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Is Your Salon/Spa Business Flawed By Design?
February 28, 2021 | By Neil Ducoff | No Comments
A salon/spa business begins with an idea that quickly evolves into a vision with amazing opportunities.
Once that entrepreneurial seizure grabs hold, you’re willing to “bet the ranch” on building your vision.
If you were an experienced service provider at another salon/spa, it’s likely that part of your plan involved clients following you to your new business.
You hire some service providers, some with followings, and pay them some form of a commission (straight, sliding scale, level pricing, product charges, etc). Why? Because that’s the way it’s always been done.
From the day you open the doors, the prime objective is to “build” your service providers. The reasoning is simple. The faster you build “them” … the faster your company grows.
The energy of a newly opened salon/spa is exciting and empowering. Sustaining that energy is the biggest challenge — especially for owners that are more skilled at doing services than leading a business.
And when service providers build their clienteles and fall out of love with the salon/spa, they leave with “their” clients. When multiple service providers leave at once, it’s a devastating walkout that can take years to recover from.
FACT: Employees leaving with their clienteles and walkouts all happen by design.
The preceding scenario is one that almost all salon/spa owners can relate to.
FACT: Building a truly successful salon/spa is about building a company brand — not building client loyalty to individuals.
Here are some essential factors to help you rethink your salon/spa business:
- It’s about building a career, not building a clientele: If your salon/spa expects service providers to build their clienteles, you’re sabotaging the sustainability of your business. KEY: If they build it, they will leave with it.
- Commission rewards individual sales — not teamwork: Commission is about “come back to me.” Commission is nothing more than a piece of the service/product sale. It is not about overall performance and teamwork. KEY: Pay must reward the right behavior, attitude, skill development, attendance, teamwork, contribution to achieving company goals and objectives, etc.. Commission is anti-team.
- Team service has always been key in a service business: Team service means, “the skills of the entire salon/spa are available to each and every client.” Many owners say, “We share clients.” But “we share clients” is far from breaking down all the barriers that commission and individual clientele building creates. KEY: Team service is about building a brand. It must be embedded into the systems, values and culture of your salon/spa. It must be natural and unforced. Clients need to be educated on the value of team service. Why? Because the industry trained clients to be loyal to their favorite service provider.
- The commission ceiling: When the book is full, the only way to earn more money is to raise prices, work with an assistant and double book. That’s simply trying to squeeze more revenue out of a service provider’s column on the appointment book. It’s how the commission game is played. KEY: Service payroll, even on commission, is a percent of total revenues on your Profit & Loss Statement. That’s the payroll percent you must control. The problem is that on commission, you can’t control that payroll percent without changing/lowering commission rates. Changing commission rate is a surefire way to test your leadership and employee loyalty.
Here’s my challenge to you: You can pay employees very well without paying commission. You can offer real benefits like health insurance, vacations, company paid education, and more. And you can still earn a very respectable bottom-line net profit — in addition to earning an owner’s salary.
Yes, I’m talking about Team-Based Pay. But what most owners don’t realize is that Team-Based Pay is a complete collection of systems that drive productivity, profitability, staff retention and customer loyalty. More importantly, it’s proven, and it works.
It’s time for owners of employee-based salons/spas to eliminate the inherent flaw that commission creates.
To learn more about Team-Based Pay and Strategies: