Electronic Funds Transfers

Salon owners must take advantage of every opportunity to increase their profit margins and edge out their competitors. One way of accomplishing these goals is to utilize Electronic Funds Transfers or EFTs. Owners who are not already using this tool are missing out on an important means of generating year-round income and retaining customers.

Gaining popularity in the early 1990s, EFT has become a simple and effective way for savvy business owners to generate consistent revenues. Virtually any salon can benefit from the use of an EFT program, although salons that are computerized and that have at least six pieces of tanning equipment may find it more beneficial.

EFT membership programs are as easy to implement as they are advantageous. A client must fill out a short enrollment form, choosing a payment option such as their checking or savings account or a credit card. Payments automatically are transferred each month from the client’s account to the salon’s account. If a client eventually wishes to stop making payments through an EFT program, he or she generally is asked to give written notice within 30 days of the final transaction.

One of the benefits salon owners receive through the implementation of an EFT program is client retention. Because clients no longer have to think about paying for tanning, as it happens automatically, the end result is that they will tend to stay with the salon longer than they would.

When a customer signs up for 10 tans or a month of unlimited tanning, both packages are used for their duration with no guarantee that the customer will return once the tanning time is used up. However, signing up a customer for a membership and then setting them up on EFT guarantees that the salon will retain that customer month after month.

In addition, by charging an initiation fee for a membership, a salon can make more money up front and charge lower monthly fees. Because the monthly fees are lower, members will decide that it’s not worth it to leave the salon for the two or three months they don’t tan during the summer, in addition to not wanting to pay the initiation fee again. Another benefit is that the salon is generating the same amount of income even if the client does not come in to tan as often.

For the customer, the equation is quite simple: During the first month of their membership, the customer typically will use the beds often, but once they have received their tan, then they simply are maintaining it. The salon is still receiving income every month, but instead of having people trying to get a tan and using the beds a lot, they have people trying to maintain their tan, who don’t use the beds nearly as often.

Additionally, a salon generally is able to offer a discount on EFT memberships as they eliminate the manual labor of accepting payments physically and having to note or update accounts. And since it is automatic, EFT eliminates the human component of time. Experts cite that every time the sales staff has to deal with accounts, it costs money, when they could be servicing their existing clients and enrolling new ones.

Perhaps the greatest benefit of utilizing EFT is its ability to help salon owners generate a year-round cash flow and maintain a steady income level, even during a salon’s slowest season. With EFT, salon owners not only are guaranteed income during slower times of the year, but also know how much income they are going to receive and at what times of the month.