Startup Lessons from Launching an On-Demand Salon Business

Hairdoo was an on-demand beauty startup in the men and women beauty space with their flagship product, Hairdoo. My co-founder and I built a 2 sided marketplace for licensed hair artists and consumers.

The marketplace let artists join and be part of the platform. The consumers could then have the option of booking a hair artists to an address that is either an office, home or hotel.

The Artist would then be matched with the consumer based on the consumer’s hairstyle and preferences.

When the artist arrived they would bring all the equipment and materials, cut the hair, and clean up. When the job was done the client would be able to rate and review the hair artist and leave a tip in app.

Market Size:

The men’s hair care market as a whole is worth $89.9 Billion as 2017 according to Mordor Intelligence.

As of 2020 there are estimated 3,820 barber shops in the US earning a total of $3.8 Billion in revenue which amounts to 4% of the entire market.

To capture 1% of this market would amount to $38 Million in yearly revenue

We realized that to make this work required a large base of high quality hair artists. Due to the presence of Hollywood that supplied high quality hair artists and contractors, and greater travel distance compared to other metropolitan areas Los Angeles was the best place to launch this product.

Value Proposition:

We will deliver to you a salon quality haircut at your home, hotel or office for a flat rate of $45 including delivery.

This value prop was extremely ambitious and in retrospect limited us from growth.

A better approach would have been to remove the price and focus on the delivery of a high quality haircut.

We will deliver to you a salon quality haircut at your home, hotel, or office.

Competitors:

There are several competitors in the space such as Shortcut and Priv. We decided that to compete effectively we needed to go for the convenience and price angles.

The other competitors had more of a salon style environment, where we offered a flat rate model at the cost of artist selection.

We also decided that a smart move would be to target men only. This would narrow down the competition and let to build a small business in this space using a small initial funding round.

Approach:

To develop this product we first needed to define the system. The challenge was to build a system of trust where both parties, the customer, and the artist, felt like they were in control at all times.

We needed to make a system that felt like Hairdoo was the trusted middleman and would handle any issues or disputes for both parties, the artist and the customer.

To do this we had to understand the in-appointment experience. This would help us build the system to manage the stages in every appointment

An appointment could be broken up into 7 parts

We needed to place rules for the appointment to make this manageable in the beginning

  1. A user can only have 1 appointment active at a time — This helped us manage the number of appointments and prioritize the users current appointment. It also cut down on back and forth in customer service conversations.
  2. A user must wait until an appointment is over before booking another — This complimented our first rule for appointments
  3. Appointments are created as ‘requests’ until confirmed — This changed the thinking of appointments. This change was similar to the idea of taking a ticket and then being served on a later date. By doing this we built customer trust since customers were only charged when their appointment was confirmed.

We also needed to create an app control the business logic

  1. Appointment State 1 can be initiated by the customer — Customers should be able to start appointments
  2. Internal appointment flow can only be progressed by artist — Artists would need to accept this. This is crucial since assign appointments would erode artist trust
  3. Customer action is needed to end the appointment flow (state 7) — A customer should have to confirm that the appointment is over. This builds customer trust knowing that they have power to control the ending point of the appointment
  4. At any point of the cycle you could talk to a customer service rep to resolve any issues with the haircut, payment and scheduling. — This is important knowing to building customer trust, since they know at any point they can talk to a real live human being to fix any issues.

Customer trust is built by knowing that Hairdoo has their best interests and we will work to resolve any problems they may face.

Once we had these constraints in place we realized that we needed to create a couple pieces to build this system

  1. Artist app — This is distributed internally to the artists to control their profile on the Application
  2. Consumer iOS app — This is distributed externally and is the entry point for customers to use the service.

Artists need to trust that Hairdoo has their best interests in mind and will send appointments that are close to them and turn down appointments that logistically impossible

The Artist app controls had several requirements that defined the design and execution of the artist app.

To build an accurate product that fit the needs of the artists we needed to take these features into account.

  1. Artists need to be able to accept jobs — They should be the ones in control of accepting. This builds artist trust
  2. Artists need to be able to turn down jobs — Some jobs are unreasonable and having the job show up to the artist would be a failure in our system. In the rare case this does happen, the artist should be able to turn them down.
  3. Artists should be notified of appointment updates — This communication is extremely important in building trust
  4. Artists need information about the client as well as the client’s hair information — Without clear communication an artist could be really unprepared for a job. When this does happen it erodes artist trust and makes the artist hostile towards working on Hairdoo.

Artists need to trust that Hairdoo has their best interests in mind and will send appointments that are close to them and turn down appointments that logistically impossible

Design wise:

To approach this we found the optimal design route was to create a timeline. The timeline is meant to display the jobs in chronological order.

This would give inherit priority to jobs higher in the timeline. It would also give artists a way to peek ahead to see jobs later on during the day.

Once an artist is in the appointment state we found the optimal design route was to create a full screen takeover.

The full screen takeover would allow for instructions and controls. Text messaging let us have direct connection with the artist.

Customer Journey:

Users were acquired through paid channels and organic. We found that Facebook advertising over stories was an inexpensive way for users to discover Hairdoo.

Hairdoo works in the beauty and fitness sector and Instagram was a natural marketing channel. Because of the visual nature of our product, a combination of stunning content marketing and visually pleasing advertising helped us acquire users for an inexpensive price.

Our regular content schedule gained users regularly through the discover page of Instagram and from our Instagram subscribers.

We complimented this by adding targeted Facebook ads in our regions of operation, we were able to acquire users using a combination of paid and organic advertising.

To build initial customer trust on the customer facing side was a different set of challenges.

Typically in a salon you can see the artists working. However in a virtual salon this is difficult at our scale.

We managed to add videos and other onboarding tools. the problem was this only showed when the customer was signing up and wasn’t effective after that.

Our workaround for trust was to create an onboarding survey at the start of the customer journey.

This survey served the purpose of understanding the user’s hair preference and what styles they prefer. From this data we use it to offer a free consultation for their first haircut.

By doing this we built customer trust and offered them a way of having a conversation with the customer.

Administration and Logistics:

Appointments are monitored using an administrative dashboard.

In order to ease the overhead required for an operation like this we attempt to automate as many parts of the business as possible.

A few examples of our automations in action is dispatch and payouts.

Logistics was very hard in Los Angeles and there weren’t a lot of good solutions. The best way that we managed was to strategically move around supply to make sure that all of our areas had at least several artists.

In addition we offered discounts in areas that an artist is heading to temporarily boost sales and maximize the artist’s time for traveling.

Pricing:

In retrospect, we severely limited ourselves with our pricing model. We were offering a one time flat rate for all haircuts in the same category.

This was hard to sustain because we are basically calling all of our artists equal value even if there are different scales of experience.

This made it harder to attract better artists, which in turn made it harder to provide better haircuts, which in turn led to an unhappy customer experience.

If I were to change this going back a variable pricing model would be better where price is set either by the artist or through a bidding scheme where artists pay is decided by their demand.

$45/per haircut flat is too low for our artists.

Acquisition Funnel:

Once the app is loaded we needed to start converting these sessions to paying users. We discovered a big issue is exciting the customer through a digital medium. To solve this we had a few solutions.

We discovered the optimal solution which was giving a first order promotion before signup attached to a countdown timer.

This promotion would provide the user an incentive to signup while the timer would set an expiry date.

Once a customer is associated with emails and phone numbers we our next job is to educate the customer on our service.

We explored several options to do this.

We found the optimal way is to present our artists during the onboarding flow. Since this is a crucial step in our onboarding and we make this front and center in the home page.

To provide quality hair service, we also must learn more about the user. We thought about the different ways we might approach this.

A few ways we attempted to do this is by sending the user an email with a survey upon signup.

Another way, and a more optimal way, was to a dialog in onboarding process. Our users are given survey about their haircut preferences and hair style. They are also given an option to request a consultation from an artist on our team.

Once we receive the survey information the onboarding is complete and the user is given a 7 day promotional price of 50% off.

We realized that most customers don’t signup upon first learning about the service.

To remedy this, we used 7 day promo period was enough to give users breathing room while offering us time to give them more options to book with.

Rebooking Funnel:

To mirror a physical barber shop, customers are usually given an opportunity to rebook the same hair artist typically a month out.

We thought of ways to provide the same experience through a digital medium.

To do this efficiently we used a double prong strategy. After the appointments customers are given an option to rebook the same hair artist immediately.

This alone wasn’t enough since there was no guarantee that we would be able to book the same artist a month out.

To remedy this we offered a way in the artist app to let any customer book this artist in particular as well as artist codes to let them promote themselves off the app.

A typical haircut cycle is once a month, at the extreme its 2 weeks per trim. We used this insight to schedule rebooking campaigns 2 weeks to a month from their last cut.

Fin:

This was a great experience learning about the obstacles in building a business. If you enjoyed this article don’t forget to share, follow, and clap!

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