We have looked at some mechanisms to understand Marketing and understanding the finances of attracting customers. Now we want to look at the other part of the equation or the Life Value of a Customer (LVC). We want to look at increasing the value of a customer by increasing Revenue through increased average Sales or increase the frequency of Sales.
To do this, I want to focus first on a Hair Salon as an example. One of my first clients was a Salon and one thing that I found was that the Salon made its real money from Color Treatments. This leads to a periodic visit by customers to the Salon. One thing that can directly impact Revenue is the rebooking of appointments at 4 weeks instead of 6 weeks. There are several ways to impact this. For example, the cashier function can ask to book appointments at the exit and suggest a 4-week interval. There is also the choice of a "Cut of a Month Club". This is a discount card that can be used to encourage use on a more regular basis.
This can be enhanced by looking at the sizing of the products that are sold. Since Product Sales are a great upside, the Salon wants clients to purchase each time. The idea here is to stock sizes of products that are about one month's worth of product. Running out of products can provide a prompting to book another hair appointment. There are other reminders that can be done by E-mail, Telephone, or Direct Mail. All of these ways can be used to decrease the time between appointments.
Here is one last idea for this example. The most important thing is to get new clients to become repeat clients. They are the most important prospects for becoming new repeat clients. The question is what the Salon does to cultivate this new relationship? If there was ever a time for a Salon to give a discount, it is to that first-time visitor. But there are many ways to cultivate the client. For example, send a hand-written note to them thanking them for their visit. Any personalized touch can be an excellent way of improving turning that one-time client to a repeat client.
Now, why did I focus on creating repeat clients? Prospects that have already done business with you have the highest conversion rate. These prospects are better than referrals. Think long and hard about how to convert customers into repeat customers.
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