What is your salon/barber client worth to you as a haircare professional?
How much?
Knowing this number will ABSOLUTELY put you in control of your business.
Knowing this number will separate you from the competition.
Knowing this number will “shed new light” on your existing and future clients.
I’m talking about the LIFETIME VALUE OF A CLIENT (LVC).
I love talking about this subject because of the impact it could have on your
overall business.
It’s simply the amount of profits you’ll earn over the customer’s “lifetime” of doing business with you.
Until you as a salon professional (marketer) knows how much a client is worth, you’ll never know how much you can afford to spend to get a new client, and how much you can afford to spend to keep your current clients happy and buying from you again and again.
Here’s the formula:
Lifetime Value can be determined a couple of different ways.
- The average purchase amount…
- Multiplied by the average number of times a customers buys per year…
- Multiplied by the average number of the customer continues to buy…
- ***Plus, the monetary value of their referrals***
(Your prices/fees) X (the average number of visits to your salon per year) X (the average number of years a client remains loyal to you and your salon)
= THE LIFETIME VALUE of a Client
Check this out…
One of my best client John gets his haircut twice a month.
Thats:
40.00 x 2 = $80.00 per month
80.00 x 12 = $960.00 per year
960.00 x 7(average number of years as a loyal client) = $6720.00
This number represents the gross amount of value;
but do you get my point?
Knowing this number allows you as a salon/barber professional
to know how much you can spend on advertising to get more clients.
Knowing this number allows you to know how much you can
spend to retain your current clients.
If it cost me a $1,000.00 to get a new client…I’m still ahead $5,720.00 based
on the John example above.
God forbid…
If John leaves my salon, that would be a $960.00 DROP in my gross yearly income!!!
… a $6,720.00 DROP over 7 years!
Do you see how important it is to know and understand this number(LVC)?
You can play with this number ALLLL DAYYY LONGGGG and come up
with different scenarios.
Grab your calculator and start playing with that number.
You will be amazed
Talk to you soon,
K.L. Horne
PS: I forgot the most important part!!! SUPPOSE YOUR BEST CLIENTS REFERRED MORE CLIENTS LIKE THEMESELVES?
Just suppose in the “John example”, that John referred 3 people like himself?
That would be 3 x $6,720.00 = $20,160.00 gross profit
This means John is worth even more than what he spends himself.
The bottom line is.. John is worth a lot of money!!
