First-Time Client Retention Rate or as I like to call it FTCR, is the percentage of first-time clients that return for a second visit within a specified period of time, usually 90 days.
Converting first-time clients into repeating loyal customers is the undisputed growth driver for salons and spas. In fact, it’s the undisputed growth driver for all businesses. Here are my crucial facts about first-time client retention:
FTCR is not the same as request rate: Request tracking is an old measurement system. It only measures “who asks for who” — not how many first-time clients return to the salon/spa for a second visit. The fact is request rate measures if “a column on your appointment book” is building a following.
We refer to request rate as a salon/spa’s Walk-Out Factor. If you want to know how much damage will be inflicted on your business if a “column on your appointment book” leaves, track individual request rates. If you want a “team-based culture” never track individual request rates.
FTCR is teamwork driven: Growing a successful salon/spa isn’t about how busy certain individuals are, it’s about how your entire team works in concert to create the highest levels of customer satisfaction. No matter how technically excellent the service is — indifference, attitude, lack of professionalism, appearance and other factors by one or more employees can degrade FTCR. That first visit is your one shot at making a great impression.
FTCR is the prime factor for pay raises: Our prime issue with commission is that it is compensation based entirely on an individual’s service revenue. If you keep feeding new clients to a service provider with a low FTCR — you’re paying that service provider commission on every new client they fail to retain. On team-based pay, the first critical number that measures performance is FTCR. Low retention — no raise. Team-based pay puts your payroll dollars where the performance is.
FTCR measures if your systems are working: Check out this scenario: You go to a fine restaurant. The meal was amazing, but the service was horrible and it took forever for your meal to come out. You don’t return. The systems in the kitchen were malfunctioning. The wait staff was short-handed.
It’s exactly the same at a salon/spa. A new client’s hair or spa service may have been wonderful, but if the elements surrounding and supporting it were not, the client may be lost. FTCR is a measurement of how thorough your systems are designed and executed. You cannot achieve impressive first-time client retention rates if your systems are misfiring.
FTCR is your salon/spa’s quality score: If your salon/spa’s FTCR is 40 percent, that means 60 percent of the first-time clients you fight hard to attract are not returning. You can believe all you want your salon/spa delivers on its promise to the customer, but if half or more of all first-time clients do not return, you and your team are talking quality more than delivering it.
FTCR tells you truth about your brand: Building on the fact that FTCR is your quality score, FTCR also tells you if your brand image is rock solid or cracked and breaking up. FTCR is a powerful indicator of brand strength because it measures your salon/spa’s ability to satisfy and WOW new clients that were attracted via marketing, reputation and word of mouth. Converting a first-time client to an existing/retained client is the ultimate brand acid test.
FTCR doesn’t care who a client returns to: FTCR is about building a company — not building a column on the appointment book. If a first-time client returns to the original service provider that’s great. If a first-time client returns to different service provider that’s great. Owners need to communicate to every employee when a client returns to the business; it ensures the sustainability of the business and the growth opportunities for all employees. The higher the FTCR, the higher the salon/spa’s productivity rate. The FTCR battle cry is, “The skills of the entire team are available to each and every client.”
FTCR and pre-book rate are interdependent: There is a direct correlation between pre-book rate and FTCR. The higher your salon/spa’s pre-book rate, the higher the client satisfaction rate and the higher your first-time and existing client retention rate. Hair grows back. One facial doesn’t fix a skin issue. Failure for a service provider to communicate the maintenance cycle for a service is a failure of professionalism. Allowing clients to walk out of your business without engaging your pre-book system is simply squandering the client retention and frequency of visit opportunity.
FTCR measures consistency: Is your salon/spa’s service experience truly consistent? Consistency creates predictability. Delivering great service every time, across all columns on the appointment book requires systems, training, coaching, measuring, etc. The lower your FTCR, the more inconsistent the customer experience is. If your vision is to deliver world-class service experiences … consistency is a non-negotiable.
FTCR reflects your culture: Culture is the collective thinking and behavior of your salon/spa. The tighter and more disciplined your culture – the higher your FTCR. The more committed your team is to delivering the extraordinary service – the higher your FTCR. Likewise, the more country club and unstructured your salon/spa is, the more it springs leaks in revenue opportunity and its ability to attract and retain first-time clients.
FTCR defines your leadership ability: The previous eleven crucial facts about FTCR all require a level of leadership that may be uncomfortable for many owners. Leadership is about taking a company and its team to a better place. The more you develop your leadership skills … the more impressive your FTCR. No compromise.
Here’s my challenge to you: Use these twelve crucial FTCR facts to rate your salon/spa. For each fact, rank how your business rates on a scale of one to ten (ten being extraordinary). Be brutally honest. Have staff members rank the salon/spa too. If you score a 90 to 120, your company is pretty extraordinary. The lower that score goes … the more work you need to do.
Neil Ducoff, founder of Strategies and author of the upcoming book “No-Compromise Leadership,” developed the team-based pay concept more than 30 years ago and developed a company that trains and coaches to ensure businesses implement the program successfully. For more information, e-mail firstname.lastname@example.org or visit www.strategies.com.