6 Critical Metrics in Business That Spa, Salon, Barbershop & Wellness Business Entrepreneurs Should Know About
As an entrepreneur, you should know that numbers tell stories.
And to run a successful salon, spa, or barbershop, you need to be keenly aware of the stories that the numbers in your business are telling you.
This is where your business performance metrics come in.
Sometimes referred to as key performance indicators (KPIs), business performance metrics are quantifiable measurements used to track the success and health of a variety of aspects of your business.
There is no one metric a company can use to determine the overall health of your entire business. Rather, there are a host of measures you view together to get the full picture and then figure out how to improve.
In this post, we’ll shed light on the top small business metrics that barbershops, salons, and spas should track. You’ll learn what key business metrics to look at, why they’re important, and what you could do to ensure that they’re trending in the right direction.
Let’s get started!
Table of contents
- Why do business metrics matter?
- Top metrics for small business: 6 things you should measure
Why do business metrics matter?
If you’re a beauty or wellness entrepreneur, we’re willing to bet that running the numbers isn’t your favorite thing to do. Like most service providers, you’d rather spend your time honing your craft and serving your clients.
However, staying on top of certain small business metrics is a MUST for your company. Having a handle on your KPIs keeps your business on track and paves the way for future success.
Consider the following:
They shed light on your performance. Business performance metrics let you know how you’re doing in the most objective way possible. Numbers don’t lie, and your business metrics are some of best sources of insights when it comes to the performance of your services, marketing initiatives, staff, and more.
They help you benchmark your business against your peers. Knowing your metrics can be useful when comparing yourself to your peers or competitors. While we don’t recommend spending too much time in comparison mode (each business is unique, after all!), it helps to have a general idea of where your business stands compared to the rest of the industry.
They inform your business decisions. If you’re not sure what the best course of action is for your business, turn your performance metrics. The data will enable you to make more informed decisions, so you can reduce guesswork and move forward with confidence.
Top Metrics for Small Business: 6 Things You Should Measure
By now you’re well aware of why tracking metrics in business is important. The question is, what exactly should you measure?
When it comes to small business owners in the beauty and wellness space, there are a number of specific KPIs that tell you how your salon, spa, barbershop, is doing.
Here are the top business performance metrics we recommend you monitor consistently.
1. Average annual revenue
The most basic number that any business owner should know is their company’s annual revenue. Annual revenue is simply how much money the company took in in a given year.
If you’ve been in business for more than a year, you should not only be tracking the annual revenue of each year, but also the average revenue taken from across all or a subset of years.
Comparing average annual revenue with previous years is an easy way to see if your business is, on average, growing or shrinking. For instance, if your average annual revenue from 2010-2015 was $75,000 and $100,000 from 2016-2020, you can easily see that your company is growing.
How to improve your average annual revenue
There are numerous ways to boost your annual revenue, but some of the top steps you can take to improve this metric are:
Review your pricing. A reasonable price increase could raise your sales and revenues. Review your current rates, the prices of your competitors, as well as the price sensitivity of your clients. Depending on what you gather, a price change may make sense for your business.
Expand your footprint. Adding more stations or expanding to other locations may improve your capacity for sales, because you’ll be able to serve more clients. Just note that growing your business may come with additional costs, so run the numbers to ensure that your profits aren’t taking a hit when you expand.
Acquire more clients. Boost your sales and marketing initiatives to attract more clients to your salon, spa, or barbershop. Depending on your business, you could do things like:
- Invest in social media marketing
- Boost your SEO efforts
- Drive word of mouth and referrals
- Run ads or promotions for new clients
Improve other areas of your business. Because this metric encompasses such a vast scope, working to improve your other business performance metrics (as we’ll discuss below) may ultimately improve your average annual revenue.
2. Average booking value
Average booking value is the metric that tracks the average planned price of appointment at the time of booking. In other words, it’s the price of the services that the client decides to purchase when they book their appointment.
When analyzed properly, this metric can be a good way of determining the performance of your marketing channels and other elements of your business.
Here are a few ways to deconstruct your average booking value:
- Service type. Which services yield the highest values? Do people prefer individual services or package deals? Knowing these things may help you streamline your services.
- New versus returning clients. Is one type more likely to book for a higher value? Breaking down the booking value of different customer segments could give you ideas on how to market to various client groups.
- The channel through which the customer found you. Analyze the booking values driven by your client acquisition channels. What’s the average booking value of clients who find you on Instagram versus Google? Knowing these things can help you decide which marketing or advertising platforms to focus on.
- The employee the service was booked for. Are some of your employees better at encouraging high-value bookings? Looking at your average booking value per employee can help you come up with ways to better manage and motivate your team.
- Any promotions applied at the time of booking. Do certain promotions actually inspire higher-value bookings or do they not seem to affect anything?
By viewing your average booking value under these different circumstances, you will be able to determine which parts of your business can be optimized to improve your booking value, so you can maximize each appointment.
How to raise your average booking value
Make it easy for clients to find and book services. One of the best ways to increase your average booking value is ensuring that clients know the services and options available at the time of booking.
If you have an online booking portal, make sure the page clearly presents all your services and any add-on offerings, so clients can click and book them.
Offer service add-ons at booking. You can offer add-ons as upgrades to the original service or as complementary services. For example, if someone is scheduling a haircut appointment, consider prodding the customer to book a color treatment while they’re at it.
3. Average service pricing
Average service pricing is exactly what it sounds like: it pertains to your rates and how much your services are priced. It’s a good idea to look at your individual service rates as well as your average pricing across your entire service menu
Doing so will help you understand whether or not you’re over- or under-charging, as well as where you stand compared to other businesses.
It’s also a good idea to look at your pricing alongside your revenues and bottom line, as this will enable you to determine how profitable and healthy your business is.
How to improve your average service pricing
Regularly review your pricing. It’s important to review this metric regularly to ensure that you’re on par with industry standards and you’re not leaving on the table. Evaluate your pricing — along with the rates of your closest competitors — on a quarterly basis, then make a decision on whether or not you need to tweak your prices.
Know your market, then price accordingly. The right price for your services depends a lot on your market and target clients. A $100 haircut may seem reasonable to a certain segment of clients, while others may find that rate outrageously expensive. The key to figuring out the right amount is to understand who you’re selling to, then making sure that your rates are acceptable in their view.
4. Time to booking
This metric gives you information about your clients’ purchasing habits, the point at which they start thinking about a service, and their loyalty.
This number can be further broken down in a few ways:
- The type of service. Do clients book certain services out a month in advance, while others are often scheduled day of?
- Customer demographics. Do returning clients book further out than new clients? Perhaps younger clients book closer to the day than older clients?
- Employee. Do certain therapists or stylists have guests booking further out in advance?
As you segment this business metric, you can get a much better idea of the booking habits of your clients, which makes planning, forecasting, and operations much easier.
It may be that if you find manicures are typically booked day-of while massages are booked a week in advance, you could consider scheduling an extra nail technician to work even if the bookings don’t suggest a busy day. Or if you know that you’ll have many more hair treatment clients coming in a month from now, then you can order the necessary supplies well ahead of time.
How to improve time to booking
Book the next appointment while the client is still on site for their current service. Train your employees to work on rebooking clients seamlessly at the end of the service. Doing so will help you secure your next appointment and ensure that the client doesn’t wait too long to schedule appointments.
Plan your promotions around your availability. Knowing your average time to booking will enable you to anticipate your schedule and availability for the days and weeks ahead. Use those insights when crafting your promotions.
For example, if you know that the next couple of days will have several empty slots, quickly create an offer encouraging clients to schedule a service on those days. Be sure to emphasize the booking deadline to drive a sense of urgency!
5. Percentage of clients who return
Loyal clients are the most valuable part of any business. Knowing how many of your clients come back to your establishment is a great indicator of long term success.
You could also gain additional insights into your customer retention by breaking this metric down to get more specific data about which employees and services are most likely to result in a higher return rate. If you’re finding one service has a very low return rate, for instance, it can tell you that something needs to be changed about it.
How to increase the percentage of clients who return
Train your team to rebook clients. You and your team should strive to book follow-up appointments for the client during their visit. This is one of the easiest (and most natural) ways to encourage clients to come back.
Educate your clients on why they should re-book their appointment. A hair stylist, for example, could tell the customer that coming back for follow-up treatment in 2 months will help them maintain the best look possible.
Improve the quality of your services. If you have a very low return rate overall, it most likely indicates that clients aren’t happy with the services or experiences that they’re getting from your business.
As such, take an honest look at your offerings and find ways to improve. Sometimes, this could mean refreshing the look and feel of your salon or spa. In some cases, you may need to train your team on better customer service practices.
In any event, drill down on the reason behind low customer retention and come up with a plan to improve.
6. Visit frequency
Tracking how often your loyal clients come in for appointments is another good way to keep a pulse on the health of your customer base’s loyalty. As with other small business metrics, breaking this down provides better clarity on the total visit frequency of your customer base:
- Type of service. Do colorings see a higher visit frequency than hair trims? If a service isn’t driving high visit frequency, perhaps you can introduce new offerings to get people to come back more often.
- Employees. If you have employees who inspire more frequent visits than others, take a look at what your top performers are doing and apply their strategies to the wider team.
- Customer type. If you have certain clients who come back more frequently, it may be worth tweaking your marketing strategy so you can reach more of these clients. On the other hand, if a certain customer segment has a low visit frequency, consider coming up with fresh ways to engage them.
How to raise visit frequency
Send reminders. Sometimes, clients don’t schedule appointments simply because you’re not top of mind. You can address by sending timely reminders when clients are due for their next visit. Be sure to utilize your client’s preferred communication method (e.g., email, text, phone call) when connecting with them.
Start a loyalty or rewards program. Rewarding your clients every time they pay you a visit will reinforce their positive behavior and keep them coming back. Consider creating a rewards system that enables clients to unlock perks whenever they reach a certain number of bookings.
You can’t improve your business if you’re not tracking your numbers
Business metrics are extremely important. They provide a wide window into the health of your company, and they make it easier to make decisions and brainstorm innovations. Being aware of key business metrics also allows you to see how you measure up against similar businesses, making it easy to gauge your performance.
Need help benchmarking your business performance metrics? Access Genbook’s Free Pricing Insights, a tool that sheds light into the average KPIs of salons, barbershops, and spas in the U.S. Based on the data of 13 million+ appointment bookings, Genbook’s Pricing Insights tool gives you the lowdown on your industry’s metrics so you can improve.