Most economists believe that a recession is either here now or likely to be here before the end of 2023. A recession is when the economy slows down for a significant period of time across all industries. One key indicator to keep an eye on is our gross domestic product and service production. In other words, is the United States manufacturing and delivering paid services—such as beauty industry services—at the same rate, an increased rate, or in the case of a recession, a decreased rate.
Another marker is the consumer price index. This looks at the prices of the things we all buy, such as housing, food, transportation, energy, health care, education, commodities, and the beauty industry would fall into the other expenses category. Has this gone up? Has it gone up significantly? This is tied to inflation and a sign of a looming recession.
The last marker to keep in an eye on in regards to a recession ending is the unemployment rate. In this category, the United States is looking rather good. We are currently sitting at about 3.5%. To put that into perspective, during the Great Depression, unemployment was 25%, during the recession in 1982, it was at 10.8%, and in April of 2020, it rose to 14.7%.
The good news is, during recessions there are two things that fall into the other expenses category that consumers will still spend money on. The first is live music and the second is, their appearance! So, we are recession proof to a certain degree but there are still consequences we need to be aware of.
WILL WE BE AFFECTED?
We have a lot more competition now. Consumers will be weighing the value of what we deliver. Can they get the same or better outcome elsewhere without spending as much? Now, this is not a call to discount or lower your prices. That would be against everything I believe! But, it is something to be aware of so that you can start asking the question—how can we increase the value of guests’ experiences. More on that topic below.
Another threat is consumers will be coming in less often. Instead of coming every six weeks for a color and haircut, they might come every six weeks for their color only and then they’ll stretch their haircuts to every other visit. You may notice your clients already doing this! This is why your number one mission in addition to getting and keeping new hires is to get and keep new clients.
HOW CAN WE PREPARE
Here are four ways you can prepare for how a recession affects our industry.
Know Your Numbers
What is your company’s average ticket? Weekly revenue? Number of new clients per month—per day? These are just a few benchmarks that you want to know and look at regularly. It’s also important to know your budget and make sure you never decrease your investment in any area that helps you get and keep new clients—or new talent. If you are in a position to cut expenses, start looking at those things that are nice to have but don’t move the needle on your average ticket, new client acquisition, revenue, or recruiting. It could be as simple as offering a different type of tea or water in a glass instead of bottled. Or using two types of wax on your backbar instead of four. We are creative people and there are creative ways to deliver excellence without burdening your budget!
If you’ve thought of a creative way to revise your budget, we’d love to hear them! Email us: firstname.lastname@example.org
Launch or Relaunch a Service
Have you ever been to a business who’s done a little remodeling or revising of their business model and then they’ve held a regrand opening event? I’m not suggesting an event—but rather the idea of launching a new service or relaunching an existing service in a new way.
An example of this could be hair extensions. Maybe you already offer hand tied hair extension wefts. But now, you could launch tape-ins. This opportunity offers results in less time and less of an investment for guests. Hair extensions are a great opportunity because most times you’re preselling the appointment. The client purchases the hair and could reserve their upcoming visit by prepaying a portion upfront. And as most of us who offer hair extensions know, the prebook rates are significantly higher!
Another example could be your treatment category. You’ve always had them, but they’re not booked that often. Take three of your treatments that you know are a good fit for almost every guest and simply rename them! If the treatment used to be called moisture boost, you now call it hair hydration and introduce it for a special price point for a specific time frame as an add-on service. Set a goal, get the team involved, and you’ve got a winning strategy for increasing your average tickets.
If you’ve not done this yet, why not? It’s the perfect way to increase the frequency of client visits. Think of your barber clients who come every six weeks and spend an average of $45 per visit. If you offer a monthly barber membership for $39. You’ve now increased your revenue by 15% and that doesn’t include the opportunity for product sales because you’ve gone from having nine opportunities per year to twelve.
A color club membership can operate similarly! Imagine your balayage or babylight hair color clients coming in monthly. What kind of difference could that make on your bottom line? How this works is, your clients pay $79 per month to receive a glaze, root smudge, or all-over hair color service. On the months they’re in for their advanced color service you simply put their color club investment towards their larger service. In other words, they’ve prepaid the $79 towards their larger services but this membership brings them in twelve times per year versus six times. That’s huge!
Increase Your Client Count
The name of the game? Butts in the seats. If you’ve previously relied on 50-100 new clients per month, now is the time to double your new client count. The first step to achieving anything is getting crystal clear on your objective—what’s your monthly client count goal? Next, how do you actually pull off doubling your new client count? The answer is marketing!
Digital marketing strategies such as mya—a proprietary match-making client recruitment software will engage your website visitors, match them with the beauty professionals at your company that are the best fit for them—like eHarmony—and convert a whopping 35%-55% of them into long lasting clients! This strategy is based on behavioral economics. mya predicts a positive outcome for your clients before they come in for their first visit, helping you increase your average ticket by up to an additional $40.00 per ticket.
In other words, you have a website, how many prospective clients are visiting your site monthly? That’s your website traffic. Then, you have to wonder, how many are choosing your brand, your team, and booking appointments at your business? You have to have a sophisticated tool to convert website visitors into lifetime clients, and that’s mya.
Internal marketing strategies such as your referral program. When is the last time you promoted your referral program? Generating word of mouth from the people who love you the most is low hanging, high quality fruit. Start talking about your need to grow your clientele! Remember when you first opened? You weren’t ashamed to let people know that you were new and you’d love for them to send their friends, family, and colleagues to your business. Now, you have an opportunity to be vulnerable and ask your clients to help you spread the word and in return you’ll gift them with something special—something of added value.
Pro Tip: Never give discounts for referrals. Instead, offer your clients a complimentary product or service. It doesn’t have to be valued over $20.00 but the value proposition will mean more to your buyers than a devalued coupon or discount.
Guerrilla marketing is an old-school tried and true strategy for growing your clientele. It’s having boots on the ground, going door-to-door to promote your business. Think about your ideal clients. Where do they hang out in person? Go there! Bring a stack of $20.00 promotional gift cards with you and start giving them away. Do this at your local coffee shop, gym, yoga studio, cycling studio, church, your kids’ extra curriculars, Chiropractor’s office, Whole Foods, a neighboring beauty business that complements—not competes—with yours. The opportunities are endless! Can’t afford a booth at your big-city expo? Take a handful of team members and walk throughout and give away brochures and gift cards.
I once heard that successful people are willing to do what other people aren’t able or willing to do. Sometimes we get too comfortable with the status quo and forget what it took to get where you are. Going back to behaviors that helped you achieve the level of success you’re at will differentiate you from your competitors during a recession.
For more helpful tips on thriving during a recession, listen to the Beyond The Technique Podcast—a platform created to change the way owners are supported in their business.
About the Author
During the early stages of running her own salon, Kati Whitledge, the founder of mya, discovered a pain point many industry professionals face—failing to know if their marketing efforts are truly working. Beauty industry professionals spend thousands on marketing tactics every year. Still, with a new client retention rate of just 30% throughout the industry, it’s hard to know if we’re actually keeping most new clients.
For Kati, the solution was creating a resource that empowers business owners to better themselves, their team, and their clients. That solution originally become Meet Your Stylist, a fun, easy, and accurate match-making technology designed for salons, hairstylists, and their clientele. Since then, Meet Your Stylist has evolved into mya, the proprietary match-making software serving hairstylists, barbers, and the beauty industry.
mya has now helped thousands of clients find their perfect beauty industry match and have helped beauty industry professionals grow their businesses through better first-time experiences. By pairing people based on their skill set, budget, personality, lifestyle, and love languages—mya creates lasting relationships that keep both sides coming back for more.
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Originally posted on Salon Today