Industry • Best Practice
Measuring What Matters: The 5 Essential KPIs for Self-Care Industry Owners
Jul.20,2023By Boulevard Staff
For an accurate view of the health of your business, prioritize these self-care-specific stats
Once your self-care business has opened its doors, life moves pretty fast. Day-to-day challenges like scheduling, ordering supplies, and managing client expectations may take up the bulk of your working hours, but it’s critical to take a breather and analyze the health of the business at regular intervals. This will help you understand whether or not you’re operating as efficiently as possible.
Naturally, calculating sales versus expenses will keep you out of the red, but long-term success and growth demands that you dig a little deeper. These five key performance indicators (KPIs) will help you optimize comprehensive business performance while elevating your salon or spa to new heights of profitability.
Average ticket price
Average ticket price is one of the easier KPIs to calculate: Just add up your sales over a specific period of time and divide by the number of client sessions within that same timeframe. This helps you gauge sales activity and see if your strategies for increasing sales are working. The ideal ticket price varies by business type; for example, services at a medspa are generally going to cost more than those at a barbershop. As a starting point, use your lowest-cost service and compare it to the current average ticket price; if haircuts are $10 and you’re averaging $12 per ticket, it’s a clear sign that there’s room to improve. What’s important is making sure you’re consistently exceeding your goal ticket price, as even an extra $5 to $10 per appointment can add up to tens of thousands of dollars over the course of the year.
If you’re not, there are several ways to course-correct. One is finding creative ways to promote add-on services (think eyebrow waxing or a scalp massage) without coming off too “salesy”. Similarly, recommend retail products at checkout, but be sure to explain each product’s specific use and how it helps the client maintain their look. If your space is always busy but you’re still not hitting the mark, it might be time to raise prices; performing market research on local competitors will give you a better idea of whether or not your prices are in line with client expectations. Finally, it may be time for a fresh marketing campaign; emails and other promotional materials touting special deals or seasonal events might be exactly what you need to draw in more high-value clients.
New client retention rate
Getting new faces in the door is a first step, but for long-term growth and success, keeping those clients is key. A 5% increase in retention can increase profits anywhere from 25% to 95%, so the value of keeping first-time clients speaks for itself. Calculating this one is a bit more complicated (unless you have advanced reporting software to do the math for you); you’ll need to look at each individual new client that came in during a specific period of time and then note whether that client returned within 30, 60, or 90 days. For example, if 100 new clients visited in January and 50 came back by April, your 90-day retention rate is 50%.
Industry sources vary on the ideal new client retention rate, but aim for at least 50%. If you’re not hitting that benchmark, it’s time to look for opportunities to improve. Does your team provide an outstanding client experience? Are they encouraging booking follow-up visits at checkout? Is your salon or spa a welcoming, relaxing environment? Could you introduce a loyalty program to incentivize repeat visits? These are all questions to ask yourself if your new client retention rate is falling short.
While many profit-growing strategies in the self-care industry focus on client behaviors, it’s just as important to make sure you’re utilizing your team as efficienctly as possible. Divide the hours your staff is booked by the hours they’re scheduled for appointments (then multiply by 100) and you’ll have the percentage of time your team is using to directly serve clients, as opposed to conducting administrative work and other salon duties. This provides visibility into staffing needs — is your team overworked? Underutilized? Are you scheduling too many people for slow periods and not enough for the rushes? This not only ensures you’re staffing as efficiently as possible, it helps keep your team from burning out.
Just as client retention is critical to a business’s success, so too is staff retention. As experienced self-care professionals know, the majority of clients are loyal to their specialists, not the shop. The more members of the team you lose, the more time and money you’ll have to invest in getting new staffers up to speed.
Pre-booking rate is the percentage of clients who book future appointments on a day they receive service. Increasing this KPI requires a vigilant approach to follow-up appointments, meaning your staff should be prepared to recommend a return date at checkout. This helps you better forecast revenue, and set yourself up for a boost in client retention. This data can also help you figure out when to ramp up your marketing efforts, such as email reminders to book that follow-up and special offers to bolster slow periods.
The best way to increase pre-booking is to make it a habit. Create best practices for return dates for every kind of service; maintaining a new hair color requires follow-ups every five to 10 weeks, for example. To get clients in the pre-booking mindset, send email or text reminders when it’s time for another round of services; eventually, they’ll be ready to book their next appointment before leaving the salon.
Like utilization rate, booked forecast helps ensure that you’re getting the most revenue you can out of your operating hours. You can find your booked forecast by calculating the projected revenue of the appointments currently on your books, and this KPI can be tweaked to calculate by day or by staff member. Booked forecast provides visibility into your future, allowing you to set ambitious-but-realistic goals, organize staffing levels, find opportunities for growth, and maintain inventory levels. When analyzed in conjunction with the other stats on this list, booked forecast lowers your financial risks by ensuring you’re not wasting valuable time or products; it also improves client satisfaction, since you’ll know you have the resources on hand to serve them.