Are you leaving money on the table?

This is the Build Your Salon podcast with me, Phil Jackson, here to help salon owners master the skills you need to build bigger profits and a fuller life. Hello Salon Builders, Phil Jackson back again. I'm here to help you make the changes in your business to generate the profits that you deserve. So, who could do with making a bit more money? I know there's been times in my career when I definitely could. In fact, I don't need to go back too many years before I can remember a time where myself and my partner had to not pay ourselves for three months in a row just so that we could keep the salon doors open, which is a crazy situation and a horrible, demotivating place to be, and I hope you never have to go there. But we did, and we survived, and what frustrates me is that I see salons all over the place that are leaving available money on the table. We're not taking it, and I'd like to talk to you today about how we can make a little bit more money. So, I'm here in Chicago. I did want to take you outside and show you a bit of Chicago, but unfortunately it is flipping freezing here and pouring with rain. So, we have retired to my bedroom, and I hope that's okay. So, I'm looking a bit dishevelled because I've just got off the aeroplane. And it put me in mind of something that the airlines do really, really well, which is offering a premium version of a service that they're already carrying out. And that's something I think we can translate into salons very successfully. There's an old statistic which still bears a lot of fruit for me, and that is that 20% of your customers will purchase a premium version of what you're doing if you make it available and good value to them. If I'm really honest, I see hair salons doing a slightly better job of this than beauty salons. Apart from the odd deluxe facial that I see here and there, I don't really see premium versions of beauty treatments terribly often. I think it's because hair salons are used to tiered pricing a lot more than beauty salons are, so we seem to have less resistance to premium pricing. So, let me give you an example and show you how this could pan out in your salon.

I'm going to use a hair salon as an example. And let's say that over a year, you have 1,000 customers who are happy to pay £10 for an add-on service. We're going to use a conditioning treatment as an example. So, they're coming in, they're having either a blow-dry or a cut, and they're happy to pay £10 for a deep conditioning treatment because they understand the benefits and you've sold that to them really well. Now, if that statistic of 20% rings true, that means 200 of those customers would be happy to pay a premium. Let's see what that does to the figures. So, instead of having 1,000 customers paying £10 for a conditioning treatment, we would have 800 who are paying £10 and 200, let's say we're going to get a deluxe version of that conditioning treatment in, and they're going to be happy to pay £20, so twice as much. Straight away, we're putting another £2,000 a year through the till for no extra work at all. Sounds good already, doesn't it? It doesn't necessarily have to be a premium version of the product. It could be that we're going to introduce something like a deluxe head and scalp massage, or it could be that you're actually going to do the opposite and make it a quicker experience. There are customers who will pay a premium to be in and out of the salon a lot quicker. Or it could be that you're going to bundle additional products and services in with your conditioning treatment to represent that value. You can't just call it a deluxe version and not offer that extra value. Your customers won't like that. Here's where people go wrong. They stop. Let me take you back to that example again. If we can say that 20% of our customers are willing to pay a premium for our conditioning treatment, it's also true of that 200, 20% of them would be happy to pay for a super deluxe version of that treatment. So let's say that 800 are going to pay £10 for the standard conditioning treatment, 160 are going to pay the £20 additional sum, and 40 of those are going to be happy to pay for, let's say, £30. That then takes our takings on our conditioning treatments from £10,000 up to £12,400. Let's put another layer in as well. So 20% of that 40, and this is what this looks like, and I promise this is the last one. So 800 are happy to pay £10, 160 are going to pay £20, 32 are going to pay £30,

and eight people, let's say they're going to go for a super deluxe, fantastic experience, scalp and shoulder massage. You're going to extend the time. You're going to make sure that the products you use are absolute premium, and they're going to pay £50. So just eight people a year would be willing to pay £50. That takes our takings on conditioning treatments up to £12,560. That's a 25% increase for doing really not very much work, and certainly not going to try and find extra customers. 25% increase just on one service. Now, I'm not pretending that that 25% is all pure profit, but let's be really conservative. Let's say that after we've taken the tax off, and we've also paid extra for those premium versions, and there may be a slight increase in your labour charge, let's say that 10% increase is going to be pure profit. That's 10% more profit for doing the same number of customers, no extra marketing and advertising, no new customers coming to your salon at all. Or if that doesn't float your boat, how about doing 10% less work for the same money? Sounds good, doesn't it? So what I want you to do right now is go and find your price card, go through and just highlight those products and those services that you could potentially offer a deluxe or a premium version to your customers for. If you have some success with it, please get in touch, phil at buildyoursalon.uk. I love hearing about how well you're doing. I'll speak to you next week. Hey everyone, it's Phil. Did you like the episode? Be sure to subscribe and tell your friends. For more help in getting more from your salon and your life, head over to buildyoursalon.uk. Enter your name and email for our newsletter list. In the meantime, keep on building.