Apple's Credit Card Is Going to Change Everything

Is Your Business Ready?

Apple recently announced they are entering into the credit card business and pushing Apple Pay even more into the mainstream. There is a very real future that most credit card transactions will take place without an actual credit card.

Learn more about Apple’s new credit card

NFC (Near Field Communications) is the future as more and more people will be using their iPhones and Android devices to pay for their purchases. If your business does not have the proper equipment, you will be missing sales.

If you have not upgraded your merchant processing equipment to accept not only Apple Pay, but chip functionality, you are at risk of fraud that the credit card companies will not protect you from. You have to accept payments via chip or NFC and forget about swiping.

If you are not sure about your current setup, or would like to make sure you are paying as little as possible in merchant fees, check out my friends over at Felix and they can do a no obligation analysis for you.

Rewards VS Product Commission

Our Rewards System at Tangerine Salons

While many salon owners pay a commission on the retail that is sold by a hairdresser, I have an argument that paying a commission actually hurts the bottom line instead of increasing it. The motivation shouldn’t be in what the hairdresser gets out of selling retail, but what does the client get out of it. This mindset will be more profitable for the staff as well as the business.

Here are a few thoughts on eliminating retail commissions in lieu of a rewards program.

  • Those that sell will sell. Those that won’t, won’t.

  • By paying a retail commission, you are sending the message that educating their guest is not a mandate, but a voluntary action, thus the staff member gets to decide to do it or not.

  • Most seasoned hairdressers won’t care about a 10% commission on a $12 bottle of shampoo, therefore you are paying them a percent of your retail margin when you don’t have to.

  • If the hairdresser thinks the only benefit to selling retail is a 10% commission, then the battle is not going your way.

  • If a hairdresser sells only one item per year, and you give them a commission, you are rewarding mediocrity.


What We Do Instead

Tangerine Salon Pro Salon Consulting.jpg

It’s not that we don’t compensate retail sales with our staff, we just do it differently. My philosophy is to reward a job well done, rather than pay for what we consider to be a part of the service.

We had many ideas of how to reward and at first we gave “education dollars” based on the benchmarks. This worked moderately well, as we hire education hungry staff and require a certain number of classes each year. However, it was difficult to manage and it became an accounting nightmare.

I had an idea of creating a rewards program where our staff could accumulate points per unit sold, rather than dollar amount. Much like a loyalty program, these points could be cashed in at different levels and the ‘rewards’ were valued accordingly.

Awards range from education classes, tools of the trade, vacations and gift cards. Awards are meant to enhance the staff members expertise and growth and we believe vacations can do that as much as education.

We call our program Fresh Rewards and it has helped our retail bottom line by almost 25%.

How It Works:

Simply stated: a staff member gets 10 points per unit sold. For example if they sell a $12 bottle of shampoo, they get 10 points. If they sell a $78 liter of conditioner, they get 10 points. By awarding points by units sold rather than dollar amount sold, we keep our margins at about 4% of wholesale cost.

This means that we pay out an average of 4% on our total bottom line in retail sold by service providers. Beats 10%, doesn’t it? When the staff member accumulates 500 points, they are eligible to cash in their points for that awards tier. (See image below to see our tier levels)

There are many terms and conditions, so that every aspect of the program is clear to the staff. Here are our terms, but feel free to tweak for your own use.


The Details

One Product = 10 Points Accumulate points throughoutthe year by selling products toredeem for the prizes of your choice.

Rules & Regulations:

  • Family member and friend purchases are not eligible for points.

  • Only 8 units of $8.50 or less will be eligible per month for point accrual.

  • Points are not transferable from year to year.

  • If you redeem for a class credit, you will be given a voucher to be turned in at the time you sign up to attend the class.

  • If you redeem for a tool credit, you will be given a voucher. You may then purchase the tool and turn in the voucher with the receipts to be reimbursed.

    If your two outside class requirements have not been fulfilled by the end of the year - 1,500 points will be deducted from your total while the missed classes need to be made up within the first 6 months of the following year.

Travel Terms & Conditions:

  • All expense paid trips to Aveda Congress, New York Advanced Academy and the Salon International Hair Show - Include airfare, hotel, and a $50 per diem for food each day. Management will make all travel arrangements.

  • Carnival Cruise for two - Includes two cruise tickets for a 3-5 day cruise (up to $800). Management will purchase the cruise tickets.

  • Weekend Trip (up to $400). Management will make hotel arrangements. You will be given a per diem for food.

The Stylist / Retail Conundrum

A challenge that every salon owner faces is making the most of their retail sales. Those that crack the code and have a vibrant retail business enjoys what that adds to the bottom line and the profits that come with it.

You’ve already invested in inventory, displays, the square footage for retail, etc. Therefore, being successful at this is not just icing on the cake, but a necessary revenue stream for sustained profits.

When there is a good retail strategy, the salon will also benefit with a more loyal clientele as they have completely bought into the whole ecosystem that you are offering. Having a thought out business plan to make sure you are not just a hair salon, but a “hair care” salon will help create a culture of success.

The largest hill to climb with this business plan is that the sales force are not sales people.

The largest hill to climb with this business plan is that the sales force are not sales people. They are hairdressers. This means the hairdresser may be the only touchpoint you have between your clients and your product line. So how do you connect the dots?

A majority of salons pay a retail commission that hopefully motivates the stylist to “sell”. I’m going to make an argument that this does nothing to increase sales and only robs from your bottom line

At the end of the day, those that sell, sell. Those that don’t, don’t. Even if you offer them a piece of the profit through retail commission, that will still be true. If you were to conduct an experiment and take the hairdresser who sells the least amount of retail and give them 100% commission, within a week, they will return to the back of the line when it comes to results.

This is due to personality types and the fear of rejection. Those that can sell, sell. Those that can’t, can’t, and they will or won’t whether there is financial gain or not. You have to change the entire strategy and the way of thinking.

It’s the term, “sell” that’s the problem. It creates conflict for your team. It creates unnecessary pressure and focuses on money rather than solving clients problems.

In our multi-location company, we don’t offer retail commission and we sell close to $1,800,000 in retail every year. We even tell our hairdressers that we never want them to sell anything, ever.

It’s the term, “sell” that’s the problem. It creates conflict for your team. It creates unnecessary pressure and focuses on money rather than solving clients problems. A simple shift in terminologies, culture and strategy is all that is needed to turn your team into “problem solvers” rather than unqualified sales people.

Tangerine Salon Pro

That’s why we train that educating the guest of the products they are using throughout the service is not just part of the job, but it’s a disservice to them if you don’t. It’s part of our service wheel, it’s part of our culture that the team is proud of.

The goal is to never sell. Instead, educate. We educate guests which of our products will solve their problems. And when a guest is informed on what will solve their problem, they buy it.

While we don’t believe in retail commission, we do believe in rewarding a job well done. We implemented a program that rewards through a point system for every unit of product the team member’s guests purchase. They then can redeem for rewards including cruises, shears and other styling tools, bucket list education events like NYFW and Aveda Congress, etc.

This controls our costs as well as we formulate the rewards to a particular percentage of sales, which is about 4%. This is much more sustainable than offering 10% or more on every item that is picked up off a shelf. Keep in mind that your margins on your retail are actually much lower than meets the eye. From the cost of the good sold, to the square footage of your retail area, inventory and other related costs, you need to keep as much of the profit as possible.

How Do We Coach?

Tangerine Salon Pro - Retail Consulting

It took a bit to get a grasp on the best way to coach this culture, but think we have it down pat now. We use a saying called “W3H” which stands for “What you are using, Why you are using it, How to use it, and Where it is”. This gives team members a simple formula that is easy to remember and makes perfect sense.

We never look at the amount of sales a team member is responsible for, but how many of their guests are also retail guests. You would be surprised at how motivating this is for hairdressers.

We give them a pie chart that outlines how many guests they served and then how many of those guests are also Aveda clients. They really take it personal and strive to convert more guests into being a part of our entire ecosystem through W3H and “every guest, every time”.

We also engrain our team into the Aveda culture which gives us another layer of our foundation. The environmental aspect of Aveda is one that our team and guests not only get behind, but evangelize. It’s more than just a problem solver for our guests, but it’s also helping impact the world for good, and our team is a big part of that.

Let Social Media Work to Your Advantage

Many people ask the best way to make social media work for their brand. The only problem is, no one knows. Almost weekly, the big social media platforms change their algorithms that makes reaching potential customers harder and harder.

With the big three now relying on their ad platforms, you can rest assured that it's not easy to get your content seen organically. Twitter, Instagram, YouTube and Facebook are still the best possible way to get your story out, but you have to be strategic about it. 

WHAT'S YOUR SOCIAL STRATEGY?

When you post is as important as what you post.

When you post is as important as what you post.

Companies that succeed at social are the ones that are consistent. At Tangerine, we have a full time marketing team that is responsible for creating and posting content daily. If you don't have this resource, then find someone on your team that is passionate about it and let them (with your oversight) run your accounts.

We promote certain posts with paid ads on Facebook and Instagram, but not that often. What we really want is for our staff and our followers to share, like and comment on our posts. This starts the organic process of people not associated with your brand to see your content.

INVEST FOR QUALITY

We suggest that you invest in a few things to make sure your posts look professional and thought out. For example, all four of our salons are equipped with Diva Ring LIghts, so that our Instagram and Facebook photos stand out from just iPhone photos, etc.

We also have a couple of Canon 70d DSLR cameras and quality lens' for our YouTube channel. This makes our content represent our brand with exceptional quality. 

IT'S NOT HOW YOU START THE RACE, IT'S HOW YOU FINISH

You aren't going to get 100,000 followers on Instagram overnight, but by starting today, you will start to see your influence in social media grow. At the end of the day, the influence of social media is limitless, so shoot for the stars.

Continuing Education: 3 Strategies to Keep Your Stylists Sharp for Years to Come

We work really hard to be our best and we like to think we are the best salon around.

So the main thing for us, when it comes to client edification, is to be what we say we are---to actually be the best. Be that by constantly educating our stylists.

Some of our salon competition are booth rental salons and salon suites where the stylist is an independent person with no help or accountability. Usually, they don’t have continuing education.

We want to go a different route, constantly bettering ourselves for the client’s delight.

We recognize that

  1. If you want to be the best, you have to hone your skills.

  2. Education gives you the edge on your competition.

Therefore, we have an education process. To keep our stylists sharp, we employ the following three strategies.

Tangerine Salon Pro Consulting

1) Identify who takes care of what

One of our master stylists who was with us in the beginnng is also our lead educator. She's not only a hairdressing expert, but a Tangerine Salon expert. She's a culture champion. She’s responsible for putting together a curriculum and keeping people accountable for ongoing education.

To help with the administration of the education, she partners with one of our management staff who puts together the calendar, scheduling, etc.

It’s very important for those two to be clear on their responsibilities. At the end of the day, a hairstylist doesn’t have the time (or equipping) to take care of the administration, so ours focuses on what the training looks like instead of when or where it takes place.

2) Bring in outside educators

We bring in outside educators to go hand-in-hand with our own.

Sometimes these are Aveda corporate educators. Sometimes they’re not.

Whomever we chose, we’re looking to stay current with today’s trends. Right now it’s all about pink/purple hair; tomorrow will be totally different.

 

But each of our stylists has to be prepared and well-versed in new techniques.

3) Outside classes

We require our stylists to take two outside classes every year, independent of what we do for them as a company.

We’ll coordinate with them once they find the classes and get them approved, but they have to find them on their own.

The Aveda network education calendar is off the charts; the content is frequent and so good. But we do allow them to go outside the network; it just has to be approved. It can’t be one of classes put on to sell a product.

We have a point system in our salon, and the stylists can use points to cover the cost of the classes. Or they can save points for other things.

The previous three strategies are for those who are well-established in our salon. For up-and-coming stylists, we run two other types of education:

  • An apprentice program: Newer stylists are required to go to weekly classes taught by an in-house facilitator.

  • New hires class: As the owner, I do a class for new hires once a quarter. I lay out the company’s history, direction, and expectations.

“To be what we say we are.”

The beautiful thing about education is that it’s a revenue driver as well. We encourage stylists to convey what they learn to clients.

We want them to say things like “I just learned about this new technique that would look great on you.” In that situation, education can lead to up selling a new service.

More revenue, better-equipped stylists, clients who trust you---education leads to all that.

To be what we say we are (the best salon around), continuing education is a must. Our whole company stays in step with the industry, and that gives us the edge to stand out.

The One Mistake We Made with Our First Salon (that You Should Avoid Like the Plague!)

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Employee growth opportunities are crucial to the longevity of any business.

Salons are no different! When opening our first salon, we had to learn the hard way. Our compensation was inconsistent, and there was no standardized structure.

As a result, there was resentment among stylists and no path for promotions and growth. We didn’t know what to do, and our lack of a standardized pay structure made it impossible to give raises when we needed to give raises.

Outlined expectations and clear compensation structures are so important if you want to create a positive work culture among hair stylists and every other individual at your salon. Having a standardized structure in place will save you time, money, and a lot of headaches down the road.

Don’t make the mistake of a messy, inconsistent compensation plan; you can’t afford to have a slippery foundation for pricing and promotions. It will only lead to:

  • Animosity for people who are making more than others

  • Frustration for management when expectations aren’t met

  • Complacency and a lack of motivation due to unclear incentives or promotion goals

A standardized structure for payment and growth, or lack thereof, will make or break your salon. To avoid any compensation mistakes so your employees are happy and you don’t overpay or underpay, consider the following:

1.  Compensation levels inspire hard work and a clear vision.

Having multiple compensation levels for stylists is like handing them the keys to their own success—and your salon’s. [Click to Tweet]

Outlining a specific path from one level to the next is the road map they need to achieve professional satisfaction. It will motivate them to adopt the salon’s core values, take ownership of the salon’s vision, and reinforce their own value.

Nothing kills motivation to constantly improve more than a dead-end compensation structure.

In fact, according to Gallup’s, State of the American Workforce Report, over 70% of American employees are not engaged or fully committed at work. They aren’t working to their full potential, affecting economic growth.

Your employees want to move forward. Once these levels are clearly defined, it may surprise you which person on your team is most ready to make the leap toward that next goal.

2. Create a clear-cut road map to get from one level to the next.

Why fuel a cut-throat, frustrating environment where one stylist is making more than another—without a clear reason why—when you could cultivate positive self-speculation and personal ambition?

A dose of healthy competition is fine. But if an unclear pay structure is causing strife or hostility toward management or other stylists, frustration will eventually lead to complacency or discontentment at your salon. Don’t lose your best stylists because they don’t have the room—or resources—to grow at your salon.

In the same vein, don’t leave your employees guessing.

Communication is the key to personal and professional relationships. Who would want to be in a relationship without really knowing where it’s going? [Click to Tweet]

Setting your employees up to pursue their own ideas of how to get promotions will only lead to misguided expectations.

At Tangerine Salon, we offer clear steps for how to get to the next price point and the next commission percentage. Always set a standardized road map of what they can do.

3. Walk them through Point A to Point B.

A roadmap isn’t enough; you have to give your employees a clear understanding of where they are starting and ending up, where they are at all times,  and where they are ultimately going—from the moment you hire them.

Create a standard for each department of what Point A looks like and what Point B looks like. At Tangerine Salon, we have a definitive starting point (Point 1) and a definitive ending point (Point 8). Establish how many raises or levels there are and set your employees up to pursue each growth opportunity.

4. Establish a specialized compensation structure within each department.

Each department within your salon has different requirements. Pay is different for spa employees than for hair stylists.

Product usage may be more expensive in one division than another. Square footage in one department may factor in to your specialized compensation model. Assess a standard pay structure for each department.

For guest services at Tangerine Salon, each employee acknowledges the specific starting price point and the necessary steps it takes to be promoted as a guest services lead or key holder. They are well aware of the hourly wages as they move toward different levels specific to guest services.

5. Set performance standards—business and people metrics.

To create a solid, standardized compensation structure, you have to establish performance metrics for different roles. There are a few ways we recommend doing this:

  • Vision cards:

Each stylist at Tangerine Salon is given a vision card for the next level. Studio stylists want to become senior stylists. A vision card is a tangible reminder of where they are on their road maps and where they are going.

When creating a vision card, generate five or six different goals so they know exactly when they can move to the next level. This is an excellent way to establish specific business metrics: how much retail do they need to sell? What is their average service ticket?

 

  • The “mensch” standard.

Separate your performance standards into two categories: business and people metrics. At Tangerine salon, we like to celebrate “mensch” qualities.

Mesch: "A person of integrity and honor”

We provide a new hire class called “Are You a Mensch?” because we believe in a set of qualities that are invaluable. You may hit all the business metrics, but the “mensch” standard helps managers gauge who’s volunteering at charity events, participating in educational opportunities, or working well with the team.

Get as creative as you need to be to come up with a standard that works for you and your salon—and make sure it’s something the whole team can understand and aim for.

6. Frequently meet with your employees to see where they are.

This seems like a simple concept, but it’s one of the most important things we do at Tangerine Salon. Make sure you’re checking in with your employees to evaluate their vision cards and various metrics so there is no room for confusion or miscommunication. We like to conduct weekly and annual check-ins: managers go over the numbers with employees, but we also measure by annual reviews.

The more frequent the meetings, the more your employees know exactly where they are by the time their annual meetings are scheduled.

How you handle your compensation structure will determine the success of your salon. [Click to Tweet]

Conclusion

Take the time you need to establish the best methods that work for you.

Salon Expansion: 6 Tips Before Adding a New Location

Is it time to grow your salon’s vision?

There’s nothing more rewarding than expanding your salon to multiple locations, growing your brand, and creating more jobs for talented stylists.  But how do you know when it’s time? And what steps do you have to take to make sure everything runs smoothly?

For some salon owners, the only logical solution is to expand and keep moving forward. At Tangerine Salon, we knew when it was our time. We took the plunge to open another location once we were 90 percent booked and had clients pouring in from all over the area.

The best way to preserve the company’s culture and bolster our vision was to become a multi-location enterprise. For other salon owners in different stages, however, the idea of expansion isn’t always a green light.

Take it from us: The rewards far outweigh the challenges—if you’re ready. Before you add a new location, make sure you’ve considered the following:

1) The “85% booked” rule

Before opening a new location, make sure you have the resources, funds, and quality stylists to mirror your current business. (Click to Tweet)

We recommend the 85 percent rule: Don’t open another location until you’re at least 85 percent booked in your initial location. Why? Because there’s no reason to reproduce something that hasn’t fully come into fruition.

You can’t realistically propel your business forward and sustain its current success if it’s not ready. Wait until your community recognizes the quality of your brand—until you’re at least 85 percent booked—before taking the leap.

Opening a new location exhausts energy, time, money, and resources. There are many areas to inspect before taking action, and the 85 percent rule is the best place to start.

Tangerine Salon - Dallas / Preston Hollow Location

2) Protect your salon’s identity

Our salon slogan is simple and crucial: One salon, four locations.

If you’re ready to open a new location for your salon, ask yourself if you can transition into a multi-location enterprise without sacrificing your salon’s identity and company culture. You cannot replicate your business without replicating what sets your salon apart and what makes it unique.

How do you open a new location while maintaining the salon’s identity? Define your value system and core competencies.  

Personality ≠ Identity.

Another location may acquire a different vibe or specialize in different types of haircuts, color, or styles. Personality does not need to be replicated, but ultimately, your brand should be cohesive at each location. Before expanding, ask yourself, “What standards do I want my new location to abide by?”

Tangerine Salon - Coppell Towne Square Location

3) Be strategic about location
Business owners in various industries know location is everything, especially if they rely on foot traffic or exposure from other nearby businesses.

If you’re ready to become a multi-location enterprise, look at high rent districts and consider where your salon would thrive.

I advise owners to keep an eye out for co-tenancy. If Whole Foods, Trader Joes, or high fashion brands cater to your demographic, don’t be far behind. Take your time finding the perfect spot, and adjust your rent budget accordingly before diving in to a new salon.

4) Set a culture foundation
Before you can recruit for your new location, stop to consider the company culture. Do you have a plan for your culture foundation?

One helpful exercise: select two talented stylists at various locations to create a team at the new location. Choose individuals who believe in your vision and identity.

Invite your staff into the conversation so they can take ownership and contribute to the culture foundation. It takes more than a manager to establish a good work culture.

5) Recruit, but build a brand that attracts people
Hopefully, your brand attracts interested hairstylists and you won’t have to spend a lot of time and energy on recruitment.

Don’t stretch yourself too thin; if you can’t afford to staff the second location or you can’t find stylists who meet your standard, continue refining your brand and vision.

When it comes to finding top talent, go after what you want. (Click to Tweet)

Seek out the talent you’ve envisioned by targeting hairstylists on Facebook and building connections on social media. There are a number of ways to recruit talented stylists.

Find out what works best and explore as many avenues as possible that align with your salon’s standards.

Tangerine Salon - The Star in Frisco Location

6) Train a manager to fulfill your vision
Unfortunately, you can’t be in two places at once. Find and train a manager to preserve your salon’s brand in the new location. A manager development program is paramount to our success at Tangerine Salon.

We adopt a competition to measure which assistant manager takes the salon’s vision to heart and whose personality best aligns with the new location.

The most important part of vetting any new manager is cultivating a positive, one-on-one learning relationship. (Click to Tweet)

As he or she learns the culture and fundamentals of the job, work with the manager personally. Do walk-throughs and sit where clients sit; gain a new perspective into the guest’s experience.

Conclusion
You may be eager to throw caution to the wind and start a new location, but I urge you to seek out a coach during this important season of your business.

Learning the hard way costs a lot of time and money. If it’s your first time moving to a second location, Salon Forward can give you outside perspective, encouragement, and advice.