Five ways to improve salon profitability

The last quarter of the year is an important time for salon owners. It is a time to reflect on the year that has passed, taking stock of the lessons learned, then looking ahead and setting goals and plans for the following year. Ultimately, it all comes down to this: how do you grow your business profitably? This is an important question to ask and there is no time like the present to start planning. To help you do so, I have put together my top five tips that can help improve profitability in your salon.

Increase your client base

One of the easiest ways to generate more profit is to grow your client base. This is done by reaching a new audience and encouraging them to try your services. In this area, word-of-mouth referrals from existing clients can be a very powerful source of new clients, so simply ask them to refer a friend or family member and then reward them for doing so.

Social media advertising is another effective way to reach a new client base. These days, with social media being at the forefront of everything we do, creating a salon that is pleasing to the eye and ‘Instagrammable’ can create the opportunity to reach new clients.

In addition,focus on providing good training to your staff, which, in turn, will improve the experience for your clients. Make sure your staff understand your brand message and encourage them to talk about it as well as other services you offer to clients, which should help to encourage them to re-visit.

Increasing spend per visit

You can encourage clients to spend more money per visit by selling products within the salon. Salons are often focused on services, but the most successful salons drive retail sales as well. When I conduct training, I often say that every client should leave the salon with at least one product to take home. Doing so can add significant revenue to your bottom line that would otherwise be lost. If these tactics are used correctly, you can unlock additional profit from your existing client base without additional investment.

Most people tend to stick to the services they know and rarely move away or expand on them. You’ve got the client through the door, which is the hardest first step. The next step is to keep them coming back and encourage them to try other services. Upselling can come across as pushy and annoying if done incorrectly. Your staff should be trained on how best to put this forward to clients. Teach them to communicate other service offerings that are either related to what the client is having or encourage them to get to know their client a little better, which will allow them to recommend services in a friendly and helpful manner.

Repeat business

Another way to grow your profitability is to encourage repeat salon visits or incentivise more services in one visit. Make your salon a luxurious, friendly and professional space that people enjoy spending time in. Make multiple services possible at one time, for example, enjoying a mani/pedi while having your hair blow-dried. Achieving this comes down to how productive and efficient your salon team are, so create a focus on training your staff and enhancing the experience for your clients.

Ultimately, clients are looking for a good experience, excellent customer service, top-quality results and a friendly environment.

Another simple but effective way to encourage them to come back is to ask if they would like to book their next service, which works well for regular services, such as manicures, pedicures and haircuts.

Reduce overheads

This step is a challenging one, yet as any business owner will tell you, it is also a necessary one. Review your operating expenses and make cuts where possible. Operating expenses can easily get out of hand, driving up business costs that negatively impact your profitability. Operating costs should be regularly scrutinised and understood, and I often find that they can be corrected simply with training or by providing operational enhancements.

Another key area to look at is staff training; productivity and staff retention both go towards reducing costs. Make sure that they are given the correct training and encouragement to meet service timelines. You can also look at cross-training to increase revenue, which reduces the overhead of employing further staff members.

The importance of marketing

Lastly, we should never underestimate the power of marketing to drive profitability. Whether you are recruiting new clients, launching new services, selling new products or announcing new staff or locations, marketing is how you will convey that message to your clients and generate revenue from that announcement. If you fall short on your marketing activities, you limit the profit potential of your business. Use ‘free’ channels, such as social media and email marketing, to regularly communicate with your clients. Use ‘paid’ channels, such as advertisements, to reach a new client base. The marketing opportunities are endless, and the rewards are significant, so ensure you have a plan for marketing to drive your profitability.

Increasing salon profits is not always easy but is totally possible with some consistency and clear goals in place. The key is to remember to keep your salon culture and values at the forefront of everything you do.