What are KPIs!?
In our last blog, we talked about how as salon owners and independents, we juggle a lot of tasks behind the chair. Something that often gets overlooked in the salon industry is KPIs. But they are critical to helping you take control of your business!
What are KPIs? It is an acronym for Key Performance Indicators. They are used as a way to measure the success of our business. KPIs allow us to make data-driven decisions and set goals for our business and our team.
There are so many KPIs under the sun that you can focus on, but it’s important to narrow it down at the start so that you can really hone on what’s going on behind the chair.
A couple of our recommended KPIs are: (1) Am I growing? (2) And am I sustaining?
Am I Growing?
Are your revenues growing year to year? Are you getting more clients every year? Is your businesses bank account growing?
Look at the customers you serviced from last year. The number of guests served in the prior year is a good benchmark for the existing year.
Now you can set a target for growth. Maybe you want to grow by 2%, 10%, 15%, or more. For example, let’s say we want to grow our business by 5%, which is still a really good growth rate. Now let’s divide that by 12 (for each month in the year). Therefore, you want to see a growth in new customers at a rate of 0.4% month over month in order to achieve the annual 5% growth rate.
Now, this is how much more services or sales that you want to hit each month in order to grow by 5%.<>Let’s say you’re a salon owner with staff. Do the same for each one of them. Look at how many guests were served in the prior year and give them a growth target.
Set the bar to help them achieve these goals, so that your team is growing, but so is your business. It truly is a win-win.
Am I Sustaining?
Are you currently able to sustain where your business is at? Are you able to retain your existing customers?
You always want to strive for 100%, retention of the customers in your business. Generally, 80% of our revenue comes from our existing clientele. However, we do want to be able to grow our business so that we can have new customers and new revenues.
It’s important to look at your team to see how full their books are, but also how many of their clients are recurring.
This way, you can together come up with a strategy to help make your clients more sticky or come back more frequently. This can be achieved by doing a promotion, do an email or SMS reminder for clients who haven’t come in for a few months. You can also do a referral program to incentivize current customers to come back, but also encourage their friends and family to come to your salon.
Additionally, if you or some of your staff are in higher demand. You should have a talk about increasing their prices. It’s so important to be charging your worth. Especially if you haven’t increased your prices for some time, it may be time to do so.You always want to stay accountable to yourself and your team. So have these conversations, so that you can all grow but also continue to improve your salons practices.