The History of Loyalty Programs
If someone were to look in their wallet, they would probably find at least five loyalty cards and a few more cards from stores that they simply provided their phone number to in order to record points and purchases. As a result, consumers now expect rewards from practically every business they frequent.
Loyalty programs began in the United States in 1793, when merchants began giving out copper tokens that consumers would then collect and exchange for items in their store. Since then, loyalty programs have flourished in many industries and can be obtained from retailers, wholesalers, and manufacturers.
When American Airlines launched the first full-scale loyalty program in 1981, their customers were rewarded with virtual miles that could later be redeemed for flights. This program provided their customers with an incentive to continue flying with them; within a few years, every major airline followed suit.
The Structure ofLoyalty Programs
Loyalty programs can be highly formal, such as using a card and specific rules, or completely informal, like putting toys or prizes inside snack and cereal boxes, supplying trinkets with fast food meals, or offering a gift with purchase. Professionals can model these programs by giving a gift to clients with a specific service or presenting an additional product when a certain dollar amount is spent on retail.
Loyalty programs change the way consumers interact with companies and, when implemented into a spa, will lead to an increase in spending on services and retail. As spas compete with each other for clients with high-disposable incomes, they should look at creative ways of offering rewards and go beyond just giving a client points.
Many popular big box beauty retailers offer points that are redeemable for products every month. Because their offerings change, and also because there are a range of products that are available for various point levels, customers are allowed to cash in points right away or save them for something better. If a prize is desirable enough to a particular customer, they may shop at the store more frequently in order to get the prize more quickly.
Department stores tend to use informal reward programs for beauty purchases by offering a gift with purchase, which often drives consumers to spend more money in order to get a cute or flashy cosmetics bag filled with sample products that more than likely do not even match their skin tone. Consumers walk out of the store feeling satisfied, even if what they were given is not necessarily of great value.
How the Spa Benefits
Loyalty programs add value to spa services, eliminating the need for professionals to feel as if they have to give a discount. Loyalty programs ensure that the client is paying full price for services and retail products at all times, meaning that there is more money flowing into the business. It is important to remember, however, to keep the cost of the reward lower than what the client would actually save if they were to be offered a discount.
For example, if a client purchases a manicure and pedicure that totals $85 as a service purchase, the professional could offer the client either 10 percent off of the package of services, losing $8.50, or give the client points or a small gift. The gift (or prize for accumulated points) would cost less than the discount ($8.50) and make the client feel appreciated.
Giving clients a small gift will accomplish a few things: It will create an environment in the spa where discounting products and services is no longer needed, allow professionals to charge full price for services with a loyalty program, and ensure that clients are more than happy to pay those prices. Clients will walk out of the spa feeling satisfied. As they take their gift home and every time they see it or use it, they will not only remember the spa, but also the rewarded feeling they felt when they were given the gift.
Some spas choose to add an enrollment fee when their program offers ongoing, automatic discounts on products and services. If this route is chosen, it can immediately boost the spa's income every time a client enrolls. Skin care professionals could also attach the enrollment fee as a donation to a charitable cause. If the spa chooses to attach any type of fee to the loyalty program, they should give notice of the fees and be very specific about the charges that will be involved. Include details on how and when the fees are charged and how to cancel them.
If the program is complimentary, it is important to automatically enroll all of the clients. For clients that have not been seen for some time, professionals can mail them cards and program information, inviting them back and introducing them to the program at the same time.
Professionals can also increase benefits for less-desirable booking times, like early mornings, and for new services and product lines that clients might be hesitant to try. These actions can drive business and increase sales.
Tracking loyalty programs can be incredibly stressful. The best option is to ensure that a spa software that has built-in loyalty program abilities is being used. These softwares make the tracking process transparent and automatic, allowing clients to log into their account to see their point level and instantaneously updating points at the time of purchase. Point systems are more effective when clients know their balance, so always ensure that it is noted on their receipt or stated every time they make a purchase.
If a spa is locked into a spa software agreement with a program that does not have the capability to run a loyalty program, they can look into a secondary software program that can interact with their existing system or stand alone. The least desirable method would be to track points on paper or use the antiquated punch card system. For loyalty programs that use the gift-with-purchase model or are informal, no tracking, other than the regular bookkeeping, would be needed.
What can be Offered
The options are endless when deciding what to offer clients. Keep a sharp eye out when doing retail product shopping and ask the sales representative if they have any close-out deals on products or if they can offer the spa access to a large number of sample-size products for a reasonable price. Travel-size amenities make great gifts or prizes and are often within budget.
Skin care professionals should think outside of the box. For example, look for deals on high-quality flip flops if the spa is in a resort area or have the spa's logo put on custom products for a special giveaway. Spas can also use quick, low-cost services for rewards, such as an eyebrow or lip wax, scalp massage, hair mask, or spray tan.
Loyalty programs can bring many benefits to the spa, however, it is important to properly plan the program before launching it, ensure that there is a strong tracking system in place, and make sure that clients know about it and use it. Boost customer loyalty with unique rewards and give clients a reason to be repeat business.
Kelly Richardson is the CEO and founder of B.Bronz Sunless, a professional line of sunless tanning products sold in resort spas throughout the United States and Canada. She is also the owner of a chain of sunless tanning salons, Sonoma Tanning. Her companies have been partners with several professionals sports franchises to provide products and services to their dance teams. Richardson is also an educator, speaker, and writer who focuses on business development and sunless tanning for many major industry trade magazines.