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Team-Based Pay Case Studies

June 30, 2016 | By Eric Ducoff | No Comments

Want to see what Team-Based Pay looks like in action? Here are two case studies showcasing the financial and cultural horsepower of a Team-Based Pay salon/spa.

Case Study #1 – The Urban Salon Team – Burlington, VT 

Case Study #2 – Rituals Salon-Spa – Midlothian, VA

Team-Based Pay Case Study [#1]: The Urban Salon Team

Team-Based Pay Case Study - Urban Salon TeamThe Urban Salon Team
2015 & 2017 Team-Based Pay Awards winner for Client Loyalty
Owner: Stacey Hamblett
Location: Burlington, VT
Square Feet: 1,300
Year Opened: 2000
Began Team-Based Pay: June 2011
Website: urbansalonteam.com

“I had more people and was making less money. And now I have less people, and I’m making more money. And that money is able to help my business grow.”

Landmark improvements experienced since incorporating Strategies’ systems and Team-Based Pay…

Pay conversion: Our Team-Based Pay conversion took place six months after I attended the Strategies Incubator Seminar in 2011. I had a walk out within one month after attending Incubator with two remaining. It was very liberating to convert. The walk out resulted in losing my manager and one third of the revenue. It was a long, yet rewarding recovery and I now know that my company wouldn’t have grown with the old commission model … or those employees … to where it is today.

Performance reviews: I implemented performance reviews and ended up terminating the last employee who had been employed for five years prior to Strategies. This left one employee besides myself — and she was my daughter. We only had a part-time salon coordinator at the time. Performance reviews took a lot of refining and focus. The salon is now able to grow and operate more harmoniously, as employees are informed of their expectations and are held accountable. More importantly, there’s the fulfillment when they’ve met those expectations.

 

Huddles: Huddles are our blood line and an always-evolving process. When they become mundane and unexcited, we change it up. Our culture depends on the information flow of saleable hours, rebooking percent and percent to goal. They ignite the team’s sense of urgency for the day. It isn’t required of everyone, but if someone has done something that inspires or moves another team member, it is mentioned during huddle and creates a warm feeling for everyone.

Cash flow: I struggled with the cash-flow plan for a long time. When I found my rhythm and understood what the cash flow was for, it became the financial performance tool for my company. Prior to that, it always felt like homework.

Critical numbers: What the hell were those in 2010? I had no idea what client retention meant, let alone that my business’ growth depended on it. Critical numbers are the foundation of my company. Everyone lives by them. We usually create our scoreboard on the critical number that needs the most attention.

Staff retention: My company went almost two years without a permanent/full-time administrative employee. There hadn’t been a sustainable job description and I had no idea what we needed or wanted. It took time to create Urban Salon’s core values, a skill certification program and to build our culture. We hired someone three years ago for our Director of Customer Care position, and he handles desk operations, sales and marketing. He is an amazing person that exemplifies leadership qualities. He has completed Strategies’ Incubator, Incubator Grad, MasterMind and Game Planning Retreat courses.

As for service providers, we struggled with new hires. They were inexperienced and our production was 85-90 percent with no time for proper training. We finally hired an experienced stylist over a year ago and she has also been a great fit.

https://strategies.com/wp-content/uploads/2016/06/Urban-Salon-Team-numbers

Financial achievement: I paid off my business loan last year. I eliminated credit card debt the end of 2015. There is $13,000 in savings with a $2,000 cushion in checking account. I used to wait for credit card sales to hit my account on Tuesdays before entering payroll so it would be available for paychecks on Friday. It was so stressful. The company is on track for 15% profit for this year.

Benefits: Payroll percentage used to run from 47-57% and now consistently runs at 32-36% … depending on new hires. As the owner, I have been able to take a manager’s wage and two weeks of paid vacation. My staff earns PTO time (calculating 1 week/year and two weeks at five years), they receive four paid holidays, IRA contribution after three years and a health care contribution. They also receive a bonus paid day for successful performance reviews. It’s a win/win for everyone. It promotes happier employees because they are not stressed out when they need to take a day off or might be sick. As a result, I have experienced less call outs and higher productivity.

Technology: We launched Millennium in July of 2015. We had been saving and preparing to purchase new software for over a year. What a milestone! When I first attended Strategies Incubator with a stack of reports, I had no idea what they meant. Now I can’t imagine running my business efficiently without them … which is why I switched to Millennium.

Describe why your company deserved the Client Loyalty Outcome TBP Award: 

The Urban Salon clients are the reason. 40-50% of our clients truly believe that they can see anyone at our salon. There is never any “my client” attitude. We thank our guests for their loyalty with a respectful loyalty plan, and our retention for existing clients is a consistent 85%. Our new client retention fluctuates seasonally, but our new software will help us track it more accurately.

We offer services such as “mini-retouches” or “tune-ups” that other salons don’t. We focus on client needs and what would make their grooming experience easier and successful. Checking out can usually cause hassle for the guests, so we rebook them prior to check out. We create a happy environment and our guests feel like they are truly part of our team.

We operate with a sense of urgency. We perform new client call backs. We respond immediately to their requests. We create an experience like no other.

Ready to have numbers and loyal clients like the Urban Salon Team? Download this free Team-Based Pay White Paper report to learn the system that got them there, and what it can do for your salon, spa or medspa.

Team-Based Pay Case Study [#2]: Rituals Salon-Spa

Team-Based Pay Case Study Rituals

Rituals Salon-Spa
2015 Team-Based Pay Awards winner for Productivity
Owners: Pete & Sheri Polignone
Location: 
Midlothian, VA
Square Feet: 
5,500
Year Opened: 
2006 – Opened on Team-Based Pay
8-time Salon Today 200 winner
Website: 
ritualssalon.net

“Our family business opened with ten employees in 2006, generating $300,000 in sales. In 2011, due to tight quarters and to alleviate congestion, we moved down the street and built out into a 5,500 square foot space. We presently employee 45 employees that will generated $3.5 million in revenue in 2015. Rituals is our first venture into this industry, and we have been a Team-Based Pay  salon from the start.”

Landmark improvements experienced since incorporating Strategies’ systems and Team-Based Pay

  1. Due to our systems and no-compromise thinking, when we expanded to 5,500 sq. ft. — and from 12 to 45 employees in two years — we saw only minor culture adjustments.
  2. With our expansion, we knew that information flow would be our biggest challenge, and that our ability to trust and to entrust others with responsibilities was key. The “Creating Culture of Trust” class Neil Ducoff presented to our staff was the catalyst in maintaining essential information flow.
  3. As many salons or spas experience, we lost key revenue producers who were generating over $800,000 worth of business. But because our true team-based culture is so attractive to our clients, we retained over 70% of the clients of those service providers who left, and kept on rolling without a hitch.
  4. We started our business in 2006 by implementing all of the Team-Based Pay systems, and we continue to follow the processes by the book. From the day we opened, all of our critical numbers have been in line with the Team-Based Pay benchmarks, including huddles, payroll percentage, critical numbers,, scoreboards and core values

Rituals Case Study Numbers

Describe any major “fiery pit of hell” challenges that your business has overcome: 

  1. Information Flow: During our expansion, we noticed things falling through the cracks. We started working with employees to help in the communication process, and the flow of information back to management.
  2. The loss of three employees in 2015 could have placed us in a downward spiral and made others wonder where we were going. Again, information flow was the key. We showed the team our client retention rates, and asked them for input on how they felt about the other the three team members leaving. Most were relieved after seeing that we had retain all the exiting employees’ clients, and it gave the younger employees hope and assurance that all was well.

Describe what is unique about your Team-Based culture: 

As in our personal family life, trust and consequences for your actions are “no compromise”. Living by these values, and reinforcing them with Team-Based Pay thinking, we have put a shared emphasis on giving back. This is a huge draw for our customers and employees … especially those that came to us from other cultures. We draw like-minded people.

List the employee benefits that your company offers:

  • Employer paid health and dental care
  • Employer funded 401K
  • Up to 3 weeks paid vacation
  • Paid sick days
  • Earned time off for referrals
  • Employee and family discount programs
  • No interest loans
  • Personal event allowances (weddings, etc.).

Productivity Outcome Award Highlights

Describe why your company should be considered for the Team-Based Pay Productivity Award. 

Our company has never been below 70% productivity. We work it. We “spread the love around” through recommendations and cross-promoting.

Describe what sets this company apart from others in the productivity category. 

We believe in sharing. It may sound a bit corny, but our philosophy is simple: It is through giving we receive. 

Describe how this company represents and embodies the systems and philosophies of Team-Based Pay and Productivity. 

Our staff understands that we all have less-than-stellar days, and they know that their fellow employees will have their back on those days. The staff realizes that cross-promoting from behind the front desk, behind the chair, or on the tables adds value, and by recommending other services to clients while they are visiting us helps the team and the company achieve monthly goals. We all work seriously hard at selling ALL of the hours we have available for sale … no matter whose column it is. 

Describe your most successful company initiatives designed to improve productivity. 

At every daily huddle, we discuss who our new clients are, who is needing a “bit of love” on the floor that day, and remind everyone of either the add-on we are featuring for the day, or the treatments we have had success with lately. This helps to fill open spots on the books.

Describe your company training policies to create balanced productivity. 

In our training process, everyone is trained on all services relating to their department. There are no specialists on our staff.

Is your company debt-free? Yes!

Come learn Team-Based Pay from the experts that invented it! Join us at the four-day Strategies Incubator, or at this year’s Team-Based Pay Conference.

Categories: Team-Based Pay

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