The proven strategy to reduce the cost of no-shows in your salon

Over the past two years, business owners have been confronted with more challenges than they could have ever imagined. 

While COVID-related lockdowns and restrictions might be behind us, beauty businesses have encountered a new problem: rising levels of no-shows and last-minute cancellations. 

Without little to no warning, cancellations can throw your business’ cash flow completely out of whack. However, there’s one dependable strategy to reduce the cost of no-shows in your salon: online deposits.

“We use deposits really as a way of managing cash flow and stopping no-shows and cancellations”

“We use deposits really as a way of managing cash flow and stopping no-shows and cancellations,” says Jason Donnelly, founder of Asylum Hair and Beauty. Donnelly had mulled over the decision to implement deposits for a while but it wasn’t until his business experienced record cancellations over the Christmas period that he decided to pull the trigger.

“We had been fully booked until Christmas week came and we had around 20% of our bookings from either very last minute cancellations or clients not turning up,” he adds. “This meant we lost out on earnings and by this point, we’d turned more business away because of being full already.”

The benefits of online deposits

Reduce no shows

Timely research shows that businesses that take a deposit reduce their no-show rate by a whopping 55 per cent. Online deposits ensure your client is committed at the time of booking and that you are paid for your time. 

Manage your cash flow

In business, cash flow is everything. By having regular cash coming in from pre-paid deposits, you can spread out your costs and set yourself up for financial success. “Now, even if we do get a last-minute cancellation, it means we still make money for those free time slots,” Jason explains. “This means we know our cash flow for those times will allow us a business to keep going.”

How to implement a deposit policy

Before you do anything…

Before you start taking deposits, you’ll need to set up an online payment gateway. TimelyPay allows you to quickly and easily take online payments from clients and request a deposit on booking. It’s quick and easy to set up and means you can tap into a whole host of Timely’s other features too.

Crafting a deposit policy that works for you

Then, you’ll need to double down on the details. You could ask for full or part payment, depending on what suits your business. Some businesses ask for a flat rate (for example: £50) whereas others charge a percentage (usually somewhere between 10 and 70%). 

“We get a lot of positive feedback on the deposit system as people can then spread the cost of their appointment and don’t feel they pay as much when they visit us.”

Jason explains how he tailored a deposit policy for Asylum Hair and Beauty: “We decide to go with charging a 50% deposit on booking an appointment. The policy states that the deposit is non-refundable if you cancel in a period less than 48 hours before the appointment or if you don’t show up. Timely makes all of this very simple as the amount of deposits goes straight into our bank account the next working day. On the system itself, it shows us an icon of a dollar note to say there is a deposit on the account. If we have a cancellation or no show, we can simply charge the deposit with the click of a button.”

Once you take a deposit, TimelyPay allows you to store your clients’ card details, making the final in-salon payment a breeze. Jason adds: “Now we get a lot of positive feedback on the deposit system as people can then spread the cost of their appointment and don’t feel they pay as much when they visit us.”

Communication is key

When you’re ready to get started, it’s important to communicate your new policy to your existing clientele. You could do this via your website, social media or at the time of booking. If you don’t like the word ‘deposit’, try flipping the script by labelling this payment as a ‘booking fee’ instead. 

Jason admits that it wasn’t all “plain sailing” during the transition period. “When we first started taking deposits, it was a relatively new concept for salons in our area to be doing this and so we did get a few clients that did not see the need to pay deposit for our services.” That said, Jason says that for the most part, clients were understanding.

“The difference this has made to our business has been exponential.”

For Asylum Hair and Beauty, “The difference this has made to our business has been exponential.” While there might be an adjustment period while your regulars get used to the change, remember that the benefits of taking a deposit far outweigh the cons.