Why beauty memberships beat credit-based systems
As beauty memberships become increasingly popular, we often hear from clinic and salon owners asking how best to track client payments as they accumulate into credit for treatments. This is a common misconception about how memberships work, so let's explore the key differences between membership and credit-based systems.
Understanding the difference
Beauty memberships are changing how clients access and pay for treatments. Unlike credit systems where payments build up for later use, memberships work like your Netflix subscription or gym membership - providing ongoing access to specified services.
How memberships work
- Regular affordable payments (weekly, fortnightly, or monthly)
- A treatment plan with prescribed intervals between treatments
- Extra perks like priority booking and product discounts
- Access during the term of the membership
How credit systems work
- Payments accumulate into a redeemable balance
- Clients book when they choose to use credits
- Manual tracking of remaining balances required
- Credits carry forward until used
The impact on your business
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Credit system risks
- Financial liability from unused credits sitting on your books (that negatively impacts your business valuation and ability to get a bank loan)
- Cash flow challenges when multiple clients redeem at once
- Complex accounting and tracking requirements
- Difficulty forecasting revenue and scheduling staff
- Risk of credits being used during peak periods and impacting cashflow
- Potential legal issues around expired credits
- Administrative burden of tracking and reporting
Membership benefits
- Predictable, reliable monthly revenue (that helps your business valuation and ability to get a bank loan)
- Even distribution of appointments
- No liability from accumulated credits
- Simplified accounting and reporting
- Clear capacity planning and staff scheduling
- Automated payment processing
- Better cash flow forecasting
The client experience
With credit systems
Pros:
- Flexibility to book when desired
- Can save credits for later use
Cons:
- Risk of forgetting to use credits
- Potential stress about expiry dates
- May miss out on regular treatment benefits
With memberships
Pros:
- Affordable regular payments
- Guaranteed regular appointment slots
- Consistent results from regular treatments
- VIP perks and priority booking
- No need to track credits or expiry dates
- Better treatment outcomes through consistency
Cons:
- Less flexibility in appointment timing
- Commitment to regular treatments required
The membership formula
- Create personalised treatment plans that will help clients achieve optimal results
- Define the treatment regularity
- Offer flexible payment schedules
- Include perks that are exclusive to your members
- Use aglow to automate everything
The bottom line
Beauty memberships aren't about accumulating credit - they're about creating a sustainable way to deliver regular treatments. While credit systems might seem simpler at first, they create unnecessary complexity and risk for your business. Memberships offer a more sustainable approach that benefits both your business and your clients.
By moving beyond credit-based systems to memberships, you're not just changing how clients pay - you're transforming how they experience and value your services.
