Salon Success Secrets

Referrals, Retention and Revenue

• Lindsay Lowe & Jen Booth

Share episode

Send us a text

Tired of the endless hustle for new salon clients? This game-changing episode reveals why your existing clients are actually your greatest untapped resource for building predictable, sustainable income.

We break down the shocking math behind client acquisition that most salon owners never consider. When you calculate that acquiring each new client can cost around $145 (factoring in marketing and overhead), it becomes clear why focusing solely on new faces is a losing strategy. If that client spends $100 and never returns, you've lost money—period.

Discover the three critical mistakes most salon owners make: neglecting existing clients, missing early warning signs when clients start to fade away, and accepting client loss as inevitable when it's often preventable. We share practical systems to address each mistake, including our Client Rescue System that can dramatically improve retention rates.

Learn why top companies like Disney maintain a 70% new client retention rate (compared to the industry average of 24-25%) and how to apply those same principles to your salon. We break down six specific strategies for building sustainable salon wealth, from increasing transaction value to creating effective referral systems that turn happy clients into your best marketers.

With 60 salons competing for every Starbucks in America, standing out requires more than just technical skill or trendy services. The difference between struggling and thriving salons isn't luck—it's having intentional systems for retention, referrals, and relationship-building.

Ready to transform your approach and create the kind of salon clients never want to leave? Listen now and start implementing these proven strategies that replace hustle with systems and hope with predictable income.

Do you have a question for Salon Success Secrets Podcast?

Send a text or leave a voicemail at (469) 283-5590 or send us an email to hello@salonbusinessschool.com. We would love to hear from you.


Start growing in business and leadership with powerful tools, advice and resources in your inbox every week:

Learn more about Salon Business School Events:

Upcoming Events | Salon Business School


Learn more about Salon Business School Coaching:

https://keap.app/contact-us/4732115411329800


Learn more about Salon Business School for Salon & Spa Owners:

https://keap.app/contact-us/8468267787462617


Are you ready to go all in? Join Salon Business School:

Apply to Join Us! | Salon Business School


Listen to all the Salon Success Secrets podcasts anytime, anywhere here:

Podcast | Salon Success Secrets

Speaker 1:

salon owners. Let me ask you something how much time are you spending chasing new clients, posting reels, running promotions, crafting offers for first time guests? Now let me ask you this how much time are you spending making sure the clients you already have are coming back? If the answer is not enough, this episode is going to be just for you.

Speaker 2:

I love it, you know, because today we're flipping the script and talking about how retention and referrals are the real way to create predictable income inside of your salon. So let's talk about the truth when it comes to income uncertainty, because income uncertainty is that anxious feeling when you're not sure if you'll hit your numbers and be profitable. So you're just hoping that clients rebook, you know. You're hoping that retail sells and you're hoping new clients show up as well. But let's be honest, you know hope is not a strategy. So let's get you out of survival mode and into systems work.

Speaker 1:

Yeah, awesome, I love that. Hope is not a strategy. Strategy that is so good. So let's first we have to dive into the real cost of what it takes to acquire a new client. So we're going to get a little mathy on you, um, so you might want to get some pen and paper for this. You can stop it Once you listen to the recording, go back and listen to it again, because you're really going to want to understand this number. It can help transform the way you do business.

Speaker 1:

So this is just going to be a scenario of a salon example. So let's say, for example, your salon spends $2,000 a month on advertising. So this can be Facebook ads, this can be Google ads, any kind of advertising or marketing. In this example, your salon spends $2,000. Your overhead is $100,000. We're going to say that in this instance, you bring in a hundred new clients a month with an average ticket of a hundred dollars, so that's $10,000 in new client revenue. We did a hundred times a hundred. That's how we got 10,000.

Speaker 1:

So also in this scenario, we're saying that new clients are responsible for about 12.5% of your revenue, so they also account for 12.5% of your overhead, or 12,500. Because, remember, we said our overhead was $100,000. So if you add in your ad spend and you're spending $14,500 to bring in a hundred clients, that actually equals to $145 per new client. Let me say that again, that's $145 per new client. So if that guest doesn't ever return like you lose money. You lost money even if they paid you for the service or even if that client only spends a hundred dollars. You definitely lost money, especially if they never return.

Speaker 2:

That is so good, you know, and really the way that we came up with that 12.5% was when you take that 100,000 or sorry, you take that, you know, genuine over the average ticket was a hundred dollars. You saw a hundred new guests, that equals $10,000 in client revenue. So we added in also that ad spend and then that's how you figure out that percentage, to know how much they're responsible for in your revenue. And you might also be thinking, gosh, you know, um, hey, uh, I, this is really great mathy, math that you guys just shared with us. Um, and it truly is like when you start to get this and you realize like, oh, my goodness, if they're not spending $145, then we lost money, it makes you realize like, yes, we absolutely need new guests. But the most important part, you guys, is this next part, which is the mistakes that most salon owners make, and that is mistake Number one is focusing only on those new clients, you know, because the returning clients are your gold mine, you know. So let's talk about you know, what are some action steps that you can take if you're making mistake number one, which is only focusing on new guests, guests, um, you know, let's really dote on those returning clients. Let's delight them. Write them a thank you card, add a surprise treatment for them. You know, let's really dote on those returning clients. Let's delight them. Write them a thank you card, add a surprise treatment for them. You know, really just show them that you care.

Speaker 2:

Mistake number two that most salon owners make is missing the signs when someone is fading away. You know, because usually somebody just doesn't go see you right away, and if they haven't rebooked or bought retail or responded to any messages or anything that you've sent them, that's a yellow flag, you know. So I pulled a report after I stepped away from behind the chair and what was shocking to see, jen and I had very similar situations happen. You know where that seven guests I'd loved hadn't been in for 10 plus weeks, you know. So immediately got on the phone, called them, you know, sent them handwritten notes. What was really cool is that four came back. One of them moved, one had gone somewhere else, but she ended up rebooking with us again because we cared enough to notice. And so that is a huge thing. When you start to pay attention to that, um, you can prevent that mistake from happening. And you know, mistake number three is thinking client loss is normal, because some is, but pretty much all or most quite a bit is preventable.

Speaker 1:

Yeah, yes, I love that. And so when you when Lindsay was saying, most is preventable like you have to think about creating that client rescue system, that CRS we like to call it. You know, this is when you could send a you've been missed card. Ignore you, um, you add a little bump in the envelope. It could be a chocolate if it was mother's day, or, you know, a 20% off a retail item, it could be anything just to make that connection to them and let them know hey, we, we see you, we hear you, we want you to come back in, um, so that you know you want to build that customer service culture. Like, if you think about Disney's, for example, like every cast member and Lindsay said this the other day, she's like I love that they call them cast members because they truly know what their position is.

Speaker 1:

So if you're thinking about Disney, like every cast member starts with, like Disney traditions, and so that's a class where they learn how that Disney's real products aren't roller coasters, they're actually about creating happiness for guests. It's about making people feel special. And so same thing at our salons. Like your salon, your real product isn't the haircut or the lashes or the color. It's actually creating confidence for clients, it's creating renewal, it's creating belonging, and you're not just selling services, you get to sell that transformation, and so when you're thinking about client loss, you've got to have that customer service training to prevent breaks in the system, so that your team truly knows how to use the systems and how to look for opportunities to continue to elevate your experience.

Speaker 2:

Yes, and Jen, my audio and video cut out for just a second, so I don't know if you can see and hear me Okay. But you know, hey, stuff like that happens inside of the salon. Can you see and hear me Okay?

Speaker 1:

I can, I can. You're back better than ever.

Speaker 2:

Awesome, um. Yeah, so you know, it's amazing how many, how often we just don't even realize that this is going on for us inside of the salon. You know, and um, I think when you start to build that culture, like you were just talking about um, and you start to ask you know, um, I think it starts to make a huge difference in what you see for sure.

Speaker 1:

That's so true. Uh, someone we were, we were onboarding someone the other, or a new hospitality host the other day and the schedules weren't working out for that first day of onboarding and somebody said, yeah, we're just going to um, could we just get her started up front without her understanding and going through the onboarding? I said absolutely not. Like they have to have that context. They have to know why we do what we do, not just what we do, but they have to understand the why behind it.

Speaker 1:

And I think that's what Disney is really good at and that's why you know, in our industry, new guest retention for us is like 24, 25% in our industry. Maybe yours is higher, but for Disney their new client retention is 70%. So if you imagine transforming your salon to have 70% new guest retention, how that impacts everybody's take-home pay, the salons. It impacts the team's take-home pay. You're able to do more for your front desk or hospitality team, whatever you may call them, and also you're serving your purpose of making people feel more confident. So they want to come back because their life is transformed as well. So they want to come back because their life is transformed as well. So I love that really thinking about like? What are the opportunities to continue to train your staff in the customer service experience?

Speaker 2:

Yes, so good. And I mean, just think about what all you could do if your new client retention was like Disney set that you know, seven out of every 10 new client coming back, Like when you really start to focus in on this area, that is what explodes businesses and explodes your income, you know. And so let's talk about some referral marketing that works, because most people don't refer because no one asks, you know. So here's a great little question that you could ask Um, anybody who comes into your salon, just ask them. Hey, on a scale of one to 10, how likely are you to refer us to a friend, you know? And if they respond with one through four, call them right away and find out what went wrong. You know, because 9-1-1,.

Speaker 2:

Hey, is this, susie? Did you give us a one through a four? We're here to help, Okay, you know, see what went wrong. Because a lot of times it's like a minor thing that like, hey, if you could correct it, like that could just transform that client relationship. It could turn them into, you know, a five to seven or it could turn them into a 10. But even if you can't transfer the number, even if they're like I wouldn't, you know, spit on you if you were on fire, hopefully you don't get that response, but even if they just say that you know, just know that, hey, 10 years down the line, they're going to remember that you called them.

Speaker 2:

You cared enough to call them and so you know it might be water under the bridge at that point, but if you don't call, you'll never know. And if they respond with a five to seven this is what we like to call the neutral zone you know this is a good opportunity to engage them or surprise them or look for a way to build some sort of connection. And if they respond with an eight through a 10, those are your people, those are your hidden influencers. But guess what? They need tools. So create easy, thoughtful ways for them to refer. You know, give them, you know, a give 20, get 20 card. Or you know, give them many gifts to give out or give them, offer them some sort of um, special, thank you, um, for referring. You do some sort of handwritten invites. Just make it feel good for them to share, make them want to get that word out and that message out for you.

Speaker 1:

I love that, make it feel good to share. That is a beautiful thing to think about. So let's dive into six ways. Like to add value and build wealth.

Speaker 1:

So one would be like increased transaction size with treatments and add-ons, and you're doing this for the purpose for making the, for creating a solution to the client's greatest problem. We're here not to give someone the ick. We're here to give them impact, and we truly know that when hair is treated or when skin is treated with the right things, people feel more confident, and so being able to increase your average ticket, which would be your transaction size, like you're making people leave with more value. They're going to feel more confident. Another opportunity is to invite guests to visit more often. You know that would be like celebrating their birthdays. Recently, lindsay and I actually are able to send our clients a birthday happy birthday message from our team to our clients on their birthday. So on their birthday, they get a text from our salons, they open it and there's the team singing them a happy birthday. So and then with a special little birthday gift like that's how you get guests to visit more often or even like celebrating their half birthdays.

Speaker 1:

You've probably seen the marketing around half birthdays. Hey, it's, it's six months, it's halfway to your birthday. Come in and you know, enjoy X, y and Z. It's six months, it's halfway to your birthday. Come in and you know, enjoy X, y and Z. And so that's one way to add value and build wealth. Another one is the be the one stop beauty expert to reduce spending elsewhere.

Speaker 1:

Like we are in the business of creating a complete look for clients from head to toe. So no longer do we just do hair, skin, we we have to help them see the opportunities of what clothes to wear, how to do their makeup, like, what jewelry to wear. Like that's creating that you know that look for someone that makes them feel more confident. And you know people, when they're in our spaces, they want to buy makeup, they want to buy the tools you use. So having them accessible for them, where they can just grab, grab it that day and have it that day, it's going to make their life easier. Another opportunity is increased retention with better rebooking and reminders. So having scripts, that's really a beautiful thing, having those scripts with your team so that they know you know how to ask for a pre-book, how to um, you know, uh, what's the best way to set the client up for success and the stylist up for success? And it's not. Hey, my schedule's really busy. You should go ahead and book, or the holidays are coming up. You should go ahead and book. I'm so busy. Look at me, I'm so busy. That's not the script we're talking about. Like you want them to have a script that serves everyone to their highest good. You know, one other thing to add value and build wealth is to win back lost clients with those personal touches we talked about that. Lindsay shared that story of how, when she no longer was doing hair and some of the clients that she was serving hadn't been in a while, so she personally reached out and was able to attract some of those back. Like, how special would you feel, like if you went somewhere else just because you're like, yeah, it was good, but there's something missing? And then the owner or that service provider reached out to you like, tell us how we can do better, tell us how we can be better. That's what Disney would do and that's why they have new client retention at 70%. Another opportunity is ask for referrals often and reward them often, and so again, it's teaching your team to have those scripts, to know when to ask for a referral, to know what to say and to also reward the clients that are referring lovely clients to your salon.

Speaker 1:

Interesting fact you know there's other amusement parks besides Disney, like in our hometown. There's Carowinds, there's Six Flags. I don't even know all the different amusement parks. I think they might be owned by Paramount, but even if they're not, it's interesting. I was just there the other day with my niece and I thought I wonder what their client retention is compared to Disney's, because I knew that Disney's was 70% and their new client retention is only 40%. So it's like they have more systems in place at Disney than any other amusement park and that's how they're able to ripple that out.

Speaker 1:

We were just there the other day and they were doing make a wish for kids at care lands where we were at, and it was just so interesting to watch is, you know, they get a special place in line, which is awesome. We loved it. My little six-year-old niece loved watching it too, and it was like some rides. The people, the attendance, were almost aggravated that they were having to deal with this, but on some rides some of the attendance were high-fiving the kids Like you wouldn't have that at Disney. All attendance would be would have been high-fiving the kids at every single ride and that's what sets companies apart. That's what changes your retention from. You know new client retention from 40% to 70%. So just think of ways that you can add value and build that wealth.

Speaker 2:

Wow, it just makes me want to pass out some high fives. It's so good. You know and I think it's easy to say you know to come up with lots of excuses for why we do or don't do things in life, but I'm just curious did you know that there are 60 salons for every Starbucks location in America? Wow, let me say that again, there are 60 salons for every Starbucks in America. You know, and Jen just recently shared this stat with me and I shared it with some people earlier today and we were talking about it and I was like so how many salons or how many Starbucks can you think of in our town? And they were like, well, one, two, three, there's three. And I was like, yeah, there's, there's three like freestanding locations, but there's one in our grocery store and then two more in other grocery stores, and we forgot that there's one in target.

Speaker 2:

And so we came up with six, you know, and I'm in a small town, so there's quite a few Starbucks. And so we did the math. I was like, okay, so if there's six? So first we only thought there was three, so that would mean there's 180 salons in this town. But now that we discovered, hey, there's actually six, because we forget about those little hidden, closet ones. There's actually probably you know 300 and you know 60 plus salons in our town, and that's wild when you think about that, because what it means is standing out is the only way to grow, and the difference is systems, standards and consistency. You know, because wealth is not built on viral videos. It's built on repeat business and relationships. It's built on repeat business and relationships. So we would invite you to audit your retention, refine your referral systems, train your team and remember predictable income doesn't come from hustle not at all. It comes from strategy and systems. So now go build the kind of salons that clients never want to leave.