When it comes to salon and spa management, it can be easy to take your busyness — and business — at face value. If your chairs are full and your center is bustling, you must be turning a good profit, right? Not always. To see how your results stack up, you must look beyond superficial measures of success.
Tracking the right key performance indicators (KPIs) helps you understand which factors contribute to your success, so you can make the most of your time and money — two of your most precious assets.
In this blog, we’ll cover why KPIs are important, which KPIs to measure across four key business functions, and how technology can help.
1. Customers and Retention
Your business can’t grow without customers. And, while everyone wants more customers, some bring in more revenue than others.
Are you getting a lot of first-time customers but not as many repeat visits? Are repeat visits rising while referrals stagnate? Are happy customers visiting as frequently as you’d like? Are certain employees retaining more customers than others? To know the answers to these questions, look at your KPIs.
If you don’t track it, it doesn’t count. To understand how your current customer mix is contributing to your success, you must look at the right KPIs.
Top Customers and Retention KPIs:
- Customer Count: Total number of customers
- First-Time Customers: Number of first-time customers
- Repeat Customers: Number of repeat customers
- Customer Visit Frequency: Visit frequency by customer and by service
- Pre-Booking Percentage: Percentage of customers who pre-book appointments
- Customer Retention Rate: Customers retained divided by all customers
- New Customer Retention Rate: New customers retained divided by all new customers, as defined by the number of new customers who returned for a second visit within a given period
- Existing Customer Retention Rate: Customers retained divided by all existing customers, as defined by the number of existing customers who returned for another visit within a given period
- Customer Retention Rate by Employee: Average rate of customers retained by service provider
- Customer Satisfaction (CSAT) Score: Measured by customer responses to a post-visit survey
- Hotel Guest Capture Rate: Percentage of hotel guests who have patronized the salon or spa
- External Guest Ratio: Total number of external (non-hotel) guests divided by the total number of guests who visited the salon or spa
Which KPIs to Measure:
- If you’re trying to get a snapshot of your overall growth, look at your total customer count, but don’t make assumptions based on this KPI. Dig deeper into other KPIs to get the full picture.
- If you wish to measure the effectiveness of a certain marketing campaign or promotion, for example, measure your number of first-time customers during the campaign period.
- If your goal is to increase revenue by 10% in the next quarter, you might focus on these KPIs: average ticket size, retail service rate, and occupancy ratio.
- If you’d like to increase your customer retention by 15% in the next quarter, you could focus on customer retention rate, new customer retention rate, and customer retention rate by employee.
Once you start tracking a few KPIs over time, you may be surprised at what you learn about your business.
The right salon and spa software can help you easily identify and track your chosen KPIs over time in one simple-but-sophisticated solution. Learn more
Tracking your customer and retention KPIs is important, but you must dive deeper. Next, look at your service KPIs, like average service ticket size, service provider utilization rate, average treatment time, and others.
If you’d like to boost sales and increase efficiency, you could look at how much your customers spend on each visit and how long they spend on a treatment. If you wish to make improvements in these areas, be sure to do so without making your customers feel rushed or pressured to buy more, as that could negatively impact your brand image.
If you notice your service provider utilization rate is low, you could coach your service providers to help them deliver great service in a timely manner.
Additionally, if you wish to grow your revenue through more upsells, track your average service ticket size KPI over time.
Are you tracking the KPIs that correlate with your business goals? If your KPIs aren’t surfacing the right insights, you don’t have the data you need to drive results. Get smart analytics.
Top Service-Related KPIs:
- Average Service Ticket Size: Average price of a service ticket
- Service Provider Utilization Rate: Utilization rate across all service providers
- Average Treatment Rate: Total treatment revenue in a given time period divided by the total number of treatments performed in that same period
- Average Treatment Time: Total number of treatment hours sold divided by the total number of treatments sold
- Occupancy Ratio: Percentage of available appointments booked
3. Sales and Revenue
When salons and spas think of growth, revenue is the first thing that comes to mind. We caution against only looking at sales and revenue KPIs, though. Many secondary KPIs tell a richer story about your business growth and trajectory over time — even if your sales and revenue hasn’t caught up yet.
Of course, your bottom line matters. Smart salon and spa management means keeping an eye on sales, revenue, and other metrics — particularly how secondary KPIs help or hinder your growth.
Business Tip: Drive Sustainable Growth
The “growth trap” — when an organization becomes increasingly complex due to their growth — often catches salons and spas by surprise. Get the right salon and spa software to track KPIs and grow smarter. See what smart salon & spa software can do.
Common Sales and Revenue KPIs:
- Sales: Total sales in a given period
- Sales Compared to Prior Period: Difference in sales between the current and previous period
- Retail Sales: Total sales from retail products
- Services Sales: Total sales from services
- Retail Sales to Total Sales: Percentage of total sales from retail sales
- Average Retail Ticket: Price of the average retail ticket
- Product Units Per Customer: Average number of product units purchased per customer
- Retail Service Ratio: Product units purchased divided by the total number of appointments
- Gift Card Sales: Total revenue from gift card sales
- Gift Card Redemptions: Total number of purchases made with gift cards
To learn how to drive more revenue for your salon, spa, or medspa during Covid-19, check out this blog.
4. Staff Management
Your staff is the face of your business. You can spend all the time and money in the world on marketing, but that doesn’t mean a thing if your staff don’t deliver a consistent brand experience. How can you ensure your staff delivers a positive experience and does their best to sell more products and services? Look at your staff-related KPIs to help you understand and improve your staff’s performance.
When measuring staff KPIs, be sure to offer incentives and rewards for a job well done versus hounding your employees to do better. Top business leaders suggest focusing on positive ways to reinforce the right behaviors — before they start to disappear.
For instance, if one of your service providers consistently goes above and beyond, you may wish to offer them a bonus, a pay bump, or simply some words of encouragement. If, by contrast, another staff member is underperforming, you could provide additional coaching and training and reward them when you see improvements.
For example, if a service provider has a high number of customers per day but a low number of repeat customers, that’s not ideal. If a service provider has a high number of repeat customers but a low number of product units per customer, they may need coaching on how to upsell more successfully.
For more tips on how to motivate and retain beauty and wellness professionals, check out this blog.
See the Big Picture
When you measure staff-related KPIs, be sure to compare them with other relevant KPIs across business functions. Smart salon and spa software can help you do that. Learn more.
- Customers Per Day: Number of customers per day, by service provider
- Rebook Rate by Service Provider: Percentage of customers who rebook their next appointment by service provider
- Wages vs. Sales: Percentage of the service provider’s wage (per day) compared to how much they produce in sales
How Zenoti Can Help
With our smart salon and spa software, it’s easy to track and boost all your relevant KPIs with the power of AI. Get in touch to see how Zenoti can help you level up your salon or spa business, without adding to your growing to-do list.