Let’s cut to the chase. If you have become a hostage of your employees close your doors. That may sound radical but if you are paying out 50-75% in commissions, you lost your mind and your business a long time ago—give up now. If you are just opening a spa go into that new business with a plan for compensation. Sure the hiring market is tough right now. If it is so difficult to hire staff in your area that you must pay out these types of commission, don’t open your spa, it’s going to fail.
Still opening a spa? Do you want to reform your currently opened spa? I suggest that you chew on a strap of leather and hunker down to the hard cold facts about compensation.
- DO NOT PAY 50% COMMISSION. Just say no. I know that most of your competition is paying in that manner. Most of your competition is probably just barely getting by. First of all when you negotiate with would be employees you need to be speaking an unfamiliar language. They will come to you with a commission mentality. The trick to overcoming this obstacle is to flat out say that you pay much differently. Turn you pay system into an asset by letting the interviewee know that you pay very well to top performers and you pay an average amount to poor technicians. Which group do they fit into?
- Pay a base salary that is measly like $9. This will offer some amount of security to technicians new to the industry. Let new employees know that you are there to help them be the best that they can be. You aren’t just giving them a slim hourly wage and then forgetting about them.
- Compensate generously for retail. At least 10% on sales where your profit margins are slim. Have a much higher 20-30% commission on private label items where your profit margins are much fatter.
- Compensate on a quarterly basis for client retention. It is not enough to simply service a client. Retention is the key to building a strong business. Retention is also a key indicator of the type of job your technician is really doing. Low retention is a red flag for retraining, coaching, disciplining or even firing.
- Compensate up to 50% for add on services that weren’t on the books. Add on’s like brow and lip waxing, make up application, glycolic or papaya peels with a facial. These services wouldn’t have happened if the technician hadn’t sold them to the client at the point of service.
- Offer a lower commission rate on regular service sales. 25% is a good number to work from.
Being profitable is a necessary evil when operating a business. Spas are glamorous, fun places to own and work but they need to be closely scrutinized if they are to be profitable. Many industry consultants offer a variety of programs for assessing your business and firming up the bottom line. No matter the method that you utilize for getting into the black, do something. A sick spa is only going to get sicker without help.