How to Grow Referrals
Word of mouth is a tried-and-true method for gaining customers in any business. So it’s no surprise that the #1 most successful marketing practice for salons and spas is a program that drives word of mouth — the “25/20 Referral Program.” This is an easy, two-step process that generates an average of 16-50 new clients per month for 6-to-10-chair salons. The concept is simple:
STEP 1: An existing client invites a friend to try your salon, by extending to them a $20 credit toward any service they have not yet tried.
STEP 2: When the friend comes into the salon to use it, the referring guest then receives a $25 salon credit toward product purchases.
Existing guests like the program, because:
- It lets them extend a special deal to their friends.
- They are rewarded more than the new client. (This eliminates the common complaint, “Why do new customers always get the best deals, not loyal customers like me?”)
New guests like the program, because:
- They have less doubt about patronizing an unfamiliar business if a trusted person has recommended it.
- The $20 credit is significant enough to persuade them to use it.
Salon owners like the program because:
- It’s easy to implement.
- It drives itself.
- It’s easy to measure results.
- The $25 product voucher encourages upsells and crossover to new products.
- For Aveda salons, it’s eligible for Aveda Concept Benefits.
Salon staff like the program because:
- It’s easy to manage.
- It is successful even without staff involvement (dropped into retail bags).
- It helps fill their books — especially important for New Talent.
The Strategy Behind the Program
- The 20/25 ratio. Market research shows that of all the various figures tested for this program, the 25/20 ratio generated the most success for salons and spas. It’s a significant enough gift to entice both new and existing guests, but not enough to hurt your bottom line.
- Rewards your new guest with services and your existing guest with products. You want your referred clients to get a great service at your salon — this is more likely to bring them back. A discount on products alone might result in a loss to your salon without giving them an incentive to become a guest. Your existing guest is already getting services, so this isn’t a concern. The $25 is for products at retail price (not salon cost, therefore the loss to you is lower) and the retail ticket is often more than $25, plus it’s for products they may be new to trying. Guests are also more likely to book services again now that they’re back in to see you to redeem their product voucher.
Easily Implement with a 4-Channel Plan of Action
1. Service Provider to Guest— Arm them with this simple script: “I love doing your hair. I’m sure your friends are as great as you are. If you have any friends you think I can help, I’d love to be of service. In fact, I have a gift for you and your friend.” (Gives guest the 25/20 referral card.)
2. Front Desk to Guest (Reinforcement)— “Your hair looks great! Did (Service Provider) give you a referral card for you and your friends?”
3. Email the referral card to your client list.
4. Take it Online— Offer the referral card on your website and Facebook Page.
Need help implementing? Call Imaginal Marketing; they perfected the program and they’ll set you up with all the pieces above.