Episode #368-Online Review Myths, Lies and Old Advice That Doesn’t Work Now.

Intro:

Do you feel like you were meant to have a kick-ass career as a hairstylist?

Like you got into this industry to make big things happen?

Maybe you’re struggling to build a solid base and want some stability.

Maybe you know social media is important, but it feels like a waste of time because you weren’t seeing any results.

Maybe you’ve already had some amazing success but are craving more.

Maybe you’re ready to truly enjoy the freedom and flexibility this industry has to offer.

Cutting and coloring skills will only get you so far, but to build a life long career as a wealthy stylist, it takes business skills and a serious marketing strategy.

When you’re ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists.

I’m Britt Seva, social media and marketing strategist just for hair stylists, and this is the Thriving Stylist Podcast.

Britt:

What is up and welcome back to the Thriving Stylist Podcast.

I’m your host, Britt Seva.

And today we’re going to talk about how to calculate your salon’s worth.

So there are a lot of salons owners out there who are hoping to one day sell their salon.

If you’re a stylist, I know the thought of that is scary, but actually if a salon sale is done really well, everybody wins and it can be really, really beneficial to the entire team.

This is not the first time I’ve talked about this.

If you’ve not already listened to Episode 277, it’s called How to Build a Salon You Can Sell.

I really recommend listening to that as well.

It tackles some of the other things that we’re not going to tackle in today’s episode.

So if you are a salon owner and you’re like, I do probably want to sell one day, listen to this one and 277.

If you just do a Google search for Thriving Stylist Podcast 277, it should come right up for you.

Now if you’re a stylist and you’re listening to this and you’re like, I’m not a salon owner.

I don’t ever want to be one.

I don’t have anything I want to sell like that.

My advice to you is listen up because this might be interesting for you.

If your salon does sell, I think it’s interesting to know what the terms look like.

You may get the opportunity to buy your salon and think about what that could look like and make sure that you are paying an appropriate amount for it.

So I think this will be very educational and informational.

The other thing I want everyone to keep in mind is our industry is very unique in that everybody who joins it is essentially an entrepreneur, right?

Even if you’re a commissioned stylist, yes, you are getting a paycheck if with your hourly salaried commission traditionally or whatever, you’re getting a paycheck from the owner.

However, in most salons I know, the stylist still has to generate some of their clientele.

Now I will say in the most successful salons I know, the salon is providing the bulk of the clientele.

When you look at the most profitable salons today, the salon is providing a lot of the clientele.

That being said, even if you were a stylist working in a salon that could provide your entire clientele, if you didn’t learn exceptional communication skills, or if you’re cutting or coloring or styling skills just never really refined themselves enough, you’ll probably not make it, right?

We’ve seen all of those stylists where it’s like, ugh, such wasted potential.

And that’s what makes all of us entrepreneurs, versus if we were all, if I had this podcast and it was called the Thriving Receptionist Podcast, you could be like a mediocre receptionist and do just fine.

This is not an industry where that generally works.

Now what’s interesting about our industry is it’s also a relationship-based industry, which makes selling a salon extremely difficult, extremely difficult.

I don’t know of a ton of salons that have sold for some of the numbers I’m going to talk about today, but I want to talk about how you could be somebody who would break records with the sale of your salon.

There’s a couple of salons that come to mind right now that I think 10, 15 years, when those owners want to retire, they could be in really good position to make some money doing that.

And it’s good to set yourself up now to get there at some point.

However, something for all of us to keep in mind is, because our business is so relationship based, there’s a couple of things to note.

One, reducing or eliminating your key man risk is critical.

And that’s something we talk about in episode 277.

Because you can’t really sell a clientele.

Decades ago, Stylist tried.

They were like, oh, I’m retiring.

You can buy my book of business.

But history tells us that doesn’t work.

And it especially doesn’t work now.

It worked 20 or 30 years ago when it was hard for clients to find new Stylist.

Now I can pull up my phone and find a new Stylist in 10 minutes.

It’s too easy.

And so we’ve seen it happen time and time and time again, where Stylist gifts their clientele to somebody or sells their clientele to somebody.

You can’t sell human beings and their interests.

They’re gonna go wherever they wanna go.

And so there’s not a monetary value to that.

Humans have free will.

So not a lot of value there.

When you look at it as something like a dental practice, somebody can sell a dental practice and make a lot of money doing it.

There was a dental practice that went up for sale.

I live in a small community.

You’ve probably heard me say that 100,000 times.

We don’t have a huge market to be connecting with here.

It’s like local family and friends, and that’s all you got.

And there was a dental practice that had been in the town for probably 30 years.

They sold a couple years ago.

Young husband and wife came in and bought it.

That business has exploded.

They took this dental practice that was doing just okay to something absolutely stellar, and I’m sure they paid a pretty penny for it.

There are some business coaches out there right now who are talking about sell a vending machine business.

You’re going to absolutely love it.

Or buy a vending machine business.

You’re going to absolutely love it.

Buy a dry cleaning business, and make it ultra sexy, and you’ll make a lot of money.

Buy a window washing business, and make it ultra sexy, and you’ll make a lot of money.

You can do that.

That does work.

Our industry is really different.

You can buy a salon and make it super fancy, and if the relationship and the connection isn’t there, it will still fail.

Versus with a window washing business, do you care how charming your window washer is?

Most of us, no.

So good marketing and great customer service is enough.

Our industry is super different.

So because of that, the monetary value is also incredibly different.

And so most of the general rules that apply when someone is buying or selling businesses do not apply in our industry.

So keep that in mind as we talk this through.

There are three different common methods that are used to value a salon’s worth, and one of them is the one I see most dominant.

Another is one I could see kind of emerging, but it’s not really there yet, and there’s one that I think hardly gets used because very few salons get to this place in space.

So let’s start with that one.

That one is going to be the income or earnings method.

It is one that is largely used outside of our industry and in a lot of businesses, but in ours, it doesn’t necessarily work great, and I want to explain why.

So the income and earnings method looks at a business’s ability to generate profits and cash flow into the future.

So not what have you done in the past, what have you done for me lately, and what does it look like you’ll do in the next 10 years?

So you can probably already see by that description why that’s problematic for our industry, because our industry does have that key man risk, and any investor, any bank that finances this, any business broker is going to say, if this existing owner leaves, can this salon stay open?

It’s risky, versus if the owner of a car wash leaves and some new owner investor comes in, it’s probably going to do just fine.

A lot of the customers are not even going to know there’s a new owner.

In our industry, they’re going to know in five seconds.

So there’s this huge key man risk that exists, and that makes this a problematic calculation, but we’re going to talk about it anyway.

So bigger companies use something called the EBITDA calculation.

I talked about it on the last podcast.

Very common for big company traditional sales, and it’s earnings before interest, taxes, depreciation, and amortization.

It looks at cash flow of business, challenges in our industry.

We don’t have a lot of EBITDA stuff going on.

Instead, we have something called seller’s discretionary earnings.

So in small businesses like hair salons, really the perk of being the owner is the discretionary earnings.

There’s not like these big, huge profit margins and stock options.

It’s not as complicated as that.

And so because the perks of being an owner are kind of just like the inside perks, we’ll talk about those in a second.

Instead of looking at the EBITDA, we look at the SDE.

So let me explain to you what the SDE is.

And it’s complicated.

It’s mathy.

So you look at pre-tax income, so basically gross revenue.

And generally speaking, you would take the salon owner’s production behind the chair out of that calculation.

Because if you’re selling the business, the assumption is you’re leaving.

So you can’t include your revenue that you produce.

It’s the revenue that’s produced beyond you, okay?

So pre-tax revenue, owner’s comp, interest, interest expense, I should say.

So let’s say you took out a business loan or something and you’re paying interest on that loan, that’s taken into account.

Depreciation and amortization.

So very common if you buy like salon chairs or new stations or something like that, computers for the salon.

Those are depreciating assets.

So you write off a portion of it over time.

Discretionary expenses.

So that’s the big one.

So as an owner, discretionary expenses are one of the best perks.

So having your health insurance paid for by the business, that’s a discretionary expense.

Your salary, your owner’s draw is a discretionary expense, and it’s discretionary, right?

So like you as the owner might be choosing $30,000 as your salary.

Maybe the next owner comes in and says, F the profit margin, and they want to take $60,000.

It’s up to their discretion.

That’s what makes it discretionary, right?

So your salary is discretionary.

There are a lot of salon owners who have a car registered to their salon business.

That would be considered discretionary.

Travel expenses, discretionary.

Anything that’s like not critical to the business staying open can fall into that discretionary category, like buying color.

If you are a salon that does hair color, not discretionary.

It has to happen.

But taking a business trip does not have to happen.

So that’s going to be more discretionary.

So all of those things get added in.

Non-recurring expenses.

So let’s say you have to hire a lawyer one time to fight some legal battle.

That would be a non-recurring expense.

It happened as a one-off.

Sure, it might happen next year.

It might not happen again for five years.

That gets added in.

And then you remove all of the one-time revenues.

So remember, we were looking at the gross revenue of the business.

You remove anything that was kind of like an outlier.

So let’s say the salon did 300,000 hours in revenue this year.

But 10,000 of that was because you hosted two cut and color classes in the salon and it produced $10,000 in education income.

Those are outliers.

It’s not a normal something that the business offers.

Yeah, maybe you say, well, we do it seasonally.

That’s still gonna be one time revenues because it is seasonal.

It’s not something you can always count on.

It’s not something the new owner can be like, and this is gonna be great.

They don’t know that it’s gonna be great.

It’s an outlier.

So that gets removed.

So we take that $300,000 in total gross revenue that the salon brought in, minus that 10K that came in from the education events, because that would be considered one time revenue.

Then you add in all those other things.

So owner’s comp, interest, depreciation, discretionary expenses, and non-recurring expenses.

All of those get added back in.

So this actually works in your favor.

So if a valuator were coming in, they’d say, okay, well, based on this SDE calculation, this salon does $300,000 in annual revenue, but the SDE is 358,000.

Because there’s enough cooking in the business for the owner to take care of another $58,000 in expenses.

So it shows that there’s profitability there, and there’s enough money for other cool things to be happening.

And that’s what that number represents, okay?

Now, let me pin in that for a second.

We don’t just look at that revenue.

The other thing that we look at is consistent record of historical growth and profitability, which can be a problem for salons.

Anybody who’s working on this will want to see a decade’s worth of sales and growth reports, and they want to see consistent historical growth and profitability.

Now, you can have, like, let’s say 2020 was a tough year for you.

Well, it was a tough year for everybody.

How did you bounce back?

So they’re looking for the full story, which is why they look for a pretty good range of business, and they want to see growth of revenue and profitability.

Desirable location.

Like, is your location on the up and up, so the down and downs?

Clean record and bookkeeping.

I learned from a business coach that if you have shoddy bookkeeping or creative accounting, that will kill the sale of your business before it even starts.

Highly favorable lease terms or ownership of real property.

If your lease is going to end next year, it will be very tough to sell your business.

I just watched a salon try and sell, and the sale fell through because their lease was about to expire, and so it was seen as a bad deal.

So if your lease is going to expire, not a good time to sell.

A long business history.

So if you opened your salon three years ago, it’s going to be a tough sell.

The other thing is employee tenure.

If you have a record of employees only staying with you for two years and leaving, it’s going to be tough to sell.

If you have booth renters only or primarily, it’s going to be tough to sell.

Up to date and thorough maintenance records.

So is your electrical up to code?

Is your water heater new and functioning?

Things like that.

And if all of those things in order, everything is looking good, like, wow, wow, wow, this looks like a great salon, the money you can make can be pretty good.

So this is for the savvy salon owner who’s really got it going on and can check all of the boxes that I just talked about.

There is a chance that SDE is the calculation that would be used for you.

And this is when multipliers come in.

This is when it gets really exciting to sell a business, and this is kind of the dream everybody hopes for.

So the SDE number I was just talking about was $358,000.

Right?

That was the math that we just played with.

So if this salon was a real salon that was trying to sell and it checked all those boxes, good location, long-term employees, really clean bookkeeping, everything is up to code and up to date, and everything looks great, tons and tons of business, growth, profitability, everything’s great, potentially their SDE of $300,000 could qualify them for a multiplier of 3 to 3.5x.

Meaning you would take the $358,000 and multiply it by 3 to 3.5.

So it could be a million-dollar sale.

That salon owner could potentially sell that business for a million dollars.

Now they’ve got to find the buyer who’s going to want to pay that or take out the loan to make it happen, but it is possible.

Now that multiplier increases as the SDE increases.

So if your SDE is $100,000, let’s say, so you run all of that math and you get $100,000, you’d be lucky to get a double multiplier.

So you, your SDE is $100,000, you sell it for $200,000.

So it depreciates pretty quickly.

If your SDE is $50,000, your business value is $50,000.

There is no multiplier.

You basically get an option to get out.

So you can see that there’s a lot at stake when you’re doing math like this.

It can be incredibly lucrative or end up in nothing.

And the numbers I just gave are from one company that does brokerages like this.

This happens to be called Beacon.

But if you were to work with a different broker, they might give you a totally different set of numbers.

But when you look at multipliers and SDEs, this chart gives you a sense of where you could potentially land if you check all the boxes.

Now, like I said, very rare are salons valued that way because of things, like I said, a lease that’s about to expire.

It’s a booth rental salon, non-employee salon.

They’ve had good years and bad years, whatever.

Very rarely does it end up looking like that, but it could.

So what we see a lot of is actually this asset method.

This is much, much more common.

So the asset method doesn’t require that forensic financing or look at assumptions about the growth of your business.

Is there tenure?

Does it look like there’s going to growth?

Does profit increase year over year?

It’s not necessarily looking at those things.

Instead, it just looks at assets and liabilities.

It’s super simple.

So assets would be tangible assets like the FF&E stuff.

So the furniture, fixtures, and equipment, that’s called FF&E.

Real estate owned by the business, if you own your building, that’s obviously going to be an asset.

Any inventory, so retail products you have, color that you have on hand, the computers that are at your front desk.

If you have computers, the iPads that are in the building, things like that, your shampoo bowls, all of that would fall into furniture, fixtures, and equipment.

And any cash in the bank could be a part of an asset assessment.

Then there are the intangible assets like customer list, brand recognition, online reputation, accounts payable, short-term debt, business loans, and accrued expenses.

So they do look at the big picture of what do you got, what do you owe, what’s on hand, but it is from a much higher level than the SDE calculation.

So the reason this method is common in our industry is it basically calculates what would it look like for this business to survive.

It’s not looking at growth, it’s not looking at long-term value, right?

For you to sell a business that’s doing $300,000 in revenue right now for a million dollars, the new owner would have to know they’re gonna get that money back, or no one’s ever gonna cut the check.

Very few salons today could prove, listen, if you buy this business, you can get your million back in the next five to seven years.

Very few salons could prove that.

So with the asset method, it’s more like, look, this is the value of the depreciated value of the fixtures and furnishings that are here in the space.

We got all this retail, you can have that, you can have the color, you can have the computers, and all of that is worth X.

Now, we talk about in episode 277, sometimes the money in the bank is included, sometimes it’s not, that’s part of the negotiation, but this is very, very, very common, and it surprises a lot of salon owners, because they’re like, oh my gosh, I built this beautiful business over 20 years, we do have these customer lists, but evaluator is going to decide the value of those things.

If a huge portion of that is people who see the owner, that’s going to be a problem, too much key man risk.

So there’s not a lot of sellable value in that.

So instead, a lot of owners are like, wow, so the depreciated value of the fixtures, furnishings, assets in my building is 25 grand, and that’s what they sell the business for.

And yes, it’s better than nothing, but it’s not much.

There’s also a lot of negotiating power for the buyer in that.

So the very, very common in the industry, but imagine the difference of making a million dollars or 25,000, it’s significant.

Okay, so then there’s also the market method.

This one is the one I think could be emerging.

I think our industry right now is at a place where it is starting to get much more serious, and we’re seeing kind of the end of the mom and pop era, and a lot of salon owners who are taking their business more seriously.

So the market method is very common in other industries, but not so much in ours because so many salons are special snowflakes.

So the market method is kind of similar to how the real estate market works.

So basically uses comps.

So it says, let’s find five other salons in this geographical area that have sold recently, and those salons should serve a similar customer base.

They should have a similar square footage.

They should have a similar profitability.

They should have a similar team size.

What did those businesses sell for?

So you can see why that would be really tough in our industry because very few salons are cookie cutter similar like that, versus when you look at the real estate market, there’s plenty of comps.

In most neighborhoods, it’s like, well, those two houses have the exact same floor plan, so we can give a pretty good estimate of what that should sell for.

In our industry, it’s tough because there’s so few businesses that are same z’s like this.

I do think in a few years, a decade plus, we’ll see more market method sales potentially happening, more sales based on comps, maybe.

But right now, asset sales are still going to reign supreme.

You can see, based on what I shared here, the best chance of you making really good money selling your salon is through that income and earnings method.

And the only way you’re going to make that happen is not just by the revenue, because you could see the revenue counted, but that consistent record of historical growth and profitability, desirable location, clean record and bookkeeping, favorable lease terms or ownership of property, length in business, long-term employees, up-to-date and thorough maintenance records, that counts twice.

All of those things are going to be critical because if you have that money, but you don’t have these other pieces, it’s going to be tricky.

So I hope that this is helpful.

One of the things that came up really recently, I want to close this episode by sharing, is that somebody said that it felt like I favored commission salons.

I am very open in understanding that this industry serves people who want to be independent.

I totally and completely understand that.

I know there’s challenges in being an employee.

I know there’s challenges in having employees.

The reason why I think sometimes it sounds like I favor commission salons is because the revenue and profit potential is higher.

I truly believe for both employees and for owners, if commissions are done properly, the way I pay out commissions is that employee stylists can earn up to 70% commissions.

So it’s very lucrative if done properly.

The other thing is it’s going to be tough to sell a booth rental salon for a million dollars.

And so the potential, especially if you’re an owner, is there.

If you want to have things like health insurance, if you want to have things like retirement savings, you’re not going to find that in an independent environment.

That being said, I think it’s a blessing that we live in an industry where you can be successful and independent.

I think that the Studio Suites market opening up was one of the best things that could have ever happened, because it gave the opportunity for those who do want to be independent to do it on their own terms and their own time and the way they want to do it, how they want to do it on their own schedule.

There is nothing better than that.

It also put the pressure on salon owners to level up if they want to keep growing in the industry.

I hope this has been an eye opener.

If you are a salon owner thinking about selling, I hope it’s been inspiring.

So much love, happy business building, and I’ll see you on the next one.

Intro:

Do you feel like you were meant to have a kick-ass career as a hairstylist?

Like you got into this industry to make big things happen?

Maybe you’re struggling to build a solid base and want some stability.

Maybe you know social media is important, but it feels like a waste of time because you weren’t seeing any results.

Maybe you’ve already had some amazing success but are craving more.

Maybe you’re ready to truly enjoy the freedom and flexibility this industry has to offer.

Cutting and coloring skills will only get you so far, but to build a life long career as a wealthy stylist, it takes business skills and a serious marketing strategy.

When you’re ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists.

I’m Britt Seva, social media and marketing strategist just for hair stylists, and this is the Thriving Stylist Podcast.

Britt:

What is up and welcome back to the Thriving Stylist Podcast.

I’m your host Britt Seva.

And today we’re talking about online review myths, lies, and old advice that doesn’t work anymore.

So this is a bit of an inspired episode.

I had a former Thrivers Society member reach out to me recently and she was like, hey, I was trying to do this specific thing and it didn’t work like it used to.

What do you think about that?

And I was like, oh, that’s because that’s a strategy from the past.

It doesn’t work anymore.

And what it made me realize when I got that message was that often we think that once we’ve learned something, it’s going to work forever.

And I think for all of us, like it’s that exciting feeling of when you finally have everything all figured out in your business, you’re like, yes, I got it.

I can just do this and I’m going to be good to go.

If only business were that easy, business and not just the salon business, all business in general is constantly evolving.

And the way to stay successful in business is to evolve forward.

And one of the things that has changed a lot in the last probably four years, I’m going to say since 2020, is online reviews.

So I really hopped on.

I’ve been coaching to online reviews since 2015.

However, I really started pushing hard for people to focus more on online reviews and less on Instagram in 2019.

So we’re talking like six years ago now.

It’s been a really long time and it has been a slow evolution to get people here.

However, those who heeded my advice years ago, man, are they set up for success right now, because we are now living in the age where online reviews are queen.

I know most people say king.

I like to say queen.

Online reviews are, I believe, the most critical form of social media today.

Instagram usership has been on a decline for several years.

We see less time spent on the app.

We see less consumers engaging in the app.

I know we as stylists still absolutely love it.

It’s where we network with each other.

It’s where we show off our work.

The data does show, though, that clients aren’t searching hashtags anymore, that clients aren’t using geotags like they used to.

They’re just not even opening the platform the way that they used to do it.

Actually, Facebook is having a bit of a renaissance, but even that’s not being used at the scale it was.

And when you talk to people about where they are turning to make their service-based business decisions, it’s online reviews.

And the people who jumped on the train in 2019, 2020, 2021, when I started really pushing hard for it, are set up for a major success today.

So I want to talk about some of the myths and lies and previous advice that people I think are still following that doesn’t work anymore, or misconceptions about online reviews so that hopefully as you step into 2025, you can really prioritize this super powerful tool and get the most out of them that you possibly can.

So first, let’s call it a myth.

20 online reviews or so is pretty good.

And yes, there was a time where that was pretty good.

You didn’t have to have a gajillion reviews.

Just having a handful was fine enough.

That is no longer the case.

It’s like when you first, I’m going to speak Instagram because I think it’s a language everybody understands.

It’s like saying 20 Instagram followers is good enough.

How did you feel when you had 20 Instagram followers?

You’re like, where’s the rest of my followers?

And why did you want more followers?

Because it gave you more credibility.

And it’s now the same with online reviews.

20 online reviews is like, oh my gosh, they’re getting started.

And then the more reviews you have, the more credibility you have.

And when online reviews weren’t as robust as they are now, yeah, 20 was pretty good.

And the standard has just so radically changed.

The other thing is when we talk about volume of reviews, the big shift is that volume of reviews now has a huge impact on search engine optimization.

So people are often like, you know, what are the words I could put on my website to rank higher?

That’s not really how Google ranking works so much anymore.

There are things that you can certainly do to your website to improve ranking.

But when you look at the fact that Google has Google Business, formerly Google My Business, so Google Business and Google Business primarily functions on reviews, right?

You have your Google Business index listing and it has a little map and your website’s linked there and it has information about your business and then all your reviews live there.

Okay, so that’s Google and Google is the number one search engine in the world.

Did you know that Google owns Yelp?

So you can continue to be a Yelp hater long as you’d like, but Google owns Yelp.

Yelp stock is on the rise.

Yelp usership is also on the rise.

And those who have a high volume of both Yelp and Google reviews are being pushed in natural organic search.

So when you say, how do I get more people just to find me organically?

Online reviews.

So my standard is I want you aiming to have five new online reviews every single month.

So 60 a year.

The top stylists I know, like individual stylists I know, have at least 75 reviews.

Lots of them have lots more, but at minimum 75.

The top salons I know, even the smaller salons, have 250 or more online reviews.

A lot of them have more like 500 plus.

So scale of reviews really counts right now.

And yeah, those people did have an advantage.

They jumped on the review bandwagon in 2019, 2020.

At the early inception, it’s still not too late, but you have to start now.

Myth number two, you should ask as many guests as possible for online reviews.

Those days are gone.

There was a time where that was true, but that was also part of the early inception of these platforms, right?

When we were just starting to adopt Google reviews, Google My Business was not what it is today at all.

It didn’t, you know how now when you search best salons in Chicago or whatever, the first thing that comes up is Google listings.

You have three or four suggested listings.

And then on the right, you’ll see Google Business Profile listing.

Or let’s say I search the name of my favorite salon.

It’s going to be my favorite salon.

Often their Yelp reviews will come up next.

Usually their Facebook or their Instagram, sometimes their website depending on how that ranks.

And then on the right, you’ll see that Google Business listing.

Five years ago, that’s not how Google looked.

This is a newer way of formatting.

So in the early days, yeah, ask everybody for a review.

Not everybody even knew how to do reviews.

Not everybody was using Google reviews.

A lot of people didn’t have Yelp, and so it was like whatever, just ask everybody, cast a wide net, fine.

That doesn’t work anymore.

Here’s the trouble with asking every single guest for a review or having one of those leave me a review QR codes at your station or at the front desk or whatever, and you’re just like hoping something amazing happens, right?

Or how many of you do the thing where after a client has a visit on their appointment thank you, they get a prompt that says, if you loved your service, leave us a review.

Like that’s spammy kind of review capturing.

How’s that working for you?

That’s so funny.

I was on a coaching call.

This was months ago, earlier in 2024.

And somebody was like, oh, you know what?

I do that and it works great.

And I was like, oh my gosh, it works great.

Awesome.

What’s the name of your business?

And the person gave me the name of their business.

They had seven reviews.

And I was like, how long have you been sending that thing out for?

And they’re like over a year.

I was like, so you’re telling me it works great.

You’ve gotten seven reviews in a year.

And they’re like, okay, I think I need to rethink the strategy.

So a lot of times we’re like, oh, it works.

Does it work at scale though?

And here’s the thing you should know.

If you’re asking guests too early or too often for online reviews, it just becomes white noise.

They’re not going to be, let’s say you ask me for a review.

It’s my first visit in with you or something like that.

And you’re like, or maybe it’s my third visit, whatever.

And you’re like, oh my gosh, Britt, it’s been so great working for you.

If you’ve loved your visits with us, I’d love it if you leave me an online review.

Okay, great.

Let’s say I don’t do it.

And then the next time you come in, you ask me again.

I’m like, oh my gosh, yeah, yeah, yeah, yeah, yeah.

I’ll do that thing.

And I don’t do it.

By the third time you asked me, now it’s almost starting to sound irritating.

And I’m either feeling bad that you’ve had to ask me three times and I haven’t done it.

And maybe you’re trying to shame me into it.

I don’t know.

But now it’s starting to feel weird.

And that’s the thing.

And by the way, you as a stylist are not trying to make it weird.

You’re just trying to get your freaking reviews.

But this is what happens when we don’t have a strategy around capturing reviews.

And so we’re just casting the wide net, hoping something amazing happens, is you create white noise.

And then sometimes you create like weirdness.

Like it starts to feel a little bit funky.

I always say that reviews live on the extremes.

So I want you to think of when you’ve ever left a review.

For me, I’ve left reviews when things were absolutely tragic and when things were beyond exceptional.

I don’t leave mediocre reviews.

And so just nailing your client’s hair cut is good.

It’s not exceptional, it wasn’t tragic, it was good.

Reviews are going to live on the extremes.

So our loyal guests are always going to be the most likely to leave reviews and feel the most open to reviewing when you ask.

Old advice that doesn’t work anymore, tip number one is that review contests are a good idea.

Review contests are not a good idea.

So this is something that I coached to in years past.

But in the updated Thriving Stylist Method 2025 version, which is the biggest update we’ve ever had, and it’s an expansion, the marketing funnel changed, the retention funnel changed, everything changed.

In that version, there is no review contest.

That’s not a part of the strategy at all.

For a couple of reasons.

One, the efficiency stopped working.

Two, the algorithms of the review platforms have gotten better over the years.

And now, when you get a random onslaught of online reviews when you hadn’t been getting very many for months, the algorithms know that you’re running a promotion.

And there are strict rules in place on Google and on Yelp that say you cannot be asking for reviews.

Technically, you can’t ask at all.

But what they’re trying to prevent is actually like these kind of spammy, scammy ways of getting reviews.

And so when you do contests, that’s when you’re going to be filtered.

And they’re simply not as effective as they once were.

So that wouldn’t be something I would coach to.

If you’re thinking about that, I would go ahead and skip it.

Number four, another myth.

All reviews are good reviews.

All reviews are not good reviews.

Even bad reviews can be good reviews.

Do you know that?

Actually, let’s have a little sidebar.

So a bad review doesn’t have to reflect badly on you.

There was this review once that a client had left when we were in the salon.

The client was calling me all these like really, like really vulgar names.

I was shocked that this review stayed up.

And I made up this entire story about how I had treated them.

And by the way, I had fired that client.

They were no longer welcome back in the salon, and that’s why they were so upset.

But I had done it really professionally, and they went on ahead to slander me on this review platform.

And I responded and just very calmly explained my perception of what had happened.

I wasn’t defensive.

I didn’t say, I didn’t do this, and I didn’t do that, and I didn’t even try to defend my own character.

But what was funny is when you went back and looked at that review, the angry one-star review that the client had written had like two thumbs up or something like that.

My response was something that clients commented on over and over and over and over and over and over again.

And said, we saw that, and people would say it was like hilarious because it was an uncomfortable review to read, and so everybody’s reading it.

And they were like, it’s so funny because our experience working with you is so different than what that client said, and they loved the way you handled it.

And that’s why not all bad reviews are bad reviews.

Bad reviews are an opportunity for you to show the world how you navigate challenges.

Relationships are imperfect, and clients know that sometimes they’re not going to be happy with their hair, and they want to know how you’re going to show up when things go sideways.

Like everybody can show up at their best when things are wonderful.

How do you show up when things are not so great?

And online reviews can give you a chance to demonstrate that.

Okay, so beyond that, the reason why I say not all reviews are good reviews is we want all of the reviews left for you to be living on the interest level of your marketing funnel.

So if you are in Thrivers or you know what I’m talking about, when I say marketing funnel, we have the awareness level and below awareness is the interest level.

Now, in the new marketing funnel, there’s other things going on.

I won’t reveal it here on this podcast, but awareness and interest are two totally different things.

Another level that’s a different thing is desire and opportunity.

The desire level is your website.

Having reviews on your website is fine.

It is not nearly as effective as having reviews on the interest level.

And the interest level is going to be Google and it’s going to be Yelp.

And for those of you who have been collecting online reviews through your online booking platform, that is way too low in the marketing funnel.

By the time somebody gets to your online booking platform, they’ve already decided to work with you or they already are working with you.

And so having more online reviews is like, I guess, like a little bit of psychological safety, but those reviews are not working for you nearly as hard as they would be if they were living on the interest level.

So having reviews show up on Google or Yelp or hey, incorporating reviews into your Instagram or into your Facebook is the winning strategy.

That’s where we want them to be showing up.

Now, what about TikTok?

TikTok is a tricky little social media platform.

It’s actually an awareness level platform.

It’s the only social media platform that I would call more awareness.

And I’ve adapted to that over the years because what I found from even Stylists and Saloners is they would say, oh, clients or people, people would find me on TikTok because they’d have a TikTok that went viral or whatever.

And then they would start following me on Instagram or that engage with my website.

It was how people find you.

But TikTok is a really tricky app.

If you use TikTok, if you’re listening to this and use TikTok, you know, those of us who use it follow certain accounts.

It’s so funny.

I rarely see the content hit my feed of the accounts I follow, like every once in a while.

But mostly when I go on TikTok, it’s random new content.

And that’s the tricky thing about TikTok, is it’s not the same as like an Instagram, where when you show up, it’s a lot of content of people you follow.

TikTok is not quite the same, and that’s why it lands on awareness instead of interest, just a little TikTok sidebar.

But we want our reviews to primarily be on the interest level when clients are leaving them whenever possible.

Here’s another myth.

Yelp is the worst because it filters reviews.

Absolutely, Yelp filters reviews.

I will not deny that.

Of course, it does.

Yelp uses the same algorithm criteria as Instagram or Facebook, and this has always been my challenge when people complain about Yelp, is that people will spend hours and hundreds or thousands of dollars learning how to use Instagram, and they’re so determined they have to master it, and they show up every day, and they scroll on it for two hours, and they’re so dedicated to Instagram, whether it works for them or not.

They feel allegiant to it, and they’ve got to use it as a stylist, and they’ve got to make it work, but Yelp is the worst because it filters reviews.

How many of your followers see your posts?

I can tell you how many.

At best, 5%.

At best, best, best.

The average Instagram account has a reach of between 1 and 3%.

The best are around 5%.

So on the best day, 95% of your followers do not see your post.

If you post something that’s a huge smash, yeah, more will see it for sure.

So we’re okay with the censorship from like an Instagram or a Facebook, but when Yelp censors us, we’re not okay.

And that’s the thing I want everybody to understand.

How often do you show up and nurture your Google business?

How often are you logging into Yelp to see what’s going on, to respond to reviews, to upload some fresh photos, to update your hours, to change, to see what’s even new, what features have changed, what has gone out, what has gone in?

Is my stuff up to date?

If you’re not showing up on the platform, why would it do you any favors?

It won’t.

That doesn’t even make sense.

It’s like if you hadn’t opened Instagram in six months and then you’re really frustrated that your reach is low.

Of course it’s low.

You haven’t been there.

Social media is meant to be social, and it’s the same with these online review sites.

You have to be showing up consistently in order for the platform to work for you.

Reviews that are filtered, generally speaking, fall into a few categories.

One, when you first open your Google or your Yelp account, the first several reviews will be filtered.

Period.

They just will.

Because your account is so new, they basically know that you are asking for your first handful of reviews.

So know that the first couple are going to get filtered.

Let it go.

It’s normal for everybody.

It’s not a big deal.

Your reviews will also be filtered if a large amount come in out of nowhere.

So again, if you do like a review contest or something like that, filtering will happen.

Reviews will also be filtered if it’s a brand new reviewer.

So if it’s somebody with no review history, they have a high probability of being filtered, just like if it’s a brand new Instagram account, their post is going to have very low reach.

It’s the exact same algorithm.

Everything is the same.

So what you want is consistent reviews.

You want to be consistently showing up on the platform yourself, and you want those who are reviewing you to have left a few reviews.

So if you are talking to a client and they’re saying they’re going to send you a review, say, hey, listen, do me a favor.

If you could review a few other businesses first, and then review mine, that would mean a lot to me.

That’s something you can try to do too.

That might be a big, huge ask, but you just should know that a user’s behavior on the platform dictates in a large way whether their review will be filtered or not.

So let’s go into our next myth.

You have to pay to have reviews stay public.

No.

And I learned that firsthand because I paid for Yelp.

This was years ago when I was in the salon, I paid for Yelp and I asked for some of the filtered reviews to be published.

And they said, no, that they said, it’s an algorithm.

It’s not a human thing.

They were like, we can look into it, but highly unlikely.

It’s not how the system works.

We don’t want to be pay for play.

And none of the filtered reviews came back when I paid.

And even as a paying user, we did use Yelp ads and they worked really well for us.

I don’t think everybody should be using them.

So don’t get caught up in what I’m about to say.

But even when we started paying for Yelp, we still had reviews that were filtered from new reviewers.

So in my personal experience, just because you pay, it doesn’t mean things all of a sudden change over.

When you pay for advertising on Google or on Yelp, all it does is drive more eyeballs to what you’ve already built.

So if you have an online review account with 15 reviews, and the last review was from three months ago, and you’re not really showing up there, why would you ever put money into that?

Never, never, never, ever.

And for those of you who are like, well, they keep calling me and calling me and calling me, and it’s irritating.

There is a strategy in Thrivers of how to get those calls to stop, and it works.

So I think that this is one of those things where we blame the platform instead of learning to understand the strategy.

And like I said, you can look this up, like Yelp stock is on the rise.

Yelp usership is on the rise.

We know Google rules everything.

So we can fight and we can resist these platforms, but you should know that clients are turning to them.

And some of you will say things like, well, Yelp is not big in my area.

Maybe not yet.

But did you know that a client can set up a Yelp profile for you, even if you don’t have one for yourself?

So take the reins on that and at least get something set up, something started.

And kind of like all the people who told me in 2019, well, nobody’s really using online reviews in my area.

Those stylists and salons are getting the last laugh because now they have hundreds of online reviews and it’s helping them in SEO and it’s helping them to get found naturally and it’s just bolstering the confidence that clients have when looking to book appointments with them.

So I hope this has overcome some of the maybe confusion around online reviews.

If you have any questions or concerns, as always, let’s keep the conversation going.

Leave me a rating or review on iTunes with any questions that you have.

So much love.

Happy business building and I’ll see you on the next one.