You already know that running a salon can be both a big challenge and incredibly rewarding, and you’re probably always thinking about how to improve salon profitability.
You’re not alone. Salon owners are always looking for ways to improve their profit margin. After all, along with keeping your clients happy, salon profit is what lets you open the doors every day and gives you the cash flow to grow your business.
There are many tried and true strategies to make more money in your salon, including growing your client base, encouraging more frequent trips to the salon, increasing the amount they spend when they visit, making your business more efficient and reducing your overhead costs.
Let’s take a closer look at each one.
When you’re looking for ways to help your salon business make more money, you’ll probably start with the four most common strategies: increasing the number of new customers, getting loyal clients to visit more often, boosting transaction sizes per visit, and raising your prices.
The first three strategies all focus on salon marketing and raising salon revenue. In fact, they go hand in hand. If you already have repeat customers, it only makes sense to upsell to them by recommending complimentary services. They’re also a great source of new clients, if you have a referral program in place.
While it can be tempting to raise hair salon profit margins by simply increasing prices, it’s usually not the best business strategy. A better approach is finding ways to reduce your overhead costs. The best salons try to limit or minimize unnecessary losses. This ultimately leads to higher profits.
First of all, you’ll need to increase your number of clients (and keep them coming back). This second part is essential. Advertising your salon services and increasing your social media presence takes time and money, so you don’t want the customers you attract to visit once.
Let’s look at a quick example:
The average price of a women’s haircut in the U.S. is $45. If you can attract ten new clients in a month, that’s $450 in revenue. Now, if they all keep coming back (say, for five haircuts a year), that’s $2,250. If you do that every month, imagine what could happen.
All of this is assuming that they only ever get their hair cut and don’t book other treatments or services like coloring or purchase retail products. Are you getting the idea? Awesome!
So, you want to grow your customer base. But, how can you secure those all-important first appointments? Here’s how to improve customers in a salon without spending a fortune on marketing:
One of the easiest ways is to make booking appointments easier. No, really. It can actually be that simple. Salon software can help with online bookings. Make sure that you also have contact info on your salon website and social media.
Don’t rely on a receptionist to answer the phone only during business hours. Include a way for clients to book treatments or services online, preferably at any time of day or night. This will make a big difference in the number of bookings.
Consider advertising or cross-promoting with another local business in your area. Is there a trendy new cafe or boutique that just opened up? Ask them if you could keep a supply of each other’s business cards or flyers, and consider a discount program for mutual clients.
Take a look at your salon business marketing plan. What are you doing to increase client numbers? Try expanding what your salon provides or capitalizing on an available niche market like vegan products, curly hair care or styling methods for seniors with thinning or gray hair.
If you already have a salon with existing clients, and you’re doing your best to attract new customers, then your next step is to increase the number of times your clients visit. There are a several ways that you can do this:
You can do this using salon software, if you don’t want to deal with managing individual client records or having a 1990’s-style stamp card. Even a simple “get 6 haircuts and the 7th one is free” system or a birthday gift program will incentivize bookings and increase your revenue.
Post salon updates, stylist bios, client makeovers and images of the latest styles and services your salon offers on your salon’s Facebook, Instagram and website. Social media is your best friend when it comes to marketing.
Once again, software can help with this. Automatic reminders when it’s time for another appointment, trim or hair color touch-up will do a lot to boost the number of visits each client makes per year.
Showing sincere thanks and appreciation will pay off. It helps to develop a relationship with each client and make them feel welcome.
Create a hair salon mailing list to update clients on what’s going on. You might even want to take a look at your website and start publishing a salon newsletter. You can include exclusive content such as a monthly beauty article, salon information and even promotions. This is an inexpensive and effective (not to mention fun) way to increase revenue and reach out to clients.
The best hair salon owners do this, regularly. Teach your staff about the value of rebooking and repeat clients. Incentivize them to get customers to rebook by offering rewards. Coach them to ask clients when they’d like to schedule their next appointment, during their visit.
New repeat clients are a valuable source of information. Ask them what they enjoyed about each visit or service, as well as what your business can do to improve. You can even send them an online survey and boost traffic to your website or send them an email, at the same time.
Using these strategies will go a long way towards making more money and building clients loyalty, at the same time.
Remember, if one client spends $80 on a simple hair cut and color, but visits only five times a year, that’s $400. If you can convince them to come just twice more, it goes up to $560. Now imagine that you have just 40 loyal clients coming twice more a year- you’re automatically making $22,400 from them instead of just $16,000. And that’s only with two more visits.
This is a strategy that goes hand in hand with the others. What does your average client spend each time they visit for a service?
Ideally, you should always be searching for ways to make your business more successful. This usually means finding sustainable ways to make more money. But, how can you do this? Let’s look closer wt some of the most common ways to increase profits:
It doesn’t have to be a big change to make a difference, and clients might be less likely to accept these on impulse. The key is to identify each customer’s needs and recommend accordingly. For example, if someone came in for a color, you might recommend a hair mask or scalp treatment to compliment the service.
Again, what you sell someone should compliment the service and the customer’s needs. Ask staff to offer and recommend at least two products per client visit, to increase sales. Aim to have at least 5% of your salon’s income come from retail sales.
If you’d like each customer to spend more during a single appointment, it might be time to start offering more. Consider investing in new training or equipment that lets your stylists offer the latest services. This often lets you both raise the price of certain services, while also attracting new clients and increasing your profit margin.
Depending on how successful sales have been in the past, it might be time to upgrade and expand the retail products you offer. Salon profit is linked to sales as well as services, and clients will often pay more for better quality products.
Relationships and profits are connected.This is important with new clients and with returning customers. If you and your staff work to build and maintain friendly relationships with everyone who comes through the door, this will both increase clients’ loyalty and make them more likely to trust stylists’ recommendations.
One of the best ways to increase your salon’s profit margins is to simply reduce your overall expenses. Don’t worry. This doesn’t mean that you need to do a complete overhaul of your business. Even a few small changes will have a big impact at the end of the month.
Check your scheduling to avoid leaving big gaps between appointments. Salon software can help with this. Make sure to send appointment confirmations and reminders to keep unnecessary downtime to a minimum.
Not only will this expand their skills and give them more things to put on their C.V., cross-training employees to help out with extra tasks during downtime (such as reception duties, updating the website and social media, etc.) will create a teamwork based atmosphere and save everyone valuable time.
Salons are busy places, but you probably don’t need two receptionists or someone whose whole job is cleaning and inventory, unless you run a very large business. Many salons reduce the workload by sharing the duties among staff and using online tools to help with the rest of it.
Only keep as much monthly inventory as you can sell and avoid over ordering slow-moving products. Keep back rooms and storage areas clean and free of clutter. The same goes for the overall layout. Not only could clutter become a safety hazard, but crowded spaces make it hard to find things quickly.
Salons often profit from talented stylists who regularly bring in clients. It’s easier to keep your staff (and the customers who visit them) than to spend more money hiring and training new talent.
If you’re a salon owner or manager, this is one of the most valuable tools on the market. Salon software will help you to see exactly what’s happening and take care of many aspects of running your business, all in one place.
Let’s look at how salon software automates your salon business and saves everyone’s time:
Check appointment bookings and see what your busiest times are. Identify gaps in your scheduling so that you can make a plan to increase traffic during “off-peak” times. Check for cancellations or “no-shows”.
Set schedules, avoid gaps of downtime and see who your top earners are.
This eliminates the need for customers to call and book only during business hours, allowing you to automatically bring in new bookings.
Sell (and track) gift certificates and special promotional coupons easily.
Track and review each client’s spending habits and number of visits to get a better idea of your customers’ demographics.
Send out feedback emails after each appointment and gather valuable input about each service experience.
Track inventory levels, sales and reordering easily. Set automatic ordering for fast-moving retail products or salon supplies. This will help you understand and plan strategic retail sales or promotions.
When you think about how to improve salon profitability, remember that it’s okay to start with a few smaller changes. You don’t have to do all of these things at once. In fact, it’s better to take a look at your hair salon revenue model and come up with a plan, first.
Take your time and work with your team on each change.
Not only is it important to get everyone on board if you want things to run smoothly, but these people are a valuable source of feedback and creative new ideas. If you want to know how to increase salon revenue or how to increase salon clientele, ask your team for suggestions.
After all, a thriving salon is in everyone’s interests.
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