If you’re keen to increase your profit, here’s some tips on 3 key numbers that can do just that!
New client rate
What is your new client rate?
Your new client rate is defined as the number of appointments for clients visiting your salon for the first time.
Why is it important?
- Your salon will naturally lose clients overtime, so you need to ensure you’re regularly replacing them.
- If you’ve got gaps in your appointment book, your staff aren’t being fully utilised which can result in inefficiencies.
- Your new client rate needs to be a key focus if you’re looking to grow your business.
How can it increase your profit?
- Put simply, more client visits result in increased profit.
- If you can convert new clients into long term clients, that’s where the opportunity to really increase your profit lies.
How can you increase your new client rate?
Create a referral program. Word of mouth is one of the most powerful forms of marketing and it doesn’t have to cost much! To get started, think about how your referral system will work and how you’ll reward those who refer you new clients. It can also be nice to offer new clients a small discount or gift to thank them for visiting you for the first time.
Partner with a local business. Partnering with a complimentary business is an easy way to introduce your brand to more clients in your target market. Start by deciding which businesses in your area are targeting the same clients, and have the same service quality and expectations as you (this is key to a successful partnership). Next you’ll need to decide on your offer and how you think it’ll work. Now it’s time to approach the potential partners with your concept and explain how it’ll be mutually beneficial for you both. Be sure to think about marketing this partnership too.
Once you have a good stream of new clients visiting, the key is converting them into returning clients. Here’s some ways to improve the conversion rate:
Make a good first impression. It’s important to look after your clients and while you should service all your clients well, it’s especially important to be attentive with new clients. Create clear guidelines for your staff to ensure they can make a good first impression. Plus think about extras like a welcome pack. It’s a great way to make new clients feel special and educate them about what you offer.
Match new clients with the right stylist or therapist. By really understanding your teams skill levels, personalities and interests, you’ll be able to pair them with the right clients. If your staff member is matched well to the client it increases the chances of starting off on the right foot and being able to build an ongoing relationship with the client.
Average appointment value
What is your average appointment value?
Your average appointment value is defined as the average amount spent by clients per appointment, including services and retail.
Why is it important?
- This gives you the opportunity to increase your profit without the addition of new customers or marketing.
- If you have a profit goal in mind this can help you calculate how much you need to make per appointment in order to hit it.
- Even if you have a quiet week or a few gaps, looking at the average appointment value will show you how much you need to add to each appointment in order to still reach your target.
How can it increase your profit?
By increasing the appointment value you can make more money with the same amount of time and appointments. For example, Kylie and Tracey work 40 hours a week and both see 25 clients. Kylie earns $1,925 while Tracey makes $2,875. Tracey makes $38 more per appointment compared to Kylie just by focussing on adding value to each appointment.
How can you increase your average appointment value?
Change the services you offer. Adding or changing services can really help increase your average appointment value. Adding premium service alternatives or even new, non-competing services that have higher price points provide you with the opportunity to get more dollars per appointment. You may also have low priced services that could be replaced with a higher value alternative.
Inform your clients. If they don’t know about it, they won’t purchase it! Don’t miss the opportunity to get more per appointment by simply letting your clients know of a complimentary service you offer or something new you’ve added to your services. You can let them know during their visit as well as by using marketing.
Be all ears. Always watch out for the opportunity to upsell to your clients. For example, your client may mention how dry their hair has been, so tell them about a treatment that could help.
What are retail sales?
The amount of retail products sold to clients.
Why are they important?
- Retail products generally have a healthy profit margin.
- This is an area where many salons, spas and clinics have the opportunity to improve and seriously reap the benefits.
- Stocking retail and understanding what your clients are looking for is another way for you to provide fantastic service.
How can this increase your profit?
- Retail widens what you offer to your clients, and increases their opportunity to spend more.
- It gives your clients the ability to buy products they’re interested in when they visit rather than having to look for them elsewhere.
How can you improve it?
Make impulse buying easy. Think supermarkets and petrol stations – they’re great at displaying impulse items and it’s all about putting retail within easy reach of your clients. It’s recommended you put retail close to where your clients pay as they’re more likely to choose something extra at that point in their visit.
Be an advisor. Clients are interested in learning about products that will be perfect for their needs and solve their problems. Take it a step further and explain the benefits of your product over alternatives in the market, so they purchase from you rather than elsewhere.
Give away samples. Chat to your retail suppliers and see if they have samples that you could give to your clients. Set your team the challenge of giving clients a sample that will best suit their needs and explain why you think it will benefit them. With clients trying a sample that’s perfectly matched with their needs they’re more likely to purchase the product moving forward.
There are a number of ways you can increase your profit, but if you’re able to improve these 3 key areas it will be a great start!