Spa Compensation Plans That Work

By Bryan Durocher

The right compensation structure for a spa is critical. Our industry has some of the highest payroll expenses of any type of business and therefore when it comes to compensation there is very little room for mistakes.

Many owners are paying compensation that is not profitable for their business nor holds accountability for their team in meeting performance goals. It is important to have a pay structure that is fair and equitable to the owner of the business and their diverse team. When merging investment procedures such as laser hair removal, fillers, and resurfacing with traditional spa services having the wrong compensation package can be disastrous for the business and its people.

Compensation is a combination of the actual pay structure plus the benefits the owner provides its employees. The right benefit program is important because it helps the business owner distinguish themselves from their competition as well as be used as a tool in retention of their staff. These can include vacation, paid education, retail commissions, health insurance, and special employee pricing on services and products.

The days of paying a straight 50% commissions to spa service providers are coming to and end as business owners realize there is not a profit to be made under this circumstance. There are many types of pay structures out in the market place today. No matter what type of structure a business owner uses the numbers have to add up to the right percentage in order to maintain profitability. Spa professionals such as estheticians and massage therapists may be used to commissions and owners need to hold their team accountable to retail sales, pre-booking, up-selling, and new client referral which are the drivers of the spa business they need to plan for spending significant time and training on the dialogues for each of these areas, and building their team's confidence in being able to overcome objections and not to take a "no" from a client personally when suggesting services or products.  

Team Member Compensation:

All service team members should be compensated with a base and or plus commissions salary package. This can vary in salary due to their positions and commission percentage due to services performed. A therapist may earn $10-$15 per hour draw against 35-45% tiered commissions. The owner would pay the base draw or commissions whichever was greater. Plus service providers should eligible to participate in a retail commission program. In all cases the commissions are paid out based upon their meeting performance goals.

In this type of program advancement occurs at each individual's own pace, motivation, and development. There may be certain technical and knowledge requirements to be met for a promotion and or individual price increase.

All service and retail sales will be totaled at the end of each pay period and salary and or commissions paid the following week. Example: Service week ends on Saturday and checks are paid out on the following Friday

Performance pay structure is designed to have service providers meet four specific goals which drive and move their individual as well as the entire business' financial future forward. The structure is also designed to allow the individual the ability to have income earning potential with incentives and upside. There is no cap. The harder they work, the more goals they meet, the more money they can earn.   The following are the four areas to track a service provider's performance and pay them accordingly.

Compensation Accountability Categories

Pre- B ooked % - The pre-booking number comes from the number of clients in a pay period who have scheduled their next appointment with the service provider. Example : service provider saw 40 clients during the pay period and 20 of them booked their next appointment before leaving. The provider 's pre-booking percentage would be 50% since they pre-booked half of their scheduled clients for their next appointment .

Retention % - T he number of clients seen in that pay period who are a return - request specifically for the service provider. Example: provider saw 40 clients during the pay period and 20 of them were return requests . The provider 's retention percentage would be 50% since half of their scheduled clients were repeat business .

Premium Service % - Identifying service categories such as luxury facials, body treatments, medical grade peels, eyelash tinting, tanning, and Microdermabrasion services that have a higher ticket price and clients have to come in with frequency to maintain the service and are more likely to be loyal to a service provider or business because of the formula created. Example: Service provider had $ 4 ,000 in gross service sales for the two week pay period and $ 2 ,000 of that to tal came from chemical peels, Microdermabrasion and all facials recommended above the basic European . Divide $ 4 ,000 gross service totals by $ 2 ,000 chemical totals and your chemical percentage would be 50% . Waxing and basic or express facials do not count as part of the chemical %.

Retail % - This percentage is derived by dividing the service provider's retail product sales during the pay period by the ir service sales. Example: Service provider generates $2,000 in service sales during the pay period and in addition sells $300 worth of retail product to their client , divide $300 by $2,000 and you would get a 15% retail percentage to service dollar sales.

Paying commissions and holding people accountability are well established in other industries and work very effectively in the spa when training is provided. All people naturally perform better with incentives. The harder they work the more they can earn based upon productivity. Winners keep score and what gets rewarded is what gets done.

Bryan Durocher Bio

Bryan Durocher is the author of Wakeup Live the Life You Love in Beauty, an expert for Health Journal TV, Life and Leisure TV, and contributor to NBC South Florida Today and the founder of Durocher Enterprises. Durocher Enterprises provides coaching, consulting, global industry trends, marketing solutions for med spas, spa and industry professionals internationally.

Durocher Enterprises has been published in many articles and has provided business education internationally including TSA, International Beauty Show NY, Organization Mondiale Moscow, Allured's Face & Body, America's Spa Expo, ISSE, the Premiere Beauty Shows in Orlando, Columbus, Birmingham and the International Esthetics, Cosmetics, and Spa Conference .

For more information visit: www.durocherenterprises.com

You can also reach Bryan at bryan@durocherenterprises.com