The Real Cost of Retention
What is the financial cost of building client loyalty? Although
an expanding client base is a core business goal, the cost
associated with attracting new customers is much higher
compared to cost of retaining existing clients. According to the
Gartner Group, 80 percent of your company’s revenue will
come from just 20 percent of your existing customer base. In
fact, Leading on the Edge of Chaos authors Emmet C. Murphy
and Mark A. Murphy, estimate that, depending on one’s
industry, a simple five percent increase in customer retention
can deliver an increase in business profits between 25 and 125
percent.
There is no doubt that client retention can be extremely
challenging for most brands; however, it is an attainable goal.
Three areas of specific focus to build client loyalty include:
Focus on creating an amazing customer
experience. While spas need to keep an eye on
their bottom line, it is equally important to ensure
that brand policies do not negatively affect the
client experience. No issue is too big or too small; if it involves
improving client experiences, then it is worth considering.
Tech giant, Apple, for example has built a culture of
excellent customer experience. By closely analyzing consumer
“likes” and “dislikes,” the company has actively addressed a
number of customer issues and areas of potential future
concern. Below is a good example of how they do this:
Instead of making their customers wait in line for a clerk to
service them, Apple came up with the idea of a Genius Bar at
their retail stores where customers have the option of scheduling appointments with a “Genius.” With zero wait time, the
customer is free to schedule his or her other appointments at
convenience. This is just one example of how the company
gives its customers top priority.
1.
PAUSE FOR THOUGHT: Taking the Apple example, how are
you putting your guests’ convenience top-of-mind even
before they step into your spa? Do you offer them easy ways
their scheduled treatment? Thinking about every touchpoint
of your guests’ experience ensures that you’ll leave them
with a unique experience that would drive them back to your
spa.
Appeal to the trillion-dollar client
base. With an estimated spending that is
close to US$600 billion, millennials are a
consumer force that no brand can afford to
ignore. This “always-connected generation” strives for a
healthier lifestyle and is not swayed by big brand names. Talk
to them about farm-to-spa and organic products, or antioxidants and probiotics, and you just might manage to raise their
interest.
Being tech-savvy is a boon and almost a default attribute
with millennials. However, it brings with it the risk of mental
and physical exhaustion that can manifest itself in a number of
ways. Spas can use this opportunity to build a loyal following
by offering services and products that are completely organic
and customized to specific millennial concerns, including
stress and insomnia.
If there is one brand that has played a pivotal role in
changing the perception of working out in the minds of healthconscious millennials, it is Nike. The company tailors its
campaigns and products to align closely with the interest and
affinities of its audience. Nike is not just a sneaker company. It
represents a lifestyle transformation for most millennials.
Air Jordan, for example, is a prized possession and carries
massive iconic appeal. For shoppers, an equal part of the
appeal is having the option to use colors and materials and
customize their sneakers. With powerful taglines like “If you’re
brave enough to try, you’re strong enough to finish,” Nike is
effectively championing the cause of exercising to stay fit for
women who want to balance work and personal life without
compromising their health.
By blending personalization with an almost organic appeal
in its product offerings, Nike speaks to its customers on a
personal level. And that is what millennials crave.
2.
to set up appointments, whether through an app or a mobileresponsive website? While waiting for a treatment, what
PAUSE FOR THOUGHT: Taking cues from Nike, have you
complimentary amenities do you offer guests to not only
created a marketing initiative targeted at millennial spa
make them feel welcome, but also help them disconnect
guests? If you haven’t yet, it may be time to add this to
from the outside world? If Apple has a Genius Bar, have you
your marketing plan. Consider taking a simple survey as
thought about offering a Detox or Vitality Bar where guests
part of either your intake or post-visit form that look into
can either unwind or learn about wellness while waiting for
millennials’ personal preferences in order to gain insight
June 2016
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PULSE
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