Author: Karl

Price It Right 3

On January 21, 2016

In Articles, Business, Hair Salon, Hairdressers Journal, Salon Business, Wellness

Chris Parker – SAHJ

In this third article on pricing we wrap things up. In the previous two articles we asked the question of how it is sustainable for some salons to have such cheap pricing, especially for services that have high costs associated with them. This question raised the bigger question on how to go about pricing your products and services as a strategy.

In order to answer these questions we identified that pricing, rather than gut feel, can be quite a scientific process and that many theoretical pricing methods and factors could be taken into consideration when deciding on pricing. In the context of a hair salon we identified “cost-plus pricing” and “competitor based pricing” as probably the two most influential methods used by most because of the fact that we need to cover costs before we can start making a profit and also our pricing needs to be competitive in the market place so that clients would perceive fair value for the products and services they were buying from the salon.

We also looked at how you might “position” yourself in the salon market and whether you were a value for money (budget) brand focusing on more price-sensitive clients or whether you would position yourself as a premium brand, where clients are not as price sensitive and you were able to justify your higher prices by the perceived higher quality / value of your products and services.

We also took note of the fact that hair salons sell both services and retail products and that with retail there was less room for pricing variation apart from stocking brands that may be less or more expensive than other brands.

In ending the series I would like to highlight some different theoretical pricing strategies that can be put into practise for varying reasons and at different times and stages of your business lifecycle.

Penetration pricing

Penetration pricing is when a business sets a low price in order to increase sales and gain market share. This may only be for a short time and then once the goal of increasing sales and/or market share has been achieved then the prices may be increased.

This is commonly used when a new business is opened. For example, a new business might run a 25% off special on some or all of its products and services in order to make themselves known to the market. Once the have sufficient clients gained they will then start adjusting prices back to normal.

Therefore, if you are opening a first salon or expanding by opening more branches then you may consider running a special price on various items for the first few weeks.

I think the idea behind some of the group couponing companies that offered amazing deals to their database of clients was explained as a way to penetrate the market. However, for businesses that made use of these services they found that they didn’t actually win the clients because the clients just followed the group discount supplier to the next deal at another business.

Bundle Pricing

Bundled pricing is when a business groups together more than one product and/or service and offers a better price or gives one away for free. An example might be a buy one get one free or buy one service and get a product at a reduced rate.

Bundled pricing can be very useful when it comes to special occasions like mother’s day or Valentine’s Day special. If you salon offers things like nail services then you could bundle a hair service with a nail service. Alternatively you could bundle together related stock items in to gift hampers and sell them at a better rate than if you were to sell them separately.

You may also bundle items that are paid for upfront but redeemed over a period of time. For example, pay for 10 haircuts or blow dry’s upfront and redeem them over time and receive a discount for doing so. This kind of bundling could be likened to loyalty because (like loyalty) you are rewarding repeat visits, however, in bundle pricing you are rewarding the loyalty upfront because the client is essentially pre-paying for their future services and you are rewarding them for doing so.

Psychological Pricing

Psychologic pricing is when the seller sets the price to play on how the buyer thinks about the price. For example, charging R299 instead of R300. We all know that this is the oldest trick but it enables the client to say they bought something for under R300, rather than R300. Somehow this does affect our psychology towards pricing.

Premium Pricing

Premium pricing is set to reflect the exclusiveness of the service or product. The idea is that a client would not easily be able to find the equivalent quality at a lower price and would be willing to pay the higher price because of its perceived exclusivity.

In retail this may be a particular brand that not many other salons stock and is of a very high quality. For services I think this is already happening as mentioned in my previous article by the fact that you get different pricing within the same salon depending on who the stylist is. If a stylist is perceived to be more of a “premium” brand because of awards they have won, celebrities they have worked on, or simply because of their skill or popularity then you may be able to charge a premium for their services.

Loss Leader

A loss leader is an item that is sold at or below cost in order to attract clients so that they can purchase other items at their normal prices. This is similar in a way to penetration pricing, which leads with lower priced items to gain market share.

Conclusion

As you can see there are many different pricing strategies (even more than mentioned in these articles) and it may be very confusing to figure out where to start. I think that if you stick to the basics and get those right then you will be able to start to “play” with some of the other strategies available to you. This implies the obvious, have a set price list. Ensure that you have factored in all the direct costs related to those prices and and keep looking at those costs so that you know your margins in case they are affected by things like supplier price increases. Increase your prices to keep up with inflation. Use price increases as a opportunities for promotions with your clients, ie by now and beat the price increase. Be sure of who you are in the market place, ie how you are positioned as a brand so that you do not panic simply because another salon has cheaper pricing. There are only two things that influence your turnover performance and those are the number of feet through the door and the spend per visit. If you are going to charge less you will need to increase feet through the door. If you are going to charge more then you will need to convince clients your services and products are worth it. Finding the balance between feet through the door and spend per visit is the key and once you have a good balance benchmark it and monitor it over time to keep yourself on track.

Mobile Transacting

By Karl

On November 15, 2015

In Business, Hair Salon, Hairdressers Journal, Mobile app, Software

About a year ago I wrote an article called “To App or not to App?” As the title suggests it was a look at whether salons should have their own mobile app. In asking this question we discovered that apps can and should be used by salons but this did not necessarily mean that you needed to run out and pay someone to build you your own app. Rather we recognised that there are many different types of apps that solve different types of problems for your business, from utilities to third party to industry specific, white label and custom developed. Thus the conclusion was nothing revolutionary in that when making your decision about using mobile apps you had to answer a very simple question about what problem you wish to solve and how would an app solve the problem for you.

A year down the line I would like to revisit this question and expand upon the topic as we see a rise in the area of third party apps that specifically focus on mobile transactions, ie payment via mobile phone.

Credit Card Payments via Mobile

Paying your bill by mobile phone is definitely on the rise. However, does this mean that as a salon you need to offer this service to your own clients? The answer (as always) is a business decision based on whether it solves a problem for you and does so at a cost that makes sense.

In most cases the way it works is that you install an app on your mobile phone and then link a credit card to that app. Then, when it comes time to pay for something instead of pulling out you your credit card and swiping it through a swipe machine you rather take out your cell phone, open the app, scan a code and then the money is deducted from your bank account as if you had actually swiped your credit card. So, it’s almost like you are carrying a copy of your credit card around in your mobile phone and your phone almost become the credit card machine. (Note that I am not referring here to the little hardware device that plugs into your cell phone that allows you to swipe a physical card but rather an app on your clients phone.)

Now, for many consumers the idea of storing your credit card details on your phone is something they are not too comfortable with, however, as time goes on and barring any horror reports of fraud taking place clients should become more and more confident that linking your credit card to your phone is reasonably safe.

Now, let’s get back to the core question of what problems this solves for you and at the same time what opportunities it creates?

The most obvious instance is if you currently do not have a credit card terminal to accept credit card payments in your salon, then the benefit is obvious. The question is whether it will be more cost effective to get a terminal from the bank or go the mobile route. This will depend on the bank and the mobile supplier and how good a negotiator you are.

The next potential benefit could be in providing convenience for your clients in cases where they do not have their credit cards with them but they do have their cell phones. Then you would be able to offer them a method of paying. This demand would most likely be driven by your clients and so if every single one of your clients is pushing for this capability then (cost allowing) it may be worth considering. However, clients are not likely to happen upon a hair salon while out jogging with only their cell phones and decide to stop in for an unplanned haircut so the likelihood of demand being high for this reason is less likely, but let’s see what happens over time …?

Loyalty

Another “currency” that clients are able to use for paying in store these days is with loyalty points and in much the same way as their credit cards can be linked to a mobile app they can also use their mobile apps to redeem loyalty points.

I think a far greater opportunity exists in mobile loyalty transacting than the abovementioned credit cards. However, the capabilities of the loyalty scheme itself will be up to the respective app provider and so the decision for the salon owner will be based on considering the features available and the costs involved. Considerations would include whether or not you are able to provide anything unique to your clients that the salon owner down the road cannot also provide using the same service, whether or not their facility allows you to cross pollinate with other partnering businesses that are not competitors to yourself and so on.

Gift Cards

Mobile gift card solutions are another opportunity that make more sense to me than credit card payments. How this would work in simple terms is that a consumer would be able to buy a gift card in some sort of online mall and then redeem it via mobile phone in the salon, in much the same way they would do a mobile credit card payment or mobile loyalty redemption.

Gift cards, although not as prolific in the hair industry as in the beauty industry are a great way to drive business to your salon. The question of feasibility will really be where the gift cards are available to be purchased, ie on whose website / mobile app can they be purchased and how many potential clients are visiting this web site / app? If there is good traffic to these locations then it could be a very good opportunity to drive business to your salon via gift card.

Coupons

Digital discount coupons are another option that also makes great sense. Companies are now offering solutions for discount campaigns that enable consumers to go into a participating store and redeem a discount coupon via their mobile phone in much the same way as the abovementioned options.

Digital discount coupons offer great control for promotional campaigns as they can be set to run for a limited time only and the redemption results can be tracked to let you know exactly how successful the campaign was.

Conclusion

As already mentioned, the number of mobile business solutions is rapidly increasing. However, the temptation can often be to respond to hype rather than business need. Therefore in the arena of mobile transaction methods the same principals should apply of whether or not the solution on offer actually solves a real business need or allows you to capitalise on an opportunity not otherwise available.

Price it right

By Karl

On November 13, 2015

In Articles, Business, Hair Salon, Hairdressers Journal

Chris Parker – SAHJ

A Hair Journal reader recently wrote into the magazine about salons in his area and the extremely low prices they are offering and how is this sustainable to a salon and where are corners being cut? He also mentioned he knows of a few salons who’ve recently closed their doors.

It’s a very good question, if the salon down the road or in the same shopping centre charges more or less than you do for the same product or service what should you do? How can you compete?

When asked to write on this topic I thought at first that it was going to be a very difficult and time consuming task get to the bottom of it because of the need to examine salons in detail on an individual basis. However, when looking at some of the theory behind a pricing strategy we can actually get some good guidance on how to go about deciding on pricing structures for your salon.

Why do you care?

Let’s start with the question of why we even care about this topic? The reader who wrote in to raise the topic in the first place hit the nail on the head when asking the question: “How is this sustainable to a salon” (ie cheap pricing).

I think that perhaps he had begun to answer his own question without realising it, ie by the fact that he noticed some salons had closed their doors leading to a possible conclusion that if you charge prices that so low that they are not sustainable then you will eventually have to close your doors.

The point is that pricing can make or break you, if you charge too much then clients may not come. If you charge too little then you may not be able to make enough money to cover your costs.

But how do you know?

So, how do you go about pricing? Is this something you know inherently? Is it something you learn over time with experience or do you get out the magic 8 ball and ask it? Well, I went to ask8ball.net to ask the question “should I raise my prices?’ The answer I got was “Most likely”

Ok, so there must be more to it than this – but how do you know what to charge?

It turns out deciding on your prices is not a just a matter of gut feel but rather the process can actually be quite scientific. Scientific is good as this implies a formula, something precise and measurable. So what’s the formula so you can all use it and move on ..? Well, maybe it’s not quite as simple a formula and we might need to decode a few terms like Cost Plus Pricing, Competitor Based Pricing, Price Elasticity, Sticky Prices, Supply and Demand and so on to get closer to deciding on how to set your pricing.

What’s the objective?

Before we decide on pricing we need to start with our overall objective. If we take our readers perspective then the objective of right pricing is to sustain, ie to remain in business. This seems like a very negative or limited way to look at things because we generally think about our businesses in terms of achieving growth and making heaps of money while hardly doing any work at all. However, when examined further sustaining your business actually implies that you are being successful because in order to sustain you need to keep clients coming back, pay (and grow) salaries, pay overheads, pay suppliers, compete with other salons and after all of this make enough profit to recoup your investment or the investment of other shareholders in your business. So, sustainability seems imply growth as well.

Services vs Product Pricing

A point worth mentioning at this point is that salons sell both services and retail products. When considering the pricing of these we need to realise the implications. Hairdressing is very interesting in this regard. We have things like Junior Stylist, Senior Stylist and then some guy called John (often the owner) in the price list. So you could come in for a service and pay one price for a Junior, another price for a Senior and then another for a stylist called John.

When it comes to this there is a perception (and hopefully some reality to match) that the gents cut from John for R285 is actually worth it when compared to a regular stylist charging R165, for example. Here you have an example of internal pricing strategies where the same service is being charged at different rates and you have the same challenges about getting pricing right so that clients will be happy to pay and keep coming back.

When comparing with competitor salons then you may be comparing senior stylist to senior stylist, but maybe the other salon doesn’t differentiate in the same way, they only have one price …

Retail on the other hand has less wiggle room. For example, if you sell the same product as a competitor for a higher price then how will you explain that? I can more easily understand if two different brands have different pricing or two different items for the same brand have different pricing but not the same item.

It kind of reminds me of petrol companies that advertise on TV that their product is superior. I’m told that they all generally get it at the same source but then add some of their own special ingredients to make theirs superior. When last did you make a decision to fill up at one station over another because of what they advertised on TV about what was actually in their petrol? You are much more likely to make your decision based on convenience, or service quality or cash back rewards.

Conclusion

So, this is the first article and hopefully we will go further into this topic in order to actually get something usable, but for now if there is one thing that we can take away it’s this quote from Warren Buffet “Price is what you pay. Value is what you get.”

Whatever the prices you set your clients need to believe that the price they are paying matches the value they are getting and so not a matter of the cheapest price but rather the right price.

Ye of little faith

By Karl

On November 10, 2015

In Articles, Business, Hair Salon, Hairdressers Journal

I have a three boys now. Our four year old is in the stage of learning to tie his shoes. Imagine if my attitude towards him was “oh, my son is just never going to be capable of doing this”. Or when it comes to dinner time I simply let my two year old continue to mash his food into his face rather than teach him to use a spoon or a fork or if I decided that its just too hard to potty train him and I leave him in nappies forever.

Not only would this perpetuate the problem of having children that are not capable of doing things that they really ought to be able to do themselves but it would also send a message to them (and others around them) that they are somehow inferior to other children and not capable of being taught or held accountable. What a sad scenario this would be.

Then why do owners, managers and administrators continue to treat salon staff in this way?

Are salon employees lesser human beings than all other industry employees on earth? When integrity, basic common sense, basic literacy and basic numerical skills were apportioned were they absent on that day? Does it somehow happen that as soon as you accept a job in a salon that you are somehow downgraded to the maturity and competency level of a child?

The answer must be a very definitive “NO”!

Attitude reflects leadership

The question then, is who is really to blame for the inadequate levels of internal salon management that seems to be prevalent amongst so many salons around the country?

I believe that ownership and management perpetuate the notion that internal salon administration staff are simply not capable of all doing anything that may be expected of them if they were to work in another industry.

The reason I say this is because this said on many occassion. So, if the person who hired you does not believe you have the same basic capabilities as your peers in other industries and they don’t expect it of you then why would you ever believe you are capable of or expected to perform at a similar level.

Case in point

I recently wrote an article about the importance and benefits of simply providing salon clients with a printed receipt. As a result of this one action there would be a number of other benefits that occurred as well. I also used supermarkets as an example and the fact that you would NEVER walk out of one of our big supermarkets without being given a receipt for your purchase.

However, in salons it is all too common that sales are not even entered as they occur. On far too many occasions the salon staff would manually calculate the sale (on a calculator), take the money, give the change and say goodbye. Then later in the day they may (or may not) enter the sale into their system.

Are the staff hired as cashiers at our supermarket chains mentally or physically superior to their salon counterparts? What then is the difference? I suspect it may be linked to the expectations / requirements / demands of management and ownership. They simply would not tolerate a staff member who does not comply with their point of sale procedural requirements. Salon owners and administrators not only tolerate it but they perpetuate it by taking the stance that salon staff are just not capable of anything better.

The salon environment in perspective

In my opinion the operational environment lies somewhere in between a private doctors office and a supermarket. In a doctor’s office the environment will be very calm and quiet. Patients will be required to first make an appointment, then on arrival fill in detailed personal information sheets relating to their medical and insurance details. Without this information you are unlikely to be able to engage in a consultation with the doctor – it’s not negotiable and administration staff will be the gatekeepers that ensure proper procedure is followed. After seeing the doctor you would be presented with a bill, either in person or via the post.

In a supermarket the environment will be far livelier (almost like organized chaos). Unlike the doctor’s office you will not have to fill in any personal information, but you will have to go through one of their check out points. Have you ever tried to get out of a supermarket without buying anything? You feel like a caged criminal trying to escape. It’s almost like the only way to get out is to buy something first.

Now, in a salon environment you have a bit of both. Have a lively environment with more people coming and going than a doctor’s office but not as many as you would have queueing in a supermarket. You have clients providing you with some information like name and number when they make a booking and perhaps a little more information when you do an in salon consultation. Then when they leave they pay for whatever service or product they purchased.

So if a salon is positioned somewhere in between then surely the protocols should be somewhere in-between as well? If you think about it salon staff are required to operate at a level that requires both the ability to work under pressure and also to be able to handle a greater variety of operating procedures as far as transactions go. So the assumption would be that of the three the salon staff member would be the most highly skilled, trained and accountable. Or not?

The root of the problem

The problem is not that salon staff are incapable, the problem is more than salon management and ownership do not believe in their staff or do not know how to develop their staff or do not care to develop their staff. This is very sad when you consider the effect it must have on a staff members motivation levels.

In our company, whenever something has gone wrong, whether it is a process that has failed or something else that resulted in a complaint from a client we as management always have to acknowledge first and foremost that it is a management failure that has resulted in the occurrence. The only exception might be if a staff member is deliberately refusing to comply with what is required of them, but then again see point number one as it is management that hired the wrong person in the first place.

Therefore, whenever you hear yourself saying “my staff will never be able to do that” or “my staff just make so many mistakes” then remember the fact that ultimately you are responsible for everything that takes place in your salon. Your current structure is perfectly designed for the results that you are currently getting. If you want different results then the change has to come from you first and a good starting point is to put a little faith in the human beings you have working for you. Without this any positive results that occur will simply be incidental. If you are humble enough to realise that you may be the root cause of the problem and are trying to get it right but finding it difficult to get the results then perhaps you are the one that needs to get help in order to achieve this.

However, its no good for you to simply try and hire someone to make all the problems go away for you. This is another very common problem seen in the hair industry, ie the flamboyant artist refuses to take responsibility for their business and hires an outside business person to run everything for them. I have seen this fail more times that I have seen it succeed. You have to get involved yourself. You cant flip between hiring someone or doing it yourself. It requires both, hiring the right people and being involved in the process to develop your team and get the results that you expect, require and ultimately demand.

Are you engaged?

By Karl

On November 10, 2015

In Articles, Business, Hair Salon, Hairdressers Journal, Wellness

In this month’s article I would like to ask the question “Are you engaged with your clients?” I think that many salon owners will feel a lot of pressure to be sending out regular emails to clients telling them of news, specials and other information that they hope will lead the clients to return and spend more money with them.

On one hand you will have salons that spend a lot of money paying designers to build beautifully professional emails and on the other hand you may find the salon owner, manager or receptionist creating a rather less appealing newsletter using word, power-point and clipart as their canvass and design tools. And then you will have those that just don’t do anything at all, they rely on face to face interaction when the clients are in the salon and use personality as their engagement mechanism.

Now, I do feel that a monthly or quarterly newsletter via email is very useful as it lets your clients know that your business is still in operation and you are ready for their business … even if they don’t open the email, just the fact that you sent it means that you are operational and are organised enough to be able to send them an email. I also believe in the positive engagement that takes place once the client is in the salon.

However, I believe that there are many other opportunities to engage with your clients in smaller and more frequent communications. I also feel that if they are done right they will be far more effective than an impersonal monthly newsletter or sales special.

SMS Booking Confirmations

Booking confirmations are more powerful than you might think. The most commonly used reason for sending booking confirmations is that they will prevent no-shows and thus save you money. This is true, and important. However, there is something else it does, which I believe has a deeper impact and therefore a longer lasting value. I believe that the client has a feeling of gratitude when they receive the sms reminder. On one hand it reminds them to not miss their appointment and the other hand it gives them enough opportunity to cancel and avoid the embarrassment of not showing up. It makes a small positive impression in their mind about your business and its these positive impressions that you want to create as often as possible and build upon. Talk to your software provider about automating this function so that it takes place at the same time each day and becomes part of your standard operating procedures.

SMS Birthday Wishes

Everybody loves to feel special on their birthdays and sending someone a birthday sms does just that, even if deep down inside they know it was a machine that sent it to them. These days it’s actually common for people to complain if they did not get their automated birthday sms.

However, what people love even more than a birthday wish is a birthday gift and if you are able to offer them something special on their birthday then the chances of them walking into your salon to spend some money with you are even better. How you capitalise on the situation thereafter is up to you. Again, talk to your software provider about automating this process to take place at the same time each day.

Loyalty Reward SMS Notification

If you are running a loyalty scheme in which you offer rewards then whenever a client is rewarded with something ensure that they immediately receive an SMS to notify them about it. Its no use having a loyalty scheme and hoping that clients never use their loyalty rewards. If it has been well thought out then it is better for them to redeem their rewards as the long term benefits are greater. Speak to your software provider about automating this notification so that staff members do not have to manage this process manually.

Unused Rewards SMS

Following on from the loyalty reward notification, you may wish to notify people that have rewards available but have not been back to the salon for a long time. On one hand it is common courtesy for you to let them know that they have unclaimed rewards and so the impression should be a positive one, as long as the reward value is worthwhile. Maybe only send a notification to clients who have rewards over a certain value so that they don’t roll their eyes when you send them an sms, which costs more to send than the rewards they have available.

Follow up (feedback) messages

One great way to engage your clients is to send them a follow up email or sms the day after they have been to your salon. The message should thank them for their visit so that they feel valued by you and that they get a sense that you want them to come back again.

Furthermore the message should welcome their feedback so that you can improve your service to them and give them the opportunity to complain if they need to complain. Its better for them to complain to you the day after their visit than to complain to their friends and families (or an online complaints forum) and never return to your salon.

Do I need to say it … talk to your software provider about automating this process so that it is something that always happens at your salon.

Clients that have not visited

All salons will have clients on their database that have not visited for a long time. An opportunity exists to send an email to these clients with the goal of either de-activating them from your database or getting them back in to the salon. I would do an exercise whereby you send them some sort of worthwhile offer in order to test whether they would consider coming back or not. If they respond positively it means that you have won back a client. If they respond by asking to be taken off the mailing list then at least you know your database is that much more accurate.

Talk to your software provider about conducting this exercise so that you ensure you send the message to the correct clients.

Conclusion

There are many ways apart from newsletters and specials to engage with your clients in order to continually shape a positive perception of your business. As you consider each of the above remember that once you start you must not stop. It must be something that is continued in your business for the long run. Also, start with one thing at time and ensure you get it up and running properly else you may bite off more than you can chew. Work with your software provider to automate as much as possible as this has the best chances of ensuring it is continued for the long run.

Tag ’em and bag ’em

By Karl

On November 6, 2015

In Articles, Hairdressers Journal

Imagine you are a marine biologist and you specialize in studying the behavior of great white sharks so that you can learn about them and ensure they are protected from extinction.

One part of your job might include tagging great whites so that you could monitor their movement patterns. Imagine going out on a boat one day to do some tagging. Think about how much work and cost would have already gone into getting ready for the task of actually doing the tagging. Apart from the cost of your education, the cost of the boat, the cost of the other members of your team, the cost the tagging equipment, the cost of the monitoring equipment and so on. Now, imagine you’re get out into the sea, you’ve locate one or more great whites, all the work has been done and at the last minute the person who is meant to place the tag on the shark simply chooses not to do it … and everyone packs up and goes home and hopes that somehow information about the sharks will magically become available. An absolutely ridiculous notion right? That would be absurd! All that money and effort only to walk away with nothing?

Some perspective
Okay, let’s put it another way. Imagine you are a hair salon owner. You’ve always dreamed of having your own salon and making it a success. You have invested energy finding the perfect location, you have invested hundreds of thousands of Rands into shop fitting and making your salon look as amazing as possible. You have gone through the tedious processes of hiring staff, setting up a price lists, purchasing computer equipment and software, stocking your shelves, advertising in magazines, local radio stations, even television, you have done everything you possibly can in order to get people through the door. Then, when they arrive you treat them as if you actually don’t care they exist. An absolutely ridiculous notion right? That would be absurd. All that money and effort only to walk away with nothing?

Well, if after all the effort of getting a new client to walk through the door and your staff do not capture their details onto your system it is as if they do not exist to your salon. Think I am being a little too dramatic? Put yourself in the shoes of your client. Visit a salon and then never go back. I would put money on it that 9 out of 10 salons will not care, well to be more accurate they will not ever know and hence it’s is just as bad as if they did not care and you would never hear from them again.

The message you are sending your clients
What is the message you are giving your clients when you do not capture their details on your system. The message is that “we do not really need you, you are not very important to us, we don’t really have anything worthwhile to offer you, we don’t want you to return, we have all the clients we need already and money is not important to us, we care more about counting our stock than we care about knowing our clients” and so on.

The funny thing is that salon staff are afraid of offending clients by asking them for their details, but in my opinion, it’s more offensive to clients to perpetually treat them like strangers. Do you not think that you can give a better client service if you actually keep record of what you say and do for your clients?

The critical touch point
The problem is quite easily solved, when a client calls in to make a booking simply ensure that your staff request and capture the clients name, surname and cell phone number. That’s NAME and SURNAME and CELL NUMBER. Having 120 John’s with no Surname on your database is not that helpful either, believe it or not.

However, if you do successfully capture these three every elusive bits of top secret information, then hey presto, you’ve tagged the shark. You can now track their behavior forevermore. Can I end my article at this point and getting back to my coffee? There’s not much more to it than this step. Any other information you get over and above the name, surname and cell phone is beneficial but in order for the very basic tracking of your clients and the ability to communicate with them you only need this.

What’s the point really?
I had a quick look at the client spend per visit of about 15 salons and for these 15 it is roughly R450 per visit (with a range of about R275-R650). Let’s say for arguments sake that each person visits a salon every 3 months, then over 1 year that is R1800 per person. Over 10 years that is R18000 per person. Imagine that husbands, wives, children or friends end up visiting the salon because of association to the original person then you could multiply that figure by 2, 3, 4 or more. This is a very rough illustration but gets the point across about the potential value of every client that visits your salon when you see them with a long term perspective.

Conclusion
Imagine Bruce Fordyce running the Comrades, arriving at the finish line ahead of the rest of the pack only to stop just before the line, turn around and walk off without crossing the line. Again, this would be ridiculous right?

Well, so it is with your your clients if you don’t capture their details. Every effort that is made in your business is with the express purpose of getting people through your door and keeping them coming back. Surely something as simple as adding their contact details to your system is not too difficult a task, considering all the other challenges you have faced to get where you are today.

The reason you do stock control is primarily so that you can manage and sell stock to your clients and keep them coming back. The reason you pay salaries is so that you can keep staff motivated to keep providing top service to your clients and keep clients spending money with you. The reason you write down appointments is so that staff don’t arrive at your salon on the day only to be turned away because they don’t have an appointment. The reason you send sms and email messages is so that you can communicate a message with your clients that gets them to come back. The reason that you introduce loyalty schemes is so that clients will keep coming back to you.

However, when you fail to even know their name you work against yourself and every other effort you have made in your business to be successful. You send a message that you really do not care and could not be bothered whether they come or go. Companies can spend millions trying to get their hands on client databases, whereas salons simply throw this valuable information into the garbage.

A stitch in time …

By Karl

On April 18, 2015

In Articles, General News, Hairdressers Journal

Have you ever had to do anything over again because you didn’t do it properly in the first place? Have you ever had to spend a lot of time cleaning up a mess that could have been avoided if you had just planned better?

Would you consider yourself a good manager? They say that the first function in management is planning. Planning is something I actually find very difficult – I don’t know what this says for my management skills …

Part of the reason I find it difficult is I always feel so busy with all the pressures of work that seem to almost be working against me to prevent me from planning (notice how I’m trying to make excuses). But I think there is some truth in this, life continually throws enough things our way to keep us busy for a number of lifetimes, we therefore have to be very deliberate about planning else it will never happen.

The flip side of why I find planning difficult is because if I do actually make any plans then I have to stick to them, which leads into the second, third and fourth functions of management namely activating your plan, coordinating your plan and finally maintaining your plan. If I don’t plan then I don’t have to do any of these other things and its more difficult to hold me accountable.

Im starting to wonder if this article is for your benefit or mine ..?

Types of planning

As I consider the different types of planning that you can do I realize I may be off the hook in some ways because I realize that for some types of things I do plan and for other types I don’t.

For example, I don’t plan my social life very well (probably why I don’t have much of a social life to speak of). I don’t plan holidays well either. However, when it comes to other things like certain projects at work where I have experienced what can go wrong when there isn’t a good plan in place I have been much better at planning.

How is it with you? Are you a planner by nature or do you only plan well for certain things or do you just live by the seat of your pants and rely on good instincts in the moment?

That little piece of paper

Believe it or not, this article is not an article on planning. Well, not in the general sense as I’ve alluded to above. Rather, as the title suggests, its more about being deliberate about certain small things that if done will save you time and hassle in the future. I guess this is a form of planning but its almost situational planning, ie to save you time and avoid mishaps in very specific areas.

My suggestions are not going to be anything mind-blowing but rather just some practical wisdom based on what I’ve observed over the years and how to avoid a lot of pain in certain of your business processes.

For this article I want to focus on just one thing, printing client receipts.

Print your receipts

Whenever you go to a reputable retail outlet you will notice that you always get issued a receipt once you have paid. This does not happen only when you request it, it happens automatically every time you make a purchase. When last did you have to request a receipt from the cashier at Woolworths or Pick n Pay? You’re more likely to try and refuse the receipt because its probably going to find its way into the nearest dustbin but you’ll never have to ask for one.

So, how does printing a receipt save you time and avoid pain? Well the first assumption is that you have some sort of computerized invoicing system and if you do then it means that you have a powerful tool at your disposal that should be enhancing your business processing capabilities in more ways than one. So, in order to print a receipt you need a computerized system (and by implication will get all the benefits that come with it).

However, just because you have a computerized system does not mean that you will print a receipt so go back to rule number one and ensure that you print a receipt. Lets look at the other benefits of doing this.

For owners

By printing a receipt it means that your reception staff have actually entered the sale onto the system. If they didn’t enter the sale onto the system then a number of things may go wrong, ie they may pocket the cash. If there is no record of a sales transaction then there may not be any record of cash being received. This will lead to pain in your cash flow!

For clients

Another outcome will be that the client themselves have proof that the transaction took place. The benefits to the client would be that they will be able to produce proof of purchase if they have to return a product at a later stage. This also keeps you in line with the Consumer Protection Act. Another benefit for clients will be if you have a client loyalty scheme, then the client will know that their purchase will contribute towards their loyalty balance.

For staff members

Because the sales have been entered onto the system and entered correctly then there is a higher chance that staff members will get their correct commission when salaries are paid.

Also, printing a receipt (AND GIVING IT TO THE CLIENT) means that the sale was entered into the system at the time it actually took place rather than at the end of the day after you have closed. It is disturbingly common for salons to not enter sales into their computerized systems as they happen but rather enter them all together at the end of the day. Doing it this way leaves much room for errors and manipulation. At the end of the day staff are eager to get finished and get home and having to work through cash up errors and deal with transactions that happened up to 8 hours prior can cause a lot of frustration and errors.

For accountants

I don’t know if you’ve noticed this yet but accountants are quite particular. They get their knickers in a knot if things don’t all balance or money cannot be accounted for. There’s quite a good reason for this, and this is because they know what kinds of questions will have to be answered if the “Eye of Sauron” (SARS) turns its focus onto your business. Believe it or not SARS does not like it when money can’t be accounted for and so if printing receipts for every client is a way that guarantees that every sales transaction is entered into your system and matches the money that you have in your safe or your bank then your accountant tends to be a little less condescending about how you run your business and the general state of your affairs.

Conclusion

There are many more benefits not mentioned above that are the result of simply printing a receipt like accurate reporting and analytics, targeted marketing campaigns and stock control to mention a few. Who would have thought that the little piece of paper that so often goes straight into the bin could have such a profound influence over the successful management of your salon?

If you are not currently doing this start today, ensure that every client who visits your salon walks out with a printed receipt for their purchase. Ensure all your correct details are on the receipt. Ensure that your software autoprints a receipt and also a second copy that you can keep in the salon for your own records.

It may seem like more work to have to enter the sale into your system as it happens but as the saying goes a stitch in time … well you know the rest.

Crossing Over

By Karl

On January 8, 2015

In Articles, General News, Hairdressers Journal

There are two types of people in the world, those that buy hair care products from salons and those that don’t.

It’s interesting for me to speak to some people who by middle class standards are considered to be relatively wealthy and hear that they don’t buy professional hair care products. The idea of spending R250 on a bottle of shampoo or conditioner is quite outrageous (remember these are people with large amounts of disposable income who can afford to take regular overseas holidays with their entire family).

If they are willing to buy a bottle of wine for R250 which will last all of one dinner (if lucky), why would they not be prepared to buy a good bottle of shampoo for the same price? Why would they rather choose to buy the R50 bottle at their supermarket?

The answer has to be that they don’t perceive the professional bottle of shampoo to be worth the price. They don’t understand the difference between the shampoo at the salon and the one at their supermarket. If they did they would surely buy the salon product, because they can afford it.

The honest truth is that they would rather have the bottle of wine as they can literally taste the difference between the cheap bottle and the more expensive bottle.

The answer therefore lies in knowing the difference.

Is there actually a difference?

The first and most obvious question to answer is whether in fact there is a difference between a product sold at a supermarket and a product sold at a salon. If there isn’t a difference then salons really are ripping clients off (and being ripped off by suppliers) with their high prices and salons should really just stock the same products as supermarkets and differentiate themselves by giving a professional consultation to clients on what products to buy.

If there is a difference do the staff members in the salon know the difference? If they do know the difference are they educating their clients as to what that difference is?

Listing ingredients is one way to go about educating clients on the difference but it seems that there are some camps of people quite vocal about the fact that there are not any real differences in ingredients between supermarket and professional products and you should be ready to deal with this question as it is the most obvious one.

Technical specs need to be backed by tangible outcomes, ie what real difference is the more expensive product going to make to me? Returning to the wine analogy above, you can taste the difference.

Therefore, the answer for clients should be focused on them experiencing a difference. If you said to me that a cheaper product (because of its ingredients) will leave my hair feeling thinner, drier and potentially cause damage to my hair in the long run and the professional product (because of its ingredients) will leave my hair fuller, healthier etc and have longer lasting positive results then I will be more interested. I will see the better product as more of an investment in my hair and should be able to experience the difference over time.

Is it worth it for salons?

Before we answer the above questions we need to answer the question of whether it is actually worth it to go out of our way to sell retail in the salon.

One way to look at retail sales in the salon is to compare it with beverage sales in a restaurant. The meals sold in the restaurant are like to the services you do in the salon. People book a table, like they book a cut. They come in and someone performs the service of making and bringing a meal to their table.

The kitchen has a capacity based on how many tables and kitchen staff there are in much the same way the salon has a capacity to perform services based on how much space and how many staff there are. You can turn so many tables in a night, just like you can see so many clients in a day.

However, there is no limit (apart from stock on hand) to beverages and similarly to retail. Now, I’m not advocating that restaurants send their patrons home drunk in order to maximize profits, but you get the point that there isn’t a people or space limitation to the beverages and in the same way retail – except how much stock you can physically keep on hand but I don’t recall any salon every complaining that they don’t have enough space to keep up with the high demand of retail sales.

Retail is definitely worth it. You can match and even beat your service turnover with retail sales. Clients who come in to buy retail can in turn be booked for services and vice versa so one hand can wash the other.

There is a huge market place, people are not using sunlight soap to wash their hair (well maybe some are). They are not using Vaseline to style their hair. They need haircare products, you have haircare products. They have money. You need money. Seems like a win-win..?

So when is the best time to sell retail?

The answer …. always. But maybe not in the way that you think.

When clients visit the salon to have their hair cut or styled they may not actually be in the market (at that time) for a retail product and may not like you try and push products onto them. At the same time salon staff may feel that it is very difficult and uncomfortable to try and sell retail to clients who have not actually enquired about retail.

I find that I need to buy haircare products when the ones that I am using run out. When this happens I will look for the most convenient and cost effective way to replace my products. I have an actual need and limited means to meet that need.

We usually buy groceries once a week (at least) and during this time we will make a list of things we need. In addition to food this list we will include things like toothpaste, toilet paper and yes shampoo. Now the problem becomes one of convenience as well as cost. I am a firm believer (because of personal experience) that professional products are better than supermarket products but I cannot deny the temptation to give the cheaper supermarket products another chance whenever the need for replenishing arises. It’s at this point that I am both most vulnerable (to buying supermarket products) and most ready to be sold a professional product.

Therefore, just because someone is sitting in a chair at your salon does not mean that they will walk out with a retail product. However, at some point you would like to get them buy a retail product from you so you need to start the conversation, find out their current product info, plant the seed about buying products from you and be ready to supply them when they are in need.

Conversion deals

If someone is using a supermarket product because of the price then why not offer them a special deal to try a professional product. You can do this on a case for case basis, ie you don’t have to make it a public offer to all your clients but rather you can do it on an individual level with your clients.

If you encounter a client that is using a supermarket product and you engage them on their product needs but find that they are not willing to move because of the combination of price and the perception that there is no difference in the results then why not offer them their first professional product at cost? It will cost you nothing because you will at least cover the cost that you paid for the product but it may lead to them buying their next product from you at full price and every product thereafter.

If the professional salon products are worth it then the client should be able to experience the benefits.

You will need to follow up with them to see how it is going and also to replenish their stock. The goal is to convert them from the supermarket to the professional market. Once they are converted you just need to ensure that they always come back to you for their professional stock.

The goal is to get them to cross over, if in fact you believe it is worth it.