For more than 30 years, I have had the privilege of working directly with thousands of business owners throughout the United States and Canada.
One of the vital tools that I have used to help them to better understand business operations and achieve success is the Salon Business Analysis.
The Salon Business Analysis is designed to meet the specific needs of our industry as it examines each facet of day-to-day business operations and helps determine areas of financial strength and weakness.
Accordingly, this first-hand review of thousands of business locations has allowed me to compile detailed and accurate statistics on revenue, cost, profitability, cash flow and unique guest spending patterns.
This valuable info paints a realistic financial picture of the industry and draws clear lines between the revenue generated by “Average Salons” as compared to the “High-Performance Salons.”
Many people do a double-take when they review the Gross Revenue per Guest per Year, finding it hard to believe that the revenue generated is so low. To verify my findings, I encourage you to take your total annual gross sales for each category and divide it by the total number of unique guests who patronized your business during the past 12 months.
What should provide you with hope and encouragement is that the financial success of the High-Performance Salon is based on generating just $50 more per tanner per year than the Average Salon.
Consider the following:
The typical 10-unit tanning salon (average or high-performance) has a database of approximately 2,000 active guests/200 per unit.
Average Salon
2,000 guests spending $75/year = $150,000 per year.
High-Performance Salon
2,000 guests spending $125/year = $250,000 per year.
An additional $100,000/year in gross revenue is generated by earning just $50 more per guest, per year – which is less than $5 per month!
To achieve high-performance results, the first thing you need to do is evaluate your existing database and examine how much each tanner spends on UV sessions, lotions, accessories and spray-tans. Start by dividing your database into categories according to dollars spent per year:
Dollars Spent Per Customer Per Year
$1 – $24
$25 – $49
$50 – $74
$75 – $99
$100 – $149
$150+
If your research reveals that a large percentage spends less than $50 per year, you should develop sales and marketing strategies that encourage additional spending and tanner retention.
You need to develop a simple, easy to understand pricing structure that steers tanners toward the packages and memberships you want them to purchase – while also rewarding them for their loyalty.
For Example: Which Package Would YOU Purchase?
• 10-Session Level-3 Tanning: $50
• 30-Day Level-3 Tanning: $50
Bonus: (1) free Level-5 session ($20 Value) + $10 Lotion Spending Credit
While the answer is obvious, pay close attention to the mechanics in play and the true sales and marketing value of selling the 30-day package.
The free Level-5 session is purely substitution. The guest was going to use a Level-3 system which typically costs about 50 cents per session to operate. Instead, you let them use a Level-5 unit which typically costs about $1 per session to operate.
For a difference of about 50 cents, you gave the tanner a perceived value discount of $20. Now, add the $10 lotion spending credit to the package and it gives the appearance of getting 30 days of Level-3 tanning for just $20 – without lowering the price.
Notice that the $10 is called a “spending credit” and not a “percentage off discount.” We’ve found that people respond better when they have “dollars to spend” vs. “dollars off.” And, most good salespeople can easily turn that $10 spending credit into a $20+ sale.
This is just one example of the many methods available to increase sales and dollars generated per tanner per year. I’ll be discussing others in the months ahead. ■
