5 Unique Metrics to Track The Health of Your Business

Hello, my friend. Welcome back to the Modern Hairstylist Podcast. I don't know about you, but I did not get into this industry to be a chief financial officer, to be an accountant, to be a metric tracker, to be a mathematician. None of the above, honey.

None of the above. However, we are business owners. And as business owners, it is so important that we are looking at our performance, checking our goals, tracking them, setting them, and making sure that we're looking at the right metrics to evaluate the health of our business and evaluate how our business is moving towards what we actually want to achieve in our lives, right? 'Cause if we don't have goals, if we don't know how our business is actually doing, then we're never going to be able to get out of this business and career that you're creating for yourself what we are actually looking to get out of it, which is a beautiful life that grants us wealth, freedom, time, energy, love, passion, fulfillment, et cetera, et cetera.

So, tracking your numbers. Although it's not sexy, it's so important because it helps you stay on track, it helps you get closer to those goals, and it teaches you the cold, hard truth of what is actually going on in your business and allows you the time and space and data to accurately pivot in the best way possible to get you the best results possible. So, if you're looking to truly take your metrics and your numbers and your business seriously and m- whether you are pretty okay with your numbers, whether you're really good with your numbers, maybe you're not good with your numbers at all, I'm gonna be teaching you five unique metrics in your business that are really important for you to be thinking of and tracking that all too often I don't see a lot of people tracking, and they can be a game changer for how you plan and how you pivot and how you market and all the efforts that you make in your business and how you set your goals, et cetera, et cetera. So, if you're ready to get into it, if you wanna learn these five kickass metrics, then let's get into it.

Let's go. What's the tea, friend? My name's Hunter Donia, industry business educator for hairstylists, but my friends just call me Hunty. Whether it be growing your clientele, making more money, or automating and streamlining your systems, in the next 20 minutes or so, you'll be hearing realistic, actionable strategies to create a beautiful career for yourself behind the chair.

So, if you're ready to get into it, welcome to the Modern Hairstylist Podcast. Okay, so the very first metric that I think it would be really, really powerful for people to be tracking in their business that I all too often don't see people tracking or talking about, furthermore is really difficult to track unless you have the right system set up to make it trackable is your website conversion rate. Your website conversion rate refers to the amount of people that go onto your website and then actually want to take the next step with you. So, whether that next step be straight to your online booking link, straight to calling you on the phone, um, straight to a digital consultation form like I teach, um, that would be what your website conversion rate is.

So, the percentage of visitors that you have on your website that actually go and then take the next step. Now, the reason why that this metric is important is because it'll allow you to evaluate the effectiveness of the website that you have now, right? That website conversion rate, we should be continuously trying to optimize and make as high as possible, because otherwise every time, every way that somebody is getting to your website, all of the effort that you make or all of the opportunity that is created when somebody goes to your website is lost, right? If your website conversion percentage is really low, like if you aren't getting somebody to want to take a next step with you once they get to your website, then you are wasting a bunch of time and, uh, losing a lot of opportunity, right?

But if we can have a website that is super efficient, um, b- and, and really speaks to our guests' pain points, walks them through a journey and bridges their pain points to your solutions, right? Makes you absolutely worth it to that person, then they will want to go ahead and get to that next step. And so that website conversion rate is tracking the amount of people that actually get onto your website and then feel as if it's worth it to want to start to look into doing business with you, okay? Now, the way that you track this is you go onto your website, you go into the analytics, and you see between this timeframe and this timeframe how many visitors did you have come to your website.

And then, you'll take the analytics of whatever your next step is, okay? Whatever your next step is in your process, you'll count how many people went to the next step, okay? You'll divide those many people that went to the next step by the amount of people that visited your website, and that will therefore give you your website conversion rate. Now, if you don't have a system set up that will allow you to very clearly see what this number looks like, it's gonna be really hard for you to track it, and that's why I love using a digital consultation form and only having one way that a new client can book with me through a website, because it allows me to track numbers like this.

It allows me to see, is the website that I created actually working for me? And it allows you to also test out certain things. So, let's say that you change around your branding photo shoots on your website. Let's say that you change around your branding.

Let's say that you change some of your copy or whatever it may be. You'll be able to see, did this change make a dip in my percentage? Did it make a raise, or did it stay the same? So, you actually have clear understanding of whether this worked or not, right?

So, being able to track this number is super important, or super powerful rather, and important.And when you have everybody go through that digital consultation form, you have clear data and analytics versus when you have somebody call you to book an appointment, when you have somebody text you, um, when you have somebody just go straight to your online booking site, you're not gonna have that data. Because, because I have yet to see a booking system that tells you how many views your website, your online booking actually got, right? So, if you have your website and you have a digital form that actually gives you those analytics of how many people viewed that form, then you would know what your conversion rate is and you would be able to test certain things out and be able to improve that conversion rate, make sure that your marketing efforts don't go to waste.

The next metric that we have is your percentage of retail and percentage of gratuity to your total revenue. All right? You could also include percentage of service income in this as well too, but what these percentages are referring to is the amount of your total revenue that comes from these specific places. And the reason why this is helpful for you to understand is because, let's say you wanna make $200,000 in a year, gross income, right?

If you are gonna start to goal set and plan at the beginning of the year to figure out how you're going to get to that total goal, if you don't understand where the money is actually coming from, then it's gonna be difficult for you to understand how many services or what services or how many people you actually have to have in your chair to get to that final goal. Furthermore, what your average ticket needs to be per each of those people and what your average retail per client needs to be per each of those people. So, you could decide at the beginning of the year that I wanna make $200,000, right? I wanna make $200,000 at the end of the year gross income.

Where's that money gonna come from? Is it gonna come from 85% service income and then 15% retail and maybe you're gratuity free? Is it going to come from 15% retail, 15% gratuity, and then 70% service income? Is it going to be coming from 15% gratuity, 5% retail, and then 80% of your service income, right?

So, that is going to allow you to really understand what your average ticket per client and then furthermore, what your average retail per client actually has to be to get to that final goal. I'm partial towards the gratuity free, but a high retailing stylist, and here's why. Somebody who is able to sell a lot of retail doesn't have to add much more effort or spend any more time to be able to make more money within their year, right? Yes, you have to have a little bit of conversation.

Yes, you have to educate your client a little bit, right? And you have to do the inventory. But you don't have to render any physical services or spend a lot of extra time to be able to make that extra money. So, you don't have to make as much in your service, in your service revenue, and you don't have to perform as many services to get to that end goal a lot faster, right?

Because you have this retail that you just sell, you make the money immediately, they go home with it, boom, you're done. So, having these numbers, understanding what percentages of your total revenue are coming from which places allows you to goal set and plan ahead and possibly strategize to get to that total revenue growth income goal a little bit quicker or in a more innovative way that makes more sense for you. Okay? Then we have average ticket and average retail per client.

So, these are the numbers that I was just speaking about a little bit before, and your average ticket is going to be your service income plus your retail sales plus your gratuity, which is going to add up to the total revenue, your average ticket per each client Okay? So whatever, whatever anybody's total due amount is at the end of the appointment, that is going to be their total ticket. So, let's say you have three clients in a day. Sally got a $100 total service with you, so she checked out with you $100.

Then we have Keisha, who got a, also a $100 service with you, and then we have Justin who had a $200 service with you, right? So that's $400 total that you made in a day. You divide that by the amount of people that you had in a day and then you would now understand that your average ticket, your average total ticket per client is $133. Now, what this is going to allow you to do is, is understand whenever I have a client in my business, then I have the potential of making this much money on average per that client.

And then when you goal set and you plan ahead and you decide how many clients you wanna take in a day, what services are you gonna t- be taking in a day, and then what upsells or add-ons or retail do I need to furthermore sell to this lower than my average ticket client on average to be able to get to that average ticket th- so that I will make my end goal at the end of the year, right? So, it allows you to plan ahead. It also allows you to, if you wanna get super advanced, understand what your return on your investment is in anything that you're spending money in. So for example, like let's say that you, uh, spent money on a, on a, uh, virtual assistant to help you with your marketing efforts, okay?

So then they post on social media for you. They help you get more clients into your door, right? And you don't know if you can justify the fa- the cost of actually hiring that VA, right? If you understand what your average ticket is per client, you will then be able to say, and y- your new client retention rate, which we're gonna talk about nextYou'll be able to say, okay, I know that I'm spending this much amount of money on this virtual assistant and that's a lot of...

that's a big expense. However, if the virtual assistant is getting me X amount of clients per month, then I know because my average ticket is this, that I will be able to make a return on my investment because I know what my average ticket is, right? So, you're guaranteed that you will make an ROI because you now understand what your average ticket is per client and then, of course, you have, you know, potential to raise that average ticket and set goals higher moving forward, right? Furthermore, your average retail per client is going to allow you to also do the same thing and understand what your ROI is on your retail.

It's also going to allow you to plan ahead and see, okay, I have Sally in this week on Wednesday and I know that I need to have an average retail per client of $20, so what $20 product can I sell Sally on Wednesday to make it so that I hit my goal this week? So, it allows you to plan ahead and make sure that you're planning for each and every one of your clients and every one of your days, okay? Then, it does a lot more too. Average ticket, uh, average ticket per client and average retail per client, it does a lot more, but I'm giving you a big, um, very quick overhaul review of all these metrics today.

Then we have your new client retention rate. Oof. New client retention rate. Here's the tea.

I'm gonna tell you something controversial, all right? Your existing client retention rate does not matter, okay? It is important, yes, but it does not matter. Why?

Because it doesn't give you accurate enough data to do anything with it. Like, if you were to calculate what your existing client, uh, retention is, you wouldn't be able to do anything with that number because so many things change throughout the year. You have price increases, you change your marketing efforts, you change your branding, you... there's a pandemic, um, the crazy world life events happen, right?

There are so many factors that could jade this percentage, this number, and furthermore, it doesn't make any sense for you to be using that for future planning, future goal setting or anything like that because everything changes so quickly and it just doesn't make sense, okay? What does make sense and what is extremely important and what does matter is your new client retention rate, okay? Your new client retention rate. So, your new client retention rate refers to after the first time somebody has come to visit you, have they seen you three or more times?

So, if you have had a new client that comes to see you, you want to evaluate whether or not you actually can retain that new client, whether or not that person is actually, is actually going to come back and see you because they had a great customer experience with you, you delivered great results and you had a fantastic pre/post-visit experience. All the good things that I preach about all the time, right? Your new client retention rate will give you a really good understanding of what your existing client retention rate is because if your new client retention rate is good, then we can assume that the existing client retention rate's gonna be good too. You can also understand what parts of your business do you really need to focus on because let's say you have a fantastic marketing funnel, let's say that you are so good at posting on social and getting new client requests to come through the door, but if you don't retain those people, if they don't come back to see you, then what ends up happening is is all of your marketing efforts go to waste, and you...

there are only so many people who live in your local area, right? Especially if you're in a small town. So, therefore, if your new client retention rate is low, then you wanna make sure that instead of focusing so much time on your marketing, you'll wanna focus a lot more time on your fulfillment, and furthermore, the things that I teach you how to do is create that amazing client experience and raise that retention without you having to spend a lot of time, without you having to spend a lot of effort. Everything is completely automated and mostly hands-off, so that way you can really offer that amazing experience, get those new clients to come back without you having to spend all of your time so that you can pour yourself back into that, those marketing efforts.

So, if your new client retention rate is a little bit low, and what I'm going to call low is I'm gonna call below 50% a lower new client retention rate. I want you to be shooting higher than that. And here's the thing. I think that each of these numbers and benchmarks and things to shoot for, numbers to shoot for, goals to shoot for, uh, standards, industry averages, et cetera, et cetera, they don't...

they very much range, okay? They very much can range, and when I say that below 50% is lower, that might look different for you and your unique business model that you have. If you are a gray blending specialist and your entire thing is that you get your clients to not come back as often with you, then of course, your retention rate is going to be a little bit different and it's going to... and you're gonna want to hold that retention rate to a different standard than a different stylist with a different specialty, right?

So, it's completely dependent. But why I think that 50% is a good mark is because I don't want you to be spending any time in your chair with somebody who's not going to come back and see you. It's a waste of space and time. That space should be filled with somebody who is going to be spending more time with you and you will be able to retain over a longer period of time.

This is why I talk so much about making sure that you are weeding out any clients who aren't your specialty, who you cannot serve well, because the better quality clients that you have in your chair, the better you will be able to serve them, the more enjoyable of an experience they will have and the longer they will stick with you. So, anybody who you have in your chair who is not going to be fitting that mold; furthermore, if you are not able to retain those clients, then you are wasting so much time and space in your book where you could be having somebody in there who you'd be spending, or you'd be investing with a lot of time to create a long-term relationship with that person who will stick through the price increases with you, so you don't always have to be replacing your existing clients with new clients. That hustle is exhausting.It is absolutely exhausting and it is so much easier to make more money with an existing clientele than it is a new clientele.

So, I think that 50% is a really good benchmark to kind of, on average, look for because I want one out of two clients who come to see you to be actually sticking with you for a long time, okay? That's where I want you to be spending your time and your energy. So, then we have your cancellation rate, okay? Your cancellation rate.

So, your cancellation rate is a percentage of the amount of people who cancel their appointments with you after your-- them being booked originally, okay? So, this sum can sometimes be a little bit of a difficult number to track just because, you know, i- if you're not tracking these things in your booking system properly, like if you're just deleting an appointment instead of marking it as a cancellation, or if you're not tracking your analytics and your metrics weekly like my students do, then you're not gonna have a- a great grasp or understanding of how many of these appointments that I have booked with me get canceled on. And that way you can understand if you have to make a pivot or if you have to tighten up your policies or if you have to make your clients more aware of what your policies are, what are your protocols and procedures that are reducing this cancellation rate? Anything above 2% is a very, very high cancellation rate.

You should not have 2% or more of your clients canceling originally booked appointments with you, and that's when we look into, do we need to re-evaluate how you're pre-booking? Do we need to start getting a card on file? Do we need to start taking deposits? Do we need to make sure that your clients are signing and dating your policies every single visit, every single time?

What does it need to be to increase that cancellation rate, okay? And this could be something that you could set goals for and test out. You'll be able to actually literally see if you started to track this number, let's say that you started to a- uh, require a card on file, you'll be able to see how your cancellation rate actually decreases after you put in one of these-- uh, h- after you change something in your business. And that's why tracking your metrics and tracking your KPIs is so effective and powerful and impactful, because it allows you to measure your changes.

It allows you to measure the efficiency and if you got out of the change or a strategy, what you were looking to get out of it after implementing it, right? Instead of just throwing things at the wall and hoping that they work and not being really sure if they worked or not. The numbers won't lie, but you have to track the numbers and you have to know how to do so and you have to do it on a consistent basis and then read them and then set goals for them and et cetera, et cetera. All right, my friend, I hope that you enjoyed this episode of The Modern Hair Stylist podcast.

If you enjoyed this and if you want more hairst stylists within this industry to start to take business more seriously, to start to work smarter, not harder, then I'd really, really, really appreciate if you would help me in the impact we're trying to make here by leaving a five-star testimonial wherever you're listening to this, and I am super excited to see you in the next episode of The Modern Hair Stylist podcast. Hope you have a great rest of your day. Peace out girl, scout.

End of transcript. © 2023 Hunter Donia LLC.