Elliott, president of Toni&Guy USA, worked her way up from the bottom, starting as a hair dresser in the first U.S. Toni&Guy salon in Dallas in 1985. By April 2005, she was at the helm of the company, overseeing its 56 salons and 1,560 employees.
That intimate knowledge of the company, though, was somewhat of a handicap. After working for the same company for 20 years, she decided it was time to hire outside consultants to do something she couldn’t: Evaluate the company objectively. “The 20-year mark ... made us look at things,” Elliott says. “You don’t want to do things the way you’ve always done it. We realized that it was time to reinvent, even if it’s just a slightly new direction. The salon business was successful, but we wanted to look at how the salon business operates.”
Elliott wanted the company to maintain its same cutting-edge image with both customers and hairstylists, so it was important not to grow too fast. Toni&Guy had already spun off its product division, the successful TIGI family of hair care products, and it had successful academies training the next generation of stylists.
There wasn’t anything really obvious about the salons’ operations that needed changing, because most were successful. But Elliott believed they could be more profitable, and that with some outside help to identify weaknesses, she could chart a path for the company’s future growth.
A fresh perspective
One of the most surprising recommendations the consultants offered was to consider the retail aspects of Toni&Guy salons, which the company hadn’t really considered. But once Elliott mulled it over, she thought it made perfect sense. “One of our strengths is that we carry the TIGI products Catwalk and Bedhead which is a globally recognized brand,” Elliott says. “But the salons looked more like a salon and not like a retail environment. ... The consultants helped us to look at our business differently, because they are fresh coming in and experts in their field but are outside of the salon area.”
The consultants recommended the front of the salon be reworked to appeal more to retail customers, so the company changed out fixtures and positioned merchandise in different ways. Elliott says an important part of the process was considering how customers purchase merchandise. “It had been merchandised more in a regimented way, categorized by type of product and by brand,” Elliott says. “What we did was merchandise them in a promotional aspect.”
That meant grouping items together how customers might purchase them, with shampoo, a coordinating conditioner, styling product and hairspray all together. “We want to help our clients recreate their look at home,” Elliott says. “When they leave the salon, they leave with the tools they need to recreate the look. We operate in regional, enclosed malls, which are a retail business to start with.”
Elliott says the changes have brought more customers into the salon just to shop, and some stay for hairstyling, making the salons more profitable.
This also dovetailed with a longstanding Toni & Guy philosophy: Keep the salons looking fresh. Because malls require stores to renew their looks when they re-sign a lease, it provides a good opportunity for Toni&Guy to examine the look of each salon as its lease comes up and redecorate, or even reconfigure it.
The company doesn’t rely on a set plan to accomplish this. Instead, it evaluates each salon as its lease expires and decides what look to choose. Elliott says being flexible with the design of the salons allows them to stay as updated and current as possible, which makes a big difference in how customers perceive them. Periodically reviewing the look of a business is something she would recommend to any business that needs a fresh, updated image and has multiple locations. “Just like hairstyles change, salon design images need to change to keep it fresh,” Elliott says.
Sometimes the change can be extreme, such as relocating a salon to better match its customer demographic.
Elliott says the company starts with the finances of the salon, then examines demographics of the mall and the area around it, almost as if it were looking at a new store. “We’ve had to close a few salons due to the mall completely changing and the tenant mix changing inside the mall,” Elliott says. “Our pricing is more moderate to high, so if the mall goes downhill and the tenant mix changes, our customers won’t shop at that mall. It keeps away the high traffic, which is the whole reason that we’ve chosen to do business inside a mall.”
For new locations, the company does the same research, looking at demographics of particular areas in large cities. Elliott says Toni & Guy opens about four salons a year; more than that might dilute the quality of the salons and its stylists, a lesson learned from experience.
From 1997 to 2002, the company opened eight to 10 salons a year, a tough pace for corporate headquarters to keep up with, both from a management perspective and a financial one. The company was reinvesting all of its profits back into opening more salons, and Elliott says it needed to pull back and stockpile cash for a few years so that existing salons could be refurbished and other projects could be accomplished. “We want to make sure we aren’t growing too fast,” Elliott says. “We have a term that we use called ‘controlled growth.’ Because our business is so service-oriented and people-intensive, we didn’t want to expand so fast that we lost the culture and vision and philosophy of what we were doing. “It is very important you maintain your quality. We realized we had planted so many trees so fast, we want to take some time to tweak and make sure they were strong and representing us as they should in all of those different cities.”
Training pays off
It’s not just the salons themselves that lure people and keep them coming back it’s the stylists, and the continual training they receive. Toni&Guy’s philosophy has been that education can become dated unless it is constantly refreshed, which is true in any industry but especially true in the hair industry, in which styles are constantly changing.
It starts with hiring people who are open to training and education. To make sure the stylists are a good fit, the company looks for people who are willing to go through training.
Elliott personally hires all of the stylists for the 14 salons in the Dallas-Fort Worth area. In addition to cosmetology education, she looks for a positive attitude, good communication skills and a willingness to learn. Elliott interviews them one-on-one, and the first interview is to check for the right attitude, which she looks for when she explains what the company has to offer. “It’s all about their facial expressions,” Elliott says. “Do they smile during the interview? Do they respond positively to the training opportunities? I lay out everything in detail and explain it to them on paper what they will be required to do.”
The second interview involves cutting and styling or chemically treating a model’s hair. Elliott wants the prospective employee to work with the model inside the actual salon where they might work to make sure they will like the environment.
If hired, the person spends about three months as an intern, then begins to build a book of clients. Training continues after they begin working, with what Toni&Guy calls “model nights,” when models are brought in and new techniques demonstrated.
Elliott says the training pays off.
“Because our staff is so well-trained, a walk-in turns into a repeat client right away,” Elliott says. “We turn a new client into a repeat client because of the quality of the work.”
Another effort Elliott put in place to fuel salon growth is a nationwide branding campaign. Elliott says the company has a strong brand in cities that have Toni&Guy salons, but she wants to grow the company’s name recognition and association with cutting-edge style across the country.
So the company is spending some major energy and money on a national marketing campaign that includes advertising in W and Harper’s Bazaar magazines. The company’s leaders chose those magazines because the demographics of the readers are similar to those of the customer that Toni & Guy typically attracts. “If we start going into Chicago or Seattle or other cities like that, the branding will have already occurred,” Elliott says. “Our clients are more that level of client. Our prices are medium to high. We are not a budget chain.”
For the campaign, the company created the ads in-house, in part because having creative talent in-house is less expensive than hiring an outside firm, and in part because Toni&Guy knows the look it wants for its advertising and simply doesn’t need outside assistance. “We feel like we know our business, and we know our target audience, so we know what images we want to put out there,” Elliott says. “So we didn’t go out there and hire that. We have a creative side.”
The company is on its fifth redesign of its Web site and is planning yet another one. Elliott says it’s another example of how the company constantly reinvents itself.
Toni&Guy also builds its brand by working with companies looking to provide perks to their employees.
It hosts small seminars on hair, makeup and fashions for corporate groups, which helps the company introduce itself in a new market. The seminars offer free, instant makeovers to participants to help build the company’s brand awareness.
“It breaks down all the barriers of them being leery of trying a new place,” Elliott says. “That’s where we’ve found we get the biggest return on investment because it’s just time and people. There is no money involved, but it has a huge impact. ... Once they try it, they’re hooked.”
HOW TO REACH: Toni&Guy USA, (972) 931-1567 or www.toniguy.com