Pat Shanahan, CEO of DaySmart, the makers of Salon Iris Software
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Pat Shanahan, CEO of DaySmart, the makers of Salon Iris Software

Not only has the pandemic impacted bookings and sales for salons, but it’s also influenced how generous clients are able to be with their tips following the service. In a recent DaySmart study of salon owners across the country, more than one-quarter (27%) of respondents say customers tip less often than they did before COVID-19.

While one-half (53%) of respondents say customers tip their employees just as often as before, the size of the tip is also in flux these days. Less than half (45%) of the respondents say customers are tipping the same amount as before the pandemic, and 29% say they are tipping smaller amounts of money. For salon professionals relying on gratuity as a major source of income, this uncertainty only adds to the stress of the pandemic.

This can be a frustrating situation for salon owners, whose own financial strains may prevent them from compensating for the loss in tips with other benefits. However, there are some steps owners can take to smarten their business operations and save money to redirect toward employee pay.

Responses to the question: "Have the size of customer's tips changed over the past few months?"
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Responses to the question: "Have the size of customer's tips changed over the past few months?"

Reread the reports

Salons are running much leaner than they were a year ago, though there may still be areas to improve—starting with how they’re managing their finances. Manual bookkeeping is not only time consuming, but it leaves room for error, which can mean dollars lost. Instead, owners can use business software to monitor performance—from revenue to employees—and identify areas where they are underperforming or overspending.

Data-based sales reporting can also help owners improve their retail operations to pull in more revenue. With a clear idea of which products clients are buying—and which ones they’re not—owners can make smarter inventory investments to appeal to consumers’ purchasing preferences.

Boost appointment booking

Between social distancing and decreased tips, revenue streams have slowed over the past year. To offset this, it’s important owners and their stylists make the most of their schedules to see as many clients as possible. However, owners often find themselves playing the role of receptionist at their salons, which prevents them from spending that valuable time with clients.

With an online appointment book, owners don’t have to spend their time fielding phone calls to set up appointments and can instead give clients the control to set up appointments themselves. This ensures owners never miss an opportunity to take on a new client because they weren’t able to answer the phone or an email soon enough. Plus, with everything online, owners don’t need to worry about double booking or mixing up details, which can happen when writing details down in a physical appointment book. Further, the more accurate their booking, the less likely they are to pay overhead to have their space open unnecessarily or be staffed disproportionately to the number of clients booked. 

Automate payment processing

As contactless payments increase in popularity to mitigate the spread of COVID-19, salons need a reliable system for processing credit cards—but these can cost a ton in processing fees if completed by a third party. Instead, small businesses can keep fees low by implementing an integrated processing system that links to existing accounting software and processes payments in house—meaning more money per transaction for owners to dedicate to their business.

By combining salon and payment software, a client’s invoice is settled as soon as they swipe their credit card at checkout, saving stylists time to dedicate towards their next appointment. The business software then immediately updates sales reports, and there is no need for salon employees to reconcile bank statements with other reports to ensure they’ve been paid for every service. Additionally, when connected to the salon software, the payment system can suggest tip amounts to the client at checkout, making one more push for clients to spend more on their services.

Enhance the employee experience

In the absence of normal tips, owners need to ensure they’re making up for it by providing a premium work experience, offering stylists the tools they need to do their job efficiently so that they continue to enjoy—and stay in—their roles.

Not only will prioritizing employee satisfaction help retain stylists, but it’ll keep clients coming back to the salon. That’s because, while clients may not be able to tip as often or as much to their stylists as before the pandemic, they are still very loyal to them. In fact, 76% of customers are more loyal to individual employees than they are to the brand, meaning failure to maintain staff can result in even more revenue lost during this time.

Without the guarantee of gratuity for their employees, owners must work even more resourcefully to ensure their staff are financially taken care of during these challenging times. Running an efficient business is the key to saving when budgets are tight, and with the right tools and operational strategies, salon owners can do just that.

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