Money Matters

VITAL SIGNS: Essential Salon Statistics

Percentages, averages, and ratios may make your head spin, but they’re the fastest, easiest way to keep a finger on the pulse of your salon’s business health. Learn how to run the numbers as well as what they mean.

 

SALON PRODUCTIVITY: X/Y = Z

X = service hours sold

Y = service hours available

Z = salon productivity

How busy are you, really? When calculating productivity, Ducoff cautions counting only the hours available to sell. “You can’t count time marked out on someone’s books,” he explains Troc and Ducoff agree that 85% represents maximum salon productivity and they speculate that the average salon performs at 30% to 40% productivity.

Set realistic goals for growing productivity. “If we’re only at 40% let’s look to hit 50% first.” Ducoff comments. “Seventy to 75% is good and 80% is cranking.”

Take time for a five-minutes staff huddle each morning to discuss the coming day. “Brainstorm beforehand and project if clients would be interested in services you offer,” advises Melinda Minton owner of Minton Business Solutions and a former salon owner. Role-play upselling and cross-referring clients: Suggest manicures to pedicure clients, toenail polish changes to manicure clients, and nail art, a paraffin dip or eyebrow wax to all. Train your front desk staff to do the same to fill openings as they confirm appointments and feld call-and walk-in requests.

Once you’ve maxed out, don’t start looking for a new space just yet. At 80% salon productivity increase your prices to create space for clients willing to pay more. At the same time, calculate the productivity of your current space if every station were staffed full-time. “If you’re open 60 hours a week that’s two, 30 hour shifts per station.,” Troc says.

 

FREQUENCY OF CLIENT VISITS

New clients may be the lifeblood of a salon, but remember that regular clients are both the heart and soul of your business. Are you providing them the level of service they want and need? You might be surprised, says Carder, offering herself as an example.

“My nail tech books me every three weeks, but I really want to come every two weeks because I’m constantly judged on my appearance and I can’t afford to have a nail pop off,” she says. Show staff what it means to their income if each of her regular clients were to come just one more time per year.

“Re-book clients for when you want to see them, “Troc reiterates, “Everyone calls and wants to come in now, and the next appointment typically is in three days. Add those three days up over a year, and you’re losing several visits with just that one client,”

Carder says she visits her nail tech an average of 17 times per year and spends an average of $40 for a fill. “So I’m worth $680 a year in income. If she tuned me one more time, that takes it to $720.” If she converted her to biweekly appointments, Carder’s value jumps to $1,040.

Consider what other services might draw your clients to the salon more frequently. Should some of your two-week fill clients really come every 10 days to keep their nails looking their best? Would others appreciate a polish change between fill appointments to keep their nails looking fresh.

That’s not to say should see dollar signs instead of clients. Rather Carder offers the example to emphasize the good-as-gold value of your regular clientele.

 

CLIENT RETENTION: X/Y = Z

X = number of clients returning in a specified timeframe

Y = total new clients

 Z = client retention rate

Client retention measures how efficiently your salon is growing its customer base and directly correlates to customer satisfaction. There are many ways to measure it: First to second visit, second to third visit, three or more visits, etc., but Ducoff recommends initially simplifying your task by measuring retention from the first to second visit, which historically is the hardest hurdle. “In nails you can consider someone as lost if you haven’t seen them in six weeks,” Minton adds.

The consultants we asked agree that salons average a 30%, 35% new client retention rate. “which means they mange to [alienate] almost seven out of every 10 people who walk through the door,” Ducoff says wryly.

View the salon’s client retention as a measure of the client’s experience “Fifteen percent of success is based on technical ability, while the other 85% is the client experience,” Carder says. In this sense, it’s the little things that count, from sanitation practices to the cleanliness of the bathroom to the kind of cups you serve beverages in. Client retention by service also can reveal techniques in which a person needs additional training.

According to Carder even the newest techs should retain 50% of new clients, while people with one to two years of experience should easily surpass 60%. Minton sets the bar a bit lower, saying her experience shows salons average 40% 45%. Tie client retention to pay increases. Finally, brainstorm as a staff the question of how to bring first-time clients back and don’t stop asking until first-time clients back, and don’t stop asking until first-time client retention his 70%.

 

INDIVIDUAL PRODUCTIVITY: X/Y = Z

Z = individual actual service hours sold

Y - individual maximum potential hours sold

Z = individual productivity (bookings)

OR:

X = total hours worked

Y = average appointment length

Z = individual productivity (speed)

The whole is the sum of its parts, and your techs all have to take part to grow salon productivity. Eighty-five percent productivity equals a full book, and anyone consistently hitting, 80% should increase her prices.

Set a threshold of 80% productivity over a specified period as a criteria for advancing to the next service pricing level. Fear is the greatest hokdback, so run the numbers to show techs that even though they can expect to lose 10% of their clientele, they’ll actually earn more money and have room for further income growth from new clients willing to pay more. By the same token, the salon keeps everyone’s business by transitioning price conscious clients to a more junior tech.

As you evaluate individual productivity, consider appointment lengths. If you have a nail tech who needs 15 minutes more than anyone else to do a fill, explore ways to help her speed up, which in turn will open her book and grow her income. She also may benefit from additional training or a simple boost in confidence.

 

PRE-BOOKING PERCENTAGE: X/Y = Z

X = clients who prebook next appointment

Y = clients serviced

Z = prebooked percentage


Pre-booking is a simple practice that has profound effects on everything from client retention to salon and staff productivity to frequency of client visits. Make clients happy by booking them in at their convenience. Pre-booking also enhances your customer service levels by reducing your call volume. Best of all it’s one of the easiest numbers to grow. All you have to do is ask.  

“Assume the sale,” advises Minton.” Tell the client you’d like to see her in two weeks, then ask if the same day and time fits her schedule.” Troc recommends writing scripts and role-playing between staff members. For example, what should you say if the client isn’t of her schedule?

One way might be to ask her to check her schedule and let her know you’ll call her in a day or two to follow-up-and then follow through with the call. Remind her that you have her interests at heart: Pre-scheduling her next appointment guarantees she’ll get in at her convenience rather than yours. These consultants say most salons should be able to pre-book 75% of their regular clientele.

 

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Keywords:   salon finances  



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