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Profit From a Performance-based Pay Structure

By: Denise Dubois
Posted: November 29, 2012, from the December 2012 issue of Skin Inc. magazine.
performance-based spa pay structure

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The goal of pre-booking can be accomplished at the front desk. Pre-booking should be the very first thing the receptionist and service provider does at check out before the exchange of payment. It increases client satisfaction by providing first-choice booking that works with their schedule, avoids any last-minute time conflicts and keeps them looking their best. For the skin care facility, it cuts down on incoming calls to the booking room or receptionist, and the potential of a client who may be unsatisfied with the availability of their preferred service provider. A good starting goal for pre-booking is 40% of the total client count during a one-month period.

Retail-to-service ratio

Retail-to-service ratio is the amount of retail sales compared to the total service sales. This percentage is derived by dividing the service provider’s retail product sales during the pay period by their service sales. For example, if a service provider generates $2,000 in service sales during a pay period and, in addition, sells $300 worth of retail product to her clients, divide $2,000 by $300 and you would get a 15% retail percentage to service-dollar sales. This number is important to maximize the service provider’s income and to increase client satisfaction. If products to maintain the results of clients’ treatments aren’t offered, it is more difficult to achieve their desired long-term goals. It is the responsibility of the service provider to offer suggestions about how to maintain the results of the day’s appointment.

In addition, if service providers have and actively pursue daily goals for retail, they are once again being held responsible for their growth and income. A good retail-to-service goal is 15%, which is very easy to achieve if conversations about maintenance during and after all services are put into practice.

Another good way to set a goal is to ask team members how much they want to earn in retail commission per month. Divide this amount by the number of days they work to calculate a daily goal. The most important thing is that they have a goal that will ultimately allow them to increase their income.

Making the transition

It is important to walk through this transition confidently and fairly, in a way that is comfortable for you and your team. Educate your staff throughout the process on the appropriate profitable structures, and have an action plan for when and where changes can be implemented.