At America’s Beauty Show this March, Wella Professionals hosted “Salon Savvy: The Art of Business Education,” a morning-long business seminar for salon owners and managers.

Pete Castellanos, Wella’s senior vice president of sales for the salon professional division, kicked off the session with some statistics that painted the current picture of the professional industry. Then, he provided some business-building strategies each salon should follow, and provided benchmarks by which they can measure their progress.

“Only 55 percent of women are visiting the salon for professional services,” says Castellanos. “And of those, clients are stretching their appointments out to an average of three times a year compared with last year’s average of four times per year. They also are spending less on retail and on services.”

Capping Labor Costs
Castellanos pointed to labor as the single largest operating cost for independent salon owners, and said that owners who learn to manage it successfully tend to do better. For example, salons whose labor costs fell between the following percentage of overall costs tended to be…
58-63% Break-even salons
48-55%: Profitable salons
40-45%: Leading salons

Ramping Up Retail
The greatest unrealized opportunity in salons today is retail sales. “In fact, 70 percent of clients report that their stylist has not recommended a product in the past six months,” he says. “A complete consultation ends should end with retail in hand.” Using retail sales as a measuring stick, where Retail Sales Revenue/Service Revenue=Retail Sales Percentage, he says that salons whose retail sales fall between the following percentages, tend to be…
5-8%: Break-even salons
15-20%: Profitable salons
Greater than 30%: Leading salons

Get Them Back In
“Teach your stylists to rebook their guests’ next appointments, don’t  leave it up to the front desk,” stresses Castellanos. “Shifting clients from to every eight weeks to every six weeks can mean an extra $15,000 per stylist annually to the salon’s bottom line.” Salons with prebooking percentages between the following percentages tend to be…
30-40%: Break-even salons
50-60%: Profitable salons
80%+: Leading salons