8 Tips to Turn Constraints into Opportunity

Chris Nedza

Hey, everybody. My name is Chris Nedza and I am the founder of ZeeZor, and we're a company that was purchased by Mindbody earlier this year. And we were the leading employee engagement and data analytics company in the industry. And basically, we took the data and made it actionable. And today I'm super-duper excited, because we're going to be talking to Lance Courtney, a super-duper smart guy, good friend of mine. And Lance is the Vice President and Managing Partner of Easihair Pro, an incredible hair extension company. But, I told Lance, we're going to drop the VP and just go with the Managing Partner, because he's a superstar. And he is. But the other thing about Lance is you'll see him speaking at all kinds of different events. He really knows this industry super-duper well. So, what we're gonna talk about today is kind of like what, what has happened not with preparing for COVID but what are the trends that are causing us to change in the salon industry to change their habits and behaviors because it has certainly changed the rules of the game. I mean...

Lance Courtney 

Absolutely.

Chris Nedza 

Right? Wouldn't you say that, Lance?

Lance Courtney 

Yeah, absolutely, absolutely. And it's easy to look at the negative. Nobody would have ever asked for a challenge like this. But at this point in the journey, the conversation has gone from what now to what next. And as states are beginning to open. You're in Georgia. You were one of the first states to open, four weeks ago. And other states are preparing to open. Everybody realizes that they are returning to the salon, but they're not returning to the same world and the customers are not returning to the same world. So, what looks like a constraint with within every obstacle, there's always an opportunity and behind every opportunity, there's always an obligation. And so I think as an industry, we have an obligation to actually look at the silver lining within an otherwise somewhat negative situation, a setback. But the idea is to make your comeback much greater than your setback. And now we just go into strategy. That's what this is about.

Chris Nedza 

That's right. And you know, we're going to give you about eight tips. I don't know if they're tips or they're really kind of like...

Lance Courtney 

Best practices.

Chris Nedza 

Yeah, well with it, this is what we see. Or at least this is what I see. I mean, I talk to salon owners all over the world. We get data from all over the place, and these are some trends that I'm seeing and Lance and I are going to talk about it. So, one thing that we would both agree on is the salon industry margins were razor-thin before COVID. Right?

Lance Courtney 

Absolutely. Actually, now, everyone's looking at how do we make up for you know, three months worth of backlogged revenue and you're right, even pre-COVID we did a Cash Flow Camp with, gosh, what 75 salon owners and it's interesting to note that 85% of salons, as it stands do not make a profit when it comes to services.

Chris Nedza 

Wow.

Lance Courtney 

And so what this has caused us to do, if anything, as is really fast track the importance of understanding and knowing your numbers intimately. I mean, here's what drives human behavior, right? The avoidance of pain and the seeking of pleasure. Pain and pleasure, right? This is the carrot-stick thing. And people are usually only willing to take on a new habit, behavior, or seek a new action in order to avoid a pain that they might be present to or to gain a reward. The whole entire world is in this pain phase and if anything, it forces people to really look at the numbers. If you don't know your numbers, you don't know your business.

Chris Nedza 

So tip number one or trend number one is numbers were important before, but they are uber important now. I mean, absolutely, understanding your numbers. And there's one number, you know, at ZeeZor we've often talks about five power metrics, you know, average ticket, there's a retail metric, stuff like that. But there's a new metric that we talked about before. It's called productivity. That I think it now is such an important metric. And when I talk about productivity, I'm talking about how much revenue per hour you're generating.

Lance Courtney 

Right.

Chris Nedza 

With that person, right?

Lance Courtney 

Absolutely.

Chris Nedza 

What do you think about that, Lance? I mean...

Lance Courtney 

Well, time more than anything. I mean, I've said this for years, for the past five years, but it's never been more punctuated right now. Time is the new currency. Earlier this morning, you know, because all I do is talk to salon owners day in, day out, non-stop. And I was speaking to a five location salon out west. And, you know, everybody's dealing with certain constraints, occupancy limitations,

Chris Nedza 

Right.

Lance Courtney 

We agree with them, or we don't agree with them. Some of them don't necessarily make sense, you know, 10 people in a building, no more, even though a building might be 3500 square feet. You know, nonetheless, you're dealing with time constraints, and how are you going to accommodate all of these customers? And how are you going to accommodate your team members in such a way where you can leverage a negative and really turn a negative into a positive? So, the first step is really knowing your metrics, knowing your KPIs, your key performance indicators, and then once you intimately know those numbers, how can you strategize and execute against the plan that allows you to leverage against a negative constraint and turn it into a positive and rate per hour is huge. Because if you're only if you're working with a limited number of finite hours, which everybody always has, but now more than ever, you know, time is that currency and every time is the real estate time is everything and time and space, right? The space-time continuum. So, if you're dealing with that limitation, what can you do to focus on your highest earning salon services? And, in fact, can I share a quick optic?

Chris Nedza 

Absolutely.

Lance Courtney 

So, time is money. And that's never been more, you know, true than right now. Now, in the salon, the most requested color service typically happens to a Balayage. It typically takes a hairdresser about two hours to perform this particular service. Now say they're very, very good at it. Let's say it's an hour and a half. Here's a great example of what we need to do and what hairdressers in this industry need to do in order to really strategize and look at how they're going to maximize the rate per hour. So, let's have a little boxing match. We're going to have hair color versus tape in hair extensions. Right?

Chris Nedza 

Right.

Lance Courtney 

In one corner we have hair color, weighing in, and we're going to look at rate per minute. We have hair color weighing in at $150, taking a minimum of 90 minutes to perform. So, the rate per minute on this is $1.67. In the other corner, we have tape-in hair extensions weighing in at $250. We're talking a one box, 15-minute transformation, right? Gives you volume. You can do color instead of Balayage, a Balayage, you can do a Balay-add, right? 16.67 per minute. So, rate per hour is the difference between $100 per hour versus $1000 per hour. Now, you tell me, your hairdresser who has been in quarantine, and, for two and a half months, you're about to go back to work. You're working with a finite number of hours with a finite number of people that you can serve in the building. And I haven't talked to a single salon owner or hairdresser in the industry, who is double booking and working with an assistant anymore because of these constraints. So you have a choice. You can do custom colors all day long or you can look to leverage that time and focus on your higher-earning salon services. The interesting thing is, not only in this example, would you be generating 10 times more,  $1000 an hour, but you also have a built-in pre-book, right? Because time is important and you have a built-in...

Chris Nedza 

Let me back up one second just, just so our kind of our audience is kind of getting where you're coming from. I mean, it's fantastic, right? So, the first thing you need to understand is what are your total costs? How much does it cost you for rent? Utilities? You know, all your front desk, your you know all of your costs, take that number and now you've got to divide that between how many hours in a day that you operate and that tells you what your cost per hour is going to be. So, if you know that this is why people go broke doing haircuts because you can do a haircut for 50 bucks, it may take you an hour and your total loaded-in cost maybe $75 an hour, you can lose money every time you do a haircut. And that's if you're mostly staffed and you've got all kinds of, you know, there's no pre-COVID stuff or COVID stuff going on. Now, you have to be super-duper like, I've used that word like 15 times I gotta I gotta drop super-duper.

Lance Courtney 

Super-duper

Chris Nedza 

Super-duper. Yeah, we're gonna drop that one. But now you have to be super focused on understanding how much revenue per hour you need to generate and that will help dictate what type of services you offer. And it will indicate, you know, help you train your staff on what services they should be talking about. So, I love your illustration, it's perfect because Balayage is not cheap and not every customer is going to be doing hair extensions or tape-in extensions. However, you better have a blend, because your average revenue per hour in order to survive has got to be your total cost plus a margin or you won't be in business. In mean, it's just the fact of the matter and it's never been more important than today. Um, so...

Lance Courtney 

I just I want to add something to that, you know, one of the things that we discuss at Cash Flow Camp is the idea of, you know, revenue is money in, right? Revenue and profit are totally different things. So, you've got to know, okay, your money in, increasing the amount of revenue money that comes in, decreasing the amount of potential expenses, that's money out, in order to manage and control the money left over. Money in, money out, money left over. But first, yeah, you're absolutely right, doing a detailed analysis and inventory of what your cost to run that businesses is rate per hour, whether you're a 10 location salon, or you're just a salon with 10 people or less.

Chris Nedza 

So, I want to I want to throw out two more concepts that, I mean, these are debatable. Alright, some people are going to go, what? And here's the first one. If you know you've got to have you cannot service the same number of customers, post-COVID. It's just you've got limitation because as you know, space, what do you call it? Social distancing, right? So, I want to throw out the concept of HQC, your high-quality customers. So, based on the exam, you know, if I can't see every one of my customers, Lance, which customers do I want to approach and do I want in and who can I afford to service? Which ones are the ones that are doing well?

Lance Courtney 

Well, yeah. Well, you've got to focus is we call it, you know, there's a process that we go through at camp, and it's called your ideal client vision statement. And so I, I've always joked that there's two types of clients, Chris. You know, you have the type of client that lights up the room when they walk into it and then you have the other type of client. They, they light up the room when they walk out of it. Right? Time is precious. Focus on, first, identifying the first time. Then, which of your clients are doing multiple services? Which of your clients are coming in at least eight to ten times a year, buying retail, etc, and so on. Focus on those. Because, you know...

Chris Nedza 

Let me ask you, Courtney, how many in your experience of consulting and being in the industry, how many salon owners actually study their numbers and their customers like that? That that segment their customers and know who their most valuable customers are? Do you know very many?

Lance Courtney 

No. No. I would say it's it's less than 20% that actually take a good look at market segmentation in this way, and then start crafting. And listen, as a hairdresser, you, you might be listening to this and going well, I can't control who shows up on my books and who doesn't show up on my books. And that might be the case. But what you can do it start to take inventory of the people that you currently serve, and then begin focusing on them and pre-booking them. I mean time is precious right now and the idea of what it used to look like, the idea of walk-ins don't exist anymore, not in the traditional sense. So, what this does is it gives, the silver lining is, it gives hairdressers the opportunity to reach out and schedule a virtual consultation with their guests in order to determine their nap, their needs, their challenges, etc. prescribe whatever if the whatever services treatments they're going to need in advance, in addition, to take an inventory of the retail, what they might almost be out of at home, and have all of that stuff ready to go. So, for the bottom 80% of people who've struggled pre-COVID this now, because it is a constraint, you use the word limitation, I like looking at it as a constraint and the neat thing is with a constraint, the silver lining to that constraint is it gives the hairdresser control.

Chris Nedza 

So, which is the so HQC is know your high quality customer. And, by the way, I think the point-of-sale systems have to really provide the marketing segmentation tools so that you can segment who is your top customer? And you've got to be able to market to them. You know, I love Mindbody because we have tools like that. But you know, whatever. It's it is no I mean it's so important now. I want to do the other HQE, which is a high-quality employee.

Lance Courtney 

Well, the interesting thing is, and I want to say this before we shift to that high-quality employee. And I think what I'm going to share with you is a great transition into high-quality employee from high-quality customer.

Chris Nedza 

Yeah.

Lance Courtney 

Because there's How do you get a high-quality customer? Do they just fall from the sky? High-quality customers, the interesting thing about high-quality customers is most of them are converted, not recruited. What does that mean? Well, let me give you just this very quick example here. For a moment, I'm gonna exit this full screen. And Chris, I think this is gonna be a great transition into where you're going. So, you were talking about high-quality customers? Well, I was saying high-quality customers, where do they come from? They just don't fall from the sky. In our experience, what we've seen is mostly high-quality customers are actually converted, not recruited, right? And the people who serve high-quality customers are quite often, which I think is your next point, are high-quality employees. So, here's something to look at in this example. Let's say you have, in this example, four people, four hairdressers. They all charge $50 a haircut and they service five customers today. Right? At the end of the day, Becky rings up $250, Bobby rings up $375 Megan rings up $780 for the day, and Ashley totals out at $425. So, if you had to give a gold medal to one of these four, it would obviously be Megan. There's a few questions that we have to ask. Is Megan getting better clients than Becky? See this transitions into what a high-quality employee happens to be.

Chris Nedza 

You are so, so right because my guess, let me ask you this. My guess is, although there may be days that Becky does better than Megan, in general, the trend is Megan is generally the higher performer day in and day out. Correct?

Lance Courtney 

Yes. So now, absolutely, so and you know, success leaves clues just like failure. So, what is Megan doing that Becky's not doing? I mean the opportunity is equal, results or not. So, what's Megan doing? Well, she's probably doing an in-depth consultation. She's probably doing a virtual consultation, in this case,  anywhere between 48 to 72 hours before her customers arrive in order to determine their needs, their challenges, their wants, their desires. So, she's better prepared. And what is Becky doing? Becky's doing whatever shows up on the books. This is an indication of somebody who's really not doing an in-depth consultation in advance of the service and here is where the rubber meets the road. How many more days does Becky have to work in order to generate the same revenue that Megan's bringing in?

Chris Nedza 

At least three.

Lance Courtney 

Well, she has three-plus.

Chris Nedza 

Yeah

Lance Courtney 

Right? Three plus and with so many people, and the reality is you have a lot of hairdressers who are, during this time have become, you know, homeschool teachers. And in certain places, you might be a salon owner whose team has small children that have not gone back to school. So how much more important, not only to the client but to you and your team is the idea of time? See, Megan can work one day and do three times as much as Becky and still have time to spend with her family. So, there is an impact. There's always a consequence. There's always a reward, and I think where you're going with this idea of high-quality employees is those premium spaces that are going to book up as salons are now stretching their hours to accommodate people in the post-COVID world as salons are now extending their days to seven days a week. There are certain high-traffic times within a salon and there are certain low-traffic times and there will be because hair grows, gravity pulls and things will go like this. To whom are you going to assign your peak hours? Are you going to give your peak hours to Becky, who's going to do the very the bare minimum? Or are you going to give your peak hours to somebody like Ashley or Megan and I think this is the this is the lens that everybody has to start looking at things through. As as we emerge from this.

Chris Nedza 

Yeah, no, totally. And I absolutely agree with you. It's sort of, I know some people watching this may say, well, that's really heartless. It's not. It's your job as a leader, to let people know what's possible, and then to coach them along so that they can do it. I mean, the fact of the matter is that every person that's a top-performer stylist, every one of them, I guarantee you is disciplined in that they do their homework in advance. They know who's coming. They know what they've done, they know what they've purchased. They're educating that customer, they're recommending, you know, the product and the services. And they're and they're booking them for their next appointment. I mean, it's not rocket science. You have to be disciplined. And as a leader, you've got to teach these people how to do that. And if you're a stylist, you owe it to your the owner to give your very, very best. I mean, what I started with is, margins are razor, razor-thin, it's difficult out there. So, we have to all row together. A couple other things because we're going to run out of time. On time is very important today. So what I mean by on time, not only the staff person but the customer, like we don't have that like most salons, you said it Lance are not double booking. So it is a linear progression. You get a customer come in, they have to leave, the next one comes in, and stagger shifts are happening. So, I would suggest that people do a much better job of communicating: please, customer, be on time.

Lance Courtney 

Well, yes. And not only that, because of these constraints that we're looking at, and a lot of salons that are already doing this. The ones who are open is the requesting that the customer text the salon when they arrive in order to make sure that the rotation isn't breaking any of the occupancy limitation mandates. And so I couldn't agree with you more and it further just punctuates and underscores the importance of considering a virtual consultation.

Chris Nedza 

Yeah, how about that.

Lance Courtney 

Because with you're doing this and you're literally and look, here's the elephant in the room, if you do not do a virtual consultation, you are not going to be as expeditious with your time and you're going to spend the first 30 minutes of that first appointment talking about all things COVID-related, which is not why they are there. So, if you take the time and diligently go well 48-72 hours before that appointment, you schedule a virtual consultation with the client. You do a one-minute check-in, health and welbeing, how they're doing, a little empathy goes a long way. Followed by a, an in-depth consultation with them. What you can do, Chris is you can come to agreement on all the things that you're going to need to do when they arrive for their in-person, in-salon appointment. And then you can say hello and begin executing against that plan.

Chris Nedza 

Yeah, and so that's my next point that I think is gonna be a big trend. It's that we are in a high-touch industry. And everything that we can do low-touch, we have to. So, you're in you just said it, like the virtual consultations. I know that we've got technology and software that you could do all your uptake forms, you can do all your, your, your waivers, all that stuff could be done before the walk-in so everything that you can do that doesn't require touch, you need to do like low-touch.

Lance Courtney

Yes, in advance. And, you know, I mean, I'm in California, it doesn't look like we're going to be open for quite some time. I think New York and California are going to be the holdouts. But the interesting thing is and here's the difference between ordinary and extraordinary, at least an example. So, you know, I had Robert Cromeans as a guest on my live last week, and we've been doing trainings with his team. And the interesting thing is this week, we spent over an hour and a half with his entire team, talking about how you lead, guide, and direct a virtual consultation from the very opening line to the transition to the actual consultation paths that we're using to how you wrap it up how you prepare the client, all of these things. And here's the interesting thing: they haven't opened yet, they haven't reopened yet. And there's no plans in the state of California to reopen for quite some time, but what they're doing now is going to prepare them to make their comeback greater than their setback and that's what every that's where everybody should be focused. How do I leverage time? And how do I turn a negative into a positive?

Chris Nedza 

Well, I'm glad you brought up Robert, because I love Robert Robert Cromeans has been such a good friend of ours. He's been a ZeeZor promoter, fanatic, friend. I love Robert so you from all the way, Mary and Robert, just amazing people. Two other things that I want to hit. And this is just, we at ZeeZor, we spent so much time comparing this year over last year. The app is designed for that, like I can quickly see how am I doing this year versus last year. We built a new feature that's available. And I think this is even more important to see this week versus last week, this month versus last month. You have to know if you're making improvements. So, if you don't have ZeeZor, that's fine. Make sure you're looking at your period compared to this period versus last period and make it last week,  last month. Because your year is completely messed up because of COVID. It's it's, it's you can't compare. So, you need to be able to do that. And then the final one is understanding the benchmarks. I think that's going to be even more critical, especially we're in the COVID, you don't really know what's possible in the world now.

Lance Courtney 

Right.

Chris Nedza 

What,  I mean, what's an average ticket supposed to be in COVID-world? I don't know what you think but the data will tell you what's possible what your average ticket is. yYou better understand those benchmarks. Comment on that.

Lance Courtney 

I think it's great that you've now given people the opportunity to compare week by week, because I think that is comparing against those shorter time periods gives them an opportunity to make those necessary improvements, which I think is fantastic. But the interesting thing is one thing that hasn't shifted or changed, you know, in order to perform at the top 1% in this industry, your average service ticket should come in at three times more than your base price. So example, if you charge them, let's use the let's piggyback off the previous example in the optics. Let's say you charge $50 a haircut.

Chris Nedza 

Right.

Lance Courtney 

To perform according to performance standards at the highest 1%, your average service ticket would have to average $150 or more per guest. To be in the top 10%, your average service ticket would have to be double your haircut price would be $100. And then above average would be, you know, 1.5 so $75. And so I think that's a good measuring stick for people to look at. Because, obviously, if you're only doing slightly above whatever your base prices and your base price would be the service that you do the most of...

Chris Nedza 

Right.

Lance Courtney

What you're not doing most likely is a consultation because I can tell you this, most clients have more than just one particular challenge. Right? They have a lot of challenges with their hair, their style, texture, color, volume, length, and that's why, you know, when we look at EasiHair Pro, we always make three promises in our education. And although people know us as a hair extension company, we're primarily, number one, an education company first and then a manufacturing company second. And so we make three unique promises, every time we do an education. Today, we're going to increase your service ticket, we're going to increase your retail ticket, and increase your pre booking. In addition to a couple other promises, and we guarantee it. I don't know too many other manufacturers that can do that. But I'm not saying that to pat ourselves on the back. We do that because our mission is creating successful salon professionals. And if you can't measure the success, you can't manage the success. So, everything that we do is got to be more than fluff and profit. It has to be measurable.

Chris Nedza 

Alright, so Lance, you're a super, very, very smart person. So, I'm gonna throw a curveball at you. Because okay, because we're done. But what is your give me a give me a life quote or some quote that you like, cling on, cling on to.

Lance Courtney 

Cling on as in Star Trek Klingons?

Chris Nedza 

Yeah. I mean give me a life quote or a couple of quotes that are just some wise quotes that you that are true. I'll give you mine and I think it's, it's, it's true for this period of time. And that is, this goes for salons, this goes for businesses, this goes for stylists, for anybody. Failing to plan is like planning to fail. That's one of mine.

Lance Courtney 

Absolutely. I love that. That's a great truism I'll throw out of some original Lanceisms, if you were. Because life, L-I-F-E is living inspired, fulfilled, and energized. Life is part what you choose to remember combined with what you choose to forget, coupled with what you choose to embrace, and that is a moment by moment choice. Everybody, if numbers tell us what emotions will not and box office numbers tell us what, you know, everybody's generally interested in. The biggest, biggest by far measurable genre of film happens to be superhero movies. Right?

Chris Nedza 

Right.

Lance Courtney 

Everyone's fascinated with superheroes and everyone's probably had the conversation. You know, hey, if you had a superpower, what would it be? Would it, you know, people say, oh, I fly or control time or, and there's always somebody a little bit creepy in the room that says I would be invisible. But, you know, what, what people tend to forget is, as human beings, we already have a superpower. And that superpower is the ability to choose because we're human beings. Not cat, dog, or kangaroo beings. You know, the power to choose think about this, an ant, dog, cat, kangaroo. I don't know why I keep going to kangaroo. They just can't wake up one day and decide, hey, I don't feel like being an ant anymore. I want to be a hairdresser. The interesting thing about being humans is the being you get to choose how you be. And that choice is our superpower, moment by moment, day by day. You know, there's a great line at the end of the film a Flight from Death: The Quest for Mortality and the line ends with the film. Everything has been figured out, except how to live. So, perhaps the better question is not what do we do about death. Right? Death is inevitable. What do we do about life? Life is made up of these individual moments that we create. So, it's up to us to ensure that these moments that we create are interconnected, vital, and grand to create a masterpiece of life one that we would willingly live again and again throughout all of eternity.

Chris Nedza

So, then you're with me, you're with me then. YOLO. You only live once is absolutely fake. It's false. You only die once, you live every day.

Lance Courtney 

So you live every single day. Well, the last line of that is, this is what we can strive for. And I think it's in the striving that we get an opportunity to rise to the challenge. Listen, human beings are resilient. Right? We've had H1N1. We've had, you know, the Spanish flu. We've had all kinds of things that we have endured, and we will rise above this, we will rise above this and it's up to us to choose right now to rise above this and come out better instead of coming out bitter. And I it doesn't mean or negate that the challenge isn't real. It's absolutely real. However, what are you going to do to rise to the occasion, and really activate the the superpower that we have? And I think the the key to rising above the storm is finding peace in the eye of the storm. We don't have a clear line of sight. We don't have a vaccine. There's a lot of things that we don't know there's a lot of uncertainty and one of the six basic human needs is certainty. But in times of uncertainty, what we can do is find that peace in the eye of the storm, like the eagle who rises above the storm, and how you get there is a daily gratitude practice. If everyone took inventory of the things that they did have, that they had to be grateful for. What it does is it really shifts your serotonin, dopamine, norepinephrine level in your body, you have a biological shift, right? And sometimes it takes a physical shift, run around the block, get on the bike, do something right. But don't feel sorry for yourself. Don't feel sorry for yourself.

Chris Nedza 

Lance Courtney, it has been a joy to be with you today. Every time I talk to you, it's like, it's awesome. It's kind of a little bit of zen, you know... that you know, go get 'em thing. So, thank you, Lance, for spending the day with me. I really appreciate you.

Lance Courtney 

Absolutely, man. I can't wait to go lights on, doors open across the nation. And if anybody needs resources, if it's PPE or strategy, we have a COVID resource page on Easihairpro.com. That's E-A-S-I-H-A-I-R-P-R-O dot com. There's a COVID resource page, lots of stuff right down to state mandates, what's required, etc. It gets updated three times a week. And we're not doing that because that's our core competency, we're doing this because our mission is creating successful salon professionals in getting you to go lights on doors open, as fast, furious, and safe as possible. So thank you very much, Chris. And thank you Mindbody for having me on today. It's been a pleasure and it's been a blast.

Chris Nedza 

Awesome.