Salon Spa Business

Beauty NZ July/Aug 2009

Beauty NZ July/Aug 2009

By Caroline Nelson

Salon Survival: Profit Building Strategies during tough times

Don’t fall victim to the “doom and gloom” of the media because with a few simple changes to business operations your business can prosper even in the current uncertain economy. It’s the perfect time to rethink the way you do business and incorporate new ideas to gain maximum benefit from expenditures, customer relationships, and staff. While the bottom line profitability will depend on sales growth. Fortunately with planning, realistic goals for sales increases and an action plan to achieve these goals your business will survive and thrive.

How to meet Sales Goals

Sales goals can be met by meeting customers ever evolving expectations. Up until recently many aesthetic customers were looking for anti-ageing treatments and products. Now they are looking for de-ageing services and products that literally turn back the clock. If your salon or spa has up trended and provides any or all of the latest technologies and high level cosmeceuticals then it is perfectly positioned to reap the benefits of these new consumer demands.

Also you can vastly increase sales and quickly if you train you team to “Create sales opportunities”. Firstly think of how many sales opportunities may currently be walking right out your salon door. Ask yourself if every customer that comes to your business is being fully serviced? And the way to find this out is to see how many customers just have one type of service, for example waxing but have never had other services such as facial, body massage or pedicure.

Everyone of these single service customers are a sales opportunity in the waiting. They are current customers that you don’t have to spend to get through the door because they are already existing loyal customers. They already like you and your team so it shouldn’t be hard to convert them to additional services and retail products.

Up-Selling & Cross-Selling

Up-selling and cross-selling not only increases sales but just as importantly it adds value to your customer relationships. For example if a customer is just having the same old waxing service each time she comes in wouldn’t it be beneficial to her if she could have it removed on a more permanent bases with IPL or Laser. Or the customer who keeps having a pampering facial would her skin results improve if she had a micro-dermabrasion treatment? If the answer is yes and she hasn’t been presented with these options then this is a lost sales opportunity. And from experience it is know that employees who aren’t trained to up-selling and cross-selling often do not offer the customer additional services or products. They take the easy way and just do the service the customer has scheduled for. Potential profits could be walking out the door every single day. Can you afford that during the current tight economy?

What is up-selling and cross-selling? Up-selling is selling a higher value service or product. For example the customer who is booked in for a classic pampering facial. During analysis the therapist notices a skin condition that would benefit by a more high tech service. Before commencing the classic facial she informs her customer of the skin condition and offers the more effective service. If time permits it would be done on the day or the customer scheduled for this service during her next visit.

The same goes for retail skin care. Many customers keep buying the same moisturiser they have used for years. It is easy for them and the therapist. The trouble is it may not be the best alternative for the skin. Is there one that would achieve a better result? Or maybe the skin would respond better if a serum was used under the moisturiser. It is the professional therapist’s duty to be constantly monitoring the skins progress and encouraging the customer to purchase the products that offer the best results. By training your team in the techniques of up-selling not to be mistaken with over-selling they will gain a new attitude towards sales and learn the skills to overcome customer resistance.

Cross-selling on the other hand is about introducing customers to a completely new service or product. For example the customer who comes in for a leg wax and while performing the service the therapist notices the client’s skin is keratinized. She could suggest a salon exfoliation prior to the next wax or suggest a retail body exfoliation for home use. Equally while she is doing the wax instead of just talking chit chat she could be educating her client on the other services the salon performs. You should also authorize your staff to offer introductory trial treatment offers so the customer
can experience the treatment benefits. Once they have achieved results it will be easier to convert them to a regular user of this service.

Every salon owner knows that sales growth is a key indicator of the health of their business. Fortunately, with a little planning, some sales goals, and then taking positive action, sales growth will happen. The secret is to establish aggressive but realistic goals and then develop the specific actions to achieve these goals. Most of these aggressive actions are not directed at the customer but instead at your employees. During times like we are currently experiencing we must require more from our team. But equally we have to provide the tools to support them to reach the sales
goals we set in place.

Designing Profit Building Strategies for your Business

If you want to start lifting sales then you must make a strong commitment that this is now part of your profit building strategic plan. Once you decide that this is the way forward for the business do not be influenced by employee negativity. After all this is your business you have made the investment of your hard earned cash and you are taking all the financial risks.

The first step is to make up-selling and cross-selling part of the job description of each employee – no if buts or maybes. It must be part of the job and therefore working in this business means that every team member must be willing to productively perform to reach company sales goals. Ideally before you hire staff this requirement should be clear – for existing staff it must now become the way of the future.

Now that you have established that these Profit Building Strategies are part of the overall business plan you must support your team in all ways possible to reach both the salon and their individual sales targets. This requires developing your team’s communication and selling skills. While not everyone on your team will be born sales people with guidance all can learn the fundamentals that will vastly improve their selling abilities.

The key to encouraging your team is to help them build their confidence and the way to do that is through education – technical skills development; product knowledge; analysing skills and communication / people skills. Technical and product knowledge go hand in hand with personal experience.

All employees must be using and enjoying the benefits of the services and products they hope to sell. If they know and love them they will be excited to share this information with their customers. But it goes even further, if you truly want to build a powerful profit building team you will need to invest in additional education. Your team not only needs the underpinning education of skin structure, skin types and conditions but they need a through understanding of skin care product ingredients their benefits and the results the customer can expect. Knowledge is a very powerful selling tool and the more knowledge the better equipped they will be to make the sale.

Also when you are looking at Profit Building Strategies you must take into account not only sales goals but budgets. Profit or net income before taxes is what every business should be striving for. Making a profit is the most important objective of a business because without profit the business would soon close. So to increase profits you must raise revenues and up-selling and cross-selling will help with this. Or lower expenses by reducing the cost of providing the service or product. Ideally increasing revenue and decreasing costs to provide the sale would deliver the highest profit.

The cost of sales is what you pay out for the services and products you sell. The total cost of producing a service is comprised of the total product used to perform the service, the total labour, and the overheads. But often in the beauty industry the single largest cost is out labour costs. This is why it is vital to build streamlined services into your service menu and to educate your team members to provide the service in a time effective manner. Increasing hourly productivity will be the difference between sink or swim in this economy.

And finally one of the easiest ways to grow your business and build profits is to increase retail sales. You already have regular customers now all you need to do is to get your expert knowledgeable therapists to connect with their customers and share that knowledge. Your goal is to get all your existing customers to start buying all their skin care needs from your salon. And for regulars who currently purchase skin care make sure they are introduced to any new and exciting products that will further their skin care experience in your salon and secure their on-going loyalty. Do this and the benefits will be happier customers and increased sales.

© Copyright Caroline Nelson 2009

 

Caroline Nelson is a beauty industry specific business coach and author of the Ignite Your Beauty Business For $uccess- Salon, Staff Policies Procedures & Systems manual.

To learn more about her step by-step program for salon spa success, and to sign up for her FREE e-Book "3 Top Salon Spa Money Making Secrets", visit:
www.salonspabusiness.com