Three Key Performance Indicators (KPI) For Estheticians

Every business owner needs to know what KPIs are. They give us concrete data to guide decisions and foster growth in key areas. By consistently monitoring and acting on these metrics, we can refine operations, elevate client experiences, and achieve long-term success.  Here are some KPIs we should consider looking at as estheticians:

Client Retention Rate 

Retaining clients is generally more cost effective than acquiring new ones. It's also safe to assume returning clients are advocates which has an amazing ROI (return of investment).

Here's how to calculate:  

1. Define the time period you’re interested in (e.g., monthly, quarterly, or yearly).

2. Count the number of returning clients (those who booked at least one service during the period).

3. Count the total clients (all clients who visited at least once within that period).

4. Now divide the returning clients by total clients for that time period and multiply by 100. 

Here is an example:

Suppose last quarter we had 50 returning clients and our total clients booked was 100.  We would take 50/100 and then multiply by 100, giving us 50%.

Now that we know what our retention rate is, let's dissect it.  70% and above indicates high retention, while 50% and below indicates low retention.  There may be various factors as to why retention rates are low (traveling esthetician, brand new, just opening a business) so it's important to take those things into consideration.

Ways to improve your retention rate include improving our follow up, doing an audit of the booking process, being honest with ourselves regarding our location/space, reassessing our brand story, etc.

Average Revenue Per Client

Average revenue per client can be helpful if we're setting daily or weekly goals. 

Here's how to calculate:  

1. Define the time period you’re interested in (e.g., monthly, quarterly, or yearly).

2. Take your total revenue for that time period and divide it by the number of clients you had. 

Ways to increase our ARPC include raising prices, creating packages, or getting comfortable with our retail offerings to name a few. 

Conversion Rate

A conversion rate can be applied in many different ways, but lets use consultations as an example.  If we have employees this will be especially helpful because it can be a way to assess the success of consultations. 

Here's how to calculate:  

1. Define the time period we're interested in (e.g., monthly, quarterly, or yearly).

2. Figure out our total number of clients who booked a treatment within that time period

3. Now figure out how many clients booked consultation within that time period.

4. Take the number of clients who booked a treatment and divide it by the number of consultations performed and multiply it by 100.

This is our conversion rate. Knowing this percentage can help hold us accountable, or even our team members. If these conversion rates are low it's time to take a deeper look into why. Perhaps our consultations need to be revamped, or maybe we just need more practice!

Client Acquisition Cost

This KPI is very important. This let's us take a granular approach at our marketing strategies to see if they're working.  This can be measured through analyzing costs such as videography for a new service, discount codes, and email marketing to name a few. 

Here's how to calculate:  

1. Figure out what we want to measure

2. Figure out our total marketing expenses

3. Divide by number of new clients OR number of clients that participated

Here is an example:

We are launching a seasonal fire and ice facial. Clients can book anytime between September - December (4 months).  We've spent $500 with a videographer, $20 on Etsy to purchase marketing templates, and $80 on postcards to handout to our existing customers to entice them to book our new service.  

Now our total cost of marketing is $600, and 80 clients booked the fire and ice facial. If we divide 600 by 80 we will see our client acquisition is $7.50.  

This is an important number to know because $7.50 is extremely high for a $100-200 facial. 

In the future we know we should try to lower our overall marketing costs.  Now, that's not to say we can't get clever and splice the videos the videographer created to make new content. But even still, it's important to know. We run these numbers all of the time for our tradeshows. 

KPI's can be different for every business so it's important to identify what's fits your business model.