Rethinking Retention and Thriving with Low-Return Clients

Retention isn’t a one-size-fits-all concept, especially for hairstylists running unique business models. In this episode of The Modern Hairstylist Podcast, we’re challenging the traditional ideas of success and diving into why a low-retention clientele doesn’t have to mean low revenue—or failure. If you’ve ever wondered how to make the most out of clients who only see you once or twice, this episode is for you.

What You’ll Learn in This Episode:

• The Real Deal on Retention: Why retention rates vary across different business models and why that’s okay.
• The Risks and Rewards of Low Retention: What makes this business model both exciting and challenging.
• How Retention Impacts Growth: The overlooked connection between retention and key decisions like pricing and marketing.
• Rethinking Client Value: Why focusing on frequency isn’t the only way to build a successful hairstyling business.

Why It Matters:
For stylists specializing in high-ticket services, major transformations, or clients with low-frequency needs, traditional retention metrics might not tell the whole story. It’s time to rethink the numbers and focus on strategies that make sense for your unique business.

Learn why client retention isn’t the ultimate measure of success and discover the surprising ways you can build stability, boost income, and reduce stress—even with clients who rarely return.

Who This Episode is For:

• Hairstylists running low-retention models like transition services or high-maintenance transformations.
• Stylists wondering if their low client return rates are a red flag or just part of the game.
• Anyone ready to break free from outdated retention myths and embrace a modern approach to business.

Don’t Miss:
Hunter’s insights into how to shift your mindset about retention and redefine what success looks like for your business.

Tune in to The Modern Hairstylist Podcast for actionable strategies, empowering advice, and a fresh perspective on retention.

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Transcript

Hunter Donia (00:00)
Last week, Kelly asked about retention. Kelly was asking about retention and numbers because Kelly is a great transition specialist. So her whole thing is that her clients come to see her once, twice or three times and then never see her again, right? So when it comes to that and when it comes to...

are we doing the right thing in our business and are we tracking the right numbers and should we take this number or that number into consideration or how does this look different for me? I wanted to go over all of that with you today and do a little bit of an overview about retention and then also talk about this specific case scenario. Like if you do have a nature of clientele that has low frequency of visit or just has natural low retention, what you do about it. And this is also going to be helpful for those of you

who may be experiencing, cause I know that it's out there a little bit right now, who may be experiencing clients who are stretching out visits as far as like, you know, you're good old gray coverage people, right? Like who are like, I'm not, I'm coming every four weeks now, but I need to like stretch it out to every six weeks. So the things in here may be a little bit helpful and the ideas may lend well to that as well too. Okay. So who's down for some retention overview? Are we ready to go?

So let's just do a general overview of retention. All right. So first off, we have existing client retention, right? So this is about how well you keep the clients that you already have. And it's important to notice trends here, but it's almost impossible to calculate perfectly. So a lot of the times when I get on coaching calls with people and they're worried about retention, honestly, I'm not, I'm never going to ask you for a perfect number or calculation for this.

because there's so many nuances and so many factors that just make this kind of be relevant or make it just inaccurate to what we're trying to discover. So what I care a little bit more about is new client retention. So if I were to ask you like, how well are you keeping your existing clients? Like, do you feel like they're like staying with you? Are you noticing that Susie or?

or Linda hasn't come back to see you in a long time and you're like, where the hell are my people going? Then like, you want to like take note of that. You want to think about that, right? But there's no way that I'm suggesting that you calculate it. Now, new client retention on the other hand, the definition, if a client visits you three times or more, they're considered retained. So that is the definition that I subscribe to of new client retention. And it's the percentage of clients that see you for the first, see you once, and then end up seeing you three times or more, then you can consider them retained. All right.

Now, other definitions that are important, particularly for this conversation, lifetime customer value. So lifetime customer value is the total amount of money that somebody spends with you during the entire time that they're a client with you. So the lifetime of this client visiting you and being a customer of yours.

how much total money do they give your business, So let's say that Suzy came to see me 10 times and then she never came to see me again and she paid me $100 every time, then therefore her lifetime customer value would be 1,000.

Then we have frequency of visits. So this is how often a client comes back to see you on average. So for example, you may have a gray coverage client who comes to see you every four to six weeks. So that's

average frequency of visit

that person. Or maybe you do low maintenance, ballet, ash coloring, or you do a curly cuts. And maybe your average frequency of visit is every 12 weeks, right? So you have your frequency of visit, how often a client visits you on average,

So let's talk about new client retention because that's what we got asked about. So new client retention is important because number one, it indicates stability. If your new clients are sticking around, it's a sign that your existing clients are probably happy too, right? So like I said earlier, I find it really hard to accurately calculate existing client retention. So knowing what your new client retention is, it's a pretty good indicator that your existing clients are sticking around too, right? Because it's 10 times harder to get a new client to stay.

and retain them. So if you can do that, I'm assuming you're doing a great job with your existing clients as well. this means that your business is stable and you're not losing people. And when you actually put in marketing efforts to get a new client into the chair, that they're actually going to stick around for you and your efforts aren't going to go to waste. Then reason number two, why understanding your new client retention rate matters.

is because new client retention rates affect your readiness for a price increase. So for example, let's say that you have a ton of new client requests all the time, right? Like let's say that you have client requests coming in out the wazoo, but you can't retain those clients, right? Then you can do a price increase that you may lose existing clients and then you are able to fit in all these new clients and they replace them.

but then in the long run, you're gonna have a lot less clients. So let's say that you had a ton of new client requests and you did a price increase to shed some existing clients. And now you're able to fit in all these new clients and they all see you for your first visit, for their first visit, right? So you did a price increase and you lose some existing clients. You got a bunch of new clients to come in for first visit, but then all of them fall off because you don't retain them well.

As far as total amount of clients that you have goes, It was a little bit higher, but then in the long run, it's going to be lower because you lost your existing clients and you lost your new clients. So if you, if it's great that you have new client requests, right? And we can say like, okay, I have a ton of new client requests. I need to raise my prices so I can get them in. But if your new client retention rate isn't good,

then that could actually screw you over in the long run and you can end up with less total clients. So that's why understanding your new client retention matters. So let's talk about the calculation. Now new client retention depends on how often clients return, which can

vary a lot based on your services. So we have to take in consideration your frequency of visit when we're calculating your new client retention, because somebody who has a four to six week clientele versus somebody who has a 12 week clientele, the way that you calculate that within a certain timeframe has to be different, right? You have to give your calculation enough time or that client enough time, a fair chance to have

come back to see you because a curly cut person, let's say, who only sees you ever like twice a year, you know, that person you have to you have to calculate their return over a year and a half to make sure that your numbers are accurate if you've retained them or not. So when frequency is consistent with most of your clients out, let's say that you're very specialized.

and you have a specific type of clientele and they all have a pretty similar frequency of visit, right? Then you can just go ahead and use that frequency as your baseline for the amount of time that you give somebody for the calculation. And I'll get into the calculation in just a moment. If you have multiple types of clientele and a frequency of visit averages all over the place. So let's say that you're not super specialized in a technique.

let's say that you have great coverage clients and then you have low maintenance clients. So your clients are all over the place and they're all coming back at different timeframes. Then you'd want to do the calculation separately for each of those groups. Okay. So if you have low maintenance clients and then you have higher maintenance clients, you'd want to separate the calculations when you do it and you'd want to do it for each. Okay. And the calculation is,

all built into our new client retention calculator.

let's specifically talk about the low retention business model, which is what Kelly is dealing with, right? Kelly has a business model where people oftentimes don't return, but that's like the point, right? Is like the point is, is that somebody who has been coloring their hair doesn't wanna color their hair anymore.

So then you do this project so that way they don't have to come back and see you. So therefore your new client retention is obviously going to be lower. Kelly also has people who freaking fly or travel miles to be to go see her and get this project, you know? So it's very common for these people to not come back to see her. Now there are pros to this model. You're making a big significant impact, right? Because you're helping clients with major transformations or specialized services that truly matter to them, such as gray transitioning.

You can charge high ticket premium prices because of the value and the expertise that you provide. And these are notable and marketable services, right, Kelly? So like these are like big transitions. There's a lot of benefits to not having to color your hair anymore, obviously. Right. And they there's drastic transformations. So this is a very easy thing to market as well. But a huge con to a low retention business model such as this is that you are constantly relying on new clients. Right.

You always have to be replacing these clients every single freaking day because the client sees you once and they never see you again, you know? So you are relying on a constant wheel of new clients coming in to see you. And that's risky, right? But it's not wrong or right. And that is a big theme here is that there's nothing wrong or right with the way that you run your business, the business model that you have. You just have to be willing to take on the risks.

being in favor of the pros over the cons. when we have a low retention business model, and if you're okay with dealing with the risk, what you then want to do is focus on how you can make up for the deficit that you have So the deficit that you'll have is you'll have a low lifetime customer value.

because your clients aren't seeing you, they don't have a long lifetime with you, right? They don't stick with you for a very long time. And so what you wanna do is, is you wanna make sure that you are maximizing the value of every single client that you have, Your clients are only gonna see you like once, twice or three times over a short period amount of time. You wanna get the most out of them as you possibly can. That would be a big important thing that I would be focusing on if I was running this type of business.

So we have LTV as a reminder, the total amount of money that a client spends with you during their time as your customer. And it's important because without regular high frequency clients, you miss out on long-term income, this is how we can increase LTV for this particular model is upselling with smaller services. So if you can get somebody to come back and see you for haircuts, or you can get them to come back and see you for toners.

after your large initial project, Then although they're gonna be smaller ticket, you're gonna create more stability within your business and you're going to be able to increase that lifetime customer value. And then of course, focusing on retail sales and add-ons, right? So when you have that person in your chair, you're selling them retail, you're selling them add-ons on top of the things that you need to do to complete the project. So that way you can make more money and...

just because they don't come to see you for appointments anymore doesn't mean that you can't still sell them retail for years after they never see you again, Which is where having a online retail service through your brand or through your product or through your distributor would be really great. I have plenty of clients who don't see me anymore because I've moved two hours away from them, but they have fallen in love with my brand and they still respect my advice as far as products go.

And so they just, it's super passive for me. I barely do anything and they still order from my online store and I don't do shit. Right? So that will furthermore increase that lifetime customer value. Although this person doesn't see you for appointments anymore. Right? And then the KPIs that I'd be focusing on for setting goals because we're not going to be really looking at your new client retention rate as something that we should set goals for and set focuses for. We should be looking at

how many public reviews do you get per new client? Right? So like, like I said, get everything that you possibly can out of this client, if they're going to only see you once or for a short period of time. And a review is something that would be massively valuable. So you might as well try your best and make it a goal that you set for yourself and that you track to get at least one review out of every single client that you have. And then of course, tracking your retail sales and add-ons separately for her client as well too.

So the question becomes not, my new client retention rate is going to be low, so my business is failing. And I'm not saying that's what anybody said or that's what you said, Kelly. But I think it's just a good example of like, if you ever hear somebody talk about like your new client retention rate should be this or your business is dying or whatever it may be, like that may not be relevant to you because you have a unique business with unique circumstances and nuances. And that is okay.

And there's other ways such as focusing on how can we increase the LTV to make it so you're making the most out of what you have and you're mitigating risk because you're able to make more money and save it for the long run, et cetera, et cetera. So the central question becomes how do you maximize how much this person spends and benefits you ethically? And I say ethically because we don't want to just bullshit this person obviously and say like, you have to come see me every for, for.

every four weeks or else your hair is going to fall out. You know, that's just like evil and none of us would do that. But we can maximize how much this person spends and benefits you in many ways. How can I get this client to spend as much as possible in the short amount of time that they're with me? How can I grow the business in other ways with this client besides revenue, such as getting a review out of this person? And how can I extend their lifetime as a paying client overall? So having them purchase retail from you even after they don't come see you for appointments.

Yeah, my biggest takeaway is the reviews because I have a hard time getting reviews and I need to listen to that again and I really need to because I have so many that, I mean, I get a ton from Google and it's been good so far, but you're right in all of this is so helpful.

Good reviews. That's the thing. Yeah. Work on and may put something else in the comments. That was really good too. It's like also the content, right? So it's like you the amount. mean, this goes for anybody regardless of your business model, like how I maximize the value that you can get out of every single client that you have in all the ways, not just revenue. Right. So I love that takeaway, Kelly. Thank you. Jordana, go ahead.

Hi, yeah, my big takeaway and thank you so much for this was to look at it as sort of segmenting into the higher maintenance and lower maintenance groups because I do a lot of color, but my other specialty or focus, perhaps the bigger one is texture services, which are like a three to six month turnaround. So I was kind of looking at it as an average and I think it will really help to just kind of do them separately. So that was my big takeaway from that. Thank you.

Yes, huge agree. like I said to you guys, like if you ever got on a one to one coaching call with me you're like, I think I'm ready for price increase. What should my price increase be? And we're like taking into consideration these decisions or, you know, I want to stop working Saturdays, whatever may be understanding your new client retention rate is so important and helpful for making that decision. And the the decisions that we'll be making within that decision. Right.

And so having that more accurate number by splitting up the groups and calculating them differently will be massively insightful because I've had some people run these numbers and they

average frequency of visit

have They have it all across the board and then their new

And then their new client retention percentage looks a lot lower because they have all these clients who stretch out appointments so much, right? So then it makes it look lower than it actually is. And that's why I have the calculator. So that way you guys can go in here and it'll take in consideration those nuances and then it'll give you a more accurate percentage.

Here is my tea. gonna say, I will say this all the time is that like, again, like I wanna emphasize that the message of this that I want everybody here to understand is that I don't want you to compare your numbers to your neighbor because your neighbor has such different circumstances than you. I want you to set your own baseline and your own goals. What I will say is that I like to see a new client retention average of 50%.

I like to see that per two clients, per two new clients that you have, that you would retain at least one. I like that personally. But every business is different, such as this one, where it's like, we're not even going to look at the new client retention average, right? Because it's just not going to make any, it's not going to be helpful for us,