Author: Chris Parker

Does it matter how great you say your salon is? Or does it matter more how great your clients say it is? It’s a little nauseating to others when we tend to blow our own horns.

CS Lewis, author of The Chronicles of Narnia and many other well know books gives writing advice to a young American fan named Joan Lancaster in June of 1956.

“In writing. Don’t use adjectives which merely tell us how you want us to feel about the thing you are describing. I mean, instead of telling us a thing was “terrible,” describe it so that we’ll be terrified. Don’t say it was “delightful”; make us say “delightful” when we’ve read the description. You see, all those words (horrifying, wonderful, hideous, exquisite) are only like saying to your readers, “Please will you do my job for me.””

The point is that you should not have to tell people how great you are, they should be telling you how great you are because of the great things that you do. The question therefore is how do you get your clients to say great things about your business?

Exceed customer expectations

In my opinion this is not very hard in the hair industry (with exceptions of course). Again, maybe its because I’m a man and men generally are quite easy to please and therefore salon staff don’t feel the need to work very hard to please male clients, who knows?

As a result my expectation is that if I enquire about a booking and there are none available on the day I desire I will not get offered alternatives. If I do get a booking the staff will generally not know much about me even though I may have visited the salon on more than one previous occasion. While I’m at the salon I may or may not get offered some coffee or other type of refreshment, which seems quite standard. I may or not get my head massaged at the basin and if I do it may or may not be a great experience. I will most likely not get much of a consultation apart from the usual “What are we doing today?” Once my cut is finished and the stylist has flashed the mirror behind my head while I nod or grunt approval its then time to pay. The discussion of products for my hair will most likely not come up and if it does it will be something to the effect of would like to try this product or not? Once I’ve paid that will be the end of it and the sense I will leave with is that they couldn’t really be bothered if I return.

So the question is, if that has been my experience of so many salons over the years what will it take to exceed my expectations? I don’t think it will take very much indeed.

Little things on the side

One way to start is to do something small on the side. For example, what do you get when you buy a coffee at Vida? That’s right, a dark chocolate. Now, any coffee shop I visit after having experienced Vida that does not provide me with either a chocolate or a something similar will be less of an experience than Vida (Note that Im not commenting on the quality of the coffee itself – this is a matter of its own).

Another example is Pearl Valley golf course near Franschoek in the Western Cape, which is a wonderful experience. However, one of the best parts of the experience is something that is quite achievable by other golf courses who don’t enjoy such high pedigree. They have cool wet towels at the half way house. On a hot day there is hardly any better experience than walking into the clubhouse and wiping your face with a cooled towel. Also, on the first tee box I was given a chilled apple before starting the round. These are things that other courses could also offer that if they did people would talk about them.

The idea would be then for your clients to say something along the lines of “My salon is so amazing, whenever I go there they give me _____________ “(fill in the blank). Or, “…whenever I go there, they do ____________________ for me” (again fill in the blank).

Be careful though, once you start adding something to the mix (like you do above) then if you ever stop doing it in future your clients will not feel that you are simply offering the same as everyone else again, but rather they will feel like you have taken something away from them that they have grown to expect.

Validating parking

Our offices in Cape Town are near the Cape Quarter and inside there is a car wash. One of the things that the car wash does, apart from wash my car, is validate my parking for three hours. They most likely build it into the price of the car wash, however, it still comes to mind whenever I need to get my car washed. If you are able to build it into your costs, or able to work something out with centre management then covering some or all of a client’s parking would go a long way to building wow factor.

SMS Appointment Reminders

Sending your clients an sms appointment reminder goes a long way to improving their perception of your salon. On one hand it is practical and on the other hand it lets them know that you actually care for them to return, so much so that you are willing to send them a reminder.

Discount less preferred booking dates

This may be a bold one, but if a client wants an appointment today and you cant fit them in why not offer them a discount for a slot that you do have free. This may be the difference between them returning to your salon or not. I would be blown away if a receptionist said to me “we are fully booked today, but we have a slot tomorrow and we will give you a 10% discount if you take it”. It would be worth talking about.

10% off for a repeat booking

What about saying to a client as they finish paying “if you book your next appointment now you will be entitled to a 10% discount”? If that were me I would be much more inclined to make the booking and it would be something worth talking about to others.

Surprise them with your knowledge of them

If I sat down at the chair and the stylist recalled details of my previous visits it would surprise me. These details could be of a personal nature or related to products and services. If this was the standard I could expect from a salon it would definitely be worth talking about. But, Im talking about doing this for everyone, even the person who was last there more than 6 months ago and not just doing it for the clients you see week in and week out.

Conclusion

Its hard to give someone credit when they are giving themselves credit all the time. Rather, do things for others that result in them responding positively to you. Doing things like in the examples above gives the client an overall feeling that you want them to come back again. We want you to come back so we will pay for your parking, we want you to come back so we will send you a thank you SMS. We want you to come back so we will give you 10% off if you book your next appointment now.

When people sense that you value their business then they will talk about whatever factors contributed to that.

Last year I did a couple of articles on Cost of Sales. The series was a little dry and theoretical and I wanted to follow it up with some practical points about how to monitor and manage your cost of sales so that you achieve as much gross profit as possible and this is something that all of us are interested in. Im not sure why its called Gross Profit, in my mind profit is awesome, not gross?

Before We Start

Cost of sales is made up of any variable costs that are directly related to sales volumes, ie if sales go up then these costs go up. For example, the total cost price of the retail items that you sell.

On the other hand fixed costs remain the same regardless of whether your sales volumes go up or down, for example, rent. Fixed costs are not included in cost of sales.

Some costs have variable and fixed components, for example, a basic salary that is constant plus commission, which is dependent on your sales volumes. The commission portion may be included in the cost of sales calculation whereas the basic salary would not.

Gross Profit, therefore, is the difference between your Sales Revenue and your Cost of Sales (or your variable costs).

Once you have determined your Gross Profit you then deduct all your other operating expenses like rent, telephone, insurance, advertising, ESP I.T costs etc and this will leave you with your Net Profit. And its your Net Profit that SARS is particularly interested in.

The Laws of Balance

When thinking about how I could spice up this topic in order to make it more inspiring and less like a sedative I concluded that people like articles and talks where there is a call to action and a set number of steps. For example, 3 keys to being a good boss, 5 traits of a bad employee, 7 ways to retain your clients etc.

So I was looking for a container or a way to package this topic so that it would be easy to absorb with clear calls to action.

I recalled a series of talks on personal finance by Andy Stanley (www.northpoint.org/balanced) where he compares being financially balanced to the laws of physical balance.

In this series Andy talks about the requirements to balance a pole in the open palm of your hand. First you need an objective, in this case the objective is to keep the pole upright. Without this objective the pole would fall.

Secondly, you need a focus point. In this case the focus point is the top of the pole. If you take your focus off the top of the pole it will fall down. Try this for yourself, take a broom and try and balance it upside down on your hand and take your focus away from the top and notice what happens.

Thirdly, you need to be making constant corrections. If you try this balancing act you will notice that you have to keep moving your hand in order to keep the pole upright. These movements are the constant corrections.

Andy then goes on to explain how this all applies to personal finance and if you get the chance I highly recommend that you check out this online series.

I will now use this comparison between physical balance and managing your cost of sales and gross profit.

Objective

First of all we need to define our objective. In this case the objective is quite simple, make as much gross profit as possible (in Rand value).

The goal of any business is to make a net profit, but this is simply impossible if you don’t first make a gross profit.

There’s not really much more to say about this.

Focus Point

In the balancing act, the focus point is the top of the pole. Remember that if you take your eye of the top of the pole it will fall. The focus point therefore is the monthly Gross Profit Margin, both as a percentage and as a Rand value.

One might argue at this point that Gross Profit is directly related to whatever your mark up is on your different supplier brands and so it will be pretty constant. In an ideal world this would be the case but in the real world you will see that it is not.

The outcome that we wish to achieve is that the Gross Profit margin is in fact consistent and if anything getting bigger (ie more profit) as time goes on.

Whenever there are variances that eat into the profit margin then action needs to be taken in order to firstly understand what has caused the variance and secondly to correct it (constant corrections).

Generally you can work on a Gross Profit margin of between 35% and 45% before commission. If you are going to include commission then take off another 10% from the margin. This will depend on the brands that you stock, the price you pay for your stock and the price you sell it for.

Arrange your data into monthly management accounts so that you can get a monthly Gross Profit percentage. Doing it monthly will alert you more quickly to any problems and put you in a better position to take action.

Here is a very simple example of what this might look like:

In this example you can see a Gross Profit Margin that is close to 40% but in one month (May) dropped to 34%. By keeping this as our focus point we can immediately be made aware when we need to make a correction. (note that I have not distinguished between Retail and Service revenue or Cost of Sales at this point, Im really just focusing on Retail).

Ask your accountant to help you in setting up this structure. Explain to them what you are trying to achieve. This will be right up their ally so they should be in full support of the process.

Once you have set this structure up you need to start looking at the constant corrections that you may need to start making in order to keep your gross profit margins at the level you require.

Constant Corrections

There are a number of things that affect your gross profit margin and would need constant correcting:

Commission paid to staff

In most cases this is fairly straight forward but if you have sliding scales in place then the more that staff sell the higher their rate of commission will become and the less your gross profit margin will become. Sometimes staff members get rewarded not on their retail sales alone but on the ratio between Service and Retail sales. This gets a little more complicated so you might need to run a few scenarios to see the effect it has on commissions and therefore gross profit margins.

Shrinkage

If stock is being stolen then this will be eating into your gross profit margins. Because cost of sales is generally calculated as Opening Stock, Plus Purchases, Less Closing Stock it means that all stock that has gone out of the business (whether sold or stolen) is being calculated in the cost and therefore eats into the margin. Therefore you need to be constantly correcting the issue of shrinkage in your business.

Discounting

If you are discounting then it means that you are selling at a lower value but you are still selling at the same value. Therefore you need to be careful of falling into the trap of over discounting. It is difficult as clients become more price sensitive and the effect of companies like Groupon have had. If you are going to rely heavily on discounting then you are going to need to increase your volumes in order to get the same Rand value in the bank with lower margins.

Choosing your brands

Often times people will change brands because they are not happy with the deal or the discounts they are getting from their supplier. While this makes sense at one level you must consider which brands sell the best because you may recover your lost margins purely by sales volumes. Therefore you need to get the balance right between margin and sales volumes when choosing a brand. Also you need to consider what else your supplier is doing for you in adding value to the brands they supply. This added value may need to be looked at as a savings in marketing costs rather than a savings in cost of sales.

Supplier price increases

If suppliers increase their prices this will eat into your gross profit margins immediately. There are one of two ways to deal with this, increase your own prices but this could scare clients and drive sales down. Or you could leave prices as they are and increase volumes based on a better price.

Stock Valuations

Because you are buying stock at different times and selling stock at different times the chances are that you will have items on your shelf that you have purchased at different prices. Therefore if you bought one item at R100 and another at R110 you will need to discuss with your accountant what method they are valuing your stock at so that it most accurately reflects your actual stock value because this value is used in determining your opening and closing stock values, which in turn are used to determine your cost of sales.

Conclusion

Do you know what your current Gross Profit Margin is? Do you know what it should be? Are you watching it carefully every month? Do you know what is affecting your margins and are you constantly making corrections in order to improve it?

Use this example of balance by remembering your objective, having a clear focus point and getting to work to make the corrections required.

I recently counted over 130 apps installed on my iPhone. 130 different programs that I have installed in the past year, since I last upgraded my contract.

I have them grouped according to what they do, for example, there is a folder for apps that relate to reading like Kindle, and other apps for magazines or bibles. I have social apps like Facebook and Twitter in a folder. I have news apps like News 24, BBC, CNN, Aljazeera and EWN grouped together. Now, I’m not sharing this with you to indicate how anal I am about apps, Im sharing it with you to indicate that I have over 130 apps that actually serve a purpose installed on my phone and I tend to get rid of apps that I havent in a while.

There are over 1 million apps on the iStore and many more for Android and Windows Phone. That’s a lot of apps! There are apps for just about every idea you can think of; a werewolf locator app that helps you locate Werewolves around the world, an app that tells you what nearby ghosts are thinking and even an app that claims it can detect a watermelons ripeness using the phones microphone. Really useful apps, I know …

But are all apps simply gimmicks that don’t add any real value to our daily lives? Well at this stage in the mobile revolution we can confidently say that apps are more than just gimmicks and have rooted themselves in our daily routines in good ways and bad.

Communication has been revolutionized with apps like Whatsapp, which allows you to not only send messages to individuals but also to set up groups for work, family, clubs or any other reason. News is now instant through social media like Twitter and news apps. Banking can now happen in your car (while you are stopped at a red light of course). Navigation no longer requires a map book or even a dedicated GPS. Reading no longer requires books and you can purchase just about any book and have it on your phone within a few minutes.

Apps for the salon owners

So, with this wave of mobile applications having taken the world by storm what does it mean for the salon owner. Should you be using apps? Should you have your own app?

In looking at the first question “Should you be using apps?”

Utility apps

I think the answer is a definite yes. However, my answer relates initially to the generic use of apps, ie utility apps that may solve a certain problem for you that is not necessarily directly related to managing your core business functions.

Whether it’s a notepad app for writing down ideas or meeting notes with staff or using Whatsapp for group communication within your business there are many small utility apps that you will find useful.

Third party apps

Then there are apps that third party companies develop with a specific problem they are solving or unique service that they are offering and provide you with an opportunity to take part in. For example, GoBeauty that enables you to upload last minute bookings at a special price. Then any member of the public that has downloaded the app will see your appointment become available and can book the service through the app. This solves the problem of any open slots at the salon that you cannot fill and also reaches an audience that may never had visited your salon before thus sending new business your way.

Core business related apps

Then there are apps specifically for your own salon. These apps can be anything from glorified web sites to interactive purchasing and booking engines.

They will be apps that have your own branding and do not list any other salons that may compete with you.

There are a number of ways to get your own app including having one custom built from scratch according to your own requirements. Alternatively you could take what is known as a white label app and have it branded according to your own brand needs. There are certain sites that let you actually build your own app using wizard driven tools on their web sites.

The choice you make in how to get your own app will depend largely on what you wish to achieve through the app. If you have very specific and unique requirements then you may need to go the route of a custom built app.

Custom built apps

The upside of a custom built app is that you won’t have hundreds of other competitors that have apps doing exactly what yours does but just branded differently. However, on the down side a custom built app can be very expensive. Remember that you have to have your app built for the different mobile platforms (ie for Iphone, Android, Windows Phone etc) and you can end up spending over R100k on each of these platforms if you have it developed locally. For most salons this prohibitive cost makes a custom built app a non-starter.

White label apps

A white label app may be the next best thing in that you will have an app that is most likely custom built for the salon industry requirements, has a company behind it that is maintaining it and does not have large upfront costs like a custom app. The pricing model will most likely be a few hundred Rand a month and you will be able to include your salon details, price lists, specials and news and bookings requests (amongst other things). On the down side any other competitor can make use of the same app and therefore offer the same to their clients.

D.I.Y apps

D.I.Y apps are similar to white label apps in that you are using the same engine as anyone else who builds their apps on the same site as you, except that you are putting it together yourself using the options provided to you. The app is published in the app stores by the company whose site you build it on and they charge you a monthly service for providing all these facilities.

Answer this question first

The big question is “What do you wish to achieve through an app?” If, for example, you wish to allow your clients to log in to your app and view their live loyalty points balance or buy a gift vocher in their app then a custom built app will most likely be the requirement as the app will need to communicate with your loyalty scheme and gift voucher server.

If you wish to advertise your salon and allow clients to request bookings then a white label app would most likely suffice. However, you may wish to first ensure that your web site is mobile friendly as this may cover much of this for you already. A mobile friendly web site also deals with the problem of the different mobile operating systems as it will work across platforms.

Apps can be used as a talking point as they have the initial hype factor but in order for them to be more than just a gimmick they should be offering your clients some real value else the clients will not open them and eventually delete them. Therefore, if you are going to go the app route think about it very carefully and come up with a very good reason for your clients to open the app.

What do you do when you have a power failure in the salon? The answer is simple really … follow all the steps in your policy and procedure manual on what to do in case of a power failure. Oh, you don’t have any procedures for a power failure? Well, in that case consider a few of the following points when putting together a power failure procedure.

Your computer system, which contains all your critical data (like bookings, client details and the ability to process sales records) will be shut off immediately in a power failure unless you are either working on a laptop or you have an uninterrupted power supply (UPS) installed. The danger of it shutting off immediately (apart from the fact that you cant access data) is that your data may get corrupted. So, it is very important that you do have a UPS if not working on a laptop.

In the case of a UPS you have up to about 15 minutes before it will run out of power. As a daily preventative measure you should have already printed out the days appointments (including contact details of clients). If this is not your practice then you should immediately do so before the computer shuts down.

A laptop will give up to about 2 hours before its own battery runs out so you should be able to achieve more.

The first thing you should do is communicate with your clients, ie all clients that are scheduled to come in for appointments that day should be notified to advise them of the power failure potentially reschedule. Remember, in order to reschedule you will need your computer else you may create a double booking so if you are working without a computer you will have to arrange to call the client back when the power is back on to re-schedule.

If you are on a laptop and still able to connect to the internet (ie 3G usb Modem) then you may want to SMS all clients with bookings today, or even your entire database to advise them of the power failure. This may even provide a marketing opportunity to communicate with your clients.

If you use a fancy PBX phone system that requires power then you may need to plug in an old school regular Telkom telephone that does not need power to work. This will enable you to call clients as well as receive calls from clients during the power failure.

For the clients that are still in store and any the come in that you are still able to accommodate (ie Retail sales etc) you will need some way of recording the details of the transaction so have some sort of manual docket/invoice book available. Remember that your credit card machine may not be working so you will most likely only be able to take cash.

Once the power is back on remember to insert all the sales that you entered into the manual docket book. On the dockets you should record the client name and cell number, staff name, items purchased and payment method (most likely cash).

Checklist of items required related to your computer

• Daily bookings print out
• Uninterrupted Power Supply
• 3g USB modem (if you have a laptop)
• Manual Docket Book
• Regular land line telephone handset