The Making of Zenoti, A Successful, Vertical SaaS Solution

In this article, Sudheer Koneru, our CEO, talks about focusing on the needs of a narrow marketplace to build a meaningful SaaS solution for any industry.

The Making of Zenoti, A Successful, Vertical SaaS Solution

When I started Zenoti, little did I know that a few years later people would be asking me for advice on how to build a successful, vertical SaaS solution. There’s a lot that goes into building any company, and that’s certainly true for Zenoti.

We recently held our third user conference, the Power of One, in Las Vegas. As I met with many of our clients, from some of the biggest spa and salon names, I was led to take stock of how we got here over the last 5 years.

Having worked on enterprise software teams at Microsoft and Sumtotal for over 15 years, it wasn’t a logical leap for me to venture into the beauty and wellness industry. I knew little, perhaps nothing, about spas, salons or fitness centers, with my experience being limited to my monthly subscription to a gym. That quickly changed.

After my role at SumTotal, I happened to invest in a luxury brand that was a chain of spas, salons and fitness centers. In a couple of years, due to unexpected circumstances, I had to take on the role of managing the business. At the time, I signed on assuming this would be fun as I would get to hang out at the gym and treat myself to massages at the spa.  As you’ve already guessed, I underestimated how much I had to learn about the business and how many hours it would take to fill my new role. To fill my responsibility, I stepped into the role of a receptionist, shadowed personal trainers, sat through trainings on beauty treatments and trade skills, and performed administrative functions.

While every job has its challenges, I can honestly say that I’m suited more to working in a peaceful office rather than as a front desk receptionist who has to tend the phone, manage customers at the desk, and be accountable for upselling and driving more sales!

While we were consistently meeting goals and business was booming, my top challenge was to manage six outlets while sitting at one location. I researched solutions to help address this, but there simply was no management software for gyms, spas, and salons available in the marketplace. It left me baffled as to how successful large chains managed their business. And this is exactly what led me to selling my profitable wellness business and focus on developing a software solution for the large, beauty and wellness business.

The 1.5 years I spent running a spa, salon and fitness business has been so critical to our success story at Zenoti. Folding industry knowledge with the depth expertise in building enterprise software is why we were able to launch such a strong and customer focused solution, starting from Zenoti’s first release.

With that first version of Zenoti, we met the needs of a typical spa or salon with multiple outlets. We saw great adoption in southeast Asia and the Middle East with several leading spa brands. One could assume that we could easily scale this solution for every region. However, this was not the case.

Businesses, quite simply, operate differently in every country. And further, within the beauty and wellness industry there are a variety of business models. A walk-in barbershop operates quite differently from an appointment based luxury salon, which again has different operational processes than a luxury day spa, which measures their success quite differently from a resort spa that operates inside hotels. We’ve identified many such sub-categories.

After our first 2 years of success, we had to go back to learn the nuances of each business model. This time, key managers went out to experience each of our target customers as customers; we went for massages, waxing services, and hair services. We interviewed employees who worked at large brands to learn more about them and we talked to vendors that served the industry. We were so committed that one of our team members, who is bald still found ways to visit salons and other businesses that we wanted to learn more about. The passion ran deep in our employees to really internalize the challenges that the CEOs of these businesses were living with. This in-depth understanding of these businesses enabled us to fully understand and tune our platform to accommodate the specific requirements of each niche vertical.

The Zenoti team went to work making enhancements to the platform. Our outreach to the CEOs of target accounts resulted in high response rates because our message focused precisely on their challenges and our solutions. It certainly impressed them that we knew so much about their business and that we took the time to visit their outlets even before engaging with them.

This may seem not scalable, but to learn about a niche vertical and to appreciate their business model and challenges, it takes this level of research. After our success at onboarding and supporting a couple of brands within a niche vertical, we become credible for others and we also can build more scalable sales model for Zenoti.

Zenoti has a long way to go to being the success we intend. Today, we’re focused on scaling our business across the many niche verticals in the beauty and wellness industry. As we do this, in an attempt to emphasize the importance of a customer centric culture, we encourage new hires to experience the industry. New hires are given an allowance to spend at our customer accounts and many are also given a chance to work alongside the front desk staff at our clients’ location. Our employee benefits include a monthly wellness perk that enables everyone to visit customer accounts to receive services; this helps our employees stay in touch with the guest experience we enable through our solution.

To close, I believe building a successful, vertical SaaS solution requires that staff immerse themselves in their customers’ businesses. Working for 3 to 6 months at a prospective customer business would help staff to understand the role, daily challenges and needs of your prospective customers. Learning everything by being an outsider isn’t practical. Once armed with this experience, a good software designer can deliver solutions which are exciting, relevant and usable for the industry.