(Build Salon Profits From Your Top Line)
If ever there was a business that rewarded a focus on topline revenues, it’s the indoor tanning business.
On any salon retailer’s balance sheet, the fixed costs of tanning beds, location build-out and HVAC set-up can be staggering, especially with new technologies and ancillary products/services to offer.
But the good news that we’re happy to live with is super-high selling margins. Take your pick of theories on raw cost per UV tan; but by any definition, the gross profit per tan is anything but gross to your bottom line. And, when salon owners approach me having put too much emphasis on cutting expenses versus concentrating on revenues, I dedicate my efforts to helping them by fattening up their topline sales. Once you accept the burden of fixed costs, every incremental dollar rung up can produce 70-80 cents in contribution to gross profits.
So, where do you focus first to accomplish that discipline? The best first start is to ratchet up every salon employee’s attention to their per tan average. I’ve not yet seen this fail – awareness of individual sales results triggers more conscious upselling efforts and consequently, more per tan dollars invested. It’s a simple matter of mathematics. Take an average single salon with, maybe, 150K in annual revenues, a hypothetical $5 PTA and total tan sessions of around 30,000. For this average salon, raising the PTA only a buck would take the business from survival to success. ($30,000 more success!)
If you’re not doing this, it’s high time to get your sales associates to start looking at those numbers – but even more importantly, to help them understand the power of mathematics. It only takes a few upgrade sessions, a spray tan and some lotion sales to tweak up customer investments by small increments. The key is to not get too excited about any one day’s results; but over 30 days of watching employee PTAs and comparing them along with their LPPA and EDFT close ratio (EFTs sold by individual associate in ratio to the total number of transactions they handle) you’ll see the anomalies or “odd days” good or bad average out. Over time, the inter-personal capabilities of associates to collaborate and negotiate with customers will become evident. The business is not adding new, unique customers in double-digit fashion anymore, so we have to get more per customer investment to fight off the bad economy and ridiculous “Tanning Mom” style of anti-tanning attackers.
Good sales associates who understand their huge impact on the future of your business and their place in your salon(s) can make or break you – and so can their appreciation for the importance of the mathematics of small increases on every transaction.