45. The most important measure for salon success

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. Hello and welcome and it's that time of year again. Everybody's talking about setting targets for their salon and for their team. We're talking appraisals and we're talking performance management. So I thought it was really good timing for me to share with you what I think is the one most important measure for measuring the success of a member of your team. Now, I'm not going to say that you can only measure one thing. Of course, there are a whole range of measures that we need to keep an eye on on a weekly or monthly basis. If you're not setting targets for your team at the moment, take a look in the description box. There is a link there to a free cheat sheet on setting targets for salon team members. Have it with my love and I hope it serves you well. So the one measure that I'm going to share with you today that I think is vital is called utilization. Essentially, how busy one member of your team is. Now, before we get stuck in, I need to tell you that I am not a popular guy in the salon coaching community. I estimate there's about 12, across the world, there's about 12 really, really good salon coaches. And here's what happens every time I say something like, this is the most important measure for your team. Here's what happens. OK, so out of those 12, two or three of them, I'm not on their radar at all. OK, they're not interested in what I'm doing or they've never even heard of me. Yeah. And then there's a couple more that will, word for word, copy exactly what I'm saying and share that on their own blogs and in their own videos. In fact, there's one guy who pretty much takes the transcript, which is available on the buildyoursalon.com website and virtually reads that into his own camera. Did you think I didn't know, darling? Of course I know what you're up to. And then the rest of them jump on what I've said and tell me I'm an idiot and I don't know what I'm talking about and this is absolute nonsense and not to listen to me. And they're wrong. OK, and let me tell you what they will tell you. OK, they will say that utilisation, how busy a team member is, is not the most important measure. Some of them will say that the average bill is the most important measure of a team member's success. And I don't think that's correct. I used to, in all fairness, and I used to teach that. So if you've been with me for a few years now, then you will know that average bill used to be very, very high up, if not the most important measure for success. But I'll tell you why I don't believe in that anymore. And it's because we've had to get so creative in our marketing. We've had to turn our marketing into an absolute machine for a successful salon.

And sometimes that involves running promotions or discounts. If you're not running promotions or discounts, though, I bet you are running something along the lines of some kind of loyalty card. So, for example, somebody comes in nine times for a treatment and then they get their tenth treatment free. Well, all of that has an impact on what a member of your team can make in a week or a month. So it may well be that they're rushed off their feet doing lots and lots of complimentary treatments. Or they're running around town handing out flyers, which means that they're really, really jam packed, but they're actually not putting a lot of money in the till. So average bill will look a little bit more negative, even though they might be really, really busy. So utilisation will show us how busy somebody is. And that's why I think it's a better measure than average bill. The other measure that someone will say is most important is the amount of money they're putting in the till. Well, similarly to average bill, if they're putting lots and lots of money in the till, that's a great thing. If they're not putting lots of money in, though, it doesn't necessarily mean they're not busy. So your service total or your service and retail total isn't necessarily a great measure of how brilliant a stylist or therapist is. Also, it's very difficult when you've got staff of different grades, different levels of experience, people that have been with you for a different amount of time, to compare like with like. But actually, you can do that with utilisation. The other problem with using service and retail totals to measure success is that when somebody takes a couple of weeks holiday in a month, it hits their totals really hard, which means that you've manually then got to reset the total at the beginning of that month and measure how successful they've been on the bit of time that's left. Whereas utilisation takes all of that into account because what we're measuring is out of the number of hours that were available, how many of them were actually utilised, putting money in the till. So that means if somebody goes on holiday for two weeks, then two weeks of those hours aren't available. They're not part of the measure at all. And it's a really simple calculation as well. So what we do is we take the number of hours that were actually used in somebody's column, take out all the breaks, take out all the lunch, take out all the holidays and days off. What we do is divide the number of hours that were used by the number of hours that were available. Okay, so let's say you have somebody who was employed on a 48-hour contract and they've managed to get booked up for 30 of them.

It's going to be 30 divided by 48 times 100 and that will give you a percentage. And it's something you need to monitor on a regular basis. So I feed that back to my team on a weekly basis and then I monitor it in their performance management meetings on a monthly basis too. Now, I want to explore a little bit of the history of our industry before I move on to the next point. There was a time when stylists and therapists were among the worst paid members of society. We worked very, very hard, we always have done, but we were appallingly low paid. In fact, it was very difficult to even make a living when you first started in hair and beauty. Now, I'm not suggesting we go back to those days at all, okay? I know I'm always on the salon owner's side, always on the manager's side, but I do believe that we did have to increase the amount that we were paying our team because it was just appalling. But what that meant was when we were being paid appalling wages, we had real drive and motivation to earn commission. So we were pushing really hard, we were striving all the time because we couldn't afford not to. What's happened over the last five to ten years is legislation's come in and also the competitive environment for salons has slightly shifted and that's meant that we're now paying our teams quite considerably more than we used to be. In fact, in a lot of instances over the last five to ten years, pay has trebled or even more in some cases. Now, that had to happen. We had to move to a place where we could make a good living at what we love doing in our industry. But the problem is that drive, that motivation, that striving in a lot of instances has started to fade away. So that has to be replaced with something. Now, it's all very well measuring utilisation and setting targets for utilisation, but what I would like you to do is go away and figure out what the consequence is of somebody not hitting a target. And this is the bit that's missing. So let me explain to you how utilisation works in my salon and you can use that for inspiration or completely ignore it as you see fit. But what we have in my salon is a target of 80% utilisation. It may well be that you think that's realistic, unrealistic. It depends very much on your own situation. So we have 80% as our target. 70% is acceptable. Okay, so if you're 70% or above, I'm okay with that. I'm happy with that. We can carry on just as we are at the moment. If your utilisation drops below 70%, we start having weekly marketing meetings and figure out what you can be doing to start pushing more customers into your own salon column.

And then finally, at the bottom level of consequence, if your utilisation drops below 60%, it is written into your contract that I will be reducing the hours that you are contracted for. So every month that you hit less than 60% utilisation, two hours come off your contracted times. Now, that may seem a little bit harsh to you. But frankly, if you come into my salon on a full time basis, and for 40% of the time that I'm paying you for, you're not actually putting money in my till, I don't think that's particularly reasonable either. So that's the consequence that I have in my salon. And it's really important that you have those consequences built in. Now, of course, if somebody is a brand new starter, I don't expect them to hit 70% to 80% utilisation straight away. So I build in a target for them to move up to that 70% to 80%. So what I would say is if they're replacing somebody, so if there's a clientele waiting for them, then I would give them, say, three months to hit 70% utilisation. If they're brand new to me, if they're an extra member of the team, and I know we've got to do more work and more marketing to get them busy, then I might say you have six months to hit those targets. And then if they're not hitting those targets, well, there's a consequence to that as well. And we reserve the right to terminate your employment in that instance. So by all means, set targets. I hope you're monitoring utilisation. If you're not, have a little look. It can be a bit scary if you haven't looked at these figures before. And it can be a bit of a wake up call that you need to really assess whether you need the team that you have at the moment. I hope that's been useful to you. It will be more useful if you're building the consequences in. If you've enjoyed the video, then please don't forget to subscribe. I do a broadcast like this every single week, and I would hate you to miss out on the content that I'm sharing. If you've already subscribed, I will see you again 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.