9 ideas to measure & motivate salon employee performance
Do you just measure your team’s weekly ‘take’?
Or do you look at the bigger picture?
A stylist or therapist’s weekly take is an indicator of how financially successful they are, but it doesn’t fully tell you how they are contributing to the growth of your hair or beauty business.
In this blog we look at the different ways you can measure, assess and target each salon employee’s performance and contribution to your business success.
By identifying individual employee strengths and weaknesses you will be better able to reward their contribution, improve their performance and grow your business.
A simple way to motivate all your salon team
But before we look at different ways to target or measure your employees’ performance let’s take a quick look at some HR psychology:
‘It’s not what you say it’s the way that you say it.’
We’re talking about Percentage of Target Achieved.
Use this, and you’ll build teams not egos. It levels out the playing field for all revenue producing employees.
Here’s how it works:
Simply measure the actual takings an employee brings in against their target takings which gives the percentage of target achieved, rather than the actual monetary value.
Each of these graphs uses exactly the same data, it is simply reported differently:
- The blue graph shows money taken (the most common way of reporting).
- The green graph shows the Percentage of Target Achieved.
This format focuses the mind, and inspires a personal ‘want to achieve’ as your employees are motivated to achieve and beat their own target.
Here you see each person’s targets and what they achieved in service sales figures:
- Charley’s target was £1,600.00. She achieved £1,968.23 = 123% of target.
- Izzy’s target was £4,008.62. She achieved £3,687.93 = 92% of target.
- David’s target was £4,008.62. He achieved £4,008.62 = 100% of target.
- Michael’s target was £4,596.55. He achieved £5,240.07 = 114% of target.
- Gemma’s target was £4,275.86. She achieved £5,216.55 = 122% of target.
Showing your team their Percentage of Target Achieved encourages mid and lower level employees to push harder, while ensuring your top employees continue to perform at their best.
It helps stop that ego building based on ‘big takings’ and makes motivating therapists and stylists in the mid and lower bands (who may think they’ll never take as much money as their higher earning colleagues) so much easier. Give it a try.
To calculate the percentage simply divide the takings by the target and multiply by 100 to give the percentage:
Target £1000. Takings £900.
£900 ÷ £1000 x 100 = 90% of target achieved
Target £600. Takings £540.
£540 ÷ £600 x 100 = 90% of target achieved
Now let’s look at some of the financial targets and benchmarks you can use in your hair or beauty business:
1. Average Service Value (ASV)
Average Service Value (ASV) is a popular benchmark for measuring a beauty therapist or hairstylist’s financial performance.
Try using smaller targets:
Rather than give your employee a financial target of £1,200 per week shift the focus by breaking it down into bite-sized chunks. Say ‘You should see six clients per day at an average of £40 per client’ and immediately your stylist/therapist knows what they need to do each day to achieve their target.
Breaking down the traditional weekly ‘take’ to smaller targets means:
- Your employee focuses on achieving their personal goals client by client, day by day.
- You can quickly identify where they need extra support and help from you to achieve their larger goals.
Include VAT on service sales when calculating the Average Service Value as this is the amount stylists and therapist see clients paying so it’s easier for them to relate to the total including VAT.
Gross service income ÷ number of clients = Average Service Value
2. Average Daily Retail Sales (ADRS)
Product sales are vital to boost profitability yet many salon employees have a mental block when it comes to retail sales. To help them overcome this, try measuring retail by the number of units sold, rather than their price, as it gives your team smaller targets and makes it easier to get into the habit of retailing.
Number of products sold ÷ number of days worked = ADRS
Non-financial ways to measure salon employee performance
Financial targets take a one dimensional view, don’t take into account the diversity of our industry and rarely reward the right behaviours.
Why not try using a mix of financial and non-financial criteria to target or benchmark your hair and beauty team?
Have a look at these ideas:
3. Average Daily Client Count (ADCC)
Simply the number of clients a therapist or stylist sees per day. This figure will tell you how productive your employee has been (or could be!).
Depending on the type of work and the speed they work, the number of clients seen on average per day will vary so using the Percentage of Target Achieved method we ran through earlier could be useful here when displaying stats to the team.
We find most salon employees increase their Average Daily Client Count as a consequence of being monitored.
Number of clients ÷ number of days worked = ADCC
4. First Time Client Retention (FTCR)
Did you know the industry First Time Client Retention rate is a staggeringly low 33%?
That’s right, 67% of clients do not return for a second visit. That’s a huge amount of money walking out of your salon door, never to return.
Successful salons, in our experience, target their teams to achieve at least a 60% First Time Client Retention Rate. That is, 6 out of every 10 new clients return for a second visit.
4 out of 10 non returning clients is generally seen as acceptable when you take into account visitors and nomad clients who would rather not commit to one salon.
Boost your profit
If you increase your First Time Client Retention rate from the average 33% to 60%, you almost double your second visit client numbers, growing your client base considerably in a relatively short period of time.
Just imagine the effect that would have on your bottom line.
60 new clients in month. 20 returned in 90 days = 33% FTCR
60 new clients in month. 36 returned in 90 days = 60% FTCR
5. Client Retention
Client retention is typically the weakest link to sustainable growth in our industry. Regular client retention is, of course, essential, unless you have a coach load of new clients dropped off at your door every morning (there’s a thought!).
Client retention is typically measured against clients who have visited on at least two occasions. We find successful hair and beauty business tend to aim for a client retention of around 75%.
Of course, client retention figures vary depending on the location of your salon. Rural locations can expect a higher figure on average than a city salon, whereas a salon in a shopping mall with a much higher volume of foot traffic, or a hotel that mainly has guests as clients, are likely to have lower client retention rates.
Stylist who see 120 clients in a month, 72 return in 90 days = 60% CR
Stylist who see 120 clients in a month 90 return in 90 days = 75% CR
6. Request Rates
It’s great when clients request certain therapists or stylists and shows they’re doing a good job and have a strong rapport with their client.
But, using Request Rates as a benchmark does nothing to help build a team or grow a business.
- Encourages people to act as though they own clients (the ‘that’s my client’ mentality).
- Builds egos.
- Discourages clients from moving freely around your team.
- Does not add value to your business because employees can leave at any point and if they move so do a lot of the clients.
Client Retention on the other hand is a very valuable number to know. Look at the total retained clients by the salon as a whole rather than by an individual. Why? Because as the business owner, your main concern is that the client returns to the salon not to a particular employee.
7. Rebooking Rate
Encouraging clients to rebook their next visit before leaving the salon is key to growing your business, and is easy to monitor if you have a computerised booking system or an efficient receptionist.
It is so easy to miss this opportunity. We often hear ‘our clients don’t like to rebook, they’ll call when they’re ready’.
Really? So why is it that the salon down the road has a 60% rebooking rate?
120 clients visit in a month 24 rebook = 20% Rebooking Rate
120 clients visit in a month 72 rebook = 60% Rebooking Rate
8. Productivity Rate
While not all hair and beauty business employees produce revenue directly, every employee is expected to be productive. Using different techniques to determine productivity will help you decide who is using their time productively.
For example, you could measure the number of clients a stylist or therapist has seen against the number they could potentially see if they were 100% booked.
If all appointments sold means the employee could see 10 clients in a day, and they see 7 on average = 70% Productivity Rate (also known as utilisation or up-time).
9. Attendance Rate
Measuring the number of days an employee is scheduled to work against the number of days they actually show up is a practical way to monitor attendance.
It is also a great way to give recognition for those who have 100% attendance record.
Employee scheduled to work 20 days a month, sick 5 = 75% Attendance
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These are the most usual ways of measuring, benchmarking and targeting your salon employee’s performance and contribution to business growth. Once you’ve identified individual employee’s strengths and weaknesses you can reward their contribution, improve their performance and grow your business.
Have you read our blog on which salon pay structures drive the best results?