Secrets for Success in Tough Times

Across the country, salon owners are telling me it is difficult to make a profit in the tough financial times New Zealand seems to be experiencing. Whilst it is true that most salons have noticed their patrons have tightened their financial belts there are still a number of salons trading very well and this poses the question – why are so many struggling and yet some have barely noticed the economic downturn? Or, probably more importantly, how do salon owners battle through these times and maintain profit margins? The successful salons I deal with all have three factors in common: They have a culture of high retail sales and present themselves as professional retail outlets to their customers. They have high re-booking rates for all services. They don’t rely on advertising for new customers to increase their turnover. Instead they work their database extensively and have systems in place that ensure that they maximise the spend of their existing clients. I have always believed that it is the businesses that have really well established systems in their salons that suffer the least when things get quiet. Whenever it is a tough economic climate, inclement weather, school holidays or winter they manage to maintain good figures and continue to be profitable. Successful salons recognise the importance of well established protocols and systems to drive loyalty and regular spending within their database. These very same systems also maintain high retention rates making salons far less reliant on attracting new customers for income. If you are finding business a little challenging at the moment, the first area that needs to be addressed is your retail volumes. There are a number of considerations in improving a salon’s retail sales and this includes the very clear expectations of management about staff retailing figures. These figures need to be measured and monitored at least weekly (if not daily) and staff need to be informed about their progress in comparison to realistic targets. I walk into so many salons where staff have no idea how many products they have sold or the value of those sales. It is very difficult to tell someone they need to improve if they don’t know what they are currently doing. Successful salons achieve up to 50 percent of their total income through their retail sales and therefore take this area of their business very seriously. In my own salon all staff are spoken to one-on-one each week regarding their performance figures. This is a great chance to praise, thank and reward as well as focus staff on specific areas of their performance to help them improve. It also is a clear indication that retail sales are an integral part of each therapist’s role and taken very seriously by management. If your staff are not retailing very effectively then it’s more than likely you haven’t actually clearly defined to them exactly what is expected. Another vital aspect to increasing retail sales is to sell products that are unique to your salon. I cannot see the point of offering clients exactly what they can buy from a dozen other salons in town, the pharmacy or duty free. Today’s consumer wants salon exclusive, cosmesceutical brands that really work. If you want them to be loyal to your salon then stock brands that aren’t found in every second salon in your area. Don’t just stock these brands but show your clients that you are a serious retailer and have plenty of product on interesting displays that are well signed. Visitors to your salon will never take you seriously as a skin care provider if you have minimal numbers of items on display or if your products are hidden away in locked cupboards and behind counters where they cannot be touched. One of the common factors of the salons that have not felt the brunt of the economic downturn is that they all have high (70 percent or more) rebooking rates. High rebooking rates endear clients to loyalty and ensure the return of clients more regularly. They keep waxing clients booked on a schedule of 3-4 weeks and all facial clients have written programmes of 3-6 treatments to follow. Invariably, this results in much higher retention rates where clients are regular attendees and don’t shop around or just fail to return. Couple this with regular communication by letter, email or phone calls and far fewer clients are lost to the competition. Too many salon owners fail to train staff in the important art of rebooking and the result is too many clients leave without anything compelling them to return. In essence, they are free to try the special offer from the salon down the road or utilise the convenience of one near work. Finally, all successful salons have very good existing database advertising systems in place so they are not solely reliant on expensive advertising when things are a bit quiet. Experts suggest that it is about eight times cheaper and easier to encourage an existing client to return than it is to attract a new client. For this reason successful salons rely heavily on utilising their existing client base in an effort to maximise customer numbers and merely top up their client figures through advertising for new clients. Many utilise systems of letter writing with follow-up phone calls, email and SMS messaging to communicate with clients on a regular basis. They: Send out birthday greetings with gift vouchers attached Welcome first time visitors with a bag of “goodies” Regularly tempt specific segments of their database to try new services Hold VIP events to launch new products, equipment or treatment modalities Contact clients they haven’t seen for a couple of months Call all product purchasers to see how they are loving their new skin care Encourage customers to bring a friend Have a “short notice” list of clients that will accept discounted services at short notice to fill gaps in schedules Provide regular special offers on newsletters and flyers Remind clients of their appointment time etc. Successful salons don’t feel the impact of tough times as badly because they are working diligently at maximising the spend of their existing client base. This provides such a loyal and regular platform of business that if things are slow they merely add a small amount of media advertising into their marketing to maintain their income and profit margins. Around the world the sale of beauty products has never gone backwards. Despite wars, recessions and depressions more beauty products continue to be sold each year. For this reason retail sales become a major component of a salon’s income when things get a little tight. Women might choose to skimp on groceries, they might not buy that new dress but history tells us that they will still buy their favourite beauty products. It therefore pays to train your staff to sell effectively. This, like many of the things I have suggested are easy to implement and inexpensive to set up. They only take extra training, staff meetings, mail-outs, emails and some phone calls. These are strategies that can be introduced to your salon almost immediately. It pays to take note of what the successful salons are doing – it’s why they are successful! 721

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