Compensation and Incentives

by | Farr Factor

Just because you can do something doesn’t mean you always should! That old saw has been true for much of our daily lives and it also pertains to how we pay and incentivize our salon employees. To the point: There were several years in our business when hiring the best sales associates and rewarding them with a progressive compensation and incentive system was NOT priority #1… in short you didn’t have to necessarily be a good indoor tanning retailer employer, you just had to be open!

Today, with the expansion of salon outlets and increased competition across the personal indulgences services industries, the connection between customer and your associates is the most critical aspect of maintaining and increasing revs and profits. Indulgence consumers buy from those that they KNOW, LIKE and TRUST. Having continuity among you salon team and competency make all the differences in the world. But you CAN hire minimum wage employees. Back to my message of; “Just because you CAN do something it doesn’t mean you should”. Remember that same message spoken by the Laura Dern character in the original Jurassic Park movie? They found a way to re produce dinosaurs but should they have done it? Entrepreneurial salon owners who have been so remarkably good at selecting locations, negotiating leases and equipment and fighting thru all of the startup and continual daily issues of operations have been spoiled from those easy years into thinking that they can throw any employees at the challenge of bonding with customers. Today’s employee generation (Termed the “millennial”) have a different way of viewing what’s important in their work environment. They’re used to be reinforced every time they even took a swing at that “T-Ball” when they were little kids. SO, what’s the key to compensation and incentive success to finding and keeping great millennial generation employees for your indoor salon?

Not minimum wage! Think of this formula: Minimum wage = minimum commitment and minimum effort. Not a good mathematical equation for your success.

Go to you labor market with at least a dollar above minimum wage and a incentive system that can get even a “B” player (We would all like to have only “A’s” but some good solid B performers are not the worst aspiration) an average of another dollar or two an hour. That’s much cheaper than having a staff that produces per tan averages (PTA) in the $4 range! A PTA of $8 minimum is what you should shoot for. Many of our clients are at $11 + and they’re not doing it with someone who recently worked at the Arby’s drive thru. Just think of taking your thousands of individual tans you have each year and adding a buck or two to what your staff produces thru good efforts at getting folks to know, like and trust them. It’s your choice but think about this: Would a employee with a highly interactive personality, that is reliable, honest, responsible with mature judgment and selling capabilities work for you… for very long… at minimum wage and no progressive incentive system? You can hire all of the dead heads you want at minimum wage… but should you?

Next month John will layout a detailed plan for specifics of good incentives and monetary motivations.

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