It sounds to me like you have given her excellent advice and I repeat that she is lucky to have you as a client. And she must be talented too, as I suppose she must be partly responsible for your LinkedIn-profile photo (I hope you will forgive me for making this subtle compliment here).
In most of the world, a beauty salon is not so complicated to run if you have some starting capital and some good-will to build on. I do not know much about managing beauty salons in Venice. But although I suspect, with the limited knowledge I have about Greater L.A., that that line of business around those parts is a “mature market”, I am sure that with some guidance she would have no problem. But location is Paramount – as always.

The best of luck to her

Ulrik

Thank you again for your follow up comments. As a matter of fact, she was considering buying the salon she is currently working in with the help of an investor-friend (a bank would not consider it, I’m sure). The issues that I raised for her is that the foot traffic of the current salon may make it not a good investment, as well as, she doesn’t have the experience running a business, so would need a great deal of training and hand-holding by a consultant (or her investor-friend) for at least the first 6-12 months. I would like to see her gain more experience with her current business and with marketing before she makes such a leap.

Rebekah

I agree with Nigel that for any LCV-analysis to be useful the metrics must be as accurate as possible. I do not see how that could be different – although there are degrees to the magnitude of the potential mistakes to be made. In banking for instance, where the ratio between the interest margin and the loss rate of any given customer segment can be very small, an LCV-analysis is more sensitive to data accuracy.
It is true that the purpose of this type of analysis is to look ahead and not backwards, and therefore excessive attention to details might take our focus away from the opportunities.
But to really make a difference for her, I believe we must try to look beyond the LCV of Sondra’s customers, and look at the properties (details) of her business. Chitraguptas mentions rebranding. It seems to me that Sondra’s brand is her skill, her personality, her relationship with her clients, and her location. Although it seems that she values her freedom, she should perhaps consider increasing her commitment a bit. My suggestion would be to talk to the bank about buying a stake in a salon with a good location. This would make her much more “tangible” for her clients, as she would be easier to see and easier to contact. It would even allow her to keep a staff, and then her profits would no longer depend solely on her own “scissors-time”. And she could take a vacation with less fear of her customers making relationships with other hair stylists while she is away.

I think it is important not to get too bogged down in details U.B.

I see this as a great example that can be expanded and amended for your own personal situation (thanks Rebekah for the links through to the relevant calculators as well). Thinking about different ways of improving retention rates, average spend or frequency are all important, but this is an exercise in finding the results which will give you something to build on and not the solutions.

You need to find the right metrics and measure them accurately before you can really move on and plan for the future. In this example, finding out your lifetime customer value gives you a good idea of how much you can spend on customer acquisition and retention.

Thank you for your comments. It is not her salon, she’s renting a chair. She has a car and does make herself available in the evenings. I do agree with you that she may want to consider renting another chair in an area with greater foot traffic. That is one of the problems.

Best,
Rebekah

It is not 100% clear to me if she has her own salon. But since you are describing how her clients are “coming in”, I assume she has some sort of fixed location which is her base of operations.

Travelling to her clients, she will be wasting a lot of time on the bus. Perhaps she should rather considder how alternative business hours could be applied to her business. For instance, she could open for one or two nights a week. Then she could explore the possibility of charging higher prices from working customers instead of giving discounts to unemployed costumers as you suggest.

Moving her salon to a “high street” area would most likely increase her fixed costs, but might improve visibility and might also increase the number of spontaneous clients, thus decreasing acquisition costs.

Good luck to both of you