7 Key Actions That Will Improve Your Salon or Spa Profitability Immediately

Take action with proft coaching for your salon or spa

by Pam Stellema

in Business Development, Customer Management, Financial Management, News, Salon Marketing, Staff Management

When the going gets tough….the tough get going!

Is it time for you to “get going” in your business?

It is not uncommon for salon owners to sit back for too long when business drops off, just waiting to see what will happen and hoping for the best. This is what I call the “Emu Technique of Business Management” and not what I would consider a great survival strategy!

When your business suffers a slump, whether it be a new competitor opening up in your area, losing a key staff member or a general economic downturn, it’s vital to take the bull by the horns and take action.

You must become more proactive and take responsibility for making the changes needed to turn your salon into the thriving business you want it to become.

Because many salon owners are presently working so hard in their businesses, they often do not make the time to evaluate how they can identify problem areas and take strategic actions to improve their situation.

Here are some suggested actions that you can take that will help you to get started on improving your profitability today.

Action 1

Get more clients into your Salon. Now is the time to become more proactive about building your client base. If you are one of the many salon owners who passively acknowledge the odd client referral with a thank you letter or freebie service, it’s time to rethink your strategy. This will only bring you a trickle of new clients at best.

Here’s how to do it…
• Referral Program. Start thinking about how you can develop an active client referral program that will generate new clients straight away. It is quite reasonable to ask your existing clients to refer a friend to your salon especially if you are prepared to reward them for doing so.
• Joint Venture. Joint Venture programs allow you to tap into the client databases of other businesses. For salons and spas there are opportunities with local hairdressers, gyms or any other businesses that share the same target market.
Get known in the local community. Look for opportunities to get out into the community and speak. This is a great way to get known locally and introduce your salon to prospective clients.
Run a “Bring a Friend” promotion. This is a great promotion to help build client numbers. By asking your clients to bring a friend along at their next visit you are getting the opportunity to gain new clients. Make it worthwhile for your clients to participate and remember that this promotion is about building numbers initially not making big profits. Profits will come from servicing the new clients you have made from your promotion
• Do some local advertising. Don’t bother with advertising that is outside a 5-kilometre radius around your salon. Look for local opportunities, always make a special offer, use your most popular services that hold retailing opportunities and if your advertising is in the print media, ask for some free editorial to go with it.

Action 2

Retain your existing clients. At the present, most people are in “value for money” mode including your clients! By ignoring this fact you may be running the risk of losing them to other salons that are hungry for new clients. Every service that you are offering in your salon must represent great value for money to your clients if you are looking for client retention. Given that retention is 91% cheaper than new client attraction, this is definitely important to your bottom line.

Here’s how to do it…
• Don’t start a local discounting war. This has serious long-term repercussions so instead look for ways to “value add” to your services.
• Value add. This means giving something that has a perceived value to your clients but does not cost you a great deal in either time or money to provide.
• Be genuine. It is not difficult to value add but ensure that the value is “genuine”. Savvy clients can smell a fake benefit a mile away and this will reduce your ongoing credibility (forget the “Sensuous Hawaiian Hand Massage normally valued at $20” – clients can see straight through this kind of offer).
• Bring suppliers on board. Ask your suppliers if they are willing to provide free gifts to your clients for promotional purposes.
• Stay in touch with your clients. Remind them that you are still there, offer them some free useful information and always give them a good reason to come back to you rather than try the new salon down the road.

Action 3

Train your staff to up-sell services to your clients. This is so simple and straightforward that you will wonder why you haven’t been tapping into this extra resource before. If you are not up-selling services you are missing out on some serious extra income.

Here’s how to do it…
• Train your employees. Show them how to offer your clients extra services when taking a booking.
• Review client history. If you have a computerised client system, you can generally tap into a client’s history with ease whilst you are on the phone to her to see what she has had in the past and may be due to have again. As an example, a client coming in for a bikini wax may also be due for a lash tint and brow shape. Most clients have had more than one type of service in your salon, so do your homework and find out what extra she may have if it is offered to her.
• Find the complimentary service. Nearly every service your salon offers has another service that will compliment it and all you have to do is identify what those complimentary services are and suggest them to your clients.
• Set a goal for your staff. Ask them to add at least one extra service to every appointment booked and reward them when they achieve it.

Action 4

Step up your retail sales. Retail sales are 2 to 3 times more profitable to your salon than providing services. Because of this, you cannot afford to simply do treatments without a serious attempt to add retail at the end. Most therapists are not comfortable with the retailing process but if given the right training and motivation, will generally take it on board.

Here’s how to do it…
• Communicate the “why” of retailing. Ensure your staff know why retailing is so important to your business (especially how it will affect them)
• Provide retail training. Make certain that they have the training that they need to build their retailing skills.
• Set targets and rewards. Do this either individually or as a group for achieving their goals.
• Monitor and measure their performance regularly. Remember, if they think you don’t care, why should they?

Action 5

Teach your staff how to re-book and pre-book their clients consistently. If you are not re-booking your clients you will be costing yourself a great deal of money. Not only is re-booking a sure fire way to fill those gaps in your appointment book for the coming months but it can increase your appointment numbers by up to 50%. Obviously, this is a very worthwhile skill to teach your team.

Here’s how to do it…
• Create a re-booking strategy. Make sure it includes a great script and train your staff in how to use it effectively.
• Offer to re-book every client. That means EVERY client should be offered a re-booking and given a written appointment card before they leave.
• Make your therapist responsible for client re-booking rather than your receptionist. After all, it is the therapist who has built the rapport with the clients and therefore much more likely to achieve a successful re-booking.
• Set re-booking goals for each therapist. Monitor and measure their performance regularly and reward them for great performance.

Action 6

Run a cost reduction program for your salon. How much of your hard earned money gets wasted through lack of attention to detail or just plain wastage by your staff? Every cent that is wasted in your business comes straight from your bottom line so it is important to make sure your money is not simply slipping through your fingers.

Here’s how to do it…
• Reduce phone, bank and credit card charges. Contact all of your suppliers and ask them how you can reduce your costs with them. It is amazing how much you can save using this easy process as all suppliers are fighting to retain their customers at present.
• Reduce staff costs through more effective rostering. Each team member should be involved in delivering services for at least 80% of the time that they are rostered on. Check your roster and see where you need to reduce hours to be more cost effective.
• Negotiate a better buying deal with your suppliers. Ring your suppliers and ask them how you can purchase at a better price. They may have specials buying deals you were not aware of that could be saving you money. Now is the time to be comparing costs from other suppliers as there are good savings to be made as they are also trying to keep their businesses moving.
• Reduce your freight costs. Ask your suppliers how you can get your stock freight free. Often times, by consolidating your orders and purchasing more cleverly, you can avoid the dreaded and costly freight charges that eat into your profitability.
• Check all incoming invoices thoroughly. Do this to ensure there has been no increase in costs that you are not aware of and therefore not passing on to clients. Often, prices will simply creep up on items without you noticing them especially for consumables in your salon. Always monitor pricing as when your costs start to increase, you may need to pass these additional expenses along to clients with respect to your service pricing.
• Review and reduce excessive stock holdings. Picture the stock on your shelves as being the dollars they represent. It’s usually a lot more than it needs to be. Look carefully at what parts of your inventory are moving and what are not. Only stock fast moving items in any kind of quantity to ensure that you are getting a regular turnover on every stock item. If a product simply does not sell in your salon, consider getting rid of it as it is just taking up valuable retail space that could be used more effectively by a higher turnover item.
• Teach therapists to minimise wastage in your salon. Therapists can be extremely wasteful with consumables and product in the treatment room where you cannot see what is happening. Most treatments are costing you literally twice what the suppliers tell you because of staff wastage. This is totally avoidable by ensuring your therapists know what excessive product usage is costing you and your salon. Ensure that your procedures book outlines exactly the amount of products needed to do each treatment and retrain your staff in the correct quantity of product you allow for in each treatment.
• Eliminate or minimise any unnecessary expenses. What are you currently paying outside people to do for you that could be done by your staff? I am always amazed to see $ amounts shown in the monthly figures for window cleaning and the like in salons that are barely scraping by financially. Take a look at your expenses to see how you can do more in-house to reduce unnecessary expenses during tough economic times.
• Negotiate with your landlord for a short term rent reduction. Good tenants are like gold at present and landlords do not want to lose them. This gives you a unique opportunity to renegotiate your rent with your landlord. If they are not willing to reduce your rent on a permanent basis, ask them if they would be prepared to adjust your rent down for the next 12 months so that you can stay in business. Don’t give up on the first try as an empty shop is not easy to re-tenant at present.

There are numerous ways to reduce costs in your salon. Look around and start on reducing your costs today.

Action 7

Stay positive! Think positive, talk positive and act in a positive manner. This is one of the most important things you can do to keep your salon thriving. Your clients and staff hear plenty of negative talk on the news and in the papers and they definitely don’t want or need to hear it in the salon.

Here’s how to do it…
• Encourage your staff to smile and laugh often. Laughter is free and contagious and will put a smile on the face of your clients as well.
• Compliment your staff on their positive behaviour at the end of the day. Everyone likes to know their hard work and enthusiasm has been noticed and appreciated
• Make your salon somewhere that people feel great. Do this and they will keep coming back! Negative statements never produce positive actions or outcomes.
• Avoid the doom and gloom talk. Don’t focus on how tough things are getting and don’t be tempted to indulge in lectures and blame allocation.
• Become the person you want others to be. Your team will follow your lead

Most problems never go away by themselves. Instead, they respond to affirmative action based on sound analysis of your business. Make time over the next week to sit back and look at your business thoroughly. Look for the things that you are doing right and ask yourself how you can maximise them and also look for the things that you are doing wrong and determine ways to change and improve them. By taking this time out and doing this kind of evaluation of your business, you are much more likely to make good decisions that will lead to increased profitably in your salon.

Pam Stellema
Join me

Pam Stellema

Pam is an industry experienced coach, salon owner, speaker, author and copywriter.She works beside salon and spa owners to show them how to effectively grow their profits and remain in business for the long-term.
Pam Stellema
Join me

{ 3 comments… read them below or add one }

mark pabbathi

Great information.

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annabelle

can anyone help me with this question?:)

name 6 way we can access information on the hairdressing industry?

Reply

Pam Stellema

What kind of information are you looking for Annabelle. Much of the information that applies to beauty salons and spas also applies to the hairdressing industry – even awards and conditions. Business management, staff management, marketing, customer service are all much the same. Is there a particular part of the industry you need more information about?

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