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Why Salon/Spa Retailing Must Be a Team Sport

August 9, 2021 | By Neil Ducoff | 2 Comments

The following was a question posted in our Strategies Salon Spa Business Idea Exchange Facebook group.

RETAIL COMMISSION? We are having some retail commission issues. Who should get retail commission on walk-in sales? Should the person who had to step away from their guest to ring up the sale get it or does it go to “the house”? Now, if a stylist must educate the client on what to buy, then he/she gets the commission. But what about the walk-ins that know what they want and only need the sale rung up? Thanks in advance.

Here are some of the responses …

  • Hire a receptionist and pay zero commission.
  • If you must step away from a guest, you should definitely get commission.
  • Commission on “in chair” sales only. Walk-ins are coming into the salon to purchase so it’s every employee’s job to recommend and ring out sales.
  • If you give retail commission on walk-ins, some stylists will rush to help a client before others. That makes it difficult to measure a stylist’s retail performance at the chair.
  • The first retail sale goes to prescribing stylist.
  • Walk-in purchases go to the house.
  • If the prescriber stylist has repeat clients, he/she gets the commission.
  • Walk-ins go to whoever rings them up … unless the customer patronized a specific stylist.
  • If they’re actually selling a product explaining and earning the sale, I pay a 20% commission.
  • As the owner, I suggest you handle the walk-ins. That way you’re in control.
  • I have always paid retail commission to the person who made the sale regardless of if the customer was a walk-in or a client.

As you can see, the answers are all over the place.

For an industry that is so dependent on professional products, the secret code to get professional service providers to “sell” has yet to be broken.

Even with the advancement and sophistication of salon/spa retail space, service provider engagement in retail selling is disappointing at best and frustratingly indifferent at worse.

Salon/spa software can track every service sold … by an individual. But retail is not a service. Very often, retail recommendations are closed at check out. Very often, guest services sell additional product(s). Very often, the client buys products that weren’t recommended. Just because a service provider delivered the service doesn’t mean he or she created the entire retail sale. Who gets the credit for the retail sale is complicated when one or more service providers and guest services staff are involved. The “who gets the credit” quagmire for the retail commission almost always creates more hurt feelings, in-fighting, and indifference.

Why retail commission doesn’t work:

  • Commission IS NOT team: Retail commission, just like commission on services, is an “I/me/mine” pay method that creates behaviors that conflict with teamwork. For example, a stylist that never does retail recommendations sends a client to check out. At checkout, a guest services staffer recommends and sells the client a product. The stylist learns of the sale and starts complaining that she didn’t get the retail commission because that was “her client.” The guest services employee can’t believe it and decides then and there that it’s not worth bothering with retail if the stylist gets the credit no matter what.
  • Retail commission makes retail optional: How long have you been saying to your employees, “Gotta get your retail numbers up”? How long have you been handing paychecks to employees that put zero effort into recommending and selling retail? How often have you wondered if your beautiful and fully stocked retail area is invisible to your employees? The simple truth about retail commission is that it makes selling retail optional. If a service provider sells retail, they make some extra money. If they don’t … they don’t … and clearly, the majority of service providers are okay with that. Some salons and spas play a little harder with rules like, “If you don’t sell at least 10 percent of your service sales in retail — you won’t get any retail commission.” Guess what? Too many are okay with that too because they weren’t selling retail to begin with.
  • Related: See our full blog post on Why Retail Commission Does Not Work in Salons & Spas here.

Professional product retailing in salons and spas will always be a team sport. Why? Because success in professional product retailing is about the professional recommendation and a proper closing process at checkout. For some strange reason, retailing became about the retail commission as the primary motivator. It’s not.

No retail commission — impressive retail sales

As an alternative, with Strategies’ Team-Based Pay business model, the professional recommendation is both a requirement and an expectation. Why? Because pay is based on overall performance, not a commission on service and retail sales.

On Team-Based Pay, there is no retail commission. Professional recommendations and retail sales are performance requirements. No retail recommendations — no raise. No more paying top dollar in exchange for retail indifference.

The immediate reaction from owners sounds like, “But they won’t be motivated to sell retail.” Strategies response is, “They never were and opted out.”

In 28 years of teaching and coaching Team-Based Pay, we’ve seen thousands of salons and spas doing 15 to 25 percent and more of total revenues in retail — without any retail commission.

The focus is on the consistent delivery of the professional recommendation. No Compromise!

The point of this blog post is to emphasize that retail commission motivates very few, and why “who gets the credit” thinking compromises teamwork.

More importantly, retail commission diverts the focus away from the true retail driver — the professional recommendation.

Here’s my challenge to you: Take a brutally objective look at your company’s approach to retailing professional products.

Evaluate how the “who gets the credit” thinking is compromising retail sales at the front desk.

Lastly, shift your thinking, systems and focus on perfecting the delivery of the professional recommendation to each client.

Your goal is to have every client receive a verbal and written professional recommendation.

And for the sake of teamwork and respect, get your front desk/guest services team into the retail game with a fair share of team bonusor at the least … team retail bonus.

📅 Schedule a free 60-minute strategy session to start building your Team-Based salon, spa, or medspa … CLICK HERE


Categories: Profitability

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Comments

  1. I was paying 15% commission on retail. the stylists did a great job. After my major surgery I was out of the salon for 9 months. My husband took over all of the paper work and paid 10% of the whole sale price. He was a car manager and they the way they did. It made all of us upset. So my question is when you add op all of the retail sales and even if its team pay, what total do you go off of? Retail or wholesale?

    1. Hi Patty,
      Cutting commission is never received well in any industry.
      Not sure I understand what you mean by “what total do you go off of … retail or wholesale?” Commission is always off of retail selling price.
      What’s important for you, and most owners, is that profit on retail is not what many owners believe — or were told by manufacturers. Your product is 50%. If you pay 15% retail commission, your Gross Profit is only 35%. Retail doesn’t live in your salon/spa for free. It takes up floor space that you pay rent on. There is a labor element for inventorying and maintenance. Simply put, retail should be paying for all of the overhead costs based on the square footage of your retail/front end. Overhead typically runs 40% of Gross Revenue. That means 15% retail commission results in a net loss of 5%. Just understand the math and that retail costs more than wholesale product cost and commission.

      When we do conversions from commission to Team-Based Pay, we include retail commission in the calculation for each employee’s new hourly rate. If they did great with retail, they get a better hourly rate. If they didn’t put any effort into retail … their new hourly rate reflects their lack of effort.

      On Team-Based Pay, there is no retail commission. Retail recommendations/sales are a performance requirement. The more recommendations that go to front desk checkout — the more opportunity for guest services employees to close retail sales. When the team hits the monthly service/retail goal, it triggers a team bonus that everyone gets a share of — including front desk.

      There’s a heck of a lot more to this and worth exploring.

      Hope this helps,

      Neil

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