Rethinking Retention and Thriving with Low-Return Clients

Last week, w- Kelly asked about retention. Kelly was asking about retention and numbers because Kelly is a great transition specialist. So her whole thing is that her clients come to see her once, twice, or three times and then never see her again, all right? So when it comes to that and when it comes to, are we doing the right thing in our business and are we tracking the right numbers and should we take this number or that number into consideration, or how does this look different for me, um, uh, I wanted to go over all of that with you today and do a little bit of an overview about retention and then also talk about this specific case scenario.

Like, if you do have a nature of clientele that has low frequency of visit or just has natural low retention, um, what you do about it. And this is also going to be helpful for those of you who may be experiencing, 'cause I know that it's out there a little bit right now, who may be experiencing, um, clients who are stretching out visits as far as, like, you know, your good old great coverage people, right? Like, who are like, "Uh, I'm- I'm not, I'm coming every four weeks now, but I need to, like, stretch it out to every six weeks." So the things in here may be a little bit helpful, and, and the ideas may lend well to that as well too, okay?

So who's down for some retention overview? Are we ready to go? So let's just do a general overview of retention, all right? So first off, we have existing client retention, right?

So this is about how well you keep the clients that you already have, and it's important to notice trends here, but it's almost impossible to calculate perfectly. So a lot of the times when I get on coaching calls with people, um, and they're worried about retention, honestly, I'm not, I'm never gonna ask you for a perfect number or calculation for this, because there's so many nuances and so many factors that just make this kind of irrelevant or make it just inaccurate to what we're trying to discover. So what I care a little bit more about is new client retention. So if I were to ask you, like, how well are you keeping your existing clients, like, do you feel like they're, like, staying with you?

Do have- are you noticing that Susie or, or Linda hasn't come back to see you in a long time and you're like, "Where the hell are my people going?" Then, like, you wanna, like, take note of that. You wanna think about that, right? But there's no way that I'm suggesting that you calculate it.

Now, new client retention, on the other hand, the definition, if a client visits you three times or more, they're considered retained. So that is the definition that I subscribe to of new client retention, and it's the percentage of clients that see you for the first, see you once and then end up seeing you three times or more. Then you can consider them retained, all right? Now, other definitions that are important, particularly for this conversation, lifetime customer value.

So lifetime customer value is the total amount of money that somebody spends with you during the entire time that they're a client with you. So the lifetime of this client visiting you and being a customer of yours, how much total money do they give your business? So let's say that Susie came to see me 10 times, and then she never came to see me again, and she paid me $100 every time. Then therefore her lifetime customer value would be 1,000.

Then we have frequency of visits, so this is how often a client comes back to see you on average. So for example, you may have a great coverage client who comes to see you every four to six weeks, so that's your average frequency of visit for that person. Or maybe you do low-maintenance balayage coloring, or you do, uh, curly cuts, and maybe your average frequency of visit is every 12 weeks, right? So you have your frequency of visit, how often a client visits you on average.

So let's talk about new client retention, because that's what we got asked about. So new client retention is important because, number one, it indicates stability. If your new clients are sticking around, it's a sign that your existing clients are probably happy too, right? So like I said earlier, I find it really hard to accurately calculate existing client retention.

So knowing what your new client retention is, it- it's a pretty good indicator that your existing clients are sticking around too, right? Because it's 10 times harder to get a new client to stay and s- and retain them. So if you can do that, I'm assuming you're doing a great job with your existing clients as well. This means that your business is stable and you're not losing people, and when you actually put in marketing efforts to get a new client into the chair, that they're actually gonna stick around for you and your efforts aren't gonna go to waste.

Then reason number two, why understanding your new client retention rate matters is because new client retention rates affect your readiness for a price increase. So for example, let's say that you have a ton of new client requests all the time, right? Like, let's say that you have client requests coming in out the wazoo. But you can't retain those clients, right?

Then you can do a price increase that you may lose existing clients, and then you are able to fit in all these new clients and they replace them. But then in the long run, you're gonna have a lot less clients. So let's say that you had a ton of new client requests and you did a price increase to shed some existing clients, and now you're able to fit in all these new clients and they all see you for your first visit, for their first visit, right? So you did a price increase and you lose some existing clients.

You got a bunch of new clients to come in for a first visit, but then all of them fall off because you don't retain them well. As far as total amount of clients that you have goes, it was a little bit higher, but then in the long run, it's gonna be lower because you lost your existing clients and you lost your new clients. So if you r- if it's great that you have new client requests, right? And we can say like, "Okay, I have a ton of new client requests.

I need to raise my prices so I can get them in," but if your new client retention rate isn't good, then that could actually screw you over in the long run and you can end up with less total clients. So that's why understanding your new client retention matters. So let's talk about the calculation. Now, new client retention depends on how often clients return, which can vary a lot based on your services.

So we have to take into consideration your frequency of visit...... when we're calculating your new client retention, because somebody who has a four to six-week clientele or somebody, versus somebody who has a 12-week clientele, the way that you calculate that within a certain timeframe has to be different, right? You have to give your s- your calculation enough time or that client enough time, a fair chance, to have come back to see you. Because a curly cut person, let's say, who only sees you every, like twice a year, you know, that person, you, you have to, you have to calculate their return over a year and a half to make sure that your numbers are accurate if you retain them or not.

So, when frequency is consistent with most of your clientele, let's say that you're very specialized and you have a specific ti- type of clientele and they all have a pretty similar frequent a- uh, uh, frequency of vis- visit, right? Then you can just go ahead and use that frequency as your baseline for, um, the amount of time that you give somebody for the calculation, and I'll get into the calculation in just a moment. If you have multiple types of clientele and a, "a frequency of visit averages" all over the place. So let's say that you're not super specialized in a su- in a technique.

Let's say that you have great coverage clients and then you have low maintenance clients, so your clients are all over the place and they're all coming back at different timeframes. Then you'd wanna do the calculation separately for each of those groups. Okay? So, if you have low maintenance clients and then you have higher maintenance clients, you'd want to separate the calculations when you do it and you'd wanna do it for each.

Okay? And the calculation is all built into our new client retention calculator. So, let's specifically talk about the low retention business model, which is what Kelly's dealing with, right? Kelly has a business model where people oftentimes don't return, but that's, like the point, right?

Is like, the point is, is that somebody who has been coloring their hair is, doesn't wanna color their hair anymore, so then you do this project so that way they don't have to come back and see you. So therefore, your new client retention is obviously going to be lower. Kelly also has people who fricking fly or travel miles to be, to go see her and get this project, you know? So it's, it's very common for these people to not come back to see her.

Now, there are pros to this model. You're making a big significant impact, right? Because you're helping clients with major transformations or specialized services that truly matter to them, such as gray transitioning. You can charge high-ticket premium prices because of the value and the expertise that you provide.

And these are notable and marketable services, right Kelly? So like, these are like, big transitions, there's a lot of benefits to not having to color your hair anymore, obviously, right? And they, there's drastic transformation. So this is a very easy thing to market as well.

But a huge con to a low retention business model such as this, is that you are constantly relying on new clients. Right? You always have to be replacing these clients every single freaking day because a client sees you once and they never see you again, you know? So you are relying on a s- a constant wheel of new clients coming in to see you.

And that's risky, right? But it's not wrong or right, and that is a big theme here, is that there's nothing wrong or right with the way that you run your business, the business model that you have. You just have to be willing to take on the risks, being in favor of the pros over the cons, right? When we have a low retention business model, and if you're okay with dealing with the risk, what you then wanna do is, is focus on how you can make up for the deficit that you have.

So, the deficit that you'll have is you'll have a low lifetime customer value, because your clients aren't seeing you, they don't have a long lifetime with you, right? They don't, they don't stick with you for a very long time. And so what you wanna do is, is you wanna make sure that you are maximizing the value of every single client that you have. Your clients are only gonna see you, like once, twice or three times over a short period amount of time.

You wanna get the most out of them as you possibly can. That would be a big important thing that I would be focusing on if I was running this type of business. So, we have LTV. As a reminder, the total amount of money that a client spends with you during their time as your cu- as your customer, and it's important because without regular high frequency clients, you miss out on long-term income.

This is how we can increase LTV for this particular model, is upselling with smaller services. So if you can get somebody to come back and see you for haircuts or you can get them to come back and see you for toners after, you know, your large initial project, then although they're gonna be smaller ticket, you're gonna create more stability within your business and you're going to be able to increase that lifetime customer value. And then of course, focusing on retail sales and add-ons, right? So when you are, when you have that person in your chair, you are selling them retail, you are selling them add-ons on top of the things that you need to do to do in cle- ih- uh, to complete the project, so that way you can make more money.

And just because they don't come to see you for appointments anymore doesn't mean that you can't still sell them retail for years after they never see you again, which is where having a online retail service through your brand or through your product or through your distributor would be really great. I have plenty of clients who don't see me anymore because I've moved two hours away from them, but they fall in love with my brand and they still respect my advice as far as products go. And so they just, it's super passive for me. I barely do anything and they still order from my online store and I don't do shit.

Right? So that will furthermore increase that lifetime customer value, although this person doesn't see you for appointments anymore. Right? And then the KPIs that I'd be focusing on for setting goals, because we're not gonna be re- really looking at your new client retention rate as something that we should set goals for and set focuses for...

We should be looking at how many public reviews do you get per new client, right? So like, like I said, get everything that you possibly can out of this client if they're only gonna see you once or for a short period of time, and a review is something that would be massively valuable, so you might as well try your best and make it a goal that you set for yourself and that you track to get at least one review out of every single client that you have. And then, of course, tracking your retail sales and add-ons separately per- per client as well too. So the question becomes not, uh, "My new client retention rate's gonna be low, so my business is failing," and I'm not saying that's what anybody said or that's what you said, Kelly, but I think it's just a good example of, like, if you ever hear somebody talk about, like, your new client retention rate should be this or your business is dying or whatever it may be, like, that may not be relevant to you because you have a unique business with unique circumstances and nuances, and that is okay.

And there's other ways such as focusing on how can we increase the LTV to make it so you're making the most out of what you have and you're mitigating risk because you're able to make more money and save it for the long run, et cetera, et cetera. So the central question becomes, how do you maximize how much this person spends and benefits you ethically? And I say ethically because we don't wanna just bullshit this person obviously and say, like, "You have to come see me every- for- for- every four weeks or else your hair is gonna fall out." You know, that's just, like, evil and none of us would do that.

But we can maximize how much this person spends and benefits you in many ways. How can I get this client to spend as much po- as possible in the short amount of time that they're with me? How can I grow the business in other ways with this client besides revenue such as getting a review out of this person? And how can I extend their lifetime as a paying client overall, so having them purchase retail from you even after they don't come see you for appointments?

Yeah, um, what my biggest takeaway is the reviews because I have a hard time getting reviews and I need to listen to that again, and I really need to 'cause I have so many that... I mean, and I get a ton from Google and, um, it's been good so far, but you're right and all of this is so helpful. Yeah. The reviews, that's the thing- Yeah.

to work on. And Mei put something else in the comments that was really good too is, like, also the content, right? So it's, like, y- you maximize the amount... I mean, this goes for anybody regardless of your business model, like, how, uh, maximize the value that you can get out of every single client that you have in all the ways, not just revenue, right?

So I love that takeaway, Kelly. Thank you. Georgiana, go ahead. Hi, yeah, my, um, big takeaway, and thank you so much for this, was to look at it as sort of segmenting into the higher maintenance and lower maintenance groups because I do a lot of color, but my other specialty or focus, prob- perhaps the bigger one, is texture services which are like a three to six-month, uh, turnaround.

So I was kind of looking at it as an average, and I think it will really help to just kind of do them separately, so that was my big takeaway from that. Thank you. Yes, huge agree. Like I said to you guys, like, if you ever got a one-to-one coaching call with me and you're like, "All right, I think I'm ready for a price increase.

What should my price increase be?" and we're, like, taking into consideration these decisions, or, you know, "I wanna stop working Saturdays," whatever it may be, understanding your new client retention rate is so important and helpful for making that decision and the- the decisions that we'll be making within that decision, right? And so having that a- more accurate number by splitting up the groups and calculating them differently will be massively insightful because I've had some people run these numbers and their average frequency of visit have... They have it all across the board and then- Mm-hmm.

their new cli- uh, and then their new client retention, uh, percentage looks a lot lower because they have all these clients who come and, who- who- have, uh, who stretch out appointments so much, right, so that it makes it look lower than it actually is. And that's why I have the calculator, so that way you guys can go in here and it'll take into consideration those nuances and then it'll give you a more accurate percentage. Here is my tea. I'm gonna st- I will say this all the time is that ag- like, again, like, I wanna emphasize that the message of this that I want everybody here to understand is that I don't want you to compare your numbers to your neighbor because your neighbor has such different circumstances than you.

I want you to set your own baseline and your own goals. What I will say is that I like to see a new client retention average of 50%. I like to see that per two clients, per two new clients that you have, that you retain at least one. I like that, personally.

But every business is different such as this one where it's like, we're not even gonna look at the new client retention average, right, because it's- it's just not gonna make any... It's not gonna be helpful for us. Michelle, go ahead. Okay, I haven't had a chance to do KPIs but I go- do go through my Squares stuff.

How is that different, Square, with how I do it now ? I was like, "Did I... I lost so many people." So I'm excited to go back through there and go, "Okay, what really happened?"

Got it. 'Cause it did not make sense in Square. A lot of the time, particularly with retention numbers, you cannot rely on your booking system's summary of what that looks like. They're gonna come up with whatever calculation or formula that they're gonna come up with for that.

You don't even know what that formula is, right? So what I'd rather you do is use my tool where I make it easy for you and then you understand, like, what is actually... what the nuances of this conversation are, right, and you're also getting it from me who understands the nature of your business, you know? So don't listen to your booking system.

You guys know we're getting a huge facelift in MSM this year. I'm giving you guys brand new curriculum, all the things, and you guys are gonna get a lot of really cool shit. But for now, we do have a tracking your KPIs master class and that has, like, a whole s- sheet in there, um, and it also talks about these num- numbers in general in a little bit more of a in-depth way, um, and that's a great way to track it, and then, like I said, we have the new client retention calculator and you can find that under bonus content, and we have a tutorial for it.

End of transcript. © 2025 Hunter Donia LLC.