As an entrepreneur, you should know that numbers tell stories. And to run a successful salon, spa, or barbershop, you need to be keenly aware of the stories that the numbers in your business are telling you. This is where your business performance metrics come in.
Sometimes referred to as key performance indicators (KPIs) when we’re feeling fancy, business performance metrics are quantifiable measurements used to track the success and health of a variety of aspects of your business.
There is no one metric a business can use to determine the overall health of your entire operation.
There are a host of measures and factors you view together to get the complete picture and then plan how to improve.
In this post, we’ll shed light on the top small business metrics that barbershops, salons, and spas should track. You’ll learn what key business metrics to look at, why they’re essential, and what you could do to ensure that your day-to-day efforts are trending in the right direction. Let’s get started!
If you’re a barber, beauty, or wellness entrepreneur, we already know your passion is in your craft, and running the numbers may not be the thing you look most forward to.
However, staying on top of certain small business metrics is a MUST for your company. Having a handle on your KPIs keeps your business on track and paves the way for future success.
Consider the following:
By now you’re well aware of why tracking metrics in business is important. The question is, what exactly should you measure?
When it comes to small business owners in the beauty and wellness space, there are a number of specific KPIs that tell you how your salon, spa, or barbershop, is doing.
Here are the top business performance metrics we recommend you monitor consistently.
The most basic number that any business owner should know is their company’s annual revenue. Annual revenue is simply how much money the company took in in a given year.
If you’ve been in business for more than a year, you should not only be tracking the annual revenue of each year but also the average revenue taken from across all or a subset of years.
Comparing average annual revenue with previous years is an easy way to see if your business is, on average, thriving in the green or heading towards the red.
There are lots of ways to boost your annual revenue, but some of the top steps you can take to improve this metric are:
Review your pricing. A reasonable price increase could raise your sales and revenues. Review your current rates, the prices of your competitors, as well as the price sensitivity of your clients. Depending on what you gather, a price change may make sense for your business.
Expand your footprint. Adding more stations or expanding to other locations may improve your capacity for sales because you’ll be able to serve more clients. Just note that growing your business may come with additional costs, so run the numbers to ensure that your profits aren’t taking a hit when you expand.
Acquire more clients. Boost your sales and marketing initiatives to attract more clients to your salon, spa, or barbershop. Depending on your business, you could do things like:
Average booking value is the metric that tracks the average planned price of an appointment at the time of booking. In other words, it’s the price of the services that the client decides to purchase when they book their appointment.
When analyzed the right way, this metric can be a good way of determining the performance of your marketing channels and other elements of your business.
Here are a few ways to deconstruct your average booking value:
By viewing your average booking value under these different circumstances, you will be able to determine which parts of your business can be optimized to improve your booking value, so you can make the most of—financially and otherwise— each appointment.
Make it seamless for clients to find and book services. One of the best ways to increase your average booking value is to ensure that clients know the services and options available at the time of booking.
If you have an online booking portal, make sure the page clearly presents all your services and any add-on offerings, so clients can click and book them. More on Booksy Profile Completeness here!
Offer service add-ons at booking. You can offer add-ons as upgrades to the original service or as complementary services. For example, if someone is scheduling a haircut appointment, consider prodding the customer to book a color treatment while they’re at it.
Average service pricing is exactly what it sounds like it pertains to your rates and how much your services are priced. It’s a good idea to look at your individual service rates as well as your average pricing across your entire service menu.
Doing so will help you understand whether or not you’re over or under-charging, as well as where you stand compared to other businesses.
It’s also a good idea to look at your pricing alongside your revenues and bottom line, as this will enable you to determine how profitable and healthy your business is.
Regularly review your pricing. It’s important to review this metric regularly to ensure that you’re on par with industry standards and you’re not leaving on the table. Evaluate your pricing — along with the rates of your closest competitors — on a quarterly basis, then make a decision on whether or not you need to tweak your prices.
Know your market, then price accordingly. The right price for your services depends a lot on your market and target clients. A $100 haircut may seem reasonable to a certain segment of clients, while others may find that outrageously expensive. The key to figuring out the right amount is to understand who you’re selling to, and then make sure that your rates are acceptable in their view.
This metric gives you information about your clients’ purchasing habits, the point at which they start thinking about a service, and their loyalty.
This number can be further broken down in a few ways:
As you segment this business metric, you can get a much better idea of the booking habits of your clients, which makes planning, forecasting, and operations much easier. It may be that if you find manicures are typically booked day of while massages are booked a week in advance, you could consider scheduling an extra nail technician to work even if the bookings don’t suggest a busy day. Or if you know that you’ll have many more hair treatment clients coming in a month from now, then you can order the necessary supplies well ahead of time.
Book the next appointment while the client is still on site for their current service. Train your employees to work on rebooking clients seamlessly at the end of the service. Doing so will help you secure your next appointment and ensure that the client doesn’t wait too long to schedule appointments.
Plan your promotions around your availability. Knowing your average time to book will enable you to anticipate your schedule and availability for the days and weeks ahead. Use those insights when crafting your promotions.
For example, if you know that the next couple of days will have several empty slots, quickly create an offer encouraging clients to schedule a service on those days. Be sure to emphasize the booking deadline to drive a sense of urgency!
Loyal clients are the most valuable part of any business. Knowing how many of your clients come back to your establishment is a great indicator of long-term success.
You could also gain additional insights into your customer retention by breaking this metric down to get more specific data about which employees and services are most likely to result in a higher return rate. If you’re finding one service that has a very low return rate, for instance, it can tell you that something needs to be changed about it.
Train your team to rebook clients. You and your team should strive to book follow-up appointments for the client during their visit. This is one of the easiest (and most natural) ways to encourage clients to come back.
Educate your clients on why they should re-book their appointment. A hair stylist, for example, could tell the customer that coming back for follow-up treatment in 2 months will help them maintain the best look possible.
Improve the quality of your services. If you have a very low return rate overall, it most likely indicates that clients aren’t happy with the services or experiences that they’re getting from your business.
As such, take an honest look at your offerings and find ways to improve. Sometimes, this could mean refreshing the look and feel of your salon or spa. In some cases, you may need to train your team on better customer service practices.
In any event, drill down on the reason behind low customer retention and come up with a plan to improve.
Tracking how often your loyal clients come in for appointments is another good way to keep a pulse on the health of your customer base’s loyalty. As with other small business metrics, breaking this down provides better clarity on the total visit frequency of your customer base:
Send reminders. Sometimes, clients don’t schedule appointments simply because you’re not top of mind. You can address by sending timely reminders when clients are due for their next visit. Be sure to utilize your client’s preferred communication method (e.g., email, text, phone call) when connecting with them.
Start a loyalty or rewards program. Rewarding your clients every time they pay you a visit will reinforce their positive behavior and keep them coming back. Consider creating a rewards system that enables clients to unlock perks whenever they reach a certain number of bookings.
You can’t improve your business if you’re not tracking your numbers!
Business metrics are extremely important. They provide a wide window into the health of your company, and they make it easier to make decisions and brainstorm innovations. Being aware of key business metrics also allows you to see how you measure up against similar businesses, making it easy to gauge your performance.
Need help benchmarking your business performance metrics? Booksy’s got you covered. Access and manage all of your business metrics directly in the app.
