Cancellation culture

Cancellations and no-shows are costing our industry millions each year so why are we so reluctant to enforce a strict policy?, asks Hellen ward

There is a quote I love from Shirley Temple: “Time is money. Wasted time means wasted money means trouble”. And nowhere is it truer than in our industry because the most expensive thing we sell is our time, and lost time is lost turnover forever.

I recently hosted a webinar with software company Shortcuts on the topic of cancellations and how failing to initiate a policy can impact salons in the UK. As part of my preparation, I had a good look at the legislation surrounding cancellation policies and found some astonishing data.

I started by looking at my own business. We had 4,500 cancellations in the last year, resulting in a financial loss of nearly half a million pounds.

The 285 uncharged no-shows resulted in a further loss of circa £25.5k. Together, these cancellations and no-shows amounted to 213 column hours lost – impacting not just the business but the staff in commission lost to the team members themselves. Although we operate (what I thought was) a strict cancellation policy, we clearly need to tighten up on our enforcement strategies.

A rule is only a rule if you bother to enforce it. Imagine TFL reminding passengers that they cannot smoke on the tube but relaxing the policy on the District Line between Parsons Green and Fulham Broadway? All that would result is a disrespect for the rule and a serious amount of confusion. Yet, all too often, we found receptionists were reluctant to charge late cancellation fees, feeling uncomfortable and apologetic. We also know that clients charged for no-shows often get angry and refuse to return, typically the repeat offenders.

Of course, for any business selling time (hotel rooms, for instance), occupancy rate is a key statistic to track as it is a clear indicator of the business’s productivity. So, ensuring you create some sort of policy regarding cancellations is essential. The good news in our business is that 99% of clients that were charged a deposit due to a previous missed appointment or lastminute cancellation turned up on time for their future appointments, and that over the past year, only 4% of customers cancelled last minute or missed a booking.

The new rules

Cancellation culture is growing – yet our sector seems strangely reluctant to get involved. Hospitality has long been a trailblazer – hotels rarely accept a booking without a credit card and restaurants routinely hold card details as deposits. Dentists often charge 50% upfront (I’ve paid over £500 for some cosmetic dentistry I’m having in October, with my dentist pocketing the interest on my deposit!). Concerts don’t give refunds on tickets, gyms often ask you to pay up front for classes and charge if you cancel and they are unable to fill the space. Even traders like plumbers and electricians are beginning to charge for missed appointments and schools and nurseries often charge late pick-up fees of £20 per 15 minutes!

“For any business SELLING TIME, occupancy rate is a KEY STATISTIC to track as it is a clear INDICATOR OF PRODUCTIVITY. So, ensuring you create some sort of POLICY regarding cancellations is ESSENTIAL„

It’s easy to see why. All of those sectors are selling the time of their staff. The more labour intensive the sector is, the more they’ll want to safeguard potential revenue losses. Anyone who’s ever been sent a letter by their local NHS trust will know it is accompanied by a stern reminder about what missed appointments cost the health service.

Educating our consumers is key. We have a 15-minute grace period, but latecomers will find their service is shortened to accommodate the following client, meaning both the experience and the service itself is compromised. Rather than use the term “deposit” we suggest “non-refundable booking fee to secure your appointment” because deposit implies that fees taken are returned. For our habitual no-shows, banning them until their cancellation fee balance has been cleared then insisting on pre-payment in advance going forward normally does the trick.

The legal position

You won’t be surprised to hear the onus is on the business to prove that it informed the customer about its policies with reasonable notice. The policy must be clear and enforced at every stage of the appointment “contract”.

The business can charge a fee commensurate with their loss, but if the loss has been mitigated (the appointment has been filled) the customer could have the right to ask for a refund. There are other compliance issues to consider; for example, ensuring you have the right to take payments if the cardholder is not present.

Some cancellation policies I researched in salons were extremely lengthy and confusing. Usually, stating 24-hours’ notice of cancellation is required for every booking can be enough. If initiating the policy, donating a proportion of the resulting sums to charity helps soften the blow and the customer perception.

Making it work

One thing is for sure; enforcement is critical, and to ensure this happens it’s wise to get the team on side. Use your software notes to monitor a three-strike policy so you can track and comfortably charge those serial cancellers.

I call it carrying out the safety briefing – when we fly, we’d be disconcerted if we weren’t reminded how to fasten our seatbelts, how the oxygen masks work and that cigarettes or vaping weren’t allowed in the toilets. Making sure your clients are fully aware of your policy is merely an exercise in encouraging good behaviour and limiting your own financial losses. In a culture where cancellations come at a cost, why should our industry be any different?

Hellen Ward is managing director of Richard Ward Hair & Metrospa in London, vice president of The Hair & Beauty Charity and co-founder of Salon Employers Association (SEA).