Evaluating Your Salon’s True Potential

Then it was time to dissect the numbers. Based on $192,000 in gross tanning sales and a database of 3,048 customers, the salon averaged $62.99 per customer. Needless to say, the salon owner was shocked. Despite all the clever pricing strategies and formulas, EFTs, monthly packages and specials, the salon’s average dollar-per-customer was low.

Then I posed a ridiculous scenario: If, when she opened her salon in 2003, she charged $62.99 for a full year of unlimited tanning on the premium-class beds, was there a good chance that many of the 3,048 people would have purchased the package?

"Of course," she exclaimed. "Who wouldn’t jump on such an incredible offer?"

Just for the record, I am not suggesting that anyone charge $62.99 for a year of tanning. However, when you reverse engineer the financial statements of the typical salon, you often discover that this is what happened.

The $52,000 in lotion sales also sounds very impressive until you divide the amount by the 3,048 people who tanned during the first year. That figure comes to $17.06 per customer for the entire year.

Again I posed a scenario: "What if you took a popular lotion with a price-point between $25 and $50 and gave two free sessions on the ultra-class tanning systems to customers who purchased that particular lotion?"

"That’s giving it away," she said while standing next to a hand-drawn sign advertising "25-percent off" on all lotion purchases.

Sarcastic license aside, many salon owners do a great job of attracting customers to their businesses. However, they fail to capitalize on the thousands of selling and buying opportunities presented each year.

A well-run, medium-sized salon can generate 20,000 to 30,000 tanning sessions each year. Increasing profits just 50 cents per session can have a dramatic impact on the bottom line.

Just like Hatch, who never recognized the immense wealth trapped right beneath his feet, many salon owners underutilize the revenue potential of the existing customers in their databases. Instead, they put more emphasis on attracting new customers than focusing on those who already patronize the business.

Attracting new, quality customers is critical to long-term success, but you can gain more profit with less effort by focusing your marketing and sales campaigns on the proven entity.