Client Rewards Programs

My team has been saying for years that we should do something nice for our clients. I agree - we all know it's easier to keep a client than to get a new one. So why do we put so much effort into getting clients then do nothing special for our current clients? Years ago, before I owned the salon, they used to give clients a travel size shampoo for their birthday. I always thought that sounded kind of cheap. Some employees have suggested a frequent guest program where you get your 10th haircut free. Again, I love the idea of rewarding our guests, but haircutting is our major source of income. If I give away every 10th cut, am I not just giving away about 10% of our revenue? At the time that was suggested we were still a commission salon and you know the stylist would still expect to be paid for that free cut. It just wasn't an affordable, practical idea.

Our new salon software supports rewards programs so we are looking at implementing one in the next couple of months. Our software assumes that points convert to dollars at the rate you specify - for example 100 points = $1. We select the ways points can be earned, then they can be redeemed just like cash for any product or service. That brings up the old problem of me not wanting to discount my core business, haircutting. I don't want people earning points then not paying for their haircut. I want them to spend the points on something else. So we're designing ours a little differently but it will still work with our software. Here's what we've come up with:

Points can be earned by:
Referring a new client...........................1,000 points
Prebooking your next appointment.......200 points
Trying a new class of service...................500 points

These are all behaviors we want repeated so we will reward them.

Instead of points being redeemable for anything, we have a list of reward they can spend their points on:
500 points - shoe shine or travel size shampoo
1,500 points - 8 oz shampoo
3,000 points - manicure or grey blend (we are a men's salon)
4,500 points - 30 minute massage, facial or pedicure
7,000 points - 60 minute massage
10,000 points - 90 minute massage

Note that no where am I hurting my cash flow by letting them pay for haircuts with points. My hope is that having a list of awards will get my clients working towards a goal. If they are just spending the points as they go, they never set their eye on a prize and work towards it. I want someone to think "If I refer 10 people I can get a free 90 minute massage - I can do that."

We're planning to roll this out in November and run it through December 2008. Points will expire March 31, 2009 so we don't have a long-term liability out there.