Membership Has its Privileges
I have had a number of requests lately for information and tips for creating and managing a haircut membership program for a shop or a renter. Following are some ideas of what haircut memberships are and are not along with my top five tips for implementing a membership program and a sample list of member benefits.
-A great tool for building haircut business. Memberships lock in loyal clients and distance your from competition. A member has chosen to commit to you and decided to tune out all other offers and opportunities.
-A tool for managing cash flow. You take in a large chunk of cash, upfront. New members should be able to join at any time so this cash flow can be enjoyed every month.
-A great barometer of the health of your business. If new member sign-ups or requests to do so fall off it can be an indicator that service levels and overall satisfaction might be suffering.
-A fun and powerful way to reward your best customers while locking them in to long term patronage.
-A form of gambling. You are betting a member will under-use the offer. Clients are betting they will over-consume your services. If you have done the math properly both of you can and will win this bet, albeit in different ways.
-A great way to sample products and services to your best customers. They let you, through member benefits, create trial and the sale of add on services and retail goods.
-Great marketing tools. Members will talk up and flaunt their membership to potential clients and clients who are not yet members.
-Great for gift-giving. They are a unique dads and grads gift and perfect for the winter holiday season. A heavy round of promotion and sales at back-to-school time and Valentine’s Day fills out the calendar and brings piles of cash throughout the year.
Memberships are not...
-A discount program. I will say this again: Memberships are NOT a discount program. Let’s be sure you are on board with this. Memberships are NOT to be discount programs. Members should be paying the equivalent of full price for haircuts and reaping a wealth of benefits from their membership
-A once-per-year sell. Memberships should be available for purchase every month to keep cash flow moving.
-Just for chains, large shops or big businesses. Single-chair operators and suite renters can build, offer and manage membership programs easily.
-A paperwork nightmare. They are an easy sell and easy to manage.
-Limited to haircutting. Any service purchased at intervals can be “membershipped” if you can do the math and make the offer enticing.
-One-size-fits-all. One of the greatest elements of membership programs is your ability to tweak the offer to fit your clients and your culture.
5 tips for building and offering a membership program
- Limit memberships. Offer a limited number of memberships. Exclusivity creates desire. Short sign-up windows and a limited number of memberships offered will create sales urgency. Urgency leads to action. In this case the desired action is purchase. Ideally you want to limit membership to no more than 20% of your active client base. This serves to keep the group exclusive, yet generate a nice chunk of upfront revenue. The remaining 80% of your traffic is your ongoing and day-to-day cash flow. Holding to this membership limit creates urgency to purchase, too. Once you have sold to your membership limit memberships will only come available when a member chooses not to renew. If this is managed properly you will ultimately build a membership waiting list. How awesome would that be? Every month the promotion of your limited number of open memberships is a major marketing event to be talked up and leveraged.
- Collect upfront. Memberships should be paid in full, upfront. One of the key benefits of monthly membership is locking in clients. One of the main benefits for clients is convenience. Month-to-month credit card billing allows a client to cancel at any time. This is a no-no. This will reduce the long term profitability of your membership program. It will also initiate management havoc with membership starts and stops. Pay for it and forget it is a HUGE benefit to members. It is also a key component of the psychology of membership, privilege and convenience. Once the money is spent, it is fast forgotten. Members will buy products, add-on services more freely as the haircut portion of the bill is gone. Members tend to tip heavy as they do not feel the impact of the haircut spend every visit.
- Limit time frame. Memberships are not to be open-ended. Ideally, memberships should be for one calendar year from date of purchase. This makes the spend large enough to make the cash flow valuable to you. This makes the term long enough for the client to settle into the convenience and value. Annual adds and drops allow memberships to come available at intervals to creates selling seasons. Dropped memberships can be pulled from circulation as a tool for managing the size of the heard and the cash flow it creates.
- No discounts. Do the math. The calculations for membership pricing are actually pretty simple. Do not over-think this. Generally memberships are best offered as “unlimited haircuts for one year”. This is much easier than “three haircuts per month” or other systems that need ongoing tracking. A member has a start and end date. Haircuts are FREE between these dates. Keep it simple.
How much should a membership cost? You know your best clients. How often are they getting cut? For some haircutters the answer might be monthly. Other clients might be every two week services. Do the math to determine the average visit interval for the average client that your information tells you is your best membership prospect. For the sake of example let’s say that you determine that two haircuts per month is the magic number for targeted clients. Twelve months per year X two haircuts per month is the target, so a membership should cost the price of 24 haircuts. There is not to be a discount offered on the basic haircut.
- Build the benefits.The value for you and your members will come in the form of the menu of benefits you offer to members. Adding new benefits becomes a powerful marketing tool. Below is a partial list of some great member benefits. Some of them are surely perfect fits for your clients and shop culture. You will likely think of many others perhaps unique to your program. I will be posting on my Clipperguy page and tagging MODERN SALON in the post to create an open forum for ongoing conversation about membership benefits. I will also be hosting an online chat session to discuss membership benefit ideas. Check my Facebook page or the MODERN SALON Facebook page for updates on that.
Member benefit ideas:
- Early or late haircut hours
- Premium appointment slots
- No waiting (next up) walk-in service
- Ongoing product discounts
- Preferred or valet parking
- Product sample opportunities (get these FREE from vendors eager to promote to your best customers)
- Pre-sale opportunities on new product offerings
- Celebrity meet and greets (sports and entertainment)
- Game night parties
- FREE soda or other beverages
- Price increase hold back (prices for members do not go up during membership period)
- Partner business discounts and offers (you negotiate on behalf of your best customers)
- FREE between haircut neck clean up
- Discounts on new services
- First and early scheduling opportunities for new services
- Special holiday hours
- “Guest Passes” to sample member benefits for friends and family
Memberships can be powerful tools for building business. I look forward to learning about YOUR membership program and how it helps you take your haircut business to the next level of success and profitability.