Has Your Salon/Spa Monthly Bonus Plan Gone Stale?

March 8, 2017

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When was the last time you revisited your team’s monthly bonus plan? Even when leadership is “beating the drum” around shifting behaviors, team members can become numb or lack motivation to drive performance when there’s an old incentive in place. If you don’t have a monthly bonus incentive in place, keep reading.
If you’ve been using the same bonus plan criteria in your salon or spa for the past six months, I’m 90% sure that your team has grown complacent toward it. How do I know this? Well, we face the same challenges across all three of my salon locations. If this is sounding familiar, maybe it’s time to change things up?
There are many ways to motivate your team. One way is to have an exciting team bonus incentive that fosters teamwork and drives specific performance behaviors. In most salons or spas with bonus programs, if the business hits an overall goal, then the team will share a bonus that is calculated as a percentage of sales or net income. For years, we paid 1% of overall service sales and 3% of overall retail sales when the salon location hit its overall sales goal. This worked well for a long time, but eventually it lost its potency. As a result, its effectiveness became pretty much non-existent. When this happened I knew we needed to change things up. So, here’s what we decided to do.
Instead of having one big bonus that gets distributed, we broke down the overall bonus payout into three smaller bonus payouts.  We then attached each of the smaller bonus payouts to a specific driver (ie. prebooking, add-ons, retail units sold).  In essence, we created three smaller bonuses along with three goals.   Creating three smaller bonus incentives, that when added together make a large bonus, was probably one of the best things we’ve come up with in a long while.  Now, if the team is way behind on one of the bonus goals, they are less likely to give up. Instead, they are more inclined to throw all of their energy behind the other two remaining categories. This way, they are likely to still come out with a win, even though they might come up short in another category. Sure, their bonus might be smaller, but they can still celebrate a win and that’s huge for employee morale. Instead of an all or nothing bet, now they can trigger one, two or all three of the bonus payouts! To add a little fun, we’ve even added a layer of prize money called a super bonus if they exceed the regular goal by a pre-stated amount. Consider those our stretch goals. When teams hit their stretch goals, momentum builds. This is precisely how to get your team back in the game and out of a rut.
Bonus criteria varies by location since each of our locations are focusing on different things. Also, keep in mind, you don’t necessarily have to have a super bonus for every category. You might want the team to get hyper-focused around one of the three bonus criteria, therefore you could have a larger super bonus behind that one goal and none behind the other two. It’s up to you how you lay it all out before the month begins. Below are a couple of actual breakdowns of goal and bonus scenarios at my locations.

Here’s a bonus plan for one of our larger locations:
Total Bonus Payout If All Goals Are Met $3,000
Team Bonus Goals:
Retail Makeup: Qty 60 (Bonus +$500) Qty 75 (Super Bonus +$500)
Deep Conditioner Add-ons: 250 (Bonus +$500)
Retail: Qty 915 (Bonus +$500) Qty 998 (Super Bonus +$500)
Pre-Booking: 70% (Bonus +$500)

Here’s a bonus plan for one of our medium-sized locations:
Total Bonus Payout If All Goals Are Met $960
Team Bonus Goals:
Retail Make-up: Qty 50 (Bonus +$165)
Deep Conditioner Add-ons: Qty 150 (Bonus  +$165)
Pre-booking: 60% (Bonus +$165) 65% (Super Bonus +$150)
Retail: Qty 375 (Bonus +$165) Qty 410 (Super Bonus +$150)
**Disclaimer: Before rolling out a plan like this, remember that your bonus payout will be an actual expense that needs to be figured into your overall budget. Be sure that you establish a bonus amount that makes sense based on average sales for the month and that the company can comfortably afford with profit left over.
Bonus Material: Here’s some sample scoreboards on how we keep track of our progress in each of our bonus categories each month:

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  1. Scott Gaganon

    March 9th, 2017 at 9:58 am

    Love this Chris! I’ve been wanting to do this exact practice in my salon lately! We need to mix things up!

  2. Chris Murphy

    March 9th, 2017 at 10:22 am

    Awesome! I know the feeling. Let me know what kind of results you get! Remember, you can attach any kind of driver to your mini-bonuses. I would encourage you to think about where you are needing your team to focus most. Is it prebooking? Is it increasing retail purchases? Maybe it’s something that is non-revenue related, like more consistency around value-added services? Also don’t be afraid to change the goal criteria every month. Good luck!

  3. Linda crawford

    March 10th, 2017 at 5:55 am

    Hey chris!!!!!! This is perfect, now I’ve REALLY got the get organized for this!!! Lol
    Question how does the salon coordinator fall in to this!!! She is the driver when it comes to the front by end ! Without her we wouldn’t have the quests in our chair at any given time… any suggestions?

  4. Chris Murphy

    March 10th, 2017 at 8:05 am

    Include her in on the bonus. Like you said, she’s a part of the team too! If the salon triggers one, two or all three of the bonuses, then make sure that she is counted when splitting up the bonus amongst the team. Additionally, you could also create a separate monthly contest for your guest care team. I’ll be sharing how we create separate incentives for our guest care teams in a future post. The sky’s the limit on what you can do! You just have to be creative. Glad you enjoyed the article Linda. I hope you’re doing well up there in Massachusetts!

  5. Donna Lux

    March 10th, 2017 at 8:14 am

    thanks Chirs-this is awesome!

  6. Sonny Rapozo

    March 19th, 2017 at 1:37 pm

    Great ideas Chris. I’ll certainly be implementing these in our salons.

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512.814.8406

 chris@chrismurphy.co

Located in Austin, Texas.

Chris Murphy