Pricing in today’s uncertain economy

September 22, 2008 | By Neil Ducoff | No Comments

Pricing services at salons and spas is a topic that’s always steeped in controversy. At one extreme, owners take an artistic and emotional approach that relies heavily on what the market will bear. At the other extreme, owners take a more strategic approach that factors in costs, profit margins and competitor pricing. In the middle resides a mixed bag consisting of multi-level pricing, incentive pricing, service packaging and other similar strategies with the intention of appealing to the broadest range of consumer price preferences.
Suffice it to say, pricing strategies at salons and spas are clearly more art than science. Yet, while the debate rages on, only one line item on your profit and loss statement truly matters – net profit. Did your business generate enough revenue and control its expenses to make a profit? And, at the end of the day, was that profit significant enough to be worth all the effort? In these uncertain economic times, these two simple questions must guide any and all pricing decisions and strategies.
To keep your thinking clear on your pricing strategies, consider the following:
* The problem may be your spending – not your pricing: Before you rush into a price increase or a discount strategy, get real about your spending habits. I’ve seen more owners crying the blues about profits while refusing to confront their spending and avoidance of cash-flow planning disciplines. If this describes you, it’s time to confront reality and take accountability for managing expense. Messing with pricing is not going to fix a spending behavior problem.
* The problem may be “not up-selling” – not your pricing: It’s a safe bet that you’re letting sales walk out the door simply because your front desk and service providers are not up-selling. Does your front desk and call center staff have scripts for up-selling? If not, why not? If they do, are they using those scripts? The same goes for service providers. Scripts make up-selling easier and more natural. Too many salons and spas have the systems but fail to train and hold employees accountable for using them.
* Know your cost-per-hour: You cannot effectively price a service without knowing your cost-per-hour that includes labor, product cost and overhead. Knowing your cost-per-hour is like knowing the cost of a retail product. It allows you to effectively “mark-up” that cost sufficiently to ensure a profit. Without knowing cost-per-hour, you’re simply guessing. You can read more about cost-per-hour in the Strategies’ archive by clicking this link: Service Pricing
* Discounting has its place – or not: Discounts do help influence buying decisions. Discounts allow you to focus attention on new services or time slots that need attention. Used strategically, discounting can and should boost revenues. And if the term “discount” brings shivers to your artistic and professional demeanor, you can easily package services into one attractive price and avoid the use of the term entirely. Needless to say, overusing discounts can create customer expectations to seek incentives.
* If you must raise prices: If you’ve managed your selling efforts and expenses to where a price increase is now warranted, go for it. Applying a viable and justified price increase is part of business. No need for apologies or detailed explanations. Just be honest with clients and say, “It was necessary to raise our prices.” I also suggest just doing it. Attempts to inform all clients of the impending increase just delays the inevitable. Some will complain, many will not and a few may decide to go elsewhere. That’s business.
Pass this email on to your business colleagues, managers and friends.
Neil Ducoff, Strategies founder & CEO

Pricing services at salons and spas is a topic that’s always steeped in controversy. At one extreme, owners take an artistic and emotional approach that relies heavily on what the market will bear. At the other extreme, owners take a more strategic approach that factors in costs, profit margins and competitor pricing. In the middle resides a mixed bag consisting of multi-level pricing, incentive pricing, service packaging and other similar strategies with the intention of appealing to the broadest range of consumer price preferences.... Read More

Pricing services at salons and spas is a topic that’s always steeped in controversy. At one extreme, owners take an artistic and emotional approach that relies heavily on what the market will bear. At the other extreme, owners take a more strategic approach that factors in costs, profit margins and competitor pricing. In the middle resides a mixed bag consisting of multi-level pricing, incentive pricing, service packaging and other similar…
Read More

Categories: Monday Morning Wake-Up

When learning and camaraderie bond

September 15, 2008 | By Neil Ducoff | No Comments

Many of you are familiar with our Strategies Business Series/4.0. Better known around here as SBS/4.0, this learning experience is comprised of four training sessions, three days each, held at our Business Academy in Connecticut. But, when we started our tenth SBS/4.0 group earlier this year, little did we realize how dynamic this group of 45 owners and managers would become. The structure of SBS/4.0 spreads its four training sessions out over ten months with e-mail updates every Tuesday to the entire group. This progressive learning and interaction naturally creates camaraderie and sharing – but Group 10 rapidly took it to a no-compromise level.
From the start, there was something unique about Group 10. They shared business information, manuals and successful strategies freely. But things really got interesting when they began leaning on each other for support. The Tuesday e-mail updates quickly became their lifeline. When a couple of owners encountered some serious and unexpected problems, group members rallied with encouragement and solid strategies. As entrepreneurs, we all know how vital it is to have fellow business owners bring their strength and belief in your ability to succeed when the road ahead is dark and uncertain. Over the past seven months, I’ve watched with pride as this group collectively advanced their no-compromise leadership thinking and behavior.
In three weeks, Group 10 will reconvene at the Strategies Business Academy for their third session. This time, a number of owners are bringing partners and key staff members to share the experience and energy of the group. One spa owner actually had four key employees request that they too attend SBS/4.0 with her. When she said, “Let me figure out how we’re going to pay for the added expense and travel,” they replied, “We already paid for our own tickets.” That’s what I call inspiring.
Lisa Cochran, who we fondly refer to as Miss Mississippi, called me to ask if the town allows campfires on the local beaches to do a New England clambake. When I told her fires aren’t allowed, undaunted, Miss Mississippi called the local Chamber of Commerce. On her own, she organized a clambake through a local caterer to be held on Captain Mark’s charter boat, RiverQuest, on the beautiful Connecticut River just a mile from Strategies headquarters. Now we’ve got husbands, wives and children joining the group.
The point of this story is to express how essential it is for all business owners to come together every three months to learn, share and inspire each other. We designed SBS/4.0 as a venue for just that purpose. Over the years, we’ve refined the course content to achieve that special balance of learning and interaction. With Group 10, we perfected our “secret sauce” to teach no-compromise leadership both in the classroom and in between sessions.
We have another SBS/4.0 beginning on October 12th. If you want to truly raise the bar and learn what no-compromise leadership is all about, consider joining Group 11. Click on this link for more details.
Pass this email on to your business colleagues, managers and friends.
Neil Ducoff, Strategies founder & CEO

Many of you are familiar with our Strategies Business Series/4.0. Better known around here as SBS/4.0, this learning experience is comprised of four training sessions, three days each, held at our Business Academy in Connecticut. But, when we started our tenth SBS/4.0 group earlier this year, little did we realize how dynamic this group of 45 owners and managers would become. The structure of SBS/4.0 spreads its four training sessions out over ten months with e-mail updates every Tuesday to the entire group. This progressive learning and interaction naturally creates camaraderie and sharing – but Group 10 rapidly took it to a no-compromise level.... Read More

Many of you are familiar with our Strategies Business Series/4.0. Better known around here as SBS/4.0, this learning experience is comprised of four training sessions, three days each, held at our Business Academy in Connecticut. But, when we started our tenth SBS/4.0 group earlier this year, little did we realize how dynamic this group of 45 owners and managers would become. The structure of SBS/4.0 spreads its four training sessions…
Read More

Categories: Monday Morning Wake-Up

What does “working on your business” really mean?

September 1, 2008 | By Neil Ducoff | No Comments

“Are you working on your business, or in your business?” This working “on or in” your business statement has been bandied around for years. For the leader of a business, it just makes sense. If you’re spending the majority of your time doing “the work” of the business, who’s plotting the course for growth and continued success? Who’s making sure the business has the resources, money, talent, systems and a rock-solid culture to ensure continued success? Who’s ensuring that everyone is focused and accountable? When all these “who’s” have a leader’s name attached to it, the result is what I call “the No-Compromise Company.”
For salon and spa owners, this “working on your business” typically means, “not doing services on clients.” For non-technician owners, it typically means, “being able to work in the office.” No matter what your interpretation of “working on your business” is, the big question is, what are you actually working on? Furthermore, does what you’re working on really qualify as “high-value stuff.”
To help clarify what working on your business really means, my friend Jack Stack says, “If you’re making decisions today that will affect your business in the next 30 days, you’re making the wrong decisions.” As leader, working on your business means that you are not getting bogged down in the day-to-day running of the business. Your focus must be on the opportunities and potential dangers down the road – not on the immediate activities.
When your systems are well designed and there is company-wide accountability to execute those systems with consistency, you are free to work on your business. You’ve got a leadership team and other staff that are much closer to the details of the work. Given this, your leadership team and staff should be capable of making the best operational decisions – if you let them.
Here is a hit list of do-it-now strategies you can use to ensure that you truly are working on your business:
* Redefine your role as leader. If you’re the leader of the company and you’re spending the bulk of your time servicing customers and stuck in the day-to-day operations, it’s the perfect recipe for stagnation. Start with a clean slate and redefine your role with a focus on vision and creating organization excellence. Plot your company’s course on a journey worth taking – and lead it there.
* Let go of the controls: If it’s only done right when you do it, you’re stifling the growth of others in your company. Owners that refuse to let go of the controls are forever bound to their companies, as they only function well when they’re present.
* Levels of authority: Design a system that clarifies levels of authority. This means that clear guidelines for decision-making exist at all levels of the company – and keep it there. For example, a front desk manager is responsible for all daily operational decisions that involve the front desk. The leader or general manager is not called in to solve the “double-booking error.” If the computers blow up, then they’re called in.
* You can’t be the main sales engine: If the revenues you personally generate are so vital to the financial integrity of your company, you’re stuck. You’ll never be able to work on your business. Working on your business means creating the right environment and culture that inspires all team members to contribute and grow.
* Build value to your company: As leader, your prime responsibility is to build value in your company. That means leading a finely-tuned company that adheres to no-compromise thinking and behavior. You can only build value by working on your business.
Pass this email on to your business colleagues, managers and friends.
Neil Ducoff, Strategies founder & CEO

“Are you working on your business, or in your business?” This working “on or in” your business statement has been bandied around for years. For the leader of a business, it just makes sense. If you’re spending the majority of your time doing “the work” of the business, who’s plotting the course for growth and continued success? Who’s making sure the business has the resources, money, talent, systems and a rock-solid culture to ensure continued success? Who’s ensuring that everyone is focused and accountable? When all these “who’s” have a leader’s name attached to it, the result is what I call “the No-Compromise Company.”... Read More

“Are you working on your business, or in your business?” This working “on or in” your business statement has been bandied around for years. For the leader of a business, it just makes sense. If you’re spending the majority of your time doing “the work” of the business, who’s plotting the course for growth and continued success? Who’s making sure the business has the resources, money, talent, systems and a…
Read More

Categories: Monday Morning Wake-Up

Simple systems drive customer loyalty

August 25, 2008 | By Neil Ducoff | No Comments

A quick Neilism: “Systems set leaders free.” If you want consistency in customer service, satisfaction and retention, you must use systems. A football coach has his playbook – a collection of systems designed to produce specific results. What does your salon/spa’s playbook look like?
Customers are on the receiving end of your systems. If those systems are designed well and your team follows those systems with discipline and resolve, you have the best chance of achieving consistent and predictable results. If you’re lacking systems, or they’re poorly designed and not adhered to, your customers are on the receiving end of compromise. Your company phone won’t be answered correctly. Customers will be on hold too long. Problems will take longer to resolve. Retention will suffer.
Simple or complex, customer loyalty systems just make work move smoother. I stopped at a diner for breakfast with a client. It was one of those popular and very busy local spots with lots of character. The waitress would come by and pour some decaf for my client and some hi-test for me. She had a lot of tables to take care of and I began to wonder how she could remember who had decaf or regular. I decided to ask. “It’s simple,” she said, “the decaf cups have two red rings around the top and the cups for regular have one black ring.” Duh. What a simple and efficient system.
Here is a hit list of do-it-now strategies you can use to implement systems to drive the customer loyalty business outcome:
* Go critical. Begin identifying the critical areas in your business that have the greatest impact, positive and negative, on customer loyalty. Prioritize this list and assign teams to design, test and implement the new systems.
* Set time standards for all points of contact with customers including: answering calls within three rings; greeting and acknowledging customers within thirty seconds; never leave a customer on hold for more than two minutes, etc.
* Connect the dots. Tie your critical numbers for customer loyalty, specifically your first-time retention rate, as one of the qualifiers for a bonus payout. This sends a clear message to employees that if the company can’t maintain satisfactory retention rates, it can’t afford to pay bonuses. We have a coaching client who bases 50 percent of the bonus payout on his company’s ability to maintain a first-time retention rate of 50 percent or better. He’s been working this for over a year and his first-time retention has never dropped below 54 percent.
* Collect key data. Are you collecting data on customer preferences, order history, birth date, what their favorite sport is, or any other data that can help your company personalize and customize each customer’s buying experience? What are your systems for collecting this data and getting it into a central database for service providers, sales and customer service representatives to access? If you allow client data to reside in the memory cells of your service providers, don’t complain when clients follow them when they leave. To build a company relationship with clients, you’ve got to work at it.
* Dealing with customer problems. What’s your system to ensure that problems, even the smallest concerns, are documented and reported so follow-up actions can be initiated? What’s the paper or document trail? Who follows up with the customer? When?
* Identifying and filling customer needs. Is there a system for your sales or customer service staff to follow to design the best solutions? The last thing you want in your business is an “order taker.” Taking an order is ordinary. Customizing a prescribed service and product regimen to truly satisfy a customer’s needs is extraordinary.
Pass this email on to your business colleagues, managers and friends.
Neil Ducoff, Strategies founder & CEO

customer-loyalty2A quick Neilism: “Systems set leaders free.” If you want consistency in customer service, satisfaction and retention, you must use systems. A football coach has his playbook – a collection of systems designed to produce specific results. What does your salon/spa’s playbook look like?... Read More

A quick Neilism: “Systems set leaders free.” If you want consistency in customer service, satisfaction and retention, you must use systems. A football coach has his playbook – a collection of systems designed to produce specific results. What does your salon/spa’s playbook look like? Customers are on the receiving end of your systems. If those systems are designed well and your team follows those systems with discipline and resolve, you…
Read More

Categories: Monday Morning Wake-Up

Behavior first – numbers second

August 18, 2008 | By Neil Ducoff | No Comments

In business, numbers are used to set targets and measure performance. You use business and industry benchmarks to compare how your business stacks up against the competition. You set goals for service providers and sales people. You run your financial reports in a myriad of formats to identify financial leaks and trends that signal trouble or success. Without question, numbers are vital to business. But there’s a catch. The numbers you use to guide and analyze your business performance are 100% behavior driven.
FACT: Behaviors make the numbers that you measure, celebrate and obsess over happen. Given this, why is it that so many leaders bypass the essential role behaviors play in achieving the numbers they want? Leaders spew out orders that sound like, “You need to get your numbers up,” and leaves the conversation believing those numbers are going to change. The problem is that the behaviors that produce the lackluster results are still intact. For the numbers to change, the behaviors need to change first.
From a company financial perspective, I’ve seen too many leaders build incredible cash-flow plans only to become frustrated that their perfectly formatted profit and loss statements and balance sheets are not showing improvement. The gap between the cash-flow plan and achieving the desired profits and value is purely behavior driven. With a system in place that creates and shapes financial disciplines, new and better behaviors will evolve. Financial performance will improve by changing behaviors to control spending and ultimately the management and use of financial resources.
Here are some red-hot strategies to make sure you get the behaviors right:
* Systems shape behaviors: A system is a series of processes that produces predictable results. Want an individual to produce better numbers? Provide them with the right system and skill development training to make those numbers move in the right direction.
* Understand the story numbers tell: Numbers simply tell a story. It’s your job to understand the story behind the numbers. What made this number a win? Why is this number causing a problem? If all you do is obsess over the numbers, you’ll never uncover the story that contains the lessons behind those numbers.
* Take responsibility and ownership: As a leader, all the numbers your business produces happened on your watch. They’re your numbers. If they’re numbers to celebrate, your leadership inspired the energy and the right environment for those numbers to occur. If those numbers are unacceptable, your leadership played a roll in that too. Blame does nothing to change the numbers you don’t like. Taking action and making the right decisions is all about behavior. Behavior first, numbers second.
* Your behavior needs to change first: Leaders are notorious for double-standard thinking. This means that the behaviors they expect in others aren’t necessarily the behaviors that they personally set the standard and example for. If the mandate is to sell more, do more, spend less, and you’re doing the opposite, you are the one who is compromising. You are the one who is preventing the numbers that you strive for to occur. No-compromise leadership is about accountability, execution and integrity.
Pass this email on to your business colleagues, managers and friends.
Neil Ducoff, Strategies founder & CEO

In business, numbers are used to set targets and measure performance. You use business and industry benchmarks to compare how your business stacks up against the competition. You set goals for service providers and sales people. You run your financial reports in a myriad of formats to identify financial leaks and trends that signal trouble or success. Without question, numbers are vital to business. But there’s a catch. The numbers you use to guide and analyze your business performance are 100% behavior driven.... Read More

In business, numbers are used to set targets and measure performance. You use business and industry benchmarks to compare how your business stacks up against the competition. You set goals for service providers and sales people. You run your financial reports in a myriad of formats to identify financial leaks and trends that signal trouble or success. Without question, numbers are vital to business. But there’s a catch. The numbers…
Read More

Categories: Monday Morning Wake-Up

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