Want higher profits? Drive your business with data
- Frances Gallimore
- 25 Sept 2023
- Edited 17 Feb 2023
- 2 min
- Managing and growing
To cope with today’s ever-rising costs, you need a higher turnover and stable profit margins. Sounds great, but how? With a good understanding of your business data, you increase your revenues with a few simple steps. Read how Jos Beks of Change Hairstyling makes all the data work for him. And see how you can get started yourself.
You might not realise it, but your company already has access to quite a lot of data. From your payment system to your customer system. But where do you start? Married entrepreneurs Jos and Dorien Beks own hair salons in Vught, Boxtel, and Rosmalen. She cuts and he organises everything when it comes to ICT. Since 2014, for example, he has been automating as many business processes as possible and driving their business by data.
"Because we keep a close eye on our results and data, we are now turning over €300,000 more per year," says Beks. Find out which steps Beks says you can take first.
1. Use your figures
The first step is to delve into your company’s finances. “Start with the basics”, Beks advises. “Track all your expenses and ask your accountant how to calculate your cost price. Also ask them to provide a clear visual overview of your figures. Plot your turnover, costs, and profits in a chart, for example. This will show you which costs are rising and which income is falling at a glance. Plus, you might find correlations.”
Beks continues: “The figures clearly show that opening the shop on Mondays is a good idea. Our competitors tend to stay closed on Mondays, so their customers go looking elsewhere for a haircut. A quick calculation tells us that, based on an average of 100 haircuts a day at €22 each, it would give us an extra €2,000 in turnover a week. Keep that going for a full year and you get up to €100,000.”
2. Price increase: yes or no?
Explain to customers why you are raising your prices(in Dutch), Beks recommends. “Everyone knows that energy costs have skyrocketed. But also the hourly wage of our employees has rapidly risen from €8 to €14 an hour. As a business, you have no other choice but to pass on these costs to your customer. Business owners often tell me that they are reluctant to raise their prices because they think their customers cannot afford it. But you have to remember that you are running a business. You need to have enough money coming in to keep your company healthy. If you clearly explain your reasons, customers will understand.”
Beks adds that there are also ways to avoid having to raise your prices. “We discovered that no-shows were costing us a lot of income. A dentist would simply bill any no-shows, but is a big no-no in the hairdressing industry.”
To cover the cost of 'no-shows', many hairdressers decide to increase their prices. Beks wanted to do things differently. “We wanted to approach the issue from a positive angle and came up with a novel idea to combat no-shows. As it happened, the resulting revenue even let us lower our prices. We decided to send our customers an email with a simple question: want to pay less for your haircut? No problem! However, we will be changing our rules a little. We explained to customers that we would charge them 50% if they cancelled less than 24 hours in advance. If they failed to show up without letting us know, we would charge the full 100%. Our customers responded very positively to this. They got a less expensive haircut and we managed to eliminate 4 to 8 no-shows a week. Assuming €22 for every haircut, this translates to €176 in extra revenue every week and over €9,000 a year. It was a real win-win situation.”
3. Make smart use of customer information
Keep asking your customers what they think of your services, prices, or interior. “Lots of customers told us that they hated the long wait for an appointment. That got us thinking: why should we wait for a customer to make a follow-up appointment if the data in our customer system will tell us how often they come in for a haircut. We now send customers a link with an invitation to book an appointment online every few weeks. With this new approach, all our customers easily come in for one extra haircut a year. With a total of 16,000 customers and €22 per cut, that comes down to a €352,000 boost per year.”
Smart use of digital solutions can reduce your costs and increase your profits. No knowledge of technology? Read how to approach buying and applying a digital solution (in Dutch).