Great Clips

GreatClips1

Great Clips’ technology has helped the company grow at a fast clip.

By Kat Zeman, Knighthouse Media Senior Editor

Roughly 40 percent of Great Clips' customers carry the company inside their pockets and purses – and those numbers are increasing each year.

Great Clips, a Minneapolis-based hair salon franchise with more than 4,290 locations throughout the United States and Canada, is on the cutting-edge when it comes to technology. The company invested in proprietary technology that allows its customers to check in for haircuts from their computers or through the company’s iPhone and Android apps.

Great Clips says it does not take appointments. The company believes that its “online check-in” is better than scheduling an appointment weeks or days in advance. Its customers can decide that they want a haircut today and the online tool allows them to find the nearest Great Clips salon, place them on the wait list and tells them their approximate wait time.Great Clips info box

“It’s a really awesome customer-centric tool that is very easy to use,” CEO Steve Hockett says. “It has totally changed our business. It allows our customers to see their wait time down to the minute. So you don’t have to sit and wait in the lobby. It’s very accurate. It really puts our salon into the pockets and purses of our customers no matter where they are.”

Millions And Billions

The fast-growing company, which reported roughly $1.4 billion in sales last year and expects to increase that number to $1.5 billion this year, partnered with Eden Prairie, Minn.-based Innovative Computer Software to create the algorithm for its online check-in.

Last year, 34.5 percent of Great Clips customers used online check-in. This year, the company predicts that number to climb to about 40 percent. “It’s been growing in usage by about 5 percent to 6 percent per year,” Hockett says. 

To date, roughly 7 million people downloaded the phone apps. Of that number, about 1.6 million downloads were last year alone. “Our goal is to get to 10 million,” Hockett adds. 

In addition to online check-in, Great Clips created Clip Notes, a secure global database that allows stylists to keep notes on customers’ haircut habits. It is accessible from all salon locations.

“We have millions of transactions that allow us to understand our customers’ behavior,” Hockett says. “For example, we can segment our customers into four different buckets based on how many visits they do over the course of a year and we can market to each differently.”

One of these buckets contains information on the “great customer.” Great Clips knows that this customer visits one of its salons at least seven times per year and it will market to that customer differently from how it will to a new customer or one that visits only two times per year.

The database also tells the company other valuable information. Roughly 70 percent of its customers are men. Kids, often brought in by their moms, are good customers. Senior citizens tend to favor Great Clips, too – and its prices.  

“We’ve been doing this for a long time,” Hockett says. “Twenty years ago, Great Clips made a decision to start collecting customer information and we didn’t have computers. It was done on paper.” 

By The Numbers  

Last year, roughly 40,000 Great Clips hairstylists gave about 106 million haircuts to customers throughout the United States and Canada. This year, the company predicts that number to increase to roughly 110 million. The increase in haircuts results from the company’s growing franchise business.

“Great Clips has grown to this size because of our focus on the franchise business,” Hockett says. “We have zero company-owned salons. So we are 100 percent focused on our franchisees. That’s all we do.”

The salon chain has roughly 1,200 franchisees that collectively own more than 4,290 salons. The majority of its franchisees own more than one location. Great Clips’ largest franchisee owns more than 70 salons. The average franchisee, after being in business for more than five years, owns between six to eight salons.GreatClips2

Entrepreneurs wishing to open a Great Clips franchise must have at least $50,000 in liquid assets and a net worth of $300,000, in most markets. The company charges a franchise fee of $25,000 per location. It also collects an ongoing royalty fee of 6 percent and a 5 percent ad fund charge.

The initial investment, including build-out cost and franchising fee, ranges between $136,900 and $258,250 depending on location. The average Great Clips salon ranges between 1,000 and 1,200 square feet.

Keeping It Simple 

When Hockett started with the company about 30 years ago, it was as a franchisee. “I was 27 and working for a large bank,” he says. “But that’s not where I wanted to be for the rest of my life. So I became a Great Clips franchisee.”

Although he enjoyed operating his own franchise, Hockett eventually moved to the corporate side in the early 1990s, helping other franchisees open and run their own businesses. “It’s a great company,” he says. “I have a passion for it because I love to see franchisees build their business and become successful.”

Great Clips has an elementary rule for success. “Our focus is on being simple,” Hockett says. “We do haircuts. We don’t color hair or chase the next hot thing. We’re just about great quality haircuts. We don’t allow ourselves to get distracted by other things.”

A Great Clips franchisee doesn’t need to have experience as a hairstylist. The company looks for business-minded entrepreneurs who have been successful in their jobs or other ventures. “You have to like retail and you have to like people,” Hockett says. “And they need to embrace our system and have a passion for franchising.”

New franchisees undergo an orientation program that features a mix of online and in-person training. That includes more than 13 hours of online study at Great Clips University. The company also helps them find an ideal location for their business and assists with the paperwork associated with signing a lease, as well as the build-out and the grand opening of their salon.

Franchisees also have access to operations specialists at all times. “We have about 110 employees in the field and their sole focus is supporting our franchisees,” Hockett says. 

In addition, the company gives its franchisees a variety of tools designed to help them staff their salon and train them in the Great Clips method. It has about 80 training centers throughout the United States and Canada where new salon employees and licensed cosmetologists are trained in the Great Clips system of operation.

“Plus, we’re in every salon in the system at least twice a year with a report that we share with our franchisees,” Hockett says, referring to statistics and useful marketing information gathered through the company’s database.

Giving Back

Great Clips promotes and encourages philanthropy. Its franchisees, their teams and the corporate office are dedicated to communities they serve through company’s Great Deeds programs.

Every year, the company’s salons raise hundreds of thousands of dollars through the Miracle Balloon campaign that supports local Children’s Miracle Network hospitals. 

To help those suffering from cancer, the company established Clips of Kindness, its first first-ever system-wide Great Deeds program. All Great Clips salons offer complimentary clipper cuts to customers facing hair loss due to cancer treatments.

The company also participates in “Cut It Out,” a charitable program of the Professional Beauty Association. It’s dedicated to mobilizing salon professionals and others to fight domestic abuse by building awareness and training salon professionals to recognize warning signs and safely refer clients, colleagues, friends and family to local organizations and resources for help.

 

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