A guest post by Claire Pitts, Co-owner of Business for Beauty
There’s an air of mystery surrounding successful beauty businesses. We look at their owners and wonder what it is that they know that we don’t.
- Is it that they work harder than we do?
- Is it that they had more money to start with?
- Is it that they’re just that ‘sort of person’ that you have to be to be successful?
The answer is maybe, maybe they do work harder than you, maybe they did start out with more money and maybe you do need to be a certain type of person.
But what if the answer was much, much simpler than that? What if the thing that made the difference was something you could get, a tool you could use?
I’m convinced that the reason businesses are successful is down to a basic understanding of how businesses work and that’s what I’m going to share with you now.
Imagine your business is a bucket and you’re pouring water into the top. At some point the bucket will be full and water would start spilling out all over the place.
This is how most people see their business. They believe that if they just keep adding enough new clients then one day their business will ‘overflow’ with clients.
But the reality is much different.
You see, that bucket has a hole in it (the desire to break out into song is so strong!). And water is leaking out of the bucket. Depending how big the hole is, will depend how quickly the water drains away. If the hole is too big, then the bucket will never get to even a quarter full.
And just like that bucket, your business has a hole in it. You are leaking clients everyday. The truth is, you may be leaking more clients than you are adding. It may be that it wouldn’t matter how many clients you added, you’d be forever searching for new clients, desperate to add some more into the bucket.
So, in my opinion, the answer to what makes a business successful or not is whether the owner understands the bucket principle.
And while this seems so simple, the art of plugging that hole and keeping clients in the bucket isn’t as we’re about to find out.
I want you to really grasp what I’m saying here and how it impacts on your business. It’s such a simple principle that, when I talk to people, they have a tendency to say that it’s obvious. It’s not until you really understand this, that you realise your business is dying, no matter how busy you were today.
The only way to demonstrate this is to have a look at some numbers.
It’s April 2014. You have 50 clients booked for appointments this month. A small number of these are existing, regular clients, lets say 10 and the other 40 have come from a fantastic marketing campaign you’ve just run. You’re busy, busy, busy and the money is flowing.
Fast forward a month to May and, because you’ve been so busy, you’ve stopped promoting your business. After all you’ve had 40 new clients come through the door.
Things aren’t quite as busy as they were in May, but the money is still coming in and you end up seeing 21 clients that month.
Here comes June, and blimey it’s gone quiet. You only see 18 clients this month…
July is soon with you and it’s just 16 clients. Maybe it’s the summer holidays….
August is a hot and very, very quiet month. You see just 16 clients
September is notoriously bad anyway and you only see 15 clients.
October, the weather is changing and you’re down to 15 clients, November is dark and it’s 14 clients and December you are down to 13 client, you’ve lost 74% of the original 50 clients over 8 months.
In reality, this isn’t what happens because you are constantly attracting, or trying to attract new clients, but it is what exactly what would happen if you stopped promoting your business. Maybe you wouldn’t get down to just 1 client because you’ve got 4 or 5 or even 10 clients that absolutely love you and what you do.
What am I basing these reductions in numbers on? The fact that between 50 and 65% (if not more) clients never return after their first appointment. Sound high? Maybe, but this is what research has shown me.
You see, I’m geeky. I love figures and databases and getting information. It gives me control and helps me make decisions. And what I’ve done is produce a database that analyses beauty therapists businesses so that they can see exactly what is going on with their business. If we ran your figures through the database, I would put money on the fact that, unless you are already aware of this fact, you’ll be losing a similar amount.
Sobering thought eh? Over half of all the people who come to you, never return….
It’s All About Boxes
One of the lies I hear told to me over and over again is the number of clients ‘on the books’. People parade this number, boast about it as if it’s something to be really proud of. I think they’ve actually got this completely wrong and the higher the number, the more ‘wrong’ they’ve got it.
The number that you should be showing off is the number of active clients on your books. What do I mean by this? Well, let’s go back to how things were done before computers…
Every time you get a new client you fill out a record card for them. You probably store these in a folder alphabetically, but in ‘olden days’ these would be filled in date order, in different boxes. The first box would be all those who have had appointments recently. For beauty therapists, this would be a 5 or 6 week period.
Then, there would be a second box which would have all those who have had appointments between 5 weeks ago and, let’s say 3 months.
Then there’d be a 3rd box. These clients are those that haven’t been between 3 months and 6 months.
And then there’s the last box. This is the box of death. It’s those clients who came so long ago, you can’t remember them.
Those that boast about the number of clients on their books are talking about the total number of names in all 4 boxes or, if they think they’re being realistic, those in the first 3 boxes.
The truth is, the only clients who are ‘Active Clients’ are those in the first box. And I’m guessing that’s probably about 20% of all the clients in the first 3 boxes for your business.
Every week that passes by, more clients in your business are moving between boxes, working their way out of your business and into box 4 – the box of death.
The aim of the game is to keep as many people in the first box and stop them moving from box 1 to box 2 to box 3 and ultimately to box 4.
So where are we?
We know that about 60% of your clients are coming back after their first appointment.
We know that only 20% of clients that you’ve seen over the course of your business are ‘active’ clients.
So what’s the answer?
Well, there’s actually 2 answers. The first, and most important, is to plug that hole in your bucket. There is no point spending money on attracting new clients if 60% of them are not going to stick around.
Priority 1 has to be get them to come back.
How do you do this? You start by understanding just how much a client costs you to come to you in the first place. Even if a client comes to you via Facebook, for example, it has cost you money. Whether this is just the ‘cost’ of your time, every new client will cost you money.
So, how much does it cost to attract a new client? Let’s use a simple figure of £10. Why £10? Because everyday you spend an hour on Facebook, updating statuses and promoting your business. And everyday you get 1 client for your efforts. And let’s say £10 an hour is what profit you would have made had you been providing beauty treatments (it’s probably more).
To get that first client, you have spent £10.
If that client is one of the 60% who come for one appointment and disappear, never to return, you’ve got to spend another £10 to get another client to replace them.
The question is – how much are you prepared to do and spend to get that client to come back.
All to often we think that once clients come to us they are going to stay with us, because they love us and the treatments we provide. It’s a hard fact to face, but they just don’t.
And so, whatever profit you made from the one treatment they had, also has to fund the £10 that you spent (whether real money or ‘your time’). Take a moment and look back at the last 4 weeks and the new clients you’ve had through the door and take this figure from the profit you made. What’s left is potentially all you’ve made from that client.
Now, what if you spent some money getting these 1 appointment clients to come back for a second appointment?
The good news is that, once they come back for a second appointment, you will keep them for a third, if not fourth appointment at least.
So you’ve got another chance to recoup the cost of attracting them in the first place, another chance to introduce new treatments and products, another chance to develop your relationship with them, find out what makes them tick etc.
So you’re number 1 priority is to work out how to get them to come back for that second appointment.
Priority No 2
The heat isn’t off those existing clients, you need to watch and work out what’s happening with your clients. You need to figure out when they should be coming (remember those boxes) and do all that you can to keep them from going into that 4th box, the box of death.
And this takes work. It takes an understanding of what’s happening in your clients lives and reacting quickly when they don’t book appointments.
Look at it this way. If a client has a manicure every 2 weeks regularly and then suddenly doesn’t come there’s only a few possible reasons why:
- They’re on holiday – you should know this
- They’re ill – you should find out
- They’ve gone somewhere else
If they’re not away, if they’re not ill then they’ve gone somewhere else (or are about to). Someone who has their nails done every fortnight is not going to suddenly stop having them done. So where have they gone?
And it’s part of your job to find out. Like I said above, if they’re on holiday then you should have known this – it should have come up in conversation, you should have done extra treatments like spray tans, waxing, you get the idea.
Maybe they’re ill and can’t get to you. How could you find out?
But the worst case is they’ve gone somewhere else. Now it maybe they’ve been incredibly busy during the week they should have come but this is the ‘danger’ time. It’s when they’ll ‘pop’ in somewhere else and have the treatment and, once they’ve done that, there’s every chance they wont come back to you.
So priority number 2 is to work out the average number of days between appointments for each of your clients and take action if they don’t come when they are scheduled to.
Priority Number 3 – Get new clients
It might surprise you that I’ve put ‘get new clients’ at the very end of this list. When we did a survey here at Business for Beauty among Beauty Therapists, the number one thing they all wanted help with was getting new clients.
I’m hoping that, by now, you understand that more new clients isn’t going to fix your business, not while you’ve got that huge hole in your bucket 🙂
New clients is actually relatively easy to do. You need to market your business properly using targeted marketing that pays for itself. I’m actually not going to spend a lot of time on how you do this here, but needless to say, we have tested direct marketing (letters through the door), Facebook Adverts and all sorts of other campaigns to attract new clients. Some have worked amazingly well and others, well, let’s not talk about those eh?!
And I don’t want to give you 100 ways to get more clients because, to be honest, I don’t want you to do this until you’ve sorted Priority 1 and Priority 2 out.
Where my being geeky really helps you out!
I’m going to confess, I’m not a beauty therapist. Not at all. Like I said I’m geeky and proud of it.
But I work with Teresa who is a beauty therapist. And what we’ve done together is create a database for her business, one that gives her all the answers she needs to plug the hole in her business. And it’s working.
Her returns for 2nd appointments are increasing, the number of active clients is going up. People aren’t slipping away quietly unnoticed. She’s able to see who is supposed to be coming in the next 2 weeks and who hasn’t come. So she can react quickly and get in touch with those clients and get them to come back.
She can see whose birthday it is this month and next so she can send out birthday cards with offers and/or presents.
She can see what treatments someone has to work out what offers to give them.
And, as I say, it’s working.
And you can have this too. The database is hosted on the Business for Beauty Website. It’s available 24 hours a day, 7 days a week. You can look at it whenever you want to and get the information you need.
The most important thing this database does is puts you in control. It allows you to make decisions about marketing and clients quickly and easily. There’s no need for you to sort your records into boxes, it does that for you.
And this is just the start.
You see, Teresa and I have created a whole host of marketing materials and strategies to get not just new clients, but to get people to come back again and again and again.
Download The Beauty Business Formula free here.