Are you are a busy nail technician or salon owner in desperate need of making more money? Do you feel that you are really close to grabbing the “brass ring” only to find yourself unable to reach it yet again? If you answered yes to one or both of these questions then take a moment, kick your feet up and read about the 80/20 Rule and how you can immediately apply it to work LESS and make MORE.

What I’m sharing isn’t rocket science; however, even the best of us could use a good swift kick in the pants every once in awhile to get ourselves back on track.

Understanding the 80/20 Rule

In 1897 Pareto, an Italian Economist came up with the 80/20 rule. This rule in of itself revolutionized the way we think not only about wealth but about every area of our life. Applied to your business it can be said that 20% of your employees will produce 80% of your revenue. Conversely if you are a technician, 20% of your clients will account for 80% of what you generate in revenue. Unfortunately business owners and technicians alike spend little if any of their time focusing on those areas of business that can generate the most revenue. What are those areas you ask?

1. Increasing the number of clients you have.

2. Increasing how many times they visit you.

3. Increasing how much they spend with you.

We’re going to focus our attention on what customers are spending their money on and how that can increase your profit potential. Ask yourself the following: Which generates more profit in less time? Retail or service revenue?

The answer is RETAIL! It takes you far less time to sell one bottle of product then it does to provide a service. Additionally the profit potential gained on a retail dollar is far greater than a service dollar. The less retail you sell the less profit potential you have. Consider this…let’s assume that your service revenue paid all your fixed expenses and any variable expenses associated with service revenue such as rent or payroll, payroll taxes, back bar costs, etc.

That means all of your retail revenue would be used for paying retail commissions and/or the cost of product. This would leave you between 30%-40% for profit. (Remember the catch is maintaining revenue income and budget control.) Here’s where it gets juicy! If you were a salon or spa that produced $10,000 in retail revenue each month, you would potentially put $3,000-$4,000 in profit to your bottom line. Conversely if you were a technician and you produced $1,000 in retail revenue, then you would potentially put $300-$400 profit to your bottom line. Yes! You read it right, RETAIL = PROFIT! Doesn’t that just make you want to run out and sell something? That is working smart not hard!

1. Would your time be best spent performing services all day?

2. Would your time be best spent performing services AND selling retail to each and every client?

The answer is obvious…NUMBER TWO! Retailing simply requires consistently educating and recommending products, and it can be done without adding more time to your service. As a service provider your job is to educate each and every customer about WHAT you are using, WHY you chose it for them, and HOW they can use it at home. Your customer’s job is to CHOOSE. That’s it…choose. Your goal should be to find the right mix of strategies that attract the necessary amount of customers, drive the appropriate services and ultimately aid you in reaching your desired level of sales. Doing so will have you focusing 20% or your efforts on those activities that produce 80% of your sales and profit.

— Julie Shepperly, Director of Professional Services for Milady

Editor’s Note: You can read more from Julie and the other Milady coaches at the Milady Salon and Spa Leadership blog or listen to their podcasts at Salon & Spa Coaching Corner.