How to measure the success of your business

How to measure the success of your business

8 Dec 2016 by Alyssa McArley

Do you know how successful your business is? How do you measure that success? In reality there are probably few businesses that have a solid, measured approach to determining their success. Sure healthy revenue and breaking even are a helpful guide, but how can you tell that your business is really working, that it’s truly successful?

Client metrics are a great alternative as they tell the real story. We’ve put together our top five client metrics which are all accessible using salon software reporting.

Rebooking Rate

Rebooking your client after their appointment is hugely beneficial to all aspects of your business. For your team, it ensures a pre-booked column, job security and motivation from constantly being in demand. For your business, you’re securing future income so you can make important decisions with confidence. Plus an increase in visit frequency and a reduction in time, energy and money spent finding new clients will result in boosted profits. For your clients, regular visits mean you’ll develop better relationships, they’ll get appointment times that suit them and overall their hair and beauty maintenance will be improved.

However, the most important part of measuring your rebooking rate is how you’re defining it. Rebooking is deemed as a future appointment made within 24 hours of the previous appointment. So rebooking your client before they leave the salon should be priority as once they walk through the door, the chances they’ll book within that period dramatically decreases. If your client books multiple appointments in advance that’s also counted as rebooking and it’s a massive bonus for your business!

Kitomba’s Benchmark product shows the average rebooking rate to be above 50% for the New Zealand hair industry. So use that as a starting point and become one of the savvy salons and spas that achieves well above that!

Retention rate

Client retention is all about creating loyal clients through providing high quality service and a fantastic experience. Loyal, long term clients are important to a business as they tend to spend more, cost less and make valuable referrals to new potential clients.

Just like rebooking, retention is also measured in time. If your client doesn’t make a future booking within 24 hours of their last appointment but they do book again, they are considered retained. It’s important for your retention rate that you encourage your clients to make an appointment when they get home, so remind them of all the ways they are able to do so. We recommend having Online Booking as it gives your clients the convenience of being able to book whenever – even outside of business hours. If you think they still need reminding, a personalised text or email will do the trick.

how to measure the success of your business

Revisit period

The average period of time between your client’s appointments is your revisit period. The length of time between appointments has a huge impact on your annual revenue and reducing it by even the shortest amount of time will result in a massive jump in revenue.

If you’re not quite convinced, here’s an example:

If your annual revenue is $400,000 and your average revisit period is 8 weeks, reducing it by just one day (7 weeks and 6 days) will increase your annual revenue by $7,200. That’s pretty amazing but imagine if you moved it by one week? Your annual revenue would increase by a massive $56,000!

When starting out we recommend trying to reduce your revisit period by one day, then analyse the results. We’re sure you’ll be impressed and as you become more confident you can reduce the period even further.

New client rate

Retaining clients and creating loyal ones is really important, but you can’t forget new clients. They’re the lifeblood of any business as they tie directly to revenue. A consistent increase in clients allows you to be certain of business growth and it also ensures that more potential clients are hearing about your business.

Take a look at your new client rate. It should be sitting at 10 percent, minimum. Why? Because natural attrition sits at around 10% so to balance this, you need at least 10 percent of the clients stepping through your door to be new. If your percentage is low and you regularly have gaps in your appointment book, maybe it’s time to kick off some marketing activities like running an ‘introduce a friend’ promotion or try some online advertising such as Google AdWords or Facebook ads. On the flip side if you find your new client rate is low but you’re fully booked weeks in advance, your business has reached capacity. It’s time to grow, so look at growing your team or if you don’t have the space, you might need to move to a bigger premises.

Client retail attachment

Increasing the percentage of clients that purchase retail can seriously change your bottom line. This is because you’re focusing on the opportunity to charge your clients more for each appointment.

We suggest you take a look at your client retail attachment percentage and determine a goal for how much you want to increase this. For example, if it’s sitting at 10%, why not challenge your team to increase this to 25%? That’s just a quarter of their clients that they need to convert, so it’s definitely achievable. To make it work, be creative. Perhaps you can run a friendly competition between your stylists or beauticians to see who can increase their percentage the most.

When it comes to this metric, it’s important to remember it’s not as hard as you think because you’re the specialist! Being successful in attaching retail to your services simply has a lot to do with your overall approach. Your clients are looking for guidance and direction when it comes to products. So when you’re next shampooing them, tell them which shampoo you’re using and why you’ve chosen to use it in your salon. Ensure your client understands how much to use, and how to apply it too. This goes a long way in reinforcing the fact that they should be walking out the door with a product.

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  1. Thank you for your great tips it is so wonderful to be able to see and know where you sit and how to improve keep up the good work kitomba

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