Business Tips

The 80-20 Rule in Your Salon

By Michelle Fergusson | 

The 80-20 rule (or Pareto Principle), is one of the most popular principles we are taught in business, work, spending habits, and life.

If you’re familiar with the 80-20 rule, that’s great. I’ll still give you a refresher. If you’re new to this concept, I’m excited to share it with you and how it can make an impact in your salon or suite.

The 80/20 rule was created by Vilfredo Federico Damaso Paret. And the concept was based on the creator discovering the imbalance of production in his peas. Where he found that 20% of his plants made up 80% of the peas produced in his garden.

So the theory was then put into terms that 80% of our outcomes/ results come from 20% of our inputs. Quite often the 80-20 rule is used to determine which tasks we prioritize in order to have the most impact on what we are working on. The goal behind the 80-20 rule is to work smarter and prioritize in an order to get better results.

You’ve likely heard the saying that 80% of your revenue comes from 20% of your customers. Ultimately this statement means that these customers are the sticky ones so focusing on what makes them happy and stick around, will attract more customers who are like them. (More sticky customers = more recurring revenues!)

Let’s think about it in another way. How many clothing items do you have? And how many of them do you actually wear? Likely, 20% of your clothing items are “staple” pieces that go with everything. Meaning 80% of the times you are wearing your staple clothing pieces.

At the core, the 80-20 rule is identifying your best “assets” and using them to create the most value!

So how do we apply this in the salon industry? Here are a few examples:

  1. Identify what services bring in the most money.
  2. Identify what retail items bring in the most money.
  3. Identity the top color products you use?
  4. Identify which business focused tasks you need to perform and prioritize them through the month (and if there are tasks you can delegate!)
  5. Identifying which customers frequently visit your salon and how to attract similar customers.

Leaning Out

Another way to look at it is. What color products do you have in your back bar? Which ones do you use the most frequently? For this example the answer may be bleach, 10v developer, olaplex no.1 and a 7n. Those are the “20%” of the products that make up 80% of the formulas mixed at the back bar. So to apply the 80-20 theory, means that you would focus on ensuring the products you always have in stock are your 20% category, that way you’re not overstocking color products you don’t use as frequently allowing you to “shop smarter” and not lock up your money into unused retail and products.

Is it time to Delegate?

Sometimes the 80-20 rule gets misinterpreted. Sometimes it’s seen that what falls under the 20% category (inputs) is most important, making the 80% of the other inputs unimportant. That is false. Quite often the other 80% is actually something one can delegate or not a priority right now. It can also be a way to simplify things, maybe you are studying for an exam or taking on a new education opportunity. Identify the “core” or the 20% of the things you need to know and remember to focus on first, then you focus on the 80% later.

However, sometimes the 80% are tasks that you can delegate, if you have a team. Or get help if you are a solo artist or a salon owner. This could mean working with a bookkeeper or a software into your business.

Add Technology

Adding technology into your business can be an easy win into taking some things off of your plate. Whether that’s adding in booking software, accounting software, or hair color management software; these can easily help you to make the most of your time and give you back some freedom without losing control of your business.

A booking software can help to take pressure off yourself and team members to be needed to answer phones if you do not have a designated person for this role. It also makes it convenient for clients to book-in with you or your staff.

An accounting software helps you to easily see money going in and out of your account and stay financially organized!

A hair color management software (like SalonScale) tells you the exact cost of hair color on every bowl in real-time. Empowering you to track your color costs and and charge accurately! You can feel confident knowing everything leaving your color bar is being paid for.

Michelle Fergusson

Michelle Fergusson is the Content Manager at SalonScale Technology Inc. With over 3 years of experience in the marketing field, she has worked with multiple tech companies and non for profits to help them grow their brand and optimize their profits.