In the spa and skin care business, the squeaky wheel almost always winds up getting the grease. Clients tend to be rewarded for complaining, but that strategy leaves money on the table, according to marketing consultant Betsy Kruger.
“No one likes hearing a complaint, so when a customer complains, they quickly and resoundingly rectify the complaint,” says Kruger, author of Top Market Strategy: Applying the 80/20 Rule. “The problem with this strategy is that disgruntled clients bring in less profit than loyal customers. Instead, your business should focus on gratifying your most profitable customers.”
Contrary to popular opinion, the customer is not always right, Kruger says.
“It’s wrong to reward complainers,” she says. “You should reward loyal customers since they reward your business with higher profit. You should value their business since loyal customers value your business.”
Kruger says the 80/20 rule governs all results, including profits from customers of your spa or skin care business.
“When you sort clients by their profitability, this universal law predicts that the top 20% of your customers will generate 80% of your profit. Conversely, the bottom 80% of your clients will generate only 20% of your profit—and virtually all of your complaints. This means you should target highly profitable clients with a top market strategy.”
Your business can profit from the 80/20 rule by enacting these steps.
- Distinguish your top clients. Realize that your top clients are much more profitable than your other customers. Identify ways the top 20% of your clients differ from others. What characteristics do your top customers have in common?
- Delight highly profitable clients with a top market strategy. Create a marketing strategy that responds to the desires of your top clients. This strategy will retain top customers and attract similar prospects. Focus your resources on converting these prospects into highly profitable new clients.
“Successful spas and skin care salons use a top market strategy,” Kruger remarks. “They treat their most profitable clients as honored guests. Their staff remembers their preferences and inquires about their activities. Top customers trust the staff to keep their secrets confidential. They love being honored, so they recommend them to their friends.
“Sometimes newbies make excessive demands that upset more profitable customers. But successful spas and skin care salons do not acquiesce to these complainers. Instead, their staff refers them to a competitor that can ‘better serve their needs.’ This policy helps these businesses retain and attract more profitable customers,” says Kruger.
When you replace customers with more profitable new clients, the 80/20 rule predicts that your profit from customers will quadruple.
“You may feel it’s rude to consider some customers as less valuable than others, but research proves it’s true,” Kruger says. “The top 20% of your customers magnifies your profit, whereas the bottom 20% of your customers magnifies your complaints.”
“I feel it’s rude to reward complainers since loyal customers deserve to be rewarded. When you prioritize your customers with the 80/20 rule, you are prioritizing your profits,” concludes Kruger.
Betsy Kruger heads Strategic Power, a marketing consultancy committed to empowering world prosperity, one business at a time. She writes articles and helps clients magnify their profits.