 25, offer them a free cut and some special products for free. (You can let clients know that they should remind you, or you can just count the total number of bookings they have in their history.) Don’t be afraid to get creative, giving names to the different levels in your marketing (BFF status, Girlboss status, Queen status…).
We’ve started to see membership-based loyalty programs increasingly in our industry. The idea is this: Customers buy a membership to your business or salon to lock-in discounts that eventually pay for themselves over time. Possibly the most common example of this is Amazon Prime.
Salon Loyalty Program Ideas: Actually, these are pretty simple to set up through Schedulicity’s packages functionality and Schedulicity Pay. Offer a package that gives customers 15% off blowouts if they buy 10 at a time. Or go wild and offer an annual “membership” package that includes four haircuts at a discount and maybe even special access to your calendar during the busy holiday season.
Do-Good Loyalty Programs
Perhaps the most uncommon loyalty programs — we’d love to see more of these going. The idea is that, as customers spend more money at your business, you donate money to a cause you (and they) care about. You’ve probably heard of Tom’s loyalty program in which purchasing Tom’s products means they’ll donate to developing countries in need.
Salon Loyalty Program Ideas: Pick a charity you care about and donate 10% of proceeds to it. Or plan an annual fundraising party at your space where your most loyal customers get an exclusive invite. For more ideas on charitable giving, check out these recommendations from business coach Nina Tulio.
How to Create a Successful Customer Loyalty Program
OK, so now you have some ideas and inspiration, but how do you know you’re planning a program that works? Here are some of our best pointers for getting started:
- Start simple. If you don’t have a customer loyalty program in place, anything is better than nothing. When in doubt, go punch card.
- Crunch some numbers. You don’t want to give away so much that you’re not making money back, but too often, we see salons and businesses offer discounts that don’t impress customers. Figure out what’s reasonable but still incentivizing. (15%-20% off is often a sweet spot.)
- Ask your already loyal customers what they would like to see. Would they love a membership program? Would they rather you offer discounts over time? Pick their brains — especially if those clients happen to be your family and friends.
- Use what you have. If you’re a Schedulicity user, we already offer customizable discounts and package deals, plus automated marketing emails. Those tools are the ideal combination for setting up your first customer loyalty program.
That should get you started! Here’s to more repeat customers.