No matter what type of beauty business you are in, when it comes to increasing your sales, it is a well-known fact that focusing on client retention is far more profitable than trying to attract new clients through your door.
With the cost of 'client acquisition' 5 times more expensive than keeping an existing client, it makes sense to focus on designing and implementing effective strategies that will have your current clients returning time and time again. However, that doesn't mean you should totally ditch trying to attract new clients to buy your products and services. Client acquisition is still vital to any business's success. The key is to get the balance right.
Read the Skin & Beauty Training Centre's blog: Mo' Money: 6 Effective Rebooking Strategies That Work.
Client Acquisition Vs Client Retention: What does that mean?
First of all, let's give each term a definition:
- Client Acquisition refers to all the steps and initiatives you take to attract new clients - like placing an advert in your local paper, letterbox drops or promoting your services on social media platforms such as Facebook and Instagram.
- Client Retention refers to all the steps and initiatives you take to ensure your clients keep coming back to you time and time again. Steps like providing excellent customer service, staying current with the services and products you offer and offering loyalty programs and incentives all assist in your client retention.
Client acquisition costs more money and effort on a per-customer basis. Spending $300.00 running a Facebook or Instagram campaign may get you ten new clients, or it may get you one. If you get ten new clients, each client has cost you $30.00 to acquire. If you only get one, that client cost you $300.00 to acquire.
In either case, once these new clients have walked through the door (be it physical or virtual), your client retention strategy must be on-point. This way, you can maximise the return on your client acquisition investment by increasing the lifetime value of your newly acquired client.
What is Lifetime Value? Lifetime Value is a term used to refer to the total value a client has contributed to your business - over the whole period of their patronage.
Example of Client Acquisition Vs Client Retention Strategies
You run a $300.00 advertising campaign on Facebook. From that campaign, you gain ten new clients. Each client has cost you $30.00 to acquire.
However, your advert is promoting the AntiBac Body Wash for $24.95. Because you didn't upsell, cross-sell or give the clients any reason to repurchase, those clients end up only spending $24.95 each, and the business/client relationship ends.
This client acquisition endeavour has lost you $50.00 (or $5.00 per client), with no prospect of recovering those costs in the future.
You run a $300.00 advertising campaign on Facebook. From that campaign, you gain one new client. That client cost you $300.00 to acquire.
However, when that client contacted you (mentioning that she wanted to address the acne breakout on her back), you took the opportunity to suggest she team up the AntiBac Body Wash with the Hydr8tan Exfoliation Cloth, Clearing Renewal Complex and Vitamin B3 Complex. The client agrees with your suggestion and makes the purchase.
That client will now spend $150.00 instead of $25.00, and your client acquisition costs just dropped from $275.00 down to $150.00.
Now, in this last example - even though you are still down $150.00 on that client acquisition cost - that client loved the results the products have made to her back acne (satisfaction) and happily took you up on a discount offer (client retention) you sent her to repurchase these products within six weeks (trust). In fact, on her return to you, she tells you she is so impressed with the improvement of the acne on her back that she would now like to start using these products on her face as well (satisfaction + trust).
What do you think the chances are this client will continue to purchase your suggestions and keep using the products over and over again? Satisfaction + Trust = Loyalty.
By following and continually implementing a good upselling, cross-selling and repurchasing strategy, you've turned a $25.00 client into a client whose lifetime value is potentially hundreds if not thousands of dollars. Imagine if the same scenario was true for each of those ten lost clients!
Want to know more about upselling and cross-selling techniques? Here is another blog from our sisters over at SBTC: Upselling & Cross-Selling: Service or Disservice? (wink emoji - see what we just did there?).
ASI Australian Skin Institute Is Here To Support Your Beauty Business In 2022
ASI - Australian Skin Institute is a community of beauty and pharmaceutical experts passionate about skincare.
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