{"id":279876,"date":"2021-09-21T01:07:24","date_gmt":"2021-09-21T01:07:24","guid":{"rendered":"https:\/\/www.franconnect.com\/?p=279876"},"modified":"2024-05-16T20:13:57","modified_gmt":"2024-05-16T20:13:57","slug":"9-important-kpis-for-spa-and-salon-franchises","status":"publish","type":"post","link":"https:\/\/www.franconnect.com\/en\/9-important-kpis-for-spa-and-salon-franchises\/","title":{"rendered":"9 Important KPIs for Spa and Salon Franchises"},"content":{"rendered":"<p>While some <a href=\"https:\/\/www.franconnect.com\/industries\/personal-services\/salons-spas\/\" target=\"_blank\" rel=\"noopener\">spa and salon franchises<\/a> recognize the need to <a href=\"https:\/\/www.franconnect.com\/how-to-use-kpis-as-a-tool-for-franchise-business-planning\/\" target=\"_blank\" rel=\"noopener\">measure key performance indicators<\/a> (KPIs), many rely more on intuition than analyzing the numbers. And while it takes soft skills to create an inviting atmosphere, satisfied clients, and happy employees, understanding the numbers that drive your business will help your spa or salon find \u2014 and keep \u2014 its place in the market.<\/p>\n<p><!--more--><\/p>\n<p>Think of a KPI as a map: It provides a destination point, a path, and a giant \u201cYou are here!\u201d sticker that shows where you currently stand. KPIs are valuable tools that show you a precise route to success \u2014 so embrace them! Start with this list of the top KPIs for spas and salons.<\/p>\n<h3>1. Cost Per Lead (CPL)<\/h3>\n<p><em><span style=\"font-weight: bold;\">CPL = Cost of Marketing Program \/ Total Number of Leads<\/span><\/em><\/p>\n<p>What gets measured gets improved \u2014 so every marketing effort should be tracked. This metric will help you understand how much you are spending on leads and if you should continue to invest. For example, if your <a href=\"\/ppc-advertising-for-franchisors\" target=\"_blank\" rel=\"noopener\">Google ads<\/a> result in a cost per lead of $25, but your Facebook ads result in no leads, you should reconsider the time, money, and energy you invest in Facebook.<\/p>\n<p><center><a class=\"maxbutton-5 maxbutton maxbutton-open-locations-faster\" href=\"https:\/\/www.franconnect.com\/solutions\/open-locations-faster\/\"><span class='mb-text'>Open Locations Faster<\/span><\/a><\/center><\/p>\n<p>Remember, a lead must meet two requirements:<\/p>\n<ul>\n<li>They provide a way for you to contact them for follow-up<\/li>\n<li>They are actively searching for the service<\/li>\n<\/ul>\n<p>It is a good idea to put aside a small amount of your budget (10% or so) for experimental initiatives to make sure your marketing mix is the right one for your spa, your target market, and your geographic area.<\/p>\n<h3>2. Average Treatment Rate (ATR)<\/h3>\n<p><em><span style=\"font-weight: bold;\">ATR = Total Number of Treatment Hours Sold \/ Total Number of Treatment Hours Available <\/span><\/em><\/p>\n<p>You may think that your salon or spa is successful simply because it is busy \u2014 but that isn\u2019t necessarily true. As you look at this metric, one thing to take into account is that some treatments take longer than others. So, a two-hour treatment that costs $180 is less efficient than a one-hour $100 treatment.<\/p>\n<h3>3. Spa Productivity or Occupancy<\/h3>\n<p><em><span style=\"font-weight: bold;\">Spa Productivity = Total Number of Treatment Hours Sold \/ Total Number of Treatment Hours Available<\/span><\/em><\/p>\n<p>Rent or mortgage costs are often the biggest expenses associated with a spa. With that in mind, understanding the usage of treatment rooms is an important indicator of how productive your space is.<\/p>\n<h3>4. Capture Rate: Retail<\/h3>\n<p><em><span style=\"font-weight: bold;\">Capture Rate = Total Retail Guests \/ Total Spa Guests<\/span> <\/em><\/p>\n<p>Spa and salon revenue comes from two sources: services and retail sales. <a href=\"https:\/\/www.forbes.com\/2007\/04\/20\/paul-mitchell-salon-ent-fin-cx_mc_0420fundsalonmetrics.html?sh=3e2e60f91878\" target=\"_blank\" rel=\"noopener\">According to Winn Claybaugh<\/a>, co-founder of Paul Mitchell Schools, \u201cPer square footage, the footage devoted to selling products [like shampoo and hair gel] is more profitable than footage devoted to service.\u201d<\/p>\n<h3>5. Net Promoter Score (NPS)<\/h3>\n<p><em><span style=\"font-weight: bold;\">NPS = % Promoters &#8211; % Detractors<\/span> <\/em><\/p>\n<p>Offering an exceptional experience will not only keep your guests coming back; it will also encourage them to tell others about your business and create new business through referrals. Technically a loyalty measure, the Net Promoter Score (NPS) is a fantastic way to measure this on a quarterly basis.<\/p>\n<p>NPS is a customer loyalty metric that rates customers as promoters, detractors or neutral depending on their answer to the following question: \u201cHow likely would you be to recommend us to a friend or family member?\u201d Customers rank their answer on a 10-point scale. A score of 9-10 indicates a promoter; 7-8 is neutral, and 0-6 is a detractor.<\/p>\n<h3>6. Repeat Guests<\/h3>\n<p><em><span style=\"font-weight: bold;\">Repeat Guest Rate = Total Number of Repeat Guests \/ Total Number of Guests <\/span><\/em><\/p>\n<p>Repeat guests generate a higher return on every dollar spent getting them in the door. Also, practical experience shows that repeat customers tend to spend more on subsequent visits as well.<\/p>\n<h3>7. Employee Retention<\/h3>\n<p><em><span style=\"font-weight: bold;\">Retention Rate = Total Number of Employees That Left for a Period \/ Total Employees at the End of That Period<\/span> <\/em><\/p>\n<p>Customers are more likely to develop a bond with their stylist or therapist than the brand itself. If you have an employee who leaves, you risk their clients moving with them. For this reason alone (even though there are many others), you want to make sure your team members are happy.<\/p>\n<h3>8. GOPPATH<\/h3>\n<p><em><span style=\"font-weight: bold;\">GOPPATH = Total Spa Gross Operating Profit (GOP) \/ Total Treatment Hours Available<\/span> <\/em><\/p>\n<p>Gross operating profit per available treatment hour (GOPPATH) is a strong indicator of performance because it looks at how good you are at generating revenue, controlling expenses, and utilizing your hours.<\/p>\n<h3>9. EBITDA<\/h3>\n<p>Earnings before interest, tax, depreciation and amortization (EBITDA) is a measure of a spa or salon\u2019s operational effectiveness. It is a way to evaluate a company without having to factor in financing decisions, accounting decisions, or tax environments. EBITDA shows how good your business is at generating cash, thus your business is valued as multiples of this metric.<\/p>\n<p><center><a class=\"maxbutton-1 maxbutton maxbutton-demo-request\" href=\"https:\/\/www.franconnect.com\/request-a-demo\/\"><span class='mb-text'>Request A Demo<\/span><\/a><\/center><\/p>\n<p>To calculate the adjustments needed for EBITDA, see this <a href=\"https:\/\/quickbooks.intuit.com\/r\/revenue\/what-is-ebitda-and-how-can-your-company-use-it\/\" target=\"_blank\" rel=\"noopener\">article from QuickBooks<\/a>.<\/p>\n<h3>Metrics Are a Beautiful Thing<\/h3>\n<p>The best way to help your franchisees <a href=\"https:\/\/www.franconnect.com\/7-things-you-can-do-to-achieve-franchise-goals-1\/\" target=\"_blank\" rel=\"noopener\">reach their goals<\/a> is to measure performance along the way. Learn more about FranConnect\u2019s leading <a href=\"https:\/\/www.franconnect.com\/platform-overview\/sales\/\" target=\"_blank\" rel=\"noopener\">performance tools<\/a> that can help you track the KPIs that matter most and make a positive difference in your spa or salon business.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What KPIs predict success for spas and salon franchises? We explore the most 9 of the most important spa and salon franchise KPIs.<\/p>\n","protected":false},"author":17,"featured_media":283186,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"inline_featured_image":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[111,107,108,101],"tags":[43,45],"class_list":["post-279876","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analytics","category-develop","category-operate","category-retain-and-onboard-employees","tag-franchise-best-practices","tag-franchise-marketing"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.franconnect.com\/en\/wp-json\/wp\/v2\/posts\/279876","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.franconnect.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.franconnect.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.franconnect.com\/en\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/www.franconnect.com\/en\/wp-json\/wp\/v2\/comments?post=279876"}],"version-history":[{"count":6,"href":"https:\/\/www.franconnect.com\/en\/wp-json\/wp\/v2\/posts\/279876\/revisions"}],"predecessor-version":[{"id":284960,"href":"https:\/\/www.franconnect.com\/en\/wp-json\/wp\/v2\/posts\/279876\/revisions\/284960"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.franconnect.com\/en\/wp-json\/wp\/v2\/media\/283186"}],"wp:attachment":[{"href":"https:\/\/www.franconnect.com\/en\/wp-json\/wp\/v2\/media?parent=279876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.franconnect.com\/en\/wp-json\/wp\/v2\/categories?post=279876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.franconnect.com\/en\/wp-json\/wp\/v2\/tags?post=279876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}