Thursday, February 28, 2008

Cash Flow Plan, continued

I'm going to spend more time talking about the cash flow plan because it's so important! This post will deal with how to estimate your revenue.

Your service sales can be summarized by multiplying the number of clients you see in a month by the average service ticket. For example, if you see 700 clients a month and your average service ticket is $50, your service revenue would be $35,000. To have service revenue higher than $35,000 you need to see more than 700 clients, or have a higher average ticket, or both.

So how can you get your number of clients up? Two main ways:

1. Prebooking
2. Client retention

Prebooking - book your clients next appointment before they leave the salon. This will keep them coming in regularly and prevent them stretching out appointments. They will also look better because they are coming in when they need the cut, not two weeks after that! See the post from 10-27-07 for more information on prebooking.

Client retention - each month some clients are choosing not to return in the future. Sometimes this is unavoidable (ie. relocation). Other times, a client service issue is driving them away. Find ways to keep a greater percentage of your clients and revenues will rise. I'll write more on client retention strategies later.

How can you get your average service ticket higher? When was your last price increase? If it's been more than a year, you are probably overdue. Owners hesitate to raise prices but it's part of doing business! Other strategies - do you have any add-on services to sell? How many of your clients could use a brow wax that can ad $10 or $15 to their ticket? What percentage of your clients have color? Do you offer nail services? Does your client need a polish change? How about creating a higher end service...cut and color with a mini-facial while the color processes. The key is that average service ticket does not go up on its own! You need to know what your average ticket is, know what you want it to be, and take action to get it there.

Retail revenue works the same way. Your salon has an average retail ticket and you want to increase it. For clients who already purchase retail you can employ the Noah's Arc strategy - 2 by 2. Purchase one for home and one for the gym; one for the master bath, one for the kids' bath; one for home and one for travel. For guests who do not buy retail is it because you are not making recommendations to them? Asking "So do you need anything else?" as you walk them to the receptionist is not going to generate sales. Do your clients know what products you are using on them and why? (I'm using the XXX shampoo on you because it will prevent your color from fading and give your hair a great shine).

Again, the key is to know where you are, know where you want to be, and have a strategy for getting there. Set a goal, share it with the team, track your progress, and party like rock stars when you hit your goal!

1 comment:

  1. I haven't seen where you talked about how to determine how much time to allow for each type of service and between appointments. We book appointments back to back and have set certain standards for how long we think each type of service should take. Now after almost 4 years our service providers (nail techs, estheticians & massage therapists) have decided there need to be 15-20 minutes between appointments. We are on hourly pay and that essentially increases cost per service and reduces the number of clients that can be served per day. How have you addressed this in your salon? Also how do you handle lunches? Paid or unpaid? Allowed during lunch hour (which can be premium appointments times). 30 minutes or an hour?