In the October and November issues of IST (which are available for reading 24/7/365 at istmagazine.com), I provided details on several “keys” to salon success.
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I began by quoting the brilliant Danish philosopher, Soren Kierkegaard who stated that “Life can only be understood backwards; but it must be lived forwards.”
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I, too, have found that it is only when looking back over past successes and failures that we truly learn to appreciate the value of these experiences – the wisdom they provide and the courage they instill to persevere.
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I share with you now several insights on Customer Demographics and Spending Patterns, to help you succeed in the Sun Business.
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How Well Do You Know Your Customers?
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At a recent seminar, I was discussing the Sun Business with a group of salon owners when I posed this question: How many active customers do you have in your database?
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You would have thought that I was asking for the nuclear warfare launch codes! Responses were as follows:
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“My computer system will not provide that kind of information. And if it does, I have no idea where to find it.”
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“Active customers? That’s hard to say, as we have so many customers in our database, it’s hard to tell how many are still active.”
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Your database is the lifeblood of your business! At any given moment, you should have a working knowledge of the total number of customers in your database, as well as the number who are “active.” And by active, I mean those who have spent at least $1 in your salon in the last 12 months.
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Any software program worth its monthly service fee should be able to provide this information with just a few clicks or keystrokes. If it doesn’t, you really need to find a new program that offers this vital feature.
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In the Sun Business, your main focus should be on generating the maximum amount of “dollars-per-customer-per-year.” Accordingly, you should have at your fingertips a report that lists every active customer in your database, ranked according to how much they spend with your business on a per-month and per-year basis. In this way, you can determine what type of customers are most likely to spend freely in your salon – and exactly what they are purchasing. At the same time, it will also reveal what type of customers spend the least.
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Since our industry began, the typical tanning salon database has held steady at 70% female and 30% male. And within these groups, the majority are females 25-49. Yes, this can vary by unique location, which is why you should analyze your database to develop a demographic profile of customers ranked by gender, age and spending patterns.
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Take baby steps and test sales and marketing strategies on a few customers first, before rolling out to a larger audience.
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If your database analysis reveals that your best customers (with regard to spending and sales histories) are Caucasian females between the ages of 39-49, then it would be logical to develop marketing programs designed to reach this specific audience. For example, you could develop ads and social media posts that target this group, and run ads in publications (print and online) that appeal to this group. You could also develop direct mail programs (still effective when done well) that target neighborhoods where these people live. And perhaps the most effective strategy is to create in-house promotions that utilize your existing database of like-minded customers to reach more people who are just like them!
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Begin the process of developing your customer spending profiles by dividing customers into categories according to the dollars spent during the past 12 months.
For example:
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- Total Customers who spent $1- $49.99
- Total Customers who spent $50- $74.99
- Total Customers who spent $75 – $99.99
- Total Customers who spent $100 (and so on)
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While each salon is unique, what I have often found is that about 80% of all salon revenue is generated by just 50% of the total database. And when you drill down further into the numbers, you may also find that 20% of all revenue is generated by just 5% of the database.
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This can be both good and bad. Having a handful of customers who spend several hundred dollars per year in your salon (or more) indicates that you are doing a great job of selling to this group. However, if you were to lose just a few of these customers your salon would take a serious financial hit.
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In addition to per-customer spending, you can also develop a demographic profile of each customer according to age and gender. This information will further assist you in better understanding how much each customer spends, as well as what products and services they are purchasing.
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Once you have a full database profile, segmented by dollars spent per year, customer age, gender and purchasing preferences, you will be better able to develop sales and marketing strategies for each specific group. This is so much more effective than the old “shotgun” approach, in which you try to hit every customer with the same offer.
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As you review your customer database profiles, look for areas of opportunity to increase sales and then develop sales and marketing strategies to reach each person in each group.
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For example, a customer who spends less than $50 per year in your business probably will not respond to an offer for a $100 bottle of tanning lotion. However, they may jump at a Free Salon Gift Card that offers them $5-$10 to spend on anything they choose at your business. I have found that it is much easier to motivate a customer who spends $50 per year to now spend $75, than it is to motivate one who spends $500 to now spend $750.
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And within your database, you will probably discover that you have hundreds of customers who spend less than $50 per year – which presents tremendous sales opportunities.
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Take baby steps and test sales and marketing strategies on a few customers first, before rolling out to a larger audience. And as you do, focus on the fact that if 100 customers spend just $5 more per month in your salon – it will produce an extra $6,000 per year for your bottom line!
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In the coming months, we will cover the next set of Keys that include:
Marketing & Advertising and Skin Care & Accessory Sales
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For more information on the topics covered above, write to jerry@istmagazine.online.
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