By Megan Knoll, Grand Valley State University

Many salon owners think they know who their best customers are, but the facts may surprise you. More companies in every sector are using business intelligence to get a complete image of who their most valuable customers are.

Business intelligence (BI) is a term that has become a hot topic in most boardrooms, and it is defined as the ability to take collected data and use it to make powerful decisions. Of course, all businesses today are looking to make solid decisions that help them beat the competitors, stay in business, cut costs and even compete on the global platform.

Recently, we have seen them target customers with coupons based on their purchase history (you have bought milk from me before, here is a coupon to do it again), and coupons based on their current purchases (you bought milk from me, here is a coupon for cookies to enjoy with your milk). They have even started to offer coupons based on your competitor purchasing history (you have looked at or purchased milk from another store, here is a super coupon to buy milk from me). With the amount of data companies capture on a daily basis, there are endless ways to manipulate it.

Most salons will not have access to the amount of data that a large retailer does. However, salons can take the same concepts and leverage them in their salons. To get started, a salon will need to capture data: frequency, gender, purchase history, address, zip code, etc. Most salon management software is already capturing the data and is ready for your use. Some very lucky salon owners might even find that their salon management software package includes BI tools. However, if you find that only the data is available, you can download the data to an Excel spreadsheet for manipulation. This process may be time consuming, but the long-term benefits could mean increased profits, higher customer loyalty, and more return customers.

Here are some examples to get you started in your BI exploration:

Best Customers – The question of who your best customers are is an important one. You may identify your top customers by the total of their purchase history and reward them with priority bed times or free use of lotions. Don’t forget to let the data tell you who these customers are: You may find that infrequent customers actually spend more than your regulars. If that is the case, it is even more important to treat them special.

Extended Best Customers – Once you have identified whom those top customers are, look at the purchase history of those customers.  On what items are they spending their money?  Do they buy bed time per visit? If they are already participating in a yearly membership, why not enroll them in a lotion program where they automatically buy/receive a new bottle of their favorite lotion every two months?

Zip Code Marketing – Identifying where your customers come from can help you decide where to market. If you live in an area with multiple zip codes this can help you tremendously. Target where you place ads, have billboard signs and where you send your direct mail. A zip code with a college campus means many of your customers leave for the summer. Why not try a seasonal package for those customers and focus your marketing effort on the school months?

Frequency Clubs – Some salons already have frequency or VIP clubs, but BI can help you take the idea to the next level. Many VIP clubs have tiers, which offer better privileges to the top members. You can use BI to section customers into the tiers, you may also want to offer customers the option to buy into the next tier. Many customers will jump at the chance to buy into the top level to receive the extra special treatment.

The concept of BI is rooted in the way we do business today, and will only get more advanced. Make sure your business stays ahead of the competition by utilizing all the tools at your disposal.