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If you own or operate a salon business and experienced sluggish or flat growth last year, take heart. The North America salon category saw just 4% revenue growth in 2023. So where do you go from here? Which tactics and approaches should you apply to boost profits?
To understand what today’s most successful salons have in common, read the 2024 Beauty and Wellness Benchmark Report – Salon Edition from Zenoti. The report compiles key trends and performance data for salons across the United States and Canada.
This edition covers three business categories: salons (full-service; brow and lash; other specialty salons), nail salons, and barbershops. Based on annual revenue per location, the report presents three benchmark levels of performance: top earners (the top 10% in revenue collection), high achievers (the top 25%), and the average-earning business.
Here we present four key trends from the report.
The rise in recurring revenue models reflects a change in customer spending habits, with growing numbers choosing subscriptions to their favorite salons. In fact, memberships accounted for 21% of all nail salon revenue in 2023, second only to services (73%). It's also worth noting that of all salon categories, nail studios saw the highest revenue growth (12%), more than double the growth of the beauty and wellness industry overall (5%).
The chart below breaks down customer spending at nail salons.
Whether it's the manicure-addicted or the bi-weekly facial fans, salon customers favor consistent, high-quality beauty services, and are willing to pledge their loyalty with memberships.
If you decide to offer memberships at your salon, choose a digital program that’s equally easy for your staff and customers to use.
Today’s consumers prefer to have self-service digital access, and businesses that offer such access report higher revenue. Digital touchpoints include online booking and check-in, text messaging, and a mobile app. Moreover, online gift card sales grew by 7% in 2023, further highlighting customer preference for digital options.
Digital touchpoints aren’t just convenience boosters, they’re powerful tools for salon businesses to improve customer engagement, accessibility, and ultimately, their profit margins.
Salon businesses that provide online booking options tend to earn more revenue. How much more? At top-earning barbershops, for instance, 3 out of 4 appointments are booked online by the customer. Similarly, top-earning salons have nearly 7 in 10 appointments come via online booking, compared to 3 in 10 for the average salon.
Here's a snapshot of 2023 online booking rates at salons, nail salons, and barbershops.
Why do customers gravitate to businesses that offer online booking? Because they value the ease and flexibility of scheduling their own appointments. If they can buy game tickets, order takeout, and book a cab with just taps on their smartphone, they expect the same convenience from salons they visit.
Another key finding for salons: The online booking integration "Reserve with Google" helps with client acquisition – 18% of booked appointments through this tool come from new customers.
These findings show that online booking is no longer a luxury but a necessity in the salon industry.
Salon businesses don’t always use gift cards to their full potential. Here’s why they should: In 2023, one in four beauty and wellness gift cards were redeemed by new customers, up from one in five the year before. This suggests the increasing use of gift cards by guests to introduce friends and family to their favorite salons.
The takeaway for salon owners? Think of gift card sales as a key revenue opportunity because they give you a chance to gain new customers at minimal cost.
In addition to boosting guest acquisition, online gift cards became the fastest-growing new revenue source in 2023, up 16% from the year before, and the shift to digital mirrors guest preference for online services and solutions.
As a salon owner in the digital age, keeping up with industry trends and adapting to customer preferences is crucial to thriving as a business.
So what’s trending? Notably, membership revenue models and digital amenities like online booking and gift cards. Such models and amenities can enhance customer engagement and improve your profit potential.
Want more insights and metrics for key performance indicators like upsell revenue, rebooking rate, and staff utilization? Read the salon-specific edition of the 2024 Beauty and Wellness Benchmark Report from Zenoti. It’s the industry’s only definitive resource for salon owners to compare their performance against businesses like theirs and leverage the latest trends for business success.
As the leader in beauty and wellness software - 13 years and nearly 30,000 businesses - Zenoti is uniquely qualified to develop the annual benchmark report and share it with the industry.
Get the 2024 Beauty and Wellness Benchmark Report – Salon Edition.
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