31. How to set Targets for your Salon Team

Hi everyone, this is the weekly Build Your Salon podcast with me, Phil Jackson. I'm here with the tools you need to generate the profits you deserve so that you can lead a fuller life. Welcome, and today we're talking about individual team member targets. Last week's episode was all about one-to-one meetings, so how we coach individual team members for greater success and the impact that can have on the overall salon progression. A big part of those one-to-one meetings is targets, so today, this episode is specifically about that. What I'm going to share with you is three targets that I set my own team here in my award-winning salon. Now, it may well be that there are times when you need to add more targets, and that varies according to the performance of the employee and also the stage of the career that they're at. So it may well be if you've taken on, say, an apprentice, that you might build in extra training targets as well. Or if you have a stylist or a therapist who's struggling, say, with rebookings, you might set an extra target for her specifically on that. But these are the big three that I set my team on a continual basis from the beginning of their career with me right the way through to the end. It's really important that your team know what's expected of them. So I make this crystal clear way back in the recruitment process. So before somebody even begins working for me, they know exactly what is expected of them. Furthermore, I use these targets also when I'm deciding who's available for promotion. So it may well be that these targets have certain percentages attached to them. Once you hit those, I will consider increasing your prices and moving you up our price structure as well. So these are the big three that I want to share with you. And first up, it's average bill. Average bill or average ticket value is one of the most important key performance indicators or KPIs in your salon. Average bill covers an awful lot. So if you can see that somebody's average bill is very low, there are parts of her job that she's just not doing. An average bill that's on the increase indicates somebody who's now taking retail seriously or that's also very good at selling additional products or additional services when somebody comes in to your salon. So you want to see a nice high average bill. Set a benchmark for the level that the person is at in their career and also monitor it over time. So you want to see continual improvement in average bill. Bear in mind there will be bumps in the average bill when your manufacturers increase the recommended retail price for products

and also there will be a bump when you do your annual price increase. You are doing an annual price increase, aren't you? Good. Second up, we're looking at retention. Now there was a time when my second measure was client count. So the only thing that I was interested in alongside average bill was the number of customers that you were seeing in a day, a week or a month. I've changed my mind on that. I think client count is slightly old fashioned now. I think what I'm more interested in is retention for this reason. I can increase your client count by promotional activity. So if I do some work on Facebook and throw some things out there on Twitter, do some leaflet drops and a couple of press adverts, I will see a bump in the number of customers that come into the salon, either new customers or existing customers that have been reminded that we're here. That's out of the individual stylist or therapist control. The retention rate shows me how pleased my customers are with her performance. So that's what I'm interested in. I want to know that out of 100 customers that I give you, how many are you going to be keeping? If you're starting to see retention on the slide, you need to intervene really quickly because somebody with very low retention is not an asset to your business. I would set a very low benchmark that's acceptable in your salon. Anything below that, you seriously need to consider whether that person is in the right position or even should be employed by you at all. And our third measure is utilization. So this is how busy a person is. How much of the day that you're paying them for are they actually occupied making you money? You may think that if they're nice and busy seeing lots of customers and they've got a nice high retention and we're monitoring average bill, that we don't then need to look at utilization. The reason we look at utilization is because your marketing activity, because I know you take your business seriously, your marketing activity has a huge impact on the utilization of your team. But it may not be impacting on the average bill. Let me explain. If I run a promotion where I'm giving away haircuts in my salon in Newbury, I'm not saying that I would, but potentially I could. If I was giving away haircuts, I would expect the utilization of my team to be extremely high. But because the haircuts were free, unless they're doing an amazing job of upselling on the day and selling additional products and services, I wouldn't expect the average bill to be particularly high. So utilization can be impacted purely by the marketing spend that you're putting into your business.

So we monitor the utilization. If you've got somebody who has continually low utilization, despite your marketing efforts, again, perhaps you need to address that in a slightly more aggressive way. It may even be that it's time to move that person on. In my salon, just so that you have some indicator, we have two benchmarks for utilization. We have an 80% target utilization. So I expect my regular team members to be hitting 80% regularly. Below 60%, we have what's called an intervention. So you would start having marketing meetings with me on a much more frequent basis, where we start pushing new clients into your column to increase that utilization over time. If there's still a problem with utilization after six weeks of intervention, then we would start looking at your contract and potentially reducing your hours in a hope that we can get the hours that are left a lot busier to increase that utilization number. I hope that's been useful to you. I don't pretend to know everything though. If you've got something you'd like to add, either pop it in the comments below or head over to the Build Your Salon Facebook page, where I would love to hear from you. If you're having brilliant success with your targets, please share. I love hearing about how well salon owners are doing. I hope you've already subscribed. If you haven't, hit subscribe now. I put a video and a podcast out like this every single Monday, and I would hate you to miss out on the content that I share in the future. Until next week, take care. Hey everyone, it's Phil again. I hope you enjoyed the episode. If you did, please subscribe and be sure to tell your friends. For more help and information on running your salon and your life, head over to buildyoursalon.com. I'll see you there. Bye. Bye.