Over the years we’ve seen many style trends flow through the market, think Vidal Sassoon who changed the way everyone looked at hair in the 60s. It’s trends like Sassoon’s that have shaped the hair industry for decades. But what are the business trends we should be looking at? We’ve analysed over 7 million appointments across New Zealand and Australia and identified some key trends that have occurred over the last five years.
What hasn’t changed?
Retail spend
Over the past five years we’ve seen no change in retail. Retail revenue, retail spend per client and the number of clients purchasing retail has remained level. Of course the Christmas period continues to bring a peak to sales.
Rise of the super salon
Thought of as the next big thing, super salons haven’t become a large segment in the industry. Instead of the best salons bulging with a tonne of stylists, needing larger premises and becoming super popular, the market has maintained a range of salon sizes. In fact, less than 2% of salons have 15 or more staff.
What’s changed?
Client revisit period
Your client revisit period is a really important number in your business. The length of time clients take between appointments has a huge impact on your annual revenue and reducing it by even the shortest amount of time will result in a massive jump in revenue. In the last quarter of 2011 we saw a client revisit period of 40 days (5 weeks and 5 days). However, since 2012 New Zealand has experienced a consistent client revisit period of 46 days (6 weeks and 4 days). This revisit period increase of 6 days has, on average, decreased salons revenue by $1,400 per week. Interestingly, Australia has historically had a higher client revisit period compared to New Zealand by 2 days.
We’re beating Australia in rebooking
That’s right, when it comes to rebooking rate – we’re well ahead of Australia! Data over the past five years shows that we’re hitting an average rebooking rate of 58%, up from 49% in 2011. Why? We think we’re more aware of our rebooking rate as a crucial indicator of business performance and the easiest way to ensure we’ve got dollars coming in the future. It seems Australia didn’t quite catch onto this as quickly and five years ago had an average rebooking rate of 33%. Fast forward to 2016 and they’re now sitting at 42%. Rebooking percentages in New Zealand and Australia have both increased by 9% – it’ll be interesting to see if they can catch up to us!
Online Booking
The ability to book online has seriously changed the behaviour of clients. In New Zealand, 10% of all bookings are now made via Online Booking. That’s ahead of Australia who are sitting at 9% of bookings, but interestingly just behind the UK which experiences 12% of bookings taken via Online Booking. This isn’t exactly surprising when this feature provides your clients with the convenience and flexibility they need to book with you when it suits them, frees up your phone and boosts client happiness!
Colour trend
Our data shows that the average number of colour clients has remained the same. What’s interesting is that the average client colour spend has increased over the same period by 12.5% – an increase from $96 to $108. There could be a number of reasons for this. A huge rise in colour trends, new products and an increase in value perceived by clients for colour services, therefore a willingness to pay more.
Revenue is trending up
Revenue for services is on a strong upward trend. Clients are spending more overall, not just on colour, with the industry experiencing a 15% increase in average client spend over the past five years. Year on year that’s an average increase of 2.8% and with inflation increasing just 1% each year, salons should have noticed a healthy revenue increase. If you’re not, you need to ask yourself if your prices are right. Perhaps it’s time for an increase.
Is there an opportunity?
The New Zealand Economy
According to Westpac-McDermott Miller consumer confidence has majorly increased since the end of 2016 in New Zealand. Households are in a better financial situation increasing disposable income. A healthy economy is vital to the willingness of clients to spend more with your business.
Get Online Booking
If you don’t have Online Booking, you need now! Provide your clients with the flexibility and convenience of booking whenever it suits them, increase your bookings and make more money. We’ve found that 1 in 10 appointments are cancelled or end as a no show, so reduce these by taking a deposit when your clients make an appointment via Online Booking.
We can change the numbers
It’s clear we have the ability to change the numbers! Just look at the incredible increase in rebooking rate over the past five years. We can tell you that didn’t “just happen”, it’s because there has been a real focus on the importance of this number.
Sell more
Ensuring you continue to increase prices year on year is really important particularly when you see that it’s delivered a 15% increase in revenue over the last 5 years. Regular price reviews are a great idea. But what else can you do to sell more? Sell more colours, sell more treatments? Yes, but the simplest way to sell more is to change your client revisit period. That’s right, simply focus on getting your clients to visit more regularly and you’ll be selling more services with ease!
Reduce your client revisit period and make $46,000
Changing your client revisit period can have a huge impact on your business! Across the New Zealand salons we analysed we found on average they completed 95 appointments a week and the average client revisit period is 46 days (6 weeks, 4 days). If a salon made it their mission to reduce their revisit period back down to 42 days (6 weeks), they would have the ability to increase their client visits by 9 appointments each week. Based on an average client spend of $99, that’s an extra $900 per week, or $46,000 per year!
So run your reports, take a look at the numbers and set a new revisit period goal. If your software doesn’t report on client revisit period, then get software that does (like Kitomba). Then get your team involved, explain why it’s important and how you’re going to reduce your client revisit period. Set a weekly meeting to determine how you’re tracking, create a competition between your stylists or treat them to something if they hit your target – whatever it takes to reduce your client revisit rate and increase your revenue!
