Your Biggest Economic Concern is not your Clients!

By Kym Krey

If you’ve listened to any recent news broadcast, you’d have been hard-pressed to get through it without hearing the doom and gloom of ‘the cost-of-living crisis’. Based on this, we should all be worried that our clients aren’t spending, right?

As business leaders, it’s essential for us to inform ourselves so we can strip away the dramatic headlines from the data and facts, to make accurate business decisions and confidently guide our staff’s thinking and actions.

I’ve recently been heavily researching consumer buying behaviour, reading through endless reports from market research and consumer studies that reveal to us who is spending, and what they want from us in order to keep doing that, and the results have been enlightening.

‘No one has any money!’

Firstly, 2/3 of the female consumer base are still spending (if the service experience is right):

1. The over 60’s (termed ‘the Grey Dollar’): having paid down their mortgages, are directing funds to superannuation and investments in preparation for retirement. The successive interest rate rises have less impact on lower mortgage balances and increase their returns on investments. This generation is financially established and in generally good shape. They’ve typically been working hard for 40+ years and, having gone without for decades, think: “I’ve worked hard and saved all my life. If I want to treat myself to quality skincare or haircare, I damn well will!”

This segment also reports that they’re finding it increasingly difficult to get the service and experiences they want because WE are the ones bringing the doom and gloom mindset. One survey respondent summed it up by saying “I feel like I’m constantly listening to staff complain about how bad the economy is, while I’m literally standing there, credit card in hand, waiting to be served!”

Key point: This category of clients is ready and waiting for your full service, and open to your prescriptive guidance. They need you to deliver.

2. The mid-lifers (30’s – late 50s): They’re quite established or in professional roles and earning well. Their grooming is a priority to them, and they typically have the available spend to invest in your services. However, soaring interest rates have hit this segment harder than their older counterparts, so some rethinking of spending priorities is being done, which means that whether they confirm or cancel after your SMS reminder, comes down to how they feel about your experience.

They’re having to choose which indulgences stay and which will need to wait. Will it be their facial, those new shoes or their hair colour service? Or “Will I go without my housecleaner for 2 weeks so I can have my hair done?”

Key point: This category will invest the money only if they feel the experience is worth this now more precious spend. They want your professional attention and expertise focused solely on them.

But the ‘experience’ they seek isn’t just the head massage and a great cup of coffee- it’s your expertise in action, guiding them to achieve results they never could have imagined on their own, like a one-on-one personal styling session with a celebrity fashion stylist. “What are you having done today?” or “Same as last time?” just won’t cut it with this discerning segment. They want to be in the hands of a total pro. They’ll pay, but they want you to lead.

3. The 20-somethings: Whether these clients are young workers establishing their careers or young Mums raising their family, this segment is reportedly the hardest hit. Their choices might be between hair and groceries/fuel/electricity rather than other ‘indulgences’. Commbank consumer spending data comparing spend in 2024 against the same period in 2023 shows that 25–29-year-olds have cut back their spending the most of all shoppers, whilst the over 60s are still outspending inflation!*

(*See Commbank graph*)

But, the thing that hit me the most about this data wasn’t related to client behaviour, it was relating to our STAFF! This 20-something age group encompasses a good portion of the staff in our industry, indicating that because they personally are likely experiencing financial stress, it’s also highly likely that this is affecting how they’re servicing your clients!

When your 20-something stylist is quoting a $450 colour service and thinking: “That’s so expensive!” you can bet that when it comes to prescribing the necessary home care to ensure this client doesn’t go home to struggle, up pops the thought: “I can’t recommend another $80 worth of product! No one can afford that these days!”

See the problem? Whilst we can absolutely empathise with our Stylists’ personal financial plight (and ensure we have great incentive opportunities in place for them to improve it!), if their personal money beliefs dilute or negatively impact the service they’re delivering to clients who are trusting and relying on them, (and paying significantly for their expertise!), we have a problem.

When they step through the door each morning, we need them to be our highly skilled professional with their guest’s needs front of mind, not the 23-year-old worrying about how they’ll pay their credit card. This will require strong leadership on our part as employers to help them resist the comfort zone of “I can’t recommend that” to instead thinking “Yep, that would be a lot of money for me, but my clients are trusting me to guide them and they deserve to make that decision for themselves. My role is to offer my advice to help them get the best results possible. My responsibility to them is my priority”

Unless we’re able to help our staff understand that they are not their client and ensure that each guest receives the full-service experience promised, our guests may be leaving unimpressed (or just leaving!) while our business results crash!

On a positive note, the hair and beauty industries are historically well placed to withstand financial downturns (Google ‘The Lipstick Effect’) as clients look for affordable luxuries to lift their spirits and feel good, and there will definitely be success stories in our industry from those with the courage to approach business differently.

Manage your expenses carefully to protect your profit margins (especially if turnover drops), think outside the box with clever marketing solutions (add value, don’t discount!) and keep your staff ‘up’ and focused on their ‘mission’ of thorough client care.

Kym Krey is a highly experienced and trusted salon industry business coach and leadership mentor. She’s been where you are and has the runs on the board to help you get real results. If you’re ready to turn your business around, become a better leader, take that next big leap, or scale to a million-dollar turnover and beyond, get in touch: kym@kymkrey.com.au; @kymkrey or www.kymkrey.com.au

*Commbank Cost of Living Insights Report 2024 machine