Why You Shouldn’t Call It A ‘Cancellation Policy’ And How To Reduce No-Shows

Here’s why changing your approach may increase your bookings and decrease no-shows.

For spa, salon & clinic owners, having a client cancel is a frustrating experience for everyone. It’s 12pm on a Saturday, your busiest in-demand time, and your returning client calls an hour before to cancel due to her child being unwell, or that they were called into their shift-work job. Your appointment book was booked out and now it is too soon to refill that spot, your staff member now is left with no client to treat, and your clinic manager (or yourself) has to enforce your cancellation policy with firmness, leaving the client frustrated.

Yes, you need to cover your overheads and money loss… yes, clients can sometimes mistakingly double-book themselves and have to make a lie to justify cancelling; but what about the clients who are regularly committed, and need to genuinely cancel? Should they be punished? Do you take their fee, or do you let it slide?

To answer this frequently troubling topic, we spoke with Gry Tomte, Founder of Hüd Skin and Body & her newly founded successful venture, Profit + Purpose. Here is what we discussed.

What is the biggest mistake businesses are making when it comes to client cancellations?

Gry: I believe there’s actually a number of some of mistakes businesses are making when it comes to cancellations. All are equally important, such as:

1. Not having a clear, kind, fully enforced booking policy in place for every appointment booked. 
2. Not training the teams to communicate the policy properly and with a client centric approach. 
3. Not effectively managing their wait lists to optimise any last minute cancellations. 
4. Being reactive instead of proactive when the books were full and things open up – how great would it be if you could use the manpower during those times to free up some of the tasks on that big to do list you are always stressed about??

Instead:

1. Create a clear policy in your tone of voice that speaks to the clients the way you’d speak to someone you really value (because you DO value your clients right??). Post it everywhere. On your website. Google. Socials. In your online booking system. Confirmation texts…. Clarity of expectation is key. If they know, the bonus is on them.
2. Teach your team client care! If they start to stutter or feel flustered during a call to cancel I can guarantee you the client will get their shark like teeth out. And that can escalate quite quickly.
3. Have an ongoing waitlist, let your clients know how they will be notified if openings come up – and follow up every time you get an opening!
4. Don’t be reactive! No doubt, open gaps in the books are an owner’s worst nightmare… But if you’re reactive and put the pressure on the team so they feel responsible for cancellations, I can guarantee you won’t get the best out of them. Instead, refocus, think of ways to inspire them to upgrade, add on, call lapsed clients, revisit client results and strategise ahead. And for the revenue issue – take a big breath and dont measure day to day. Measure weekly, monthly and quarterly. Constantly revisit your strategy to minimise cancellations by creating “FOMO’. If your clients feel like they’re really missing out – they won’t cancel so quickly…

Why should businesses (whether beauty salon, clinic or similar) not name it a cancellation policy? 

A cancellation policy is often perceived as a “punishment”, whereas a booking policy conveys the message that it’s a commitment to secure a time that is valuable.

Enforcing a cancellation fee after a cancellation or no show is difficult, awkward and can open up some really icky conversations for your team. And many would just rather not book back in again to avoid paying a fee.

Not to mention some of the recent posts I’ve seen lately floating around on the Facebook boards indicate that a number of people struggle with enforcing a cancellation policy because the client intentionally enters the wrong credit card details or simply just cancels the card once the business tries to charge it. 

Of course, a booking policy on the other hand is a lot easier to manage. The fee is taken upon booking to secure the spot. 

If they cancel without sufficient notice you don’t need to have the conversation – just  remove the booking fee and start the process of booking another appointment with a new fee. No biggie…. Just like an airline or a hotel, we couldn’t sell your spot to someone else, so you’ll have to pay for it.

What should businesses consider when asking for deposits? How much is appropriate, or should they take one at all?

3 things we know for sure in the beauty and aesthetic industry;

1. People WILL cancel
2. Owners WILL see $$ walking out the door when they do
3. Both clients and owners need to commit to honour each other’s time and money

If you’re a service based business and you’re not taking a booking deposit I would highly recommend you move with the times and get one introduced real quick smart! 

The first thing to consider is how it’s communicated. We all know things happen (this thing called life is unpredictable you know!). So the mindset I would encourage you to adopt is one of mutual respect for both your time and the clients’ time.

Remember, it’s not just you as a business who loses out when you get last minute cancellations – it’s also other clients who would like to get in!  And remember, if your clients love their treatments, they also miss out…

The second thing to consider is “how much?”

When it comes to the amount charged, how long is a piece of string?? Some businesses charge 50%, some $50, some $100….. and anything in between. Also, you need to decide what suits your business model. 

A few things to remember when it comes to deciding are;

• What type of average sale do you have per hour? If you’re a cosmetic nurse and your average hourly service revenue is $1000, then it would make sense to have a higher fee. Whereas if you’re a skin clinic or beauty salon, a $500 fee would seem very excessive

• The deposit shouldn’t be about making up the exact money you “lose” from that particular appointment. To illustrate why: imagine you have one client booked for Laser Genesis at $400 for 45 minutes. Another client is booked in for an hour more basic facial at $180. Both clients cancel, and since you charge 50% your 45mins  spot is valued at $533 per hour – and your facial is valued at $180 per hour.  If you charge a 50% booking fee, how will you rationalise this to your clients? Will it mean that clients on the future will be apprehensive booking in more expensive treatments in advance? Will it disadvantage your high spenders over your low spenders? 

• Whatever you ask your clients to pay if they cancel, you really need to do the same if you cancel on them. If you ask your clients to fork out $200 if they’re sick on the day – be prepared to refund $200 if your therapist is sick and you have to cancel or reschedule the client. Otherwise, how will you make the argument for a fair value exchange of time? 

All in all, a booking fee should be there to encourage clients to be committed to their time, their results and their therapist. It should never be a punishment. If it is, I’d say there’s a strong likelihood you’re always on the hunt for new clients…

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