Our clients’ data often sheds a lot of light on the good, the bad, and the ugly of their business.  With the ugly, the chain of reactions is predictable:  first a sigh of resignation as they face the brutal facts, then the light bulb of opportunity turns on, followed by the first glimpse of hope as they finally understand ways they can grow revenue.

We have seen business owners and managers in a variety of situations frustrated because they couldn’t get the necessary data out of their point-of-sale (POS) system to validate a hunch or get clarity on a decision. For instance,

  • POS reports were not calculating metrics the way the owner wanted to manage the business.  The “mysterious” formula used by one client’s POS system to calculate customer retention resulted in a number that is more than 20 percentage points higher than when we calculated it the way they wanted.
  • POS reports were not including or excluding specific transactions as appropriate to accurately reflect the needs of the business.  Depending on the question, our client wanted to include or exclude gift card purchases from the average ticket metric, or they wanted to include or exclude first-time customers paying with a gift card redemption from the customer retention metric.
  • POS reports were not including all of the relevant metrics to make a single decision.  Our client couldn’t easily get one report that combined customer retention, frequency of customer visits, and stylist utilization to correctly identify whether the stylist’s demand warranted a price increase. Or, whether the stylist’s book of business could handle the predictable drop in business due to a price increase.

While the above situations may have started out as frustrations and resignation, most business owners and managers quickly move on to see the opportunities in the situation.  Knowing the truth is freeing, even if it’s not what you want to hear at first:

  • Rather than guessing what your customer retention is, you can begin to identify what each employee can do to keep customers coming back.
  • Rather than wondering how frequently customers visit, you can see the purchasing patterns of individual customers and tailor your promotions, booking, and pricing strategy to meet your customers’ expectations and keep your employees utilized.
  • Rather than simply trying to increase your average ticket, you can know what products and services are routinely purchased together and create packages and promotions that encourage larger purchases.
  • Rather than just pushing retail product to increase your percent retail metric, you can promote products the customer will appreciate, and actually buy, based on their history.

As with most businesses, a salon and spa can be–and should be–focused on a handful of key metrics. The four metrics above are a great place to begin understanding ways to grow revenue. Once you have mastered these basic revenue-focused metrics, additional metrics, new slices of data, and more detail can be used to paint a more comprehensive picture of the profitability, productivity, and predictability of your business.

Your business is not static and you should not have to accept your POS system, metrics, or reports being static.  Your data and technology must accelerate and grow revenue, not stop it.

Question: What metrics most inform your ability to grow revenue?  You can leave a comment below.