Five Reasons Salons Fail and How to Avoid Them (With Warning Signs)

The beauty industry is super competitive, and unfortunately, many salons fall victim to closure every year. While there are several possible reasons for salon failure, we’ve put together some of the top causes and warning signs that should concern stylists and salon owners.

Too Much Focus on Client Acquisition

Bringing in new clients is essential in any business, and salons are no exception. Losing sight of customer retention, however, can be a fatal mistake.

Acquiring new clients is significantly more costly than retaining existing ones, so while a salon owner should always look to maximize exposure to new clients, keeping the current ones happy is equally, if not more important.
  

The Warning Signs:

Signs that there may be too much focus on client acquisition include:
• Low client retention
• A marketing strategy with a singular focus on bringing in new clients

The Fix:

Resolve this issue by putting more focus on customers that walk through the door. Keep clients coming back by delivering personalized attention and exceptional salon experiences. Offer special deals to regulars to let them know they are appreciated.

Poor Customer Service

Poor customer service is a quick way to put any business on the road to failure, but this is especially true with salons. The customer experience should be the focal point of every interaction, from making the initial appointment, to properly greeting clients, providing a stellar consultation, and of course, ensuring they leave happy.

Making clients feel welcomed, appreciated, and cared for in every aspect is critical to maximizing their experience. It only takes one instance to leave a black mark on the salon in a client’s mind, and many more positive experiences to make up for it—if given a chance at all.

The Warning Signs:

Signs of a poor customer experience include:
• Low client retention
• Negative reviews online
• Unprofessional employee behavior
• A high employee turnover rate

The Fix:

Ensure a consistently positive customer experience by training employees on how to interact with clients at every stage: Cover how to greet clients, how to give an excellent consultation, how to handle a dissatisfied client, and other interactions they might encounter.

Let employees know what’s not acceptable by discouraging gossip, or a generally bad attitude. Most importantly, lead by example!

Not Marketing

Many salon owners think that a sign out front is enough to bring in business. And while it might bring in one or two clients, an effective marketing plan doesn’t end there. Marketing is essential to keeping a salon in good standing and fostering business growth.

The marketing strategy must also be relevant to the clientele; spending money in the wrong place is not only ineffective (and a waste of hard-earned money), but it can even leave potential clients with a poor impression of the brand.

The Warning Signs:

Most salon owners know whether or not they are marketing, but a few things to watch out for include:
• Low client acquisition
• Never hearing a new client reference an advertisement or brand recognition from marketing strategies
• A mentality that there is not a need to actively market

The Fix:

Start small: Post on social media, or take out an advertisement in the local newspaper. Experiment with different tactics and evaluate any past salon marketing techniques to gauge their effectiveness. Ask new clients how they found the salon to assess what’s working.

Not Changing With the Times

Let’s face it: Change is a constant in nearly every aspect of managing a salon—from what clients want, to how we can reach them, and even the systems we use to manage administrative activities.

Keeping up with change is an essential part of a successful business. An outdated appearance, inadequate website, or not offering the latest services, can be discouraging to new clients (or even existing ones) and is often a drain on resources.

While dealing with change can be challenging at first, it ultimately improves business; an online booking system, for example, automatically fills last-minute cancellations without any intervention. Similarly, a good accounting or inventory program can take many of the headaches out of management.

The Warning Signs:

Since there are many potential areas for change, predicting a problem in this category is slightly less ubiquitous. However, some signs might include:
• Repetitive complaints from employees on the same equipment or system
• A drop in client retention or new client acquisition
• Continually having to tell clients that a particular service or product is not offered
• Spending too much time on work that could be automated

The Fix:

Dive in! Create a list of potential upgrades and be sure to include feedback from employees. Make a list and assess the priority of changes that need to happen. Start at the top and tackle one thing at a time.

Don’t forget about a salon’s number one asset: The stylists. Keep stylists updated on the latest trends and techniques by enrolling them in classes and encouraging continuing education.

Putting the Salon on Autopilot

Another significant and entirely avoidable reason why salons fail is that owners and managers are simply not paying close enough attention. If business seems like it’s going well, it can be tempting to sit back and enjoy the success, but not paying attention to the numbers and KPIs (Key Performance Indicators) is a costly mistake. Being on autopilot for even a short amount of time is risky, as critical warning signs may be overlooked, remaining undiscovered until a problem becomes severe.

The Warning Signs:

Signs that the business end of the salon may be on autopilot include:
• Not knowing KPIs at any given time
• Sub-par record keeping
• Neglecting critical aspects of the business, such as inventory

The Fix:

Salon owners and managers can never be too informed. Finances and other aspects of the company should be regularly reviewed to assess and adjust. For those without a business background, consider taking an introductory business class.

Additionally, always keep detailed and organized records so that numbers are available at any time. Set goals and track progress by comparing numbers from month to month, to the same time last year, and even the same time for the past five years.

While many salons fail each year, failure is often avoidable; by focusing on knowing and improving the business, and providing a superior customer experience, salons can ensure their doors remain open for years to come. Shop the latest in tools, appliances, and environmentally friendly hair care brands at Salon Only Sales to keep the salon up-to-date and meeting its monthly and yearly goals.