The real story of a salon’s performance is determined by its numbers. Businesses in the beauty industry don’t realise how important it is to measure and track key performance indicators (KPIs). In the salon and spa industry particularly, it’s important to keep identifying what’s working, what’s not and where improvements are needed. Only this will help you progress. Think of a KPI as a map with different points and where you are shows where you stand. Don’t let KPIs intimidate you. Instead, they are your competitive advantage. If you’ve just started using salon software and are not sure what to expect at least in the first six months, this blog is for you.
Tracking the Right KPIs for Salon Success and to Determine ROI
In any business, ROI (Return on Investment) is a performance measure that is used to evaluate the efficiency of an investment. ROI helps a business owner understand if investing their money has been worthwhile or not. Getting a hold of your numbers gives you a fair idea of where you’re earning or losing money. Even when you start using a salon software app, it’s important to remember that nothing happens overnight. The capabilities of the software depend on your business size and how well it has been implemented. Here’s a realistic breakdown of what you can expect:
- Operational Efficiency
In a traditional salon, staff members are usually involved with optimising schedules and ensure resources are being used efficiently. At that point, if you measure employee utilisation rates, you will realise that your team may be working efficiently. However, they might feel a burnout to meet service and revenue targets. With salon software, the immediate benefit is time savings or operational efficiency. Since it automates appointment booking, reminders, inventory, payroll and client records, a large load is taken off your staff’s shoulders. This allows them to focus on providing services rather than answering calls. The first ROI of software is a large improvement in salon productivity and ensuring employee work hours are used efficiently.
- Reduced No-shows & Last-minute Cancellations
Within a month of implementing a salon software app, owners and managers will start witnessing reduced no-shows and last-minute cancellations. This is one problem/challenge most salon owners would cite earlier. Last-minute cancellations considerably hit overall salon productivity and revenue. With automated SMS/Email reminders, no-shows are reduced by up to 40%. Salon owners themselves have witnessed this. Also, with an online booking system, salons have witnessed an increase in the customer visit frequency. The percentage of customers who pre-book appointments is larger. Online bookings drive KPIs like new clients and existing client retention. Since booking systems prompt clients to pay, cancellations and no-shows further reduce.
- Increased Rebooking & Customer Retention
Customer retention rate is a KPI that measures how many customers return to your salon over a given period. When the retention is high, it indicates customers are happy and a strong brand loyalty. Usually, the benchmark is 50% to 70%. If your salon staff is making maximum use of the app, within two to three months, you can experience a sharp increase in rebooking and customer retention. To start with, it would be a 10% increase. We’ll tell you how. Since salon software is fully automated, clients receive timely notifications and rebooking reminders. This prompting makes clients want to schedule their next appointment. Besides this, the software also runs loyalty programs, referrals and memberships which further increases the client retention rate.
- Optimising Cost-Per-Lead (CPL)
Since SMS and email reminders, and greetings are all automated, potential clients are directed to your booking page or service menu directly. This reduces the need for manual follow-ups and improves conversion rates. In the bargain, salons can reduce their cost per lead and instead maximise their return on the marketing spend. Within four or five months of getting salon software, you will be able to optimise your CPL.
- Increased Average Customer Spend
A POS system can boost retail sales by 5-15%. It can help with upselling and cross-selling services by suggesting add-ons or package deals to customers during an online booking. This helps increase the average spend per visit. This increases over a period of time and roughly takes about six months to come into full force.
- Better Business Insights
A salon owner doesn’t just invest in salon software to drive ROI. The main reason they do so is to gain better business insights. Dashboards and detailed reports reveal what’s working and what’s not. This data can be used to make changes, run targeted promotions and reduce overheads. Though initially, there may not be a lot of savings, it will accelerate growth. With the right data on your fingertips, losses and poor decisions can be prevented.
Maximise ROI with Salon360App
The secret to salon success is diving deeper into KPIs. When you invest in Salon360App, you get to make informed, strategic decisions for future growth. It helps you gain a competitive advantage in the cluttered beauty space. Now that you know why return on investment (ROI) in your beauty business matters, request a free demo to see what your business is missing out on.
