Achieve Salon Commission Excellence with These 5 Insider Tips

We don't generally attract people to the hair and beauty industry who are driven initially by money, but that doesn't mean that people don't need paying properly, and we're certainly going to demotivate them over time if we get this wrong. Here are my five tips on setting salon commissions. Hello, hello, hello, my salon friends. How on earth are you? Achingly well, I hope, and looking good and feeling gorgeous. How are we all doing as we march towards the end of February? My goodness, 27th of February, this one comes out. I always thought the 29th, when we get that leap year, that should be like an international holiday, an absolute frenzy of fun and kicking back and that little bit of extra time given to us by your Gregorian calendar. But how's it been for you? February has been a pretty strong month across the board. In my tribe, I've had lots of good reports of people doing actually pretty well in the end. After a bumpy January and a very bumpy December, I think people are starting to breathe a little bit. And I always think the spring is the time when we have the opportunity in our salons, because that's when people start to get a bit more social and they start scraping the rust off the barbecue and feel like they might be invited to a few weddings this summer. And it's when we just start to come out of our shells a little bit and out of hibernation. So beware of March, though. I always think March is spring here in the UK. My God, so often I'm let down. But fingers crossed, we might get a few sunny days to see us through. And it's been lovely hearing the birds starting to mate furiously in the mornings. So what are we talking about today? Well, this came from a Q&A session. I had a question about commissions and I always sketch out my answers. I know it sounds like I just make this shit up as I go along, darlings, but I promise you I don't. I do actually sketch out what I'm going to say first. And I started sketching out my response to Tina's question about commissions. She's a brand new salon, which is a beautiful situation to be in and wants to get some advice on commission structures. And I very quickly, my notes got too long. And then I went away and had a little think about it. And I was going to take you through different commission structures on this episode, but I don't think that's the right way to go. If you're interested in alternative commission structures, I do have a mini program on this. It's like £47 or something. It's literally my thoughts on about five different commission structures. Head over to buildyoursalon.com and you'll see it on the homepage there. It's just a little mini course that I will walk you through the alternatives. If I'm really honest, it's probably best pitched at people who have a lot of flexibility around commission structures.

And I know that in some states of the US, for example, there's not much flexibility. You kind of have to do what you're told. But in the meantime, I wanted to give you my kind of five top tips when thinking about commission to help you avoid some of the pitfalls along the way. And number one, I think our commission structure. Sorry to keep looking down. I've got lots of notes today. And number one is to make sure that your commission structure is aligned with your wage strategy. So what do you mean by that, Uncle Phil? What are you talking about? Well, in my salon, the wage strategy was always that we would pay as much as we profitably can. So our wages were on the high side and our team knew that. It was one of the things that I put my flag in the ground and said, our salon is going to stand for highest wages possible as far as our team's concerned. Now, there was another flag that we put in the ground. We always said that we would spend more on training our teams than anybody else. So I always wanted the highest wages in town and the best training in town. Now, the thing is, even in an expensive salon like mine in a rich town where mine was located, that doesn't mean that you can spend as much as possible on everything. So my team knew that our Christmas party was going to be a little bit shit, to be honest with you. And we weren't going to be spending a huge amount on making our staff room, for example, look fantastic. If we wanted our staff room repainted, guess who did it? We would get a couple of volunteer team members to come in on a Sunday and put a lick of paint on the staff room. We were never going to spend on those things because we couldn't and also spend as much as possible on our wages, as much as possible on our training. So you need to set your strategy. You need to figure out what you want your salon to be known as, as far as wages is concerned. And also, whether your team and kind of think about your team as a bit of a customer avatar. So what's going to switch your team on? What's going to motivate them? And this is what commission needs to be about. And I think you've got the commission structure right. When, let's say, three weeks into the month, it's the very last appointment of the day and she walks in 25 minutes late.

Is your team member motivated enough to stay and carry out the service? Or are they going to say, actually, you've missed your appointment slot. Let's get you rebooked. If they'll stay, then you've probably got the commission right. And you've also got a brilliant team member on your hands as well. So figure out what you're going to stand for. But figure out what the team member needs. Now, some teams, depending on their time of life phase of their career, some crave stability much more than they do a high commission structure. So they would much rather a more solid wage that they get month in and month out and then a commission to top things up. Other team members, particularly in younger teams, they actually quite like the fact that they can chase much, much bigger rewards. But actually, they may not hit that every single month. Myself, I've never felt that in my salon, I wanted people to hit commission every single month. I've always thought, you know, if you're missing one or two months, but they were the months where you called in sick for several days or you took very long vacations or something like that, then I think it's okay for you to have missed commission. In fact, it was a signal to me if people were continually hitting commission targets that we needed to review and have a look at, first of all, the level that they were on on my price card because we had tier pricing. But secondly, whether we needed to increase their basic wage, which then makes the commission targets a little bit harder to reach. On that note, when we look at what's challenging but achievable for our teams, tip number two is we don't coach people to hit their commission target. If we have to coach people, if we have to motivate people to hit commission, then the commission's not doing the work. Okay, what we coach people on in our one-to-ones, and we've had lots and lots of mentions of performance management over the last month, and have a look at the episode that I did at the end of January if you're stumped on performance management. But we should be coaching people to what the salon needs them to do. So in my mind, we coach them to the salon target. That's what we need to get through the till to make sure that we're profitable. That's what we need to put through the till to make sure that we're hitting all of the financial milestones so that we can afford all of our budgets. The commission needs to be motivating people on its own separately. So it might mean that what we're coaching people towards for the salon target is higher than their commission target. Or maybe it's even lower than their commission target. But the commission should do the motivating on that side of things. Number three, your commission has to be meaningful. So it has to be important for the team member. Otherwise, there's no point. Let me give you an example. When I opened my salon, we had retail commission. And retail commission was 10% of the purchase price after we'd taken sales tax off.

And we didn't sell very much at all. And I tried all sorts of things to try and motivate my team. And we had the one-to-ones and we had the coaching and we had the product knowledge and we had the bloody sticker charts and all of those things to try and get people to sell more retail. But the 10% thing just wasn't working. And that's because at the time, you know, bear in mind, I opened my salon in the 1800s at some stage. At the time, the price of a bottle of shampoo was about £10. If I was giving you 10% commission on that, that was a pound. And honestly, I had a young team that weren't comfortable with their sales technique. They didn't have the patter down as far as talking to customers about products was concerned. They would rather give me a pound not to have that bloody conversation. To be honest with you, it just wasn't going to tick all the boxes. And then I started to play with what we did with that commission. And in fact, we stopped paying retail commission at 10%. What I did instead was gave people a National Lottery scratch card for each item they sold. And I bear in mind, a National Lottery scratch card at the time also cost a pound. So you would think that it would be exactly the same level of motivation. But no, my team went crazy for it. It wasn't something that was long-term tenable. But we did it over a couple of weeks and they used to save up their scratch cards and we would all stay behind work on a Saturday and scratch away and see who was going to buy the first round of drinks after work. So suddenly then I realized that actually the pound wasn't going to motivate them. But that sense of camaraderie, sort of competitiveness, that could motivate my team. In the end, what I realized that what switched my team on more than anything was training. So we attached our retail commission to our external training budget. So if you wanted to go, let's say, on a big fancy course at Vidal Sassoon's in London, we would price it up. We would figure out how many products you needed to sell. And let's say it was 150 products. As soon as you'd sold 150 products, you tell me and then I'll pick up the phone and book the training course for you. And that worked really well. And I would say that my salon is one of the strongest, particularly in the UK, it's one of the strongest as far as retail sales per customer is concerned and has been consistently for some years now. So motivate people with what motivates them, not what you're guessing motivates them.

But if you're going to pay commission, it has to have some meaning to it. And 10% on retail wasn't ticking that box for me. Tip number four is make sure that people get frequent feedback as far as their performance is concerned on commission. What we don't want is nasty surprises in people's pay packets at the end of the month. So we need some sort of mechanism where they can check on their progress. Because that customer coming in in the third week of the month at 20 minutes late, that's only going to motivate people if they know that they've already hit their commission target or they know they're on that higher tier of commission. So have some mechanism where you're feeding back. Now, if you've got team members that you're having frequent performance management with anyway, if you're having weekly one-to-ones, that's going to be relatively easy. If not, have a look at your salon software system. Lots of them have apps now where you can set different targets for your team and they can check their own progress on their own app at any point of the month. And then my final point is that commissions and wages, in fact, need to make sense in the bigger sense of the financial picture of your salon. So what does that mean? It means that when you're looking at commissions and wages, you also need to be looking at prices. Because let's say you have a 5% price increase and the commission target stays the same and the wage structure stays the same. What you've done is made it 5% easier for a team member to hit that commission target. That's going to start getting very expensive for you, first of all. But secondly, we're looking for something that's challenging but motivating. What you've done is made the target slightly less challenging. So what I would do when you're looking at your price review, that's the time to revisit your wages. That's the time to review your commission structure and make sure they're all in sync together. Because then we can figure out what you can profitably afford. But we're also making sure that that target remains challenging and achievable. So I hope that's been helpful to you. I hope it's been useful. Please reach out and let me know what you're doing commission-wise. I'm also particularly interested, because I'm a nerd and a geek and I'm quite nosy as well. I'm also particularly interested if you've moved over to a team commission structure. So where everybody either wins or loses according to the success of the entire team. I'd love to know how you're managing it. I'm kind of intrigued with it. I kind of think it's the way forward for our industry.

Or I'm also interested if you're on a zero commission, where people don't get commission at all. They just get their wage. I think that buys you a lot of flexibility as far as management is concerned. So reach out, let me know, phil at buildyoursalon.com. Also reach out if you have questions for the next Q&A coming up in mid-March. And also for that mini course with the five commission structures, head over to buildyoursalon.com and you'll find it there on the homepage. Just seven short days until I'm coming in your eyes and ears again. That gives you a whole week to leave me a review on this podcast. And until then, take care. Sit down and see what's going on with the queen of salons. Hair, beauty and more successful tips for business owners. All on Build Your Salon.