We speak with many business owners in the beauty industry and one of the most common complaints we hear from these people is that they are constantly dealing with people who make bookings and then either cancel with only hours notice, or simply don’t show up at all.
This practice is costing beauty businesses (hair salons, beauty spa’s etc.) tens of thousands of dollars every year.
If only 2 people fail to show up for an appointment each week, your salon is on track to forfeit approximately $32,000 in revenue every year simply by allowing no-shows to occur.
($120 average appointment + $20 in unproductive staff wages + $50 in lost product sales + $120 lost opportunity to book a follow up appointment = $310 I lost revenue.
$310 x2 per week = $620 p/week in lost earnings
X52 weeks = $32,240 in yearly lost earnings)
To solve the problem of no-shows and cancelled appointments, all you need to do is to implement a mandatory “non-refundable” deposit upon booking, and move the majority of your bookings to your website. While booking systems such as Timely are fantastic for reducing cancelled bookings, it really only solves the problem of clients forgetting about appointments. This can be managed for free by implementing a solid reminder system, using good old fashioned phone calls.
The difference between reminders and requiring non-refundable deposits is that when people have already part-paid for their booking, they very rarely forget they have an appointment. The result is that there is a significantly reduced requirement to send out reminders – in fact, the number of contacts from your clients will likely increase.
However, as good as this would be for your business, the reduced need for reminders is simply a by-product of implementing non-refundable deposits.
Main Benefits of non-refundable deposits
There are 2 main benefits of non-refundable deposits, and these are:
1. Only those who are serious about their appointment will make a booking
2. Your staff costs are covered for any instance where someone doesn’t show up.
Only Those who are serious will make a booking
Let’s be honest here, most of your no-shows come from a certain demographic of clients.
These are people who believe it’s ok to book in with a few salons and then turn up at the salon that offers the best price. Essentially, these people are booking with you, but keeping their options open in case something better comes up on their social calendar.
This practice would completely eliminated from occurring in your business if you retired people to put their money where their mouth is an pay a deposit.
Who is going to pay a deposit on a booking they have no intention on keeping?
By implementing this policy, you will likely see a reduction on bookings – but this is entirely down to bookings not coming in from people who wouldn’t turn up anyway, so nothing is lost.
You are actually better off when these people don’t book because your schedule is now free for those “more sophisticated clients” who have more money and can now find a booking more easily.
Now every booking you receive is a client that has serious intentions about keeping their booking and this means more money in the door.
Staff costs are always covered
As mentioned earlier, when someone pulls a “no-show”, you have a staff member who is now employed with nothing to do.
When you require a non-refundable deposit, in the rare instance that someone doesn’t turn up, your staff members rate is covered and your no longer losing money in wages for that time.
You get to decide how much the deposit is, but we recommend 50%.
Assuming an average hair salon client pays $120 per visit, this means you are guaranteed at least $60 in a non-refundable deposit on each booking.
This more than covers the cost of any potential unproductive staff hours.
Added Benefits of non-refundable deposits
There is also the added benefit of purchasing psychology being in your favour.
When someone pays 50% of their appointment at the time of booking, they feel as though they’re only having to pay half price for the service.
When the client feels like they are getting a discount, they are far more likely to make purchases of physical products at the time of appointment.
You might be currently up-selling clients at a rate of 10%, but when all of your clients feel like they are getting discounted services, you could double, or even triple, your up-selling rates.
This means adding an extra $1,000 p/week in up-sell sales every week simply because your clients feel like they’re getting half price hair services.
That’s an extra $52,000 every year in up-sells. On top of the $30,000 you no longer lose each year in no-shows, this equates to adding around $82,000 in income to your business every year – simply by adding non-refundable deposits.
Implementing this strategy on your website could be done within a couple of weeks.
All you need to ask yourself are the following questions:
+ Are no-shows a real issue for you in your salon?
And if they are an issue for you:
+ Would you like to stop this from happening and see up to $82,000 of extra income in your business?
If no-shows are a problem for you, AND you want to stop them from happening, while dramatically increasing the income your business receives, simply get in touch with us and we can start a conversation around when we can help solve this problem for you.