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Today’s tanning businesses successes are not coming because of luck or that you’re the only game in town. Success comes from 4 critical factors: Salon services and environment, a consistent year around marketing program, a bonded engaged set of “core” employees and living daily with your sales numbers. For the purposes of this article I’ll talk about tracking revenue streams and building your success with the numbers.

Here are some numbers you need to know for every salon:

“PCA”-Per Customer Average This is the total average revenues you derive per each unique customer over a 12 month period. (By the way. It’s not bad to be able to compare your numbers with other similar sized salons in similar sized markets where you don’t have to be concerned with competition issues. But there are so many variances in tanning revenue potentials from even similar market to similar market that these comparisons may not be fruitful. At the very least you should compare a salon’s revenue activity against its own results from season to season, month to month.)

LPPA or lotions per tan average-rank these sales results among your individual employees in descending order, highest to lowest. There are no stronger motivators on this planet than ego and vanity. Most everyone wants to be the “star” and no one wants to be last on the ranking. Those who are first should share their best practices at salon employee meetings. For those who are on the bottom, spend some individual time training, retraining and observing their progress.

PTA or per tanning average-non EFT tanning session revenues. (Employee ranking here is again important. I guarantee that when you start ranking employee performances and making them aware of their individual results versus their co-workers the number will go up-guaranteed!

EFTs conversion rate – How many individual tanners do you convert to EFT’s each year as a ratio of unique tanners who tanned but have not converted.

EFT % customers-how many of your total tanners are on EFT draws? Is this % growing?

Upgrade sales ratio – the ratio of individual tanners (non EFT) that did not ever use an upgrade versus your total pool of unique tanners. The objective here is to view progress on converting level-one tanners to pricier beds or EFT packages. If this ratio stays high it may be making a statement about what is being positively said at the counter.

With so many of our clients, establishing a base line of performance for the salon and for its employees is your first step to success by the numbers. When you raise your total combined lotion and session average per visit by $2-$3 over a season you’ve suddenly found reasons to grow your business, invest in upgraded equipment and actually get paid!

John Farr is President of the Power Group Companies (PGC), a retail tanning consulting firm. John and PGC have consulted more than 100 retail tanning operators from a single owner operator to large multi outlet chains. Mr. Farr was a key note speaker at last year’s Smart Tan conferences and recently over-saw a panel of smaller tanning operators this year at the Smart Tan show in Nashville on the subject of their successes at “expanding their revenues” thru EFT’s.

Employee performance reviews can be one of the most effective motivators ever devised or a terrible de‑motivating exercise for both you and the employee. My intent here is to help you be an effective performance appraiser and to keep these sessions from becoming negative episodes of trauma. Appraisals should ACTUALLY motivate…. really… believe it!

Everyone needs performance feedback! There is no reason to assume that there is anyone in the world who doesn’t need or want some way to know if he is making progress in his life or job. All people, all cultures, look for ways to assess their progress. So do your employees.

When to Give Formal Appraisals and Why

No employee should go more than two to four weeks without hearing something about how they’re doing. This sounds good, but is made difficult by most managers. It is made difficult because performance feedback can be hard work and most managers look for the easy way out which is to not give feedback at all.

The formal review, like terminations or promotions, should only be the culmination of a “process.” This means that formal reviews shouldn’t be the only feedback the individual receives between annual appraisals. When the formal appraisal is given, there should be no surprises. In other words, the employee should know where he stands in your judgment at most times. If he doesn’t, the review can surprise or shock him with areas that concern you that he was not aware of. This shock can produce confusion, frustration and worse–‑resentment towards you!

This resentment towards you is because the employee will conclude that you didn’t care enough to make the effort to guide him earlier and there are few management situations more difficult to deal with than an employee who thinks you don’t care. From that point on, he’ll listen to very little you have to say during a formal appraisal. The good points that you want to communicate to help him progress will be lost as he focuses on your failing.

Employees should be given formal evaluations twice a year. This may entail more work for the manager, but it forces both manager and employee to be organized. Appraisals done once a year is not often enough. People forget, and formal reviews 12 months apart don’t impart the same sense of urgency.

Between the two reviews, the manager should be dropping into the employee’s file notes of positive aspects and those that need correction. These performance notes are a reminder of what may have been a brief oral feedback. They are indispensable when it comes time to complete the appraisal form. Often, at review time, you can’t always think of the areas to improve (the “halo effect”) or those to reinforce. Also, if someone needs a comment in either area, the best way to prove the point is with an example. If you tell an employee he needs to work on interpersonal skills, but you can’t remember some examples, it’s unlikely they’ll agree.

Agreement is vital. Simply reading what’s written without employee understanding and belief accomplishes nothing. Without examples, your employee will see you as an impulsive person who puts very little effort into helping him develop skills.

A performance evaluation needs to be an inspiring and motivating picture in time. Employees should leave with a positive air of confidence to continue doing the good things and with goals of improving in the other areas.

All too often, performance appraisals become traumatic for both parties because of the attitudes of both individuals and lack of preparation by the manager. Proper preparation will give the manager confidence in the review presentation.

In the last 15 years, I’ve guided many salon clients to correct their HR problems caused by faulty or impulsive hiring techniques. Here are some important thoughts and suggestions to consider in your pre-season new employee recruiting process:

• Any employee that’s a problem employee in your salon was most likely a problem employee somewhere else. You just did not catch that in the screening and interview process.
• Consider only candidates with some past retail experience. I never want to hire retail “rookies”. A good candidate with exposure in retail will have less “freshman” issues such as non-schedule compliance fear of selling or fear of customers in general.
• Look for interpersonal skills – their ability and desire to freely interact with you, the interviewer, to receive and express ideas and experiences.
• “Natural Warmth”. Does the candidate exude a real and natural affinity for other people? Does her personality demonstrate empathy and openness? Does she seem to be “inviting” into her world?
• How did the candidate handle an irate retail customer in the past. If they have retail experience, they should be able to say how they did, not what they would do. Past experience is the best predictor of future performance.
• Flexibility. Be certain that there are agreements with who you hire concerning work days, hours, current and future projected compensation levels and a good understanding of the job duties. (Avoid the a “bed cleaning shock”!)
• Reliability, responsibility. There is no substitute for maturity in judgment.
• “Customer delight” attitudes. Your best salon employees are those who see their first priority as delighting the customer.

Of course there is infinitely more details to the management of staff resources and I look forward to sharing more of them with you in future articles and webinars for GMS.

*First, you must know your numbers! What is your annual PCA or per customer average? That is, what does the average UNIQUE customer who walks thru the door spend in your salon(s) over a full 12 month period? That is the first key to determine what price to offer your current and hopefully many new customers?

*Second combine your PCA knowledge with what you have been charging for a month unlimited, then mix in the knowledge of what your competition is charging for a month unlimited package and you should be able to arrive at a price point that represents a “clear and remarkable value” for the tanning consumer. I like to call this the “Vito Corleone” stage of EFT package development or “I’m going to give you an offer you can’t refuse”!

* Decide if you want to simply offer a 12 month draft as your only offer or if you want to include small fees for “freezes” or “pauses”, OR, decide if you want to offer both options. The 12 month draw, without freezes or pauses, should be the cheapest option for your customer and the one with pauses or freezes option should be a few dollars more. Let the consumer decide if they want to get the lowest per month expense with the longest commitment or a higher monthly price that is more built with pause or freeze options. In any event, the net price per month has to be a “wow” price compared to competition or your normal pricing. If priced right it can by itself act as a “closer” all by itself. “Wow” here is defined as a price that stops the customer in their tracks and shouts “This is an offer that I would be crazy not to take”. The more shocking the value, when compared with your normal monthly unlimited packages, the competition prices, the freedom to tan when ever and the customer’s intended frequency of tanning visits, the more likely that the facts will speak for themselves and the EFT decision is a foregone conclusion. Inherent in presenting the EFT options to your customer is a tour of your equipment so they can also see the differences in the unique levels of tanning potential. The upper levels of equipment can help up-sell from basic “Wow” package prices for level one and raise your EFT average sale…..which is most important when you’re doing a draft in July and normal tanning levels are lower!

*Get staff partnership and agreement on the EFT offer. Compliance and support of management’s operations or directions with marketing is always higher when employees have had the chance to contribute to decision making.

* Sign up now for the next webinar on February 18th (3:00-4:00PM EDT) brought to you by Gulf Management Systems where we will provide more details of pricing and other logistics of a successful EFT strategy.