Financial Tips

Financial Tips

Peter Mahoney is the president of Salon Consultants International, Inc., a partner in Summit Salon Business College, a member of Redken’s Business Partner network and the proud owner of 25 full-service salons, spas and schools in Canada. Honored with the Ernst & Young “Entrepreneur of the Year” award, Peter is regarded as one of the most effective trainers in the salon industry. His modern day philosophies of communication and leadership inspire and evoke personal change in his audience.

THE THREE R’S

Today’s strategy calls for some old school philosophy that focuses on generating referral business, retention of new clients and rebooking. Successful application of these principles has driven the results of the top 20% of salons in our industry for decades, and is more applicable today than ever. Following are some simple but effective strategies. Implement them with passion and track them with purpose, and prosperity will soon follow.

REFERRALS

Print business cards that offer your clients $20 off their next visit if they send in a referral, plus $20 off to their guest.
Total investment: $40
Return: $600 in annual services for every retained client

Use Our Referrals Calculator

RETENTION

Create a welcome package for new clients. Include a welcome letter and 2-3 gift certificate-sized coupons to cross promote your services.
For example:
• Free Redken Chemistry Treatment with your next service
• Free polish change (or similar option) with your next service
• 20% off your next Redken Haircare purchase over $25

REBOOKING

Put a ballot box at the front desk and give a ballot to every client who rebooks their next appointment. Draw a winner every six weeks for a prize worth $100. Gift certificates, free services and iPods make great prizes. Notify winners by email and build your database. Reward your client’s stylist with the same prize and watch your rebooks grow.

VALUE OF SERVICES

David Stanko has been a professional haircolorist for over 20 years and is a Redken Artist and Haircolor Consultant. Throughout his career, he’s helped invent new ways to use haircolor technology. He’s also taught salon professionals to see beyond the technology to the artistry of their final work. David was named “Best Educator” and “Most Inspirational Educator” at Haircolor USA. He was recently accepted into the prestigious Intercoiffure Association, where he sits on the executive committee of the Haircolor Council.

Everyone loves something for nothing. But that doesn’t mean you should give it away indiscriminately. When building business, the marketing triad of every salon involves what to upsell, where to add value and when to give it away.

According to shopping futurist and global strategist Wendy Liebman, whose WSL strategic retail company publishes Trends From the Edge, all consumers are mindfully reassessing what’s important. In deciding where to go and what brand to buy, they’re asking:
• Do they like me?
• Do they respect me?
• Are they worth keeping?
   
When you’re considering offering complimentary services, let these questions guide you.
With its instant results, an add-on service such as Redken Chemistry is the perfect service to offer for free to the right clients.

Offer a free service when:
• The client in your chair has had an exceptionally bad day
• A loyalist recently hinted she’s unhappy with you or the salon
• A client has occasionally visited another salon or colored her hair at home
• You botched the last job with the client
• A cherished, top-tier client made a referral—offer both parties a freebie

Don’t offer a free service when: 
• The client is rushed
• Salon loyalty is not in question
• It’s a slow day
• For practice

The occasional freebie builds equity with your best clients, and helps anchor those on the edge. If you invest in giving away a $25 service and the client refers a friend whose services amount to $100, or the client spends $100 more than average on her next visit, your ROI is 300% (not including product cost). But more importantly, you make your client feel good when he or she needs it the most.

You’re boosting their psyche, making them look better, extending the life of their haircolor and providing them with what they crave—a quiet, stress-free moment and a fantastic scalp massage—all for “nothing.” Paying it forward ensures you remain on clients’ “love list” through the best and worst of times.
DO THE MATH

Follow this simple equation to calculate your salon’s ROI:

ROI = [(profit – investment)/investment] x 100

For example, I invested $25 in a free service and now have $25 from a client referral:

[($100 - $25)/25] x 100 = 300%


Having these types of benchmarks help you and your staff see that your dollars are going toward wise investments.

Calculate the profits
  

ADDITIONAL TIPS

Low-cost ways to promote your business include:
• Sampling is one of the easiest, most cost-effective ways to increase retail sales. Provide samples to your existing clients and offer a discount on the full-size product during their next visit
• Partner with other local businesses that have similar clientele, such as a boutique. Create unique promotions to generate referrals that benefit both businesses
• Highlight your latest promotion or service to clients through an email blast. It’s the easiest, most cost-effective way to get the word out and get clients in your salon
• Conduct a survey with your existing clients. Ask questions that will help you discover how to better service them.  
For example: 
 • What type of products or services would be of value to you?
 • What appointment times would be most convenient for you?
 • What can we do to make your salon experience better?