Why Upfront Payments Are the Key to Predictable Income for Service-Based Businesses
It can be frustrating when a well-planned day is disrupted by a client canceling, leaving an empty time slot and unrealized revenue. No-shows are costly, not just for you, but for the entire industry, including the beauty industry—estimated at GBP 637 million annually in the UK!
Running a service-based business is not easy, and having to deal with busy humans in general makes it even harder. An ideal booking would go as such:
But it usually goes south, north, and in every other possible direction, people forget, get stuck in traffic, argue with their partner, bring their cat to the vet. You name it. Humans are just *busy* busy.
Whether you are an entrepreneur or an experience business owner, you really can't avoid that. You have an appointment scheduling software, and all the other tools you need, yet, the same busy people are those driving your revenue, and you therefore have to adapt to them.
The problem remains the same: sometimes clients show up, sometimes they don't, and your goal is to reduce the number of people that end up not showing up. An elegant solution to this problem is simply to...make them pay in advance. I'm sure you've already thought about that. This article is not really to tell you what to do, but rather to give you the why and how you should do it, and how it can massively improve your performance.
Upfront Payments: The Holy Grail
Who doesn't want predictable and stable income?
The annoying part with no shows is the opportunity cost incurred. Someone must pay for it, and most of the time, it's probably your business. Having people book and pay for their services ahead of time enables two simple but important dynamics
1. It lets you do more ahead of time
2. It gives to the client the sense of commitment
Doing more ahead of time here means being able to predict your revenue a few days or even weeks in advance (let's assume zero no shows because of the added commitment). Before the end of the month, you can invest in new tools, new assets, pay rent, or any other important expense. With upfront payments, you can confidently plan for consistent revenue: you have the revenue flowing in in advance for people serious about getting the service they need. Have a great marketing strategy, advertise in your local media, and get more people interested in your business, and that predictable revenue will keep growing.
On the flip side, the client is incentivized to not losing their money and their slot because they've already paid for it. Unless there's a real emergency, they'll show up right on time and everything will go smoothly and as planned. Right?
How your policies can protect you
The client may show not up, but they may also show up but not time. Their service may take longer than usual, and so many more possibilities. In any case, there are two things you need in order to reach a common agreement with the client
- A cancellation/rescheduling policy
- An allowed lateness (e.g., "Clients arriving within a 10-minute grace period will still be served")
Rescheduling is usually alright. They may push it back a few hours or a few day, but regardless, there's probably no revenue lost. Cancelling or not showing up at all involves a more or less direct loss. You may have had to gather specialized tools or materials for the specific session and with them not showing up anymore, it turns into a loss.
Your cancel/reschedule policy needs to be clear on 4 things. Assume your client is the one asking these questions:
1. How long before the appointment can I change my mind?
2. What's the cost for me changing my mind?
3. Do I get punished for cancelling if i do it in a way that let's the time slot get filled later?
4. I may be late, will I still get the service I paid for?
You do not want people to waste your time, so you can be as strict as necessary. Your policy can equally be as simple as "pay in advance, and if you don't show up I keep the money". It's a less forgiving strategy, but is really discourages recidivists and people who really just do not care about your time.
A very simple policy you can set on your appointment scheduling/management software can go this way: "Cancellations within 24 hours are non-refundable. On the day of the booking the client will still be served even if they are up to 30 minutes late. Beyond that time, the appointment may be considered as a no-show, which is non-refundable"
It cleverly answers all questions
1. How long before the appointment can I change my mind?:
- You have up to 24 hours
2. What's the cost for me changing my mind?
- It costs the price of the appointment (non-refundable)
3. Do I get punished for cancelling if i do it in a way that let's the time slot get filled later?
- No cancelling more than 24 hours makes you eligible for a refund
4. I may be late, will I still get the service I paid for?
- Yes, you have up to 30 minutes to show up
This remains true whether you use a barbershop appointment software, beauty salon appointment scheduling software or an appointment scheduling software for hair salon.
It becomes important when they pay
It is just human nature, the instant you pay for something, it instantly has more value to you. An upfront payment will naturally have the client demonstrate an increased commitment. Not only that, but moving past that first payment wall will clear off some doubt off the client mind, especially if it is a first time client.
Your recurring clients know you and know that you're good at your stuff. The new clients are the ones you need to win over for the first time. They've probably seen your work on your socials, but them paying upfront the first time? It's a sign of trust and a sign they're willing to get the service done.
Let them decide ASAP
You want your clients to be certain of what they want. Yes, the service can change a little when it is being performed, but the point is, they showed up for it. Do not give them a chance to delay in their decision. Your services pictures, reviews and recommendations did their part, do not allow them to begin to question at the last moment. You're also selling the decision to come to your shop, so set that decision in stone from the beginning.
Conclusion
No matter your industry, if you work with appointment, you have or will experience a client not showing and messing up your entire schedule. It is possible to reduce your no shows significantly by requiring an upfront payment by the client. They will see the service as more valuable and will likely show up, considering they now have some skin in the game. In addition, make sure to send reminders via email or SMS, or simply call them to remind them.
Don't let no-shows disrupt your business. Start using Wavier today to streamline your appointment scheduling, ensure upfront payments, and keep your revenue predictable!
Wavier is an appointment scheduling software that offers an easy appointment collection and management solution for automated reminders via SMS and email, and upfront payments for service-based businesses.