How to Calculate Client Retention Rate in Your Salon

Running a salon without tracking client retention is like styling hair blindfolded: you might reach some sort of result, but it won’t measure up to your full potential.

Likewise, it is only by calculating your client retention rate that you can determine whether your salon’s services are effective in retaining clients and uncover areas for growth and improvement.

Stick with us as we discuss why this metric is so important, how to measure it and what is a good client retention rate to aim for.

What is the Client Retention Rate?

Client retention rate is a simple yet powerful metric that shows you how good your salon is at keeping its clients coming back over time. It’s more than just a number, it’s a measure of how well you’re building relationships with your clients and creating an experience they want to have again.

By understanding this number, you can gain insight into whether your salon meets client expectations and fosters loyalty, which are essential for business growth.

Why Measuring Client Retention Rate Matters

Client retention is key to the long-term success of any business. In fact, studies show that about 65% of a company’s revenue typically comes from repeat customers. 

That’s not to say that you shouldn’t be chasing new salon clients at all, but that you should calculate client retention rate to see whether you retain current ones and how to improve their loyalty and repeat visits.

Here are some key reasons why looking into client retention should be a priority for you:

💡 Cost-effective growth

Keeping loyal clients is cheaper than finding new ones. Once they trust your salon, you don’t need to spend as much on marketing efforts to keep them coming back, freeing up your budget to focus on other areas of the business.

💡 Increased earnings

Research shows that loyal clients spend, on average, 67% more than first-time visitors. That’s because they are more likely to book recurring appointments, add-on treatments, and invest in salon-exclusive products.

💡 Referral opportunities

Returning clients tend to recommend your salon to their friends and family. By implementing a salon referral program, you can turn them into brand ambassadors, helping you grow your client base without extra costs.

💡 Reliable revenue

When clients keep coming back, providing a steady flow of income, it makes it easier to plan ahead and focus on growing your salon without worrying about the future being financially unstable.

How to Calculate Client Retention Rate

You can find out what your salon’s client retention rate is in four simple steps:

1. Choose a timeframe

Pick a specific period to look at, like a month, a quarter, or a year. 

One way to go about it is to think about how often your clients usually return for your main services. For example, if most people come in for haircuts every 4-8 weeks, a monthly or quarterly time frame might make more sense.

Remember that consistency is key, meaning you should stick to the same period each time you calculate the client retention rate so you can easily compare data over time and identify trends.

For the sake of this example, let’s go with one month as our timeframe for measuring it.

2. Count total clients

Find out how many clients visited your salon during that period. If you’re using a client management app like Goldie that keeps track of every single person that books an appointment with your salon, this is going to be simple and stress-free.

You can filter appointment data by specific periods, such as a month, to get an accurate count of total clients without manual calculations. Moreover, Goldie also allows you to download custom reports to make it even easier to organize data and calculate the client retention rate.

For instance, let’s say 120 people walked into your salon during the month of October.

3. Identify returning clients 

Next, determine how many of the total clients within that month came back within the following period of time. Since we counted the total number of clients that came in during October, let’s say that we’re looking at how many of them returned by the end of November.

If you’re using Goldie, it’s going to be just as easy as the previous steps because you’ve got a detailed history of each client’s visits, which allows you to see who has returned for additional appointments.

To move further with our example, let’s assume that 80 clients out of the 120 were returning clients.

4. Apply the formula

The formula to calculate client retention rate is pretty simple: divide the number of returning clients by the total clients, then multiply by 100. 

Client Retention Rate = (Returning Clients / Total Clients) × 100

If your salon served 120 clients in October and 80 returned by the end of November. In this case, your formula would look like this:

(80 / 120) × 100 = 66%

Cool, so your client retention rate is 66%. Is that high? Or is it low? How do you interpret the result when it’s your first time crunching the numbers and you’ve got no previous data to go on? Two words: industry benchmarks.

What is a Good Client Retention Rate for Salons?

In the salon world, a good target is 60%–70%. This means that out of every 10 clients, 6 to 7 return for additional services. If you’re hitting this range, it’s a good sign that your salon is providing an experience clients enjoy and want to return to again and again.

If your retention rate falls below this benchmark, it’s not necessarily a red flag, but a sign that you should look closer at how your salon is meeting client expectations. Are your services consistent? Are you making rebooking easy? Do your clients feel valued and appreciated?

Answering questions like these can enhance your client experience and maximize the retention rate, which leads me to my next point.

How to Increase Your Client Retention Rate?

If your client retention rate is lower than expected, you should explore strategies to improve it. Even a small increase in retention can lead to significant boosts in revenue. There are a few different things you could try, including, but not limited to:

Sending rebooking reminders is probably one of the best tools you can use to drive repeat client visits. These reminders can be automated through Goldie, saving you time while keeping your salon top of mind and prompting clients to schedule their next appointment.

Starting a loyalty program is yet another powerful way to encourage clients to return and boost retention. By rewarding clients for their continued business, you create an incentive for them to choose your salon over competitors. 

Using marketing messages to keep clients engaged also plays an important role in building stronger loyalty. Goldie makes it super easy to send tailored promotions and follow-ups based on each client’s preferences and past interactions.

If you’re looking for more actionable tips on getting closer to what is a good client retention rate, we have an entire article dedicated to client retention strategies that can help you raise your metrics.

Best Practices When Calculating the Client Retention Rate

Here are some things that you should keep in mind when you calculate the client retention rate:

💡Track accurate data

Client retention rate calculations depend on accurate data, so missing or misclassified clients can lead to misleading results. Using a booking app like Goldie ensures all appointments are logged correctly, making your numbers precise and trustworthy.

💡Account for seasonal fluctuations

If your salon has busy and slow periods, measure client retention during and outside peak times for a more comprehensive view. You could also compare the results across seasons to identify patterns and adjust your client retention strategies accordingly.

💡Stay consistent

If you want to monitor client retention rate over time, you should stick to the standard formula every time you calculate it. Ideally, you also want to use the same period of time for your calculations (e.g. monthly or quarterly) to ensure that your metrics can be compared.

💡Analyze long-term trends

When you calculate the client retention rate, you might be tempted to focus on short-term numbers, especially if they fluctuate from month to month. However, these may not show the full picture. You should instead track retention rates over several months or years to identify meaningful trends. 

Conclusion

Hopefully, you now have a clear understanding of how to calculate your client retention rate and why it’s such an important metric to track.

Remember that Goldie makes measuring client retention as simple as it can be. You have access to all appointment data in one place and can send automated reminders and personalized messages that will keep your clients engaged and returning regularly.

Start calculating your retention rate today, and take the first step toward a more loyal, engaged client base!