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Salon owners, this is your last call. The Next Level Salon workshop starts today. And if you're an employee based salon owner who is tired of shrinking margins, tired of trying to motivate your team, tired of bending over backwards to increase demand, today is the very last day to secure your seat. Over the next three days, I'm handing over the exact system that salons are using right now to generate half a million dollars or more annually, pay uncapped emissions to their entire team and have stylists lining up to work for them and CL lining up to get into the salon. This is all starting today. The doors closed today. Get registered right now@ thriving stylist.com next level salon and I'll see you in there.
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Do you feel like you were meant to have a kick ass career as a hairstylist? Like you got into this industry to make big things happen. Maybe you're struggling to build a solid base and want some stability. Maybe, you know social media is important, but it feels like a waste of time because you aren't seeing any results. Maybe you've already had some amazing success but are craving more.
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Maybe you're ready to truly enjoy the
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freedom and flexibility this industry has to offer. Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you're ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists. I'm Brit Siva, social media and marketing strategist. Just for hairstylists.
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And this is the Thriving Stylist podcast. What is up? And welcome back to the Thriving Thriving Stylist podcast. I'm your host, Britt Siva and today we're going to talk about why your very best stylist might not ever deserve a promotion this year, next year, or ever again. And to start understanding this concept, I want you to picture two stylists for me. And the two stylists I'm about to describe, you've met both of them. We know these two people. I want you to picture them in your mind. Stylist number one is a money machine. Hitting every metric, every time. Retail sales, retention, referrals, 15 new guest requests a month. But also a little bit of a nightmare. Kind of a big personality. Can be a little bit moody with the team like you walk on eggshells. Could be a good day, could be a bad day. Not sure. This person might come in a little late, run a little long with their clients. The desk might have challenges with this person. If you have a front desk, this person might even be a little combative with you. You have a suggestion or you want to offer some feedback. This person doesn't want any feed back. They are making a lot of money. Clients love them. Like, if you have an issue, maybe that's on you because they're running a great business. So I'm not sure what the problem is here. This person might not be as interested in marketing or education because, by the way, their chair's already bustling like it's working. The machine is working. So please don't ask me for more because I'm already killing it over here. Sometimes this stylist gets accused of being intimidating. But listen, they've made it like they are the epitome of what we're meant to think an amazingly successful stylist is supposed to look like. And by the way, this person's probably doing multiple six figures. So they have made it like they're making good money. Clients love them. Production is great. There's all these other parts and pieces, but financially, they're killing it. Okay, then there's stylist number two. Stylist number two is producing 30% of the revenue of stylist number one. 30%. So not even a fraction. Okay. Clients also love this stylist, but their numbers are growing more slowly. Stylist 1 is maybe getting, you know, a dozen new guest requests a month. Can't even fit them all in. And stylist number two is seeing two or three, maybe four new guest requests a month. Retention's going great, but not growing as rapidly as stylist number one is. The revenues are not really there. Stylist number two does have a little bit more time, so they are mentoring the new stylist. They're very patient. When you do have feedback to offer, you can sit down with this person. They're very coachable, this person. Stylist number two maybe doesn't sell retail, but they're really great about taking photos of all their clients. They support you with the marketing. They show up on time, they're tidy. Just the revenue isn't there in the same way as stylist number one is? Based on the two people I just described, who is more likely to achieve a price increase or a commission increase this year? If the growth path you have in your salon today is based primarily around KPIs centered on revenue, we both know that it's going to be stylist number one all Day, despite the fact that they don't want to educate themselves. Everybody has to walk on eggshells. They come in late, they run long, They're a little bit difficult to deal with. You can't really talk to them. They're not willing to change their behavior. They're not coachable. Maybe they're not great for culture, but, hey, they're making tons of cash. This is tough because I understand you need stylists who make the kind of money like stylist number one does. I totally get it. You also need stylist number twos in the building. And we can't, on one hand say we're a salon that is focused on culture and camaraderie and positivity and everybody getting along and have three stylist number ones in the building. Both things cannot be true. And we can't just say, well, they're a little bit of a diva, or they've earned it, or, you know, this is kind of what happens when you get a little senior or just be a little softer. We can't do that. So it's either. Either you have a system, and you have a structure, and you do have an environment that is positive and uplifting and promotes growth and great connection, and there is no judgment and a business that can truly scale. You either do have that or you don't. And if you have a system that is created to promote those who produce the most amount of cash, no matter what, no matter what else is attached to it, as long as you make enough money, you can stick around here. That is the most expensive mistake you're likely making in your business today. And trust me, I'm the coach that talks all about money. I've been talking about money like it's a good thing for almost 15 years. I love money. I love salon owners to make money. I love stylists to make money, but not like that. And when you have a salon that looks like that, 10 years ago, it worked great. It was no problem. Every salon had a stylist number one in it or five stylist number ones in it. So what are you gonna do? You're gonna find them everywhere. Stylists aren't down to work with somebody who looks like that anymore. And if you have a salon where stylist number ones continue to be promoted, all of the most incredible talent who starts with you will not stay with you. They'll go rent a booth, they'll go rent a suite, or they'll go to the salon down the street. That doesn't Have a bunch of people that are acting like that and choose to be in an environment that is truly positive, uplifting, growing forward and where there are standards and repercussions. Adults actually like rules. They like environments that are truly supportive, where there's not special snowflakes, lakes. And when you have a system or a structure in your salon that, trust me, used to work 10 years ago, 20 years ago, 30 years ago, that basically rewards strictly on revenue based KPIs and metrics, it is a recipe for disaster. It's a recipe for low profit margins, it's a recipe for high turnover. And I want to explain over not just this one episode, but this week's and next week's, why the system that worked 10, 20, 30 years ago is collapsing hard and fast right now. And simple things that you can implement into your business to turn this around fast. So I want to talk about what most salon promotion programs are based on. And there's a ton of different coaching companies who coach to these things. So I'm not saying any one coaching company is doing this. Most of them that I look at like 90% are coaching based on a very similar series of metrics to be used as the KPIs or the performance indicators for your team. So let me, let me explain what I mean when I say KPIs. The acronym KPI stands for key performance indicator, meaning these are the things that we look at to decide if a stylist or an employee is doing well or doing poorly. Okay. So the most commonly noted suggested seen KPI's is in employee based salon teams are going to be a combination of these metrics. Retail to service percentage, pre booking percentage, average ticket retention utilization, total volume of clients, service revenue and or retail. So when you look at what was that seven or eight things, maybe nine. Most commission based or employee based salons today are assessing their team based on five or six or nine of those things that I just rattled off. By the way, those are important things to note in a stylist performance. However, when I coach, those are not the KPIs, those are a little bit different. So when we look at systems in salons or methods in salons, whatever you want to call them, structures and salons, where Those are the KPIs, that is the performance criteria that we are using to evaluate our team based on there can be a promotion attached to achieving some or all of those things. That promotion, I'm doing air quotes right now. The promotion that we call a promotion in our industry is generally a new Title, a price increase, and then potentially a commission increase up to a point. But the commission caps in most salons and the cap is anywhere between 47 and 50% almost always. And so over time, the only way to get a promotion is a price increase, which is charging your client more. And we call that a promotion. I don't know of any other industry where the product or the service costing more is considered to be a promotion for the person doing the service. It's. That's one of the very interesting, like, special snowflake things our industry does. Like, even as I say it, like, congratulations, you get to start charging your clients more. It's a kind of tricky language. We're going to charge your guests more so that we can afford to pay you more. I understand if the salon is not making more money, they can't afford to pay the stylist more. But the way that we call that a promotion is really different. You don't find cost of a product or service going up being used in the words of promotion most anywhere else. So then what we do in a system like this is we tell stylists, come work for us. The sky is the limit. You can earn as much as you want to, and as you earn more and your prices go up, that chunk of commission is going to just get bigger and bigger. Now, the percentage isn't going to go up, right? The percentage is going to stay anywhere between 35% and maybe 50%, but you can earn as much as you want. You can do half a million dollars behind that chair if you want to. That's beautiful to say and in theory, true. Right. What normally happens is the salon ends up settling into three layers, essentially, when the model looks like this, there's the low producers in the salon, the mid producers, and the high producers. You could choose any salon today, and more than likely, it's going to have stylus operating in each of those three tiers. In most salons, the largest chunk of the stylus is the mid producers. There are some low producers and some high producers. The owner's always, almost. Almost always one of the high producers. But the larger chunk, call it 60%, is going to be the mid producers. And then maybe you have 20% of the team is low and the other 20% is high. But 60%, the majority, falls somewhere into the middle. Challenge with the middle is that when you look at salon finances, and if you coach with me, one of the things I do is we look at how profitable every single person on your team is when we look at stylists in the middle, they generally operate at around 3% to 8% profit, which is almost perfectly aligned with the average profit margin of salons in the US today. Now we also have our low producers. And most low producers operate either at a deficit or a break even. And a lot of salons have a trouble identifying that because they don't know the profit point of each of their chairs. But when you look at a low producing stylist, somebody who's likely making an hourly wage, certainly an assistant, but even a stylist who's producing like 1500, 2000 size up to $3000 a month as a stylist is actually costing you money. They're operating at a non profitable level, way above and beyond what you're paying them out in wage. Like you look at the gap between wage and production, that's not necessarily profit at all. And so you have these nonprofit stylists and then you have these high producers. The high producing stylists can operate at anywhere from 20%, 30%, 40% margin. They can be producing huge profit for you. So what happens is those high producers make up for where the low producers and the mid producers lack, which gives the salon an average profit margin of, you know, somewhere within that range. Could still be around 3 to 8%. Depends on what your split looks like and what your compensation plan looks like. So let's talk more about this whole sky's the limit thought process. So let's say we tell stylist, sky's the limit, you can earn as much as you want to when you join our salon team. Perfect. So let's say you have a stylist on the team. Maybe it's stylist number one. You have stylist number one, multi six figure stylist making all the cash. Right. Stylist number one is doing $200,000 a year in service revenue behind the chair. Let's say they work four days a week and they take two weeks vacation a year. They see five guests a day. If those are all facts about this stylist, then their average ticket is about 200 bucks. An average ticket of about 200 bucks is great, right? In the average salon they'd make about 50% commission. So they'd take home a hundred grand a year pre tax. And then in this salon, maybe the next year they'd earn a promotion. So in that promotion, they're not going to earn any more commission because they've already capped out on Commission. They're at 50% already. So the promotion is maybe a title Increase, I don't know, but definitely a price increase. And let's say their price increase is $5 a service, which averages out to be about $10 per ticket. So then the next year they would have an additional $10 a ticket. So they would do $210,000 in services. Right. So now with their 50% commission split, they're taking home $105,000 a year pre tax. That's less than a 3% annual pay increase. And when you look at the cost of living just in the US and other countries, it can be more. If you're only making 3% more year over year, you're not even keeping up with inflation right now. You're, you're lifestyle would be decreasing year over year even with that price increase. It's not going to do it. Okay, so let's say we go more aggressive. Let's raise that ticket price by $20. So that takes that stylist to income increase of about 6%. That would be the annual raise. So now they're beating out inflation, but it's not really going to change their lifestyle much. So now their clients have gone from paying $200 a ticket to 220 a ticket so that the stylist can have a little bit of a lifestyle increase. They're going from making 200,000 a year to $220,000. Know it's an extra what, 1600, 1700 something dollars additional hitting their bank account pre tax, of course. So it's not nothing. But let's say this stylist like really wants to change their lifestyle. When you look at statistically, the average American needs to be making about 10% more year over year to really feel the lifestyle change, to feel the impact of the financial growth. We would need to raise that average ticket by $40 for that stylist to feel that level of growth. Imagine raising that ticket from 200 to 230 or $240 so that the stylist could make that happen for themselves. It wouldn't be sustainable year over year. So even as I'm saying that, I can hear the salon owners in the background being like, no, no, no, we don't do that. We double book, right? Well, no, no, no. We don't price gouge the clients. We double column the stylist so the stylist can work harder. And that's how they can make more money. They can start to see 10 clients instead of 5 and then 15 instead of 5 and then they'll triple column. But don't worry because we're going to give them assistance to train and mentor and they'll, they'll do the shampoos and ultimately they'll do the blow dries. And it's going to be amazing. They're going to be handling triple the clients at any given time, having 15 different conversations on any given day. And that's how you're going to make more money. And we call that scaling. That's not scaling for the stylist, that's scaling for the salon owner while the stylist is working three times harder. And yeah, they're being given support in the sense of it's somebody to mentor, to train, to have hands in the hair and all the things for sure. But it's another huge emotional pour out and more time and more capacity and all the things too to make that happen. So then really the only way to earn more is to work more, to work harder. And by the way, that used to work, that totally worked in the late 90s, the early 2000s, the mid 2000s. I mean, that was the model. 2020 was the turning point. 2020 was like the great reset of the human race. I mean, to be totally candid, like when you look at modern cultures as a whole, when you, when you look at what has changed in People's lifestyle since 2020, it is so different the way that people now talk about mental health, life balance, family, pr, putting their phone away, like, I mean, it's just so different the way that people prioritize, right? Stylist bodies are giving out in their 40s and 50s because they are doing a triple column or they're trying to pull off 10 blow dries in a day. And that's always been happening like bodies have been breaking down. This is a really physical industry. The difference being now stylists are talking about it at scale on social media and on Tik Tok and all these places. And so it's so younger stylists are looking at that and being like, whoa, I don't know if that's what I want for me. People developing color allergies, all of these things are happening that were probably happening before, but not at the same scale. And as mental health is being normalized and physical health is being prioritized, stylists are starting to say, I don't know if taking 14 clients a day is where what I'm shooting for. Right? I do want to be able to buy a house one day. I want to be able to provide for my family. I don't want to work six days a week and I don't want to run a double column. And how am I going to do that? There's three flaws in the old models that used to be seen as acceptable. There's a capacity flaw, there's a retail shift flaw that we haven't really gotten into yet. And then there's a client behavior flaw. And the client behavior flaw is the thing that we can't fight. Like it's just happening. So we have to accept it for what it is. So let's talk about that retail shift flaw because we haven't really gotten into that yet. So when we look at like using retail sales as a whole or the retail to service percentage as a metric that determines if a stylist can be promoted or get a price increase or whatever, it's flawed at its core and it didn't used to be. So when retail companies went direct consumer, it was a total flip of the relationship that retail brands had with salons. And I think it was one of those things that happened slowly and then all at once. I don't think the hair care brands were like, haha, we're going to screw our salon accounts over. I don't think so. But hair care companies have to make theirs too. Like they have to make money. Clients like to sit at home and lay on the couch and order shampoo. Like I'm sorry, they just do like look at Sephora online and what they've pulled off. Look at Ulta online. Look at the fact that Kerastase runs promotions on Black Friday that are like really hard to ignore. They're like incredible. Like I order stuff like that. Because when you look at what you can get for free from these hair care companies ordering during these incredible promotions or orderings from these big stores, it's really difficult as a client to be like, no, I'm just going to stay loyal to my stylist. It's wonderful to want them to do that. But when we as salons can't compete with what they are offering direct to consumer, it becomes very challenging. So when I was in the salon in like probably when I first started like 2007, 2008, I mean, we were running hundreds of thousands of dollars of retail through the building. I mean, it was crazy the amount of retail we would sell because lines we carried were salon exclusive. You couldn't buy them online, you could not buy them at a big box store, you could only buy them from a handful of salons. And hair care brands were really selective around, around where they would allow their brands to even be carried. So we were one of very few salons within a driving radius where clients could get these products. We were selling like crazy. It was a huge revenue source for us. And when you look at this is not a Brit Siva rule, this is just a general retail sales rule. You need to be selling through 60% of the inventory on your shelves every single month for your program to be profitable. If you are not selling through that amount, what's likely happening is you're generating revenue like you're making sales. And so it feels good. But you've got all this essentially revenue tied up in the inventory on your shelves that's not moving. So it's almost like taking a short term loan out against the inventory you're holding. Because some of what you sold you have to reinvest to restock the shelves of the stuff that you did sell. But then where is the actual profit being generated? Like you're not liquidating, right? So you always had this inventory tied up. That initial investment that you made likely on a credit card is never fully being paid off. It takes a really long time. And so where's the margin? And then we're paying commissions in that. And we're expecting stylists to sell the retail. But is it actually moving the needle for you in a meaningful way? Question mark. So we're holding stylists to this benchmark of if you don't sell retail, I can't promote you. I really want you to look at like, does that still make sense for your business any longer now? I don't hate retail. I love retail. My daughter's a stylist. I tell her to sell retail. Like, I think retail is important. It builds relationships, it's good for retention, all the things. I just don't think it should continue to be used as a metric for things like price increases and promotions. I think it's an additional arm. I think you look at it as a secondary business, not something that ties into everything else. Here's the thing. Stylists won't sell retail if they don't love the lines you carry. If they're not educated on the line in depth and if they're not educated on how to sell. Like if you're not teaching them several times a year how to sell new effective strategies, like what worked sell even three years ago doesn't work now. So are you constantly teaching them what is working to sell retail now? If not, we're not equipping them with the skills to achieve the KPIs we've set and so stylists feel defeated. Like, how am I ever going to do it, right? Then we get to the client behavior flaws, which are, of course, retail. I already talked about that. Like, with the online shopping of it all, it just does become harder. And then pre booking. Pre booking used to have to happen. I tell my kids, like, I used to walk around when I was, like, coming out of high school with, like, a physical calendar in my purse, right? And my. There was no digital calendar. Like, I carried around the pocket calendar. And that's how I kept track of everything. You had to pre book. Because if I don't pre book, I get to call you and leave a voicemail and hope you get back to me. And now you're already booked up. Like, pre booking was how people stayed organized. Our lives move too fast now. Ask a client to be able to book an appointment 12 weeks from now.
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They don't even.
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They don't know where they'll be if the soccer schedules come out yet, if they're gonna have to work. Are they travel? Traveling? Nobody knows. And so we're seeing clients will pre book, but then they move things around. There's cancellations, there's not. Pre booking is not what it once was. It's not that it's bad, but a stylist doesn't have to pre book to be successful. Like, show me a stylist who pre books and makes a lot of money, and I'll show you four that don't pre book and still make a lot of money. So is it really that critical that if somebody doesn't do it, we can't promote them?
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It.
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Some of it's just a little bit nonsensical and dated. Now, I'm not saying that none of those things matter, but at the end of the day, when I'm coaching you on your salon and I'm saying, how do we get this salon to A, earn more revenue and B, turn a higher profit margin? For the salon owner, I'm strictly starting with service revenue. Like, that is the lever that I get to pull, push, do what we need to do to improve the financial situation of the salon with no question, right? Like, if we try and move the retail lever, there's so many variables to it. If we look to hire, if we look to promote, if we change price increases, like we're making these minuscule 1%, 2%, 3% adjustments, I'm looking at service revenue because I can get my biggest bang for the buck there. And that's why in thriving leadership, when we promote A stylist, it's all about the service revenue. Now that does not mean there's not other KPIs and it doesn't mean that the other things that we talked about don't matter. But those are not the things we look at when we're promoting somebody, when we're increasing their commission, when we're increasing their price point. We look at totally different factors. The reality is, if you have a stylist in your building who does $15,000 a month in services, would you seriously not promote them if they didn't pre book? Would you seriously not promote that person if they can't sell retail? Like, it just starts to not make sense. So when you look at the primary reason that salons lose mid and high performing stylists, it's that these dated models have lumped together all of these KPIs with what should really be seen completely separately as compensation metric metrics. It's two totally different things. So I want to talk for a second about how we coach to the difference between KPIs and growth maps. Okay? Two totally different things. This is going to sound weird, okay, because this is not how most salons operate. This is how thriving leadership salons operate. So we have KPIs still in the building, still in the business. Everybody working here has KPIs. Everybody in my company has KPIs. Everybody in your salon has KPIs. Everybody does. KPIs are business non negotiables, meaning if you do not hit your KPIs, you're fired. Most of you are not running your salons like that where if a stylist is not achieving their retail sales, they're fired. If a stylist is not achieving their pre booking, they're fired. They're just not promoted. Right. So then those aren't really the same things as how KPIs are handled in most traditional businesses. It's almost like suggestions or like promotional levers, but it's not actually key performance indicators. A KPI is something that you hold somebody accountable to and if they cannot do it, they cannot work in your building any longer. And that's not how these metrics are normally being managed. And this is how you end up with people like Stylist1 who make a lot of money, but are culture destroyers. Because we're only evaluating one side of things. So what we do is we do set up a series of KPIs for your team and I'm going to share more about those next week. So listen to Next week's episode for that.
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We do set up KPIs, but the
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KPIs are make it or break.
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Break it.
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If you're not doing these things, you can't work here anymore. When you have a system that looks like that, where it's you do or don't, there is no try. Like in quoting Yoda, your culture will completely change. You won't have any people who have bad attitudes or don't clean up after themselves or refuse to participate in social media. Like it just completely shifts the game. Now on the flip side, we have these growth maps. Growth maps are your retention infrastructure. So when you think about KPIs being the floor, the baseline, this is how we roll here. This is how we operate. Your growth map is the ceiling. That's where you grow to if in your salon right now, where a stylist is growing to is make more money, have a price increase, it's not very motivating. The way that we do growth maps is very different. Now beyond that, we also have our price increase metrics. Price increases are based on eight different factors. We use our eight factor dynamic pricing calculator. We have used it for over a decade. It is flawless and beautiful. And it never overprices or underprices a stylist. It's perfection. And it works based on clientele demand and is designed to make a stylist grow as quickly as possible. So we do take into account things like utilization. When we look at pricing, we take into account things like demand and all of those. There's eight different factors.
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Right.
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But it's not evaluated in the same way as somebody would get a commission increase or somebody would be hired or fired or whatever. It's different. Price is what the client pays. It's not a promotion factor. So when the stylist charges more, will they ultimately on the back end, make more regardless of what's happening with their commission? Yeah, of course. But that's true of any product or service. Like when you look at pricing being based on client demand and market demand and true things that set the price for any value of anything in today's economy today, whether it be physical product or service, it has nothing to do with the compensation of the provider. We're talking about two completely different things. So we separate them in full. And in doing that, we're able to help teens feel more motivated, grow super fast, fast, feel like they're moving forward more often. We're able to generate way bigger profit margins for the salon, way, way faster. You're no longer going to be losing high performers, like, ever. And you're also not going to have toxic culture bombers in the building. So I want you to just think to yourself about what you've been doing in the salon, what your promotional path, what your growth path has looked like up until this point, and think for the next week of, like, maybe there, maybe, just maybe, there's a chance it needs to shift if you're open to making a change. And then next week, we'll dive a little deeper into what that could look like. Okay? You can always find me in my DMs if you have any questions. So much love, Happy business building. And I'll see you on the next one.