Loss of customers is a common thing for many of the well-known service industries. A person can be satisfied with the work of a particular company for a long time, but then he leaves without explaining the reason. Most companies that have experienced firsthand what a loss of customers is, usually have several shortcomings that negatively affect the number of clients, the frequency of customers’ visits, and, therefore, income. In this article, we’ll discuss the reasons for the loss of clients of the beauty salon and whether it is possible to avoid this or fix the current situation.
How to calculate churn rate if there is a loss of beauty salon clients
Churn is an indicator of the loss of customers, which is expressed in the absence of purchases or payments during a specific period. For several areas, this term cannot be applied (for example, a real estate market), since purchases here are not regular. The churn rate is extremely important for a business built on a subscription and transactional model, that is, associated with recurring payments to the company. This includes banks, telecom operators, SaaS services.
There are three types of churn:
- Natural - occurs due to a change of place of residence, death, changes in needs (for example, goods for children become irrelevant when the baby grows up).
- Motivated - the client prefers the offer of a competitor to the company's services or finds another way to satisfy his need. Let's say a person can refuse cable TV services because they started using subscription content delivery services.
- Hidden - the consumer still uses the services of the company, but their volume and frequency are decreasing. You may provide the best keratin treatment and procedures for heat-damaged hair, yet customers will visit you not that often. This behavior is an indicator that the customer is using competitors' products or buying substitutes.
The basic formula for calculating the loss rate of beauty salon clients is simple:
Customer churn rate = number of lost customers during the time interval/total number of customers at the beginning of the measurement period