Increasing Profit | The Coaching Hub by SalonSavy

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

by Pam Stellema | Apr 17, 2013 | Increasing Profit, Salon and Spa Business Performance, Salon and Spa Marketing, Staff Management, Recruitment and Retention

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. [starbox]

7 Simple Things You Can Do To Build A More Successful Spa Business

by Pam Stellema | Jan 8, 2013 | Increasing Profit, Leadership and Personal Well-being, Salon and Spa Business Performance, Salon and Spa Marketing

‘1. Stop discounting.

Discounting your products and services will almost always lead you down the road to financial stress.

I know you have most likely heard and read this message many times over from a variety of sources, and yet it continues to happen in most salons.

It may seem like a good short-term solution to get money in the door and boost your bank balance temporarily, but gaining those few extra dollars in the short-term may have a long-term detrimental impact on your business.

Once offered at a discounted price, the integrity of your services becomes damaged permanently.

Clients will wait for the services that they used to pay full price for, to be offered again at a discount rate before purchasing from you, and will begin to look elsewhere if you don’t keep those discounts coming.

Discounting reduces the true value of your services in the eyes of your clients.

Discounting makes you look desperate for business.

Is this really the message you want your customers to receive from you? If not, don’t discount – value-add instead.

Unless you are a whiz at maths, discounting will often cause you to lose money and lots of it.

When is the last time you costed your services properly to determine how much profit you are actually making?

If you haven’t done it lately (or have never done it), do it now.

You may be shocked to learn that you are already barely breaking even given what your costs really are.

Tip: When calculating your products costs within a service, I suggest you double the costs provided by your suppliers. You would be shocked to know just how much excess product your team use in the treatment room or even worse, flush down the sink at the end of a treatment.

2. Start value-adding.

Instead of throwing money away by offering business destroying discounts, try value adding to your services when doing promotions or creating new packages.

The secret to successful value-adding lies in what you actually “add”. Unfortunately, when done badly, this can backfire on your business and damage the rapport you have built with your clients.

For instance, just recently I received a flyer from one of my local salons offering me and “Incredible” $180 dollars worth of services for just $79.

WOW, that sounded like an offer not to be missed, but when I checked out what was really on offer, I found that all that I was getting was a complimentary hand massage, head massage, and “special mask” treatment.

In actual fact, all of these things were included in their regular treatment and I knew it.

Bad promotion.

Now I feel cheated and lied to.

Don’t treat your clients like they are fools.

If you are going to value add, make it genuine and use the opportunity to introduce your clients to something new or not well known on your service menu, that they will enjoy and perhaps try again.

3. Freshen up – re-invent and re-package your services.

Freshen up your service menu and create renewed interest from your clients.

How long have you been using the same old treatment and package names on your menu? Clients like to see something fresh along with their old favourites. This gives the impression of staying up to date within the industry.

So this is your opportunity to bring some zing into your salon by making your old and tired services look and sound more appealing.

Ask yourself this question when setting out to re-invent your menu.” What message would I like my clients to receive when they read my service menu”?

Where do you start?

First, consider how you want your clients to think of you.

Are you remedial, relaxing, holistic or something else altogether?

Once you have made your decision about what your message should be, you have established the basis of how you want your salon and your services to be perceived and named.

Remember when you are thinking of renaming your services, keep in mind that you should be selling the benefits that the client will receive, not the ingredient listing in the products you will be using.

Nothing sounds worse or less appealing to a client than a treatment called “The Hydroxy Acid Peel”.

The clients are much more interested in what the service will do for them, rather than what products are in it.

Much better to go with something like “Skin Renewal Treatment”.

This describes the benefits much more accurately for your clients and they are not left guessing if they have chosen the right treatment.

Tip: If you are hanging on to old prices and outdated services because you still have a ton of services menus that you had printed cheaply, it’s time to throw them in the bin. They are simply costing you money and retarding business growth.

4. Get rid of the ‘minis’ on your menu.

After looking through many salon service menus, I am always amazed to see treatments labelled with Mini, Petite, or Express.

Are these the treatments that you really want your clients choosing from your menu?

Not only is it nearly impossible to get the desired outcome from a mini anything service, but you are encouraging your clients to start at the bottom end of your services, both in quality and price and probably never move up from that spot.

My recommendation is that if you really, really have to have these treatments available at all, that you do yourself a major favour and at least take them off your service menu – they do not add to the image of a professional, results driven salon.

Instead, use the additional space you have created to better explain the services you know will produce great results for your clients.

5. Re-invigorate your Pamper Packages.

Pamper packages (as opposed to the bulk purchase of the same services), are often sold as Gift Certificates.

You already know that Gift Certificates can create fantastic income as well as being a great way to gain new clients for your salon.

With this in mind, it is important that the services you package together are appealing to the potential purchasers and make good sense.

Look at what your salon clients love to have most often as pampering style treatments (your hero services) and make these the basis of your newly built packages.

Don’t include services that no one wants (after all, who really wants a bikini wax in their pamper package).

Once you’ve decided what you are going to offer in your newly re-structured package, you need to add the perfect description that will leave your customer no choice but to purchase a Gift Certificate for someone special.

Tip: Pamper packages never need to be discounted. Think about using the ‘Value Add” philosophy instead. The client who buys a Gift Certificate from you is looking to spoil someone they love, and what they really want from you is to be sure that the recipient of the certificate is going to be pampered and treated like a VIP.

6. Market your salon or spa to those who are interested.

Many salon owners find marketing to be one of their biggest challenges and often confuse advertising with marketing.

They are not the same thing.

Marketing encompasses all of the things that you do to promote your unique message to existing and potential clients and only a relatively small portion of that is your advertising.

There are many things you can do to market your salon without spending an arm or leg in advertising and the best place to start is with your own database.

Using the contacts that you already have, assures you that you are targeting people who have proven to you that they are interested in what you have to offer.

After all, they have already done business with you at least once.

Referral and loyalty programs for your salon are both tried and tested ways to retain existing clients as well as attract the right kind of new clients to your salon.

Too many salons spend a small fortune on trying to attract new clients into their salon, whereas it is much more cost effective to retain the clients they have already attracted and to reactivate clients who have strayed away.

When you stay in touch with your existing clients on a regular basis through newsletters (email or snail mail), remember their birthdays, thank them for their referrals and offer them special incentives, your clients will be more likely to feel a rapport with your salon and less likely to look elsewhere for their beauty needs.

Marketing is also about the consistency and quality of the services you and your staff provide, so don’t neglect this essential aspect of your business.

Remember, everything you do contributes to your marketing message, so take the time to re-evaluate all aspects of your business to ensure that your salon is as appealing to your existing and potential customers as possible.

Tip: Why not consider a team meeting where your staff can put forward ideas on ways to improve your business. After all, they are the ones working with your clients each and every day and will be those hearing what your clients are asking for.

7. Start a professional development program for you and your team.

When you spend money on professional development you are making an investment in the success of your business.

The very best place to begin your team’s professional development program is in your own salon.

Every team member needs to have their procedures reviewed regularly to ensure that they are delivering the same high standard of work as you trained them in when they started working in your salon (you did train them didn’t you?)

Consistently delivered services are essential to client retention.

As each new team member comes on board you must ensure that they are trained in your preferred techniques and products before they even treat their first client.

You must then review all of your team regularly to ensure that they have not let any bad old habits creep back into their routines.

By creating your own procedure manual for services, you will ensure that each team member has the knowledge that they need at their fingertips that will allow them to deliver a consistent service to your clients.

Every new team member deserves, at the very least, to be provided with full training on the services your salon provides so that they can work to the very highest level of performance.

Once you have your service training in place, consider moving on to training your team in essential areas such as customer service, client re-booking and customer friendly product recommendation.

This is where the services of a good industry trainer or experienced business coach may be useful to you. Often this type of training is better received by your team from an ‘outsider”.

Not just your team need professional development though.

If you are great at what you do as a therapist, but not so great at running the business side of things, invest in some quality business guidance for yourself.

This can make all the difference between making a success of your business or going broke.

To run a successful business is a skill that needs to be learned, so make sure that you don’t neglect this in your own personal professional development program.

Develop a passion for learning. If you do, you will never cease to grow. Anthony J. D’Angelo

Take 2 Steps Outside your Comfort Zone to Generate Greater Spa Profits

by Pam Stellema | Jul 23, 2012 | Increasing Profit, Salon and Spa Business Performance, Staff Management, Recruitment and Retention

Would you like to make more money and keep more of it?

As a business owner you not only have to pay your bills and therapists on time, but you still have to have enough money left over to invest money back into your business and to take home a worthwhile paycheck for yourself.

I’ve yet to meet a salon owner who went into business for herself because she wanted to struggle to make ends meet, or to make less money in her own business than she did working for someone else.

And yet, many salon owners are in exactly that position.

They’re working longer hours, with more stress and worry and making very small profits; if any at all.

Working for yourself should be a rewarding experience.

It should be rewarding as a professional, so you can develop and deliver outstanding treatments to your clients and also rewarding financially so that you can enjoy a better life for yourself and your family.

More stress and less money is definitely not the order of the day!

Because of this, you must master the art of selling to increase not only your turnover but also your profit.

Without the ability to sell, you will struggle to grow your business financially.

But let me be clear – selling is not just retailing product to your clients. It’s the ability to promote yourself, your salon and your services to existing and prospective clients.

To do this effectively, you need to have a “selling” mindset, and more often than not, to move yourself and your team members right out of your comfort zones.

FACT: On the whole, selling is not a popular pastime for many therapists.

They often feel uncomfortable in the role of salesperson, and would undoubtedly prefer to be providing just the services that the client has requested.

This is not unusual or unexpected.

After all, most therapists become therapists so that they can care for and pamper others.

Just gather a group of therapists together and ask them why they chose to get into the profession of beauty therapy, and you’ll learn just how right I am.

The only time I ever see this change happen by itself is when those very same therapists become salon owners and assume responsibility for making ends meet.

No sooner do the first month’s bills arrive than they realise that they have to be able to generate as much money as possible from their business.

This means being able to sell their products and market (another word for sell) themselves successfully.

The mindset transformation begins just about immediately.

This is a good thing if you’re now a salon owner who suddenly understands the importance of not just providing relaxing and pampering services, but of actually making sales…but what about your team of therapists?

What is driving them to have a change of mindset, and a willingness to step outside their “minimal selling” comfort zone?

Step 1: Change the mindset

To break your therapists free of their limiting mindset, it’s vital that they understand how selling additional services and retail can benefit not only the salon but their clients and themselves as well.

Clients who aren’t being offered additional results-driven services and products are actually being denied the opportunity to purchase something that will improve their lives, and give them the outcome that they want to achieve.

A client who isn’t getting their desired results will often begin to look elsewhere to have her services or purchase her home-care products. So how does withholding a beneficial product or service help the client?

Put simply, it doesn’t!

These are five great reasons for therapists to become experts in selling. They will enjoy:

better job security,
happier clients,
greater professional satisfaction,
a less stressful working environment, and often
performance bonus payments.

To do:

Ensure your team of therapists understands the full impact of being able to sell your services and products to their clients.

Hold a team meeting and have your team to discuss ways to improve their selling outcomes.

Have your best salesperson share with the rest of the team how they make selling fun and easy.

Set team and personal targets, and provide an adequate reward if they’re reached.

Make sure that your therapists understand what’s in it for them by becoming an expert in sales.

Schedule regular sales training for your team.

Step 2: Learn the technique

Whether you’re selling a product or selling a service, the same technique applies.

When products are being sold, most people make the mistake of trying to either sell the ingredients (tea tree, AHA’s etc) to their clients and then follow this up with the generic benefits (which I am going to refer to instead as “advantages”).

They cannot be classified as real benefits to the client unless you first understand what it is that the client wants from the product.

For instance, if you have a client that tells you she is concerned with wrinkles; it’s pointless to sell her on a product because it can lighten age spots and has a sunscreen. These things aren’t important to this client.

To get your client’s interest to the point where she will buy, it’s vital to address her real concern, which is wrinkle reduction.

So instead of promoting a moisturiser by saying something like “this moisturiser contains alpha hydroxy acids and an SPF 30, and all my other clients really like it”, you would achieve better results by saying “this moisturiser contains alpha hydroxy acids which can increase the rate of cell turnover, and that means you will see a noticeable reduction in the depth of your wrinkles”.

By defining how the product can address your client’s specific concern, you can move your chances of making a sale from 20% to 90%. The secret lies in knowing what the client’s concern is and then making sure you tell her how your product can improve it.

So simple and yet not done the majority of the time.

So how do you know what your client’s real concerns are? The most straightforward way to achieve this is to ask relevant questions that will allow you to identify them. You are then able to focus on talking about the benefits that they are most interested in receiving.

By simply talking to your clients and asking them questions that are centred around their concerns, you’ll quickly discover what matters most to them.

Selling services uses the same technique.

For instance, you may sell a wonderful facial which has numerous generic benefits. It may be hydrating, it may be relaxing, it may be anti-aging, and it may also be firming. All in all, lots of benefits to be had.

But by knowing which of these benefits your clients want to receive, you are able to “sell” this service to them much more successfully.

This is where the consultation process is invaluable in finding out what you need to know.

I am a great advocate of the brief consultation even for a returning client.

This kind of consultation doesn’t have to be as formal or lengthy as the initial consultation, but it does have to be in-depth enough to be able to pinpoint what your clients really want from the treatment.

If you have a client that is stressed to the max and is looking for a de-stressing type of treatment, it would be fairly pointless to talk about how hydrating and firming the particular treatment is that you are recommending.

Many therapists fall into the deadly trap of trying to sell a product or service to a client for all the wrong reasons.

It doesn’t matter to your client if it’s your favourite product/service, or if all you other clients love it.

If it doesn’t meet her particular and special needs, you will probably not make the sale.

To do:

Train your therapists on how to focus on finding out what it is that their clients are looking for by asking great questions before making any recommendations.

Ensure all of your returning clients receive a brief consultation prior to their service

Use the FAB statement which goes like this…

Because this (product or service) contains/involves (feature)
It can (name the advantage)
Which means that (sell the benefit).

Here’s an example:

The client concern is fine lines and loss of elasticity

Because the XYZ facial includes hydration and firming ingredients (feature)

It can plump up and tighten your skin(advantage)

Which means that you will gain a smoother, softer and firmer skin tone after having this treatment. (benefit)

Now you know how to change the mindset and implement the technique. Are you ready to take 2 steps outside your comfort zone to start generating greater profits in your salon today?

Favourite quote:
If we did the things we are capable of, we would astound ourselves. Thomas Edison.

Deciding On The Best Cancellation Policy For Your Salon

by Pam Stellema | Jul 7, 2012 | Increasing Profit, Salon and Spa Business Performance

I’ve been closely following the variety of posts found on the social media pages relating to the many aspects around Salon Cancellation Policies.

What I’ve learned is that there’s no single or absolute solution to fit every business.

However, what I know for sure, is that your salon needs to have its own cancellation policy.

A policy that helps you to avoid those very frustrating late cancellations and no-shows.

A policy that will act as an effective deterrent to your clients, and therefore save you from the financial losses you incur when you’re left with a last-minute gap in your appointment book.

Getting You Cancellation Policy Right

Your policy needs to be worded in a way that’s not offensive to your clients, and yet at the same time is very clear about the outcomes for the client should they offend.

It also needs to be one that you’re happy with and willing to enforce.

Just because the salon down the street has decided what their cancellation policy needs to be, it doesn’t mean you have to have the same if it’s not going to be right for you – and only you can decide that.

Many things need to be considered first before you jump in with both feet, and possibly damage your relationship with your clients.

For example, a sternly worded and heavily enforced policy that demands part payment for late cancellations and full payment for no-shows, might be the perfect policy for that salon owner down the road, but will you be comfortable enough with it to put it up at your reception?

More importantly, are you going to be able to enforce it when the time comes, or is it going to be just a toothless tiger that clients will soon be ignoring?

Don’t get me wrong – I’m 100% in favour of having a cancellation policy in place.

What I’m saying is that it must be right for you and your salon, if it’s to be effective.

You need to consider the two major problems you currently face that demands you implement your cancellation policy and what will be right for you and your clients.

These two problems, of course, are late cancellations and no-shows.

What constitutes a late cancellation to you?

A late cancellation impacts on your salon if you’re unable to fill that spot again and it stays empty.

That means you must first ask yourself ‘How much notice do we require to fill that empty appointment slot?’ If you have the kind of salon that has clients on a waiting list, it may not be a problem at all, however, for other salons, it may be necessary to ask for 24 hours or more cancellation notice so that you have enough time to schedule another client.

Total no-shows, however, are always going to be an expense to your business, and a good cancellation policy will act as a deterrent to this happening.

Next, you have to consider what the penalty to the client will be for the late cancellation or no-show.

Will it be a set dollar amount or a percentage of the value of the appointment?

Either way, many clients won’t like it, and you risk the chance of them going to another salon.

You have to decide whether or not your client is asked to pay up, or whether it’s best to tell her you’ll waive the fee for her.

A first time offence is often waived (after all, who hasn’t missed an appointment at some time), however if you have a client who is a repeat offender, it might be necessary to ask for the payment and expect her to go elsewhere in the future.

Pre-payments

Another option is asking for pre-payment of services.

This is a controversial topic indeed.

When should you ask for prepayments?

Should it be for every service and with every client, for the clients who’ve had several late cancellations or no shows in the past, or perhaps only for certain services that are high in value and time?

I would certainly consider implementing it for clients who are consistent no-showers or late-cancellers.

It most likely also has merit for large party bookings such as bridal parties where you have put aside large amounts of time to cater for their needs.

Clients can be offended when asked to prepay for services or to pay a cancellation fee, and this is why you must consider the ramifications of introducing it into your salon before you jump in and implement this policy.

The one thing I am certain of is that you must have a cancellation policy in place.

You must know how it will impact on your business.

You must be able to live with the outcome and most importantly,

You and your team must be fully prepared before you implement it.

Remember, the majority of salon clients clients are VIP’s and do the right thing and you don’t want to risk tossing them away unnecessarily.

How To Avoid Making These 5 Profit Killing Mistakes in Your Salon.

by Pam Stellema | Apr 24, 2012 | Increasing Profit, Salon and Spa Business Performance, Salon and Spa Marketing

If you are making these mistakes then you don’t need to be, because there are lots of ways to improve the bottom line in your salon. Boiled down to a simple formula, creating greater profitability consists of increasing your revenue and decreasing your expenses. Sounds easy, doesn’t it? But hidden away in this uncomplicated sounding formula, is a minefield of potential mistakes that you could be making. Mistakes that are most probably robbing you of the healthy profit margin you want, need and deserve. Are you making any of these 5 common mistakes that salon owners make every day? Are you letting profit slip through your fingers?

Mistake # 1 Focusing on revenue instead of PROFIT

Remember this – revenue (turnover) and profit are not the same animals. Revenue is simply all the money you take in your business; whereas profit is what is left over after you have paid all the expenses. It is very easy to have an incredibly high revenue, and still run at a loss. Many salon owners have discovered this the hard way. Why does it happen? Well, it is often the result of underestimating what it is REALLY costing you to provide your services. Added to this, many salon owners put together promotions that further erode their profitability but don’t realise it until it’s too late. Let’s face it, if you want to make a profit, you simply have to know what something is costing you to provide before you settle on a selling price. It’s when you take the cost away from the selling price that you have your all-important profit. So, what’s the answer? You need to know for sure that every service and product that you are selling is making you a PROFIT. To know this for sure, you need to consider things like the cost of the labour, the cost of the products and consumables plus the overhead costs of simply keeping your salon doors open. Just guessing won’t cut it. You have to know absolutely so that you are not tricked into thinking that all those extra dollars in your cash register at the end of a busy day are profit dollars.

Mistake # 2 Using your premium services as loss leaders

How many times have you gone straight to your premium services and offered a big fat discount on them when putting together a salon promotion? Yes, it’s just about what every single salon owner does to try and get more clients through the door. And guess what? It usually works – but at what price? Well in the short term you are most likely going to generate extra revenue and that will make you happy for a little while – but it won’t be long before you realise that it came with a financial loss attached to it. In the long term, the cost outweighed the turnover and there was no profit in sight.

Mistake # 3 Holding off on necessary price increases

OK…be honest! When is the last time you had a price increase in your salon? Mmmm, just what I thought. So long ago, you can’t even remember when it was. Am I right? Well, while I hope I am completely wrong, chances are you are just like the majority of salon owners who have held off having a price increase because you feel that times are just too tough for your clients to weather any kind of price increase at the moment. There’s no doubt that times are tough – but not just for your clients. What about you? The truth is that your costs have continued to increase. Most salons have to accept increases in rent, utilities, wages, superannuation, products and much much more. Those salons who do not, or will not, increase their service prices to cover these additional expenses, will find themselves in dire financial trouble. Some will suffer so badly that shutting the doors will become the only option. The fact is, you simply cannot afford to hold off on a fair and reasonable service price increase. The minimum should be at least once per year. Not to do so could send you broke. If you don’t feel comfortable in increasing your prices all at once, divide your menu into 4 segments and increase one segment every 3 months. Continue to do this every year by at least the amount equal to the Consumer Price Index (CPI), and you will at least stay on top of your extra costs.

Mistake # 4 Making client attraction more important than client retention

Salon owners are always trying to work out ways of getting new clients into their salon. And getting new clients is a good thing…as long as it’s not at the expense of losing the ones they already have! It is sometimes quoted that it is 91% cheaper to keep an existing client than to gain a new one. If that is true, you have to wonder why salon owners are not focusing more on doing just that. Perhaps they simply don’t notice all those clients who are slipping silently away. Never to be seen again. Is this what is happening in your salon? Unless you are monitoring this area of your business (client retention and attrition), chances are you could be losing 3 out of every 4 new clients that you are spending a small fortune to try and attract into your salon. On top of that, you may also be losing existing clients who are dissatisfied with the services they have received or the care they have been given. Why should you care as long as you are getting enough new clients to replace lost ones? Well, long term it’s an indisputable fact – existing clients invariably spend more in your salon. They have had time to build rapport with your salon and their favourite team member. They are therefore more likely to have additional services and buy more retail product. They are also the ones who will introduce new clients to your salon. All things considered, long term clients are extremely valuable to you. Salon owners who understand this, spend more time nurturing their existing clients instead of continually focusing on new client attraction. They understand that existing clients are also their best resource when it comes to bringing new clients into their salon. A happy and well serviced existing client can bring in many new clients if given the right incentives to do so. Referrals from existing clients will always be one of the long-term strategies for client attraction, so remember to stay focused on keeping those existing clients happy and singing your praises.

Mistake # 5 Spending too much time working in, instead of on, your business

This one thing is probably the biggest mistake most salon owners make. It’s the very thing that stunts their growth and limits their profitability. Once a salon owner leaves behind being a technician and providing client services, and becomes a business owner; everything changes. Nothing can alter this fact. If everything doesn’t change then they are surely headed for disaster It is impossible to run a business while spending all your time providing client services. If you think of a salon as being like a ship; your will realize one very important thing and that is every ship must have a captain! Without a captain guiding the vessel, making strategic decisions and commanding the crew, there’s a very good chance, that ship will end up on the rocks. The same holds true for a salon. If some well-intentioned person has told you that all it takes is a passion for your craft and lots of hard work to succeed, then you have been misdirected. And badly. The truth is that, you have to be the captain. You have to make the time to guide your salon, lead your crew and make good decisions. You simply can’t do that if you are too busy providing services to clients. If this sounds like you, then you had better rethink what you want from being in business. If your passion is to provide services to clients then it’s time to sell up and work for someone else. However, if your passion is to be a successful Salonpreneur, then it’s time to make time for business management. If you don’t have the skills it takes to do that… get them. Get the guidance of a mentor or coach who can show you how to make more money by looking after less clients. So, how many of these 5 Profit Killing Mistakes are you currently making in your salon and more importantly, what are you planning to do to change things?

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Grow Your Salon Profit With These 5 Simple Strategies

by Pam Stellema | Oct 2, 2011 | Client Attraction and Retention, Increasing Profit, Salon and Spa Business Performance, Salon and Spa Marketing

Do you remember your mother telling you “money doesn’t grow on trees”?

It’s bound to be in your memory somewhere, probably in amongst “wear clean underpants in case you have an accident” and “someday your face will freeze like that“.

Well, like mothers usually are, she was absolutely right!

Money doesn’t magically appear like little green buds on the ends of tree branches, but that doesn’t mean that without a little bit more know how you can’t start growing a whole garden full of profit generating money trees in your salon.

Learning how to generate more profit is actually much more straightforward than you might think, and I’m going to share with you 5 simple business strategies that will fertilise your money tree and put more profit in your pocket.

Strategy # 1 – Attract More Profitable Clients

Before you can start to grow your money tree and make more profit, you need to have the basics in place, and that means knowing how to get more clients to your salon.

Client attraction can be a very expensive exercise so it’s important to do your homework before rushing out and throwing money at random advertising options.

Think about who your ideal clients are (be realistic here), what they want from your salon, and where you are most likely to find them.

One way to attract the kind of clients who want to do business with you is to tap into your current client base and encourage them to refer their friends and family to your salon.

You can do this easily with a simple referral program that rewards both the new client and the existing client.

As well as being effective, this is one of the most economical and easiest ways to build your clientele and therefore your profit.

Strategy # 2 – Keep The Clients You Already Have

Once you get all those lovely new people willing to give your salon a go, it’s absolutely vital to impress the hell out of them and keep them coming back.

It can be up to 91% cheaper to retain a client than get a new one, so making sure that they never want to leave once they are yours is vital to your long-term success.

First impressions are important – we all know that which is why most salons go all out to impress with an in-depth consultation on a client’s first visit.

However, you can’t afford to let your standards slip even after a client has been coming to you for years.

Client loyalty is not as strong as you might think and it only takes one bad experience and your client will be easy prey for your competition.

Every salon visit should be like the first time for your client; with outstanding service, consultation, treatments, and an invitation to return.

Simply meeting client expectations doesn’t create customer loyalty, so you have to devise ways that you and your team can impress the socks off your clients at every visit.

Strategy # 3 – Sell More Profit Generating Services To Every Client

This one is a no-brainer, yet many salons fall into a rut with existing clients.

The mindset becomes “Well, they didn’t want anything extra last time, so they won’t want anything extra this time either“.

Wrong!

The reason many clients move on to a new salon is because they get tired of being taken for granted.

They get the same old service and treatments every time, without being consulted on what changes they may want.

Most people like to try something new now and then, but without spending a little time talking to your clients at every visit, you’ll never get the opportunity to suggest a new salon treatment.

Don’t fall into a rut with your clients.

If you don’t offer them something new to try, they just may mosey on to the competition down the road.

Just imagine what an extra $5 earned from every customer would add up to in profit at the end of the year!

Strategy # 4 – Sell More Retail To Every Customer

There is no such thing as a salon service that doesn’t have a retail product that would make the end result look better or last longer when the client uses it at home.

When your clients are only getting the benefit of professional products when they are in your salon, they’re bound to be disappointed when the results don’t last very long.

Recommending a professional product to use at home is an important part of the solution to fix your client’s problem.

Your clients will be happier with their services when they’re using supporting products that will help them to maintain their great results…and this makes them more loyal to you and your salon.

If you’re not doing it already, try using salon prescription pads with your clients to recommend professional products.

Doing this gives your clients a reason to return, and they are more likely to purchase all the products you have recommended when you have created their personalised prescription for them.

With good retailing practices in your salon, you can substantially increase your profitability. Get your team together, and explore ways you can become better at retailing in your salon.

Strategy # 5 – Keep Your Clients Coming Back

Do you let your clients walk out of your salon without having re-booked them for their next visit?

If you do, you are letting bucket loads of profit slip through your fingers, and it’s totally preventable.

Not only will your clients extend the time between their appointments if you don’t re-book them before they leave, you risk losing a client altogether if she doesn’t have her next appointment locked in.

It’s far more tempting to try out that new salon “just for a change” if she doesn’t already have a commitment to you.

To add to that, clients feel more valued if they are offered a re-booking before they leave.

If you can increase your client’s return rate from just 4 times per year to 5 times per year you can make an enormous impact on your bottom line.

Just think, with an average spend of $55 and 500 regular clients, this would total up to an extra $27500 in your bank account. Now, who wouldn’t like that?

Do the sums for your salon and get prepared for a major surprise.

Start generating more profit in your salon!

So that’s my 5 simple strategies to help you to generate more profit in your salon. It’s not rocket science, and there’s absolutely no reason why you can’t look at ways to implement all of these profit building strategies into your salon straight away.

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