Vagaro on Digitizing Beauty and Wellness Payments and Marketing

When Vagaro founder and CEO Fred Helou started his company more than a decade ago, his inspiration was his own experience of trying to find a haircut while on a trip to Korea.

What began as an idea to make it easier for businesses such as salons and barbershops to schedule appointments has now grown into a suite of tools for beauty and wellness businesses of all types, enabling scheduling, payments, marketing and even a physical point of sale (POS).

“We realized [that] to create this marketplace, we needed to give [businesses] what they really need, which is a way to manage their employees [and] their schedules, [as well as] sell products, manage inventory, sell gift certificates, packages [and] memberships,” Helou told PYMNTS in a recent interview.

With tools that do anything from tracking employee hours to managing email marketing, Helou said Vagaro is particularly valuable for small business owners who must fulfill roles on their own that would be handled by entire departments in larger organizations.

Reducing the Complexity of Payments

Card-not-present payments are particularly common in the fitness business, Helou said. These include transactions such as membership renewals and charges, which can be automated with software. Even one-off purchases, such as those for classes or personal training sessions, can be handled in software with a few taps. Software can remove all the manual steps from those transactions, creating a smoother customer experience while also saving businesses time and money.

In contrast, though salon and spa businesses have seen an increase in prepayment since the pandemic, many transactions are still made face-to-face. For those transactions, contactless payment options have become increasingly important. These also present a marketing opportunity for retailers.

“Most times when you go and get a haircut or a spa treatment, there’s usually an upsell that takes place at the time of the checkout,” Helou said. “When you’re paying for your haircut, this is a great time [for the retailer] to say, ‘Hey, how about this shampoo?’ or, ‘How about this conditioner I just used on you today?’”

With contactless payment solutions that enable customers to pay from their own mobile devices, that interaction can begin before they even reach the checkout, he said. Customers can be presented with products as they are receiving a service, or browse products available from the retailer, and add them to their carts for when they check out.

Vagaro has also worked on a solution for creating truly contactless payments for card-present transactions, which have lower fees for merchants than card-not-present transactions. With the Vagaro physical POS, customers can tap their cards but input tips on their own devices, rather than touching the merchant’s device to add a tip. At the same time, including the customer’s device in the transaction builds deeper customer interactions.

“The nice thing is, after you check out, the next thing you’re asked is [to] give a review to that business,” Helou said. “We saw a big increase in the number of reviews businesses are getting.”

Removing Friction From the Customer Experience

The proliferation of payment options in the marketplace can add friction at checkout, especially for smaller retailers trying to keep up. Helou said that many beauty and wellness businesses are small entities for which even a slight difference in transaction fees can have a significant impact. As a result, many merchants have a preferred payment method they like customers to use due to its lower fees. Regardless, those merchants still need to have the payment options their customers prefer, and it can be difficult trying to balance all those options.

Similarly, the upsell can actually be a friction point for some merchants. This is part of why Vagaro is developing a solution that would enable customers to shop products before they ever reach the checkout.

“Not every person is a salesperson,” Helou said. “Some do it better than others, so what we’re trying to do is come up with a solution that works for everybody and is not so pushy.”

Helou said that small business owners are very good at providing the services in which they specialize, and many even understand how to handle marketing and managing their businesses. What they may lack is the time to do all those things at once.

“When you are at a salon cutting hair or giving a massage or doing facials, there is no downtime,” he said.

By automating those processes — from payments to emails that touch base with customers who have not returned in a long time — merchants can have the freedom to focus on their core businesses. They also might even find the time to broaden the scope of what they can do themselves.