3 ways beauty salon owners can increase profit margins
Fortunately, there are many ways hair and beauty salons can become more efficient while growing revenue and clients. Here are three of the best methods to boosting your business.
1. Improve product sales
Perth-based salon owner Suzanne Flanders believes the best way to boost profit margins is through focusing on retail upselling.
“It’s tough at the moment with the downturn in mining, but it comes down to how your staff upsell and promote products,” Suzanne said. Suzanne obtained a small business loan that enabled her to invest in new range of retail products that are already generating a clear return on investment.
In fact, the profit margins on product sales are often two to three times higher than that of beauty or hair treatments, and salons are 30 per cent more likely to retain a client who also makes a retail purchase. Make sure every client, every visit is asked if they need to purchase shampoo, conditioner or any of the products used in the styling of their hair that visit. This is essentially a “try before you buy” strategy. Make a note of which products you have used with a customer and try a different one on the following visit, demonstrating how to achieve a slightly different look and then offering the product to purchase.
To get the most out of your retail stock, follow these easy tips:
- Sell products you believe in
- Display them in attractive and creative ways
- Train your stylists to recommend them as solutions to clients’ problems
- Offer a first time discount or special deal like free conditioner with every shampoo.
2. Reduce overheads
More so than ever, salon owners cannot afford to be inefficient in running their business. Suzanne cites cutting down through more effective rostering as a major money saver for her salon, along with employing the right staff.
There are a number of ways salons can cut overheads, including:
- Reviewing rosters and assigning shifts more effectively
- Training stylists on how to minimise product wastage
- Negotiating with suppliers, service providers and landlords to obtain discounts—many businesses will be willing to do so to retain customers
- Have staff members perform tasks like cleaning, laundry and general admin instead of outsourcing
- Review your retail inventory and cut products that are not selling, or consider re-merchandising them to improve sales.
3. Reach out to new clients
The more clients and business your salon has, the more efficiently each dollar of expense is being used, so in addition to upselling and cost cutting, it is important to keep a steady stream of new clients coming in.
Suzanne says her salon has focused on marketing through advertising. “I have experimented with options like redeemable coupons in local newspapers – you need to find out what works and what doesn’t.”
Another strategy would be to photograph clients before they leave the salon and post images to demonstrate technique, or use hair models and video staff creating special looks step by step. Then promote all this content through Facebook, Instagram, and all the social media platforms.
If you’re having trouble attracting new clients, try these techniques:
- Marketing through social media
- Creating a referral program that rewards existing clients for referring new ones
- Create a loyalty card and give regular customers a 5% discount on product or services
- Considering a joint venture with complementary businesses like nail salons, fashion retailers or gyms to promote each other’s services
- Trial a “bring-a-friend” promotion
- Get out to community events and raise awareness for your salon. For example provide a treatment as a prize for the local school fundraiser.
And perhaps most importantly, remember it’s cheaper to retain old clients than find new ones, so maximise the likelihood of customers returning by ensuring you’re providing an excellent level of customer service and upselling retail products.
Improving profitability at a beauty salon can prove vital to ensuring a beautiful bottom line, while keeping customers looking fantastic.
If you need funds to invest in business growth, contact Prospa for more information on 1300 882 867.
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