In the first of a four-part series of elevated conversations with SALON TODAY, Zenoti CEO Sudheer Koneru shares some illuminating growth insights from the company’s 2024 Beauty and Wellness Benchmark Report, previews the company’s Innergize event and envisions how salons will tap into AI to better manage their businesses.

When you have more than 30,000 beauty, wellness and fitness business customers, you have access to illuminating data, trending best practices and industry insights. As part of a four-part series of elevated conversations called Innergize Leadership Huddle, Zenoti’s CEO Sudheer Koneru will be sharing that wisdom with Stacey Soble and the SALON TODAY audience over the coming months.

As a leading salon management software, it’s Zenoti’s mission to help their customers run, grow and prosper—even when their efforts go beyond the software itself. When the company sees an opportunity to drive positive impact, they invest in it.

In this first huddle, Koneru shares some of those industry insights from its 2024 Beauty and Wellness Benchmark Report: Salon Edition, what the company is doing to tap into the knowlege within the industry and share it and, and how today’s salons are starting to leverage technology and AI to improve their business operations:

SALON TODAY:Since this is the first conversation in our series, please give us some background on Zenoti and how you came to love this industry so much.

Koneru: I actually spent 16 years of my career doing general, horizontal technology between Microsoft and large, enterprise software that focused on big companies, but along the way I got very passionate about wellness. Although it was unusual for a person of my nature, I ended up opening a chain of gyms that included spas, salons and yoga all in one store and we had six of these locations. I was really passionate about it, because I wanted to help others make wellness a part of their lives.

As I was scaling my business, I also spent time sitting behind the front desk, working with trainers as they trained our clients, and helping out the salon and spa staff—and I saw a lot of opportunity for technology to play a role in helping run these businesses. I decided if I love this industry so much, maybe I should go build software for it, and I focused on building an enterprise-oriented software that helped businesses grow.

SALON TODAY:With 30,000 customers today, Zenoti must gain some really interesting industry insight—what are some things you could share with us?

Koneru: The best way to get insight is the qualitative aspect of working with so many successful brands, but more importantly it’s the aggregated data across all those businesses and we share it back with the industry as a benchmark report—which is generally available to everyone.

Some examples of findings we shared in last year’s report include:

• Last year, nail salons experienced the industry’s highest revenue growth. The nail category saw 12% revenue growth in 2023—more   than twice the overall 5% growth of the beauty and wellness industry.

• Salons that earn the most revenue—the top 10% in the industry—have online booking rates more than double the average salon businesses. Top-earning salons and barbershops rebook guests withing 24 hours about three times more often than the average business.

• Membership revenue is growing rapidly for nail salons and the industry overall. In 2023, 21% of all nail center revenue came from memberships, up from 17% the previous year. Conversely, membership revenue at salons and barbershops was down in 2023—amid overall industry membership growth of 8%.

• Salon gift card sales are moving online. Although salon gift cards sales were down 3% in 2023, a greater loss was averted thanks to an online shift. Online gift cards grew 7% for salons—a reflection of customers responding to offerings they can purchase online and via their mobile device.

• Cutting down the queue: Every online check-in represents one guest that doesn’t have to stand in line at reception. According to data, for every 100 guests, the best-performing salon sees 38 fewer people line up at the front desk than the average salon.

• Reserve with Google Sidebar: 25% of salon Google bookings are new customers.”

SALON TODAY:You do a business conference called Innergize, and at last year’s conference, data and AI were a big focus. Tell us a little about Innergize and what you have planned for this year.

Koneru: To give back to the industry, we put this event together where leaders of big brands come together under one umbrella. Anyone can attend, not just Zenoti customers. Together we dig deeper into insights and data. For example, last year we tried to analyze the correlation between employee retention and revenue growth.

The event brings different leaders together to talk about key data points, for example what’s happening with cancellations and no shows. And, they will share how they each handle certain challenges. For example, can you really ask for a card on file and take a deposit? Do you lose business when you do that?

Innergize becomes super relevant because it’s a conference by industry leaders for the industry. Last time, people walked away loving it in the sense that it was focused around actionable items that they could take back to their own businesses.

SALON TODAY:When you convene that many leaders together at one time, it definitely creates a brain trust. What do you believe owners took away from Innergize last year?

Koneru: “Not only did they take away data points, but they also took away a lot of best practices around what each brand is doing in the industry. Last year, there was a lot of education around AI, because it is so new to the industry. We had leaders from Amazon come and talk about AI, and the impact they think it could have in our industry. And, we shared some futuristic vision of where the industry will be and how these leaders see things evolving.

But Innergize is also about celebrating the providers, and we used data to highlight the best providers in the industry based on data—the best stylist, barber and esthetician.

SALON TODAY: AI is certainly something the industry is buzzing about, and I think a lot of leaders are intrigued but also intimidated by it. How are you seeing salons tap into AI?

Koneru: “We have a core philosophy around how people should approach it that we call AI First. What we mean by that is look at how you take any task in the salon and give AI the first crack at it and if you’re not happy with the results, then people still remain in control. For example, if you’re creating a marketing mailer about Mother’s Day, tell the AI to create a Mother’s Day campaign and that you want to do XY and Z. If you don’t like it, change it.

As we go forward, salons will be using AI agents to answer incoming phone calls, but at the same time the AI can transcribe the phone call. The front desk will be able to monitor that and if at any point they don’t like the way the AI handled the call, they can call the customer back to make sure they get what they wanted. But maybe AI will be able to handle 80% of the calls.

Or, say you’re trying to create an employee schedule for the next two weeks—give AI the first crack at it, but then tweak the schedule until you’re happy with it.

Our industry is all about touch, and that’s not changing. But you’ll be able to take the best of AI to ensure you’re bringing the best out of your people—that’s how we think about it. In fact, today, we just released a whole series of AI capabilities and announced it on our website—all along the lines of this AI First philosophy.

I think AI will improve productivity, and help the industry become more profitable. By the time we go to Innergize this year, we’ll have enough salons and spas having tried applying AI that they will be talking about how they are using it to improve margines and drive customer delight. That will be a big focus.”

SALON TODAY: Remind us, where will you be holding Innergize this year?

Koneru: It’s October 14^th and 15^th at the MGM Grand Hotel in Las Vegas. 

To learn more about this year’s event, go to www.Innergize.me.

For more information on Zenoti, visit www.zenoti.com.