Salonkee: “A Very Powerful Business Model”

Tom Michels, CEO and co-founder at Salonkee (Photo © Silicon Luxembourg/Stephanie Jabardo)

As one of Luxembourg’s most well-known SaaS, Salonkee almost needs no introduction. Launched in 2017, the end-to-end operating system for all things hair, beauty and wellness has exported its solution to almost 4,000 salons across five countries and established itself as a market leader in many of them. Tom Michels, co-founder and CEO, outlines Salonkee’s journey. 

Salonkee has kept busy since raising an awe-inspiring €6.2m in Series A in 2021. Once a small local booking solution for hairdressers, it has transformed itself into an end-to-end operating system for hair, beauty and wellness salons which has managed more than twenty million appointments across almost 4,000 salons since its inception.

As if this weren’t impressive enough, the company has also established itself as the market leader in Belgium and Luxembourg and expects to do the same in Switzerland in the next couple of months. Having grown the team from 35 employees to 100 in the last year alone has certainly helped Salonkee in these endeavours.

Despite these achievements, Tom claims that the company is still in its early stages. 

“We have a lot of exciting new things on the roadmap which we cannot talk about yet but we know it is still very early for us and are therefore fully focused on continuing our expansion across Europe,” said Tom Michels.

While Tom maintains that there is no “secret sauce” to their success, a couple of important factors have certainly contributed to it. 

An ever-evolving product

When the five co-founders first started Salonkee they did not anticipate how all-encompassing their solution would become.

“Initially it was just a booking platform with a calendar behind it, whereas today Salonkee is probably the most advanced operating system for salons across all of Europe,” explained Tom.

Indeed, over the years, Salonkee has not only added reporting and sales features but also tools which help salon managers keep track of their products and stock. On the marketing side, Salonkee also added features such as newsletters and loyalty points, with the understanding that retaining customers was key to both its and the salon’s success. Lastly, it also added waiting lists, chain functionalities as well as online and in-store payment systems directly connected to the platform.

“While other competitors might do scheduling super well, they might not be as strong on the marketing side. Salonkee aims to have the broadest and most easy to use product on the market,” said Tom.

With all these new features, the solution is far from complete, as Salonkee intends on delving “into new territory like websites, banking services, expense management and much more”.

“The company plans on remaining in Luxembourg for the time being and expanding its market share, currently at 60-65%, to at least 80%.”

Tom Michels, Co-founder & CEO of Salonkee

Market feedback

Salonkee did not grow its customer base by randomly guessing which features to add. Indeed, close relationships with its clients ensured that its solution solved the right problems without creating new ones.

“We have super close conversations and contact with our clients because our sales are active in the field and gather feedback from clients and potential customers,” said the CEO.

However, when it comes to feedback, listening to your clients alone is not enough. For Tom, it was also important to pay attention to what the competition was doing and innovate with new and unique features.

“You have to be strategic and stay ahead of the competition. For us, this meant trying to bundle as many different services together as we could and integrating them into our system over time to offer the most complete solution possible,” explained Tom.

While some SaaS companies outsource the development of their add-ons or integrate third-party services, Salonkee has stuck to developing everything internally within its Luxembourg department, realising that working with people familiar with their entire IP was most effective.

Luxembourg: an important point of presence

Throughout its journey, Salonkee has always stuck to Luxembourg as the main hub for the company and its employees. Over 50% of the company and all non-sales positions are based there and while most of its salons are abroad, this strategy has been working well.

“What’s nice about Luxembourg is that it is really international and you can find experienced people to join the company from all sorts of backgrounds,” says Tom.

While finding people on the ground abroad has been a struggle, the company plans on remaining in Luxembourg for the time being and expanding its market share, currently at 60-65%, to at least 80%. 

The magic of SaaS

There’s a reason why investor preferences have been comfortably stuck on SaaS solutions for the past decades: given the right metrics, a startup’s future success can be determined with a higher degree of certainty than any other type of startup. The model also provides many advantages to entrepreneurs.

“The SaaS model has absolutely been key to our success. It’s what allows you to scale, have recurring revenue and where you can easily build on top of the product. It really allows you to grow your revenue over time and plan ahead,” explains Tom.

By considering (and measuring) the right metrics, Salonkee has been able to determine “when to scale, where to scale and when to improve [its] solution”. On top of that, it has helped the company become more stable and predictable over time “because your revenue is recurring and you can just build on top of your existing customer base and existing revenue”.

“Keen to continue its expansion efforts, Salonkee hopes to grow its team to 180-200 employees by the end of the year.”

Tom Michels, Co-founder & CEO of Salonkee

Retention matters

If recurring revenue is the financial foundation of any SaaS company, then customer retention is the glue which holds it all together. As Tom puts it: “If you have a good retention rate in SaaS you can only grow.”

To succeed in this endeavour it was essential for Salonkee to really work on its product and nail product market fit. “We made sure that before we scaled we had a product that fit the market really really well, otherwise you expand and lose customers and it’s like putting water in a leaking bottle.”

The product market fit is slightly different in every country with the legislation and markets operating differently so one has to adapt their solution, but “the core idea remains the same, no matter where we operate”.

Creating network and flywheel effects

When the time came to scale, Salonkee had a good product and a great product-market fit which gave it the necessary ingredients to leverage network and flywheel effects to scale fast.

“The b2c side of our platform created the network effects necessary to spread brand authority and brand awareness, bringing new customers to the platform without too much effort from our side,” said Tom, adding: “The flywheel effect really came into play after we hit 5-6% of market share in a region, suddenly growth seemed inevitable”.

“The Human Challenge”

Once you get the product market fit right and understand how to interpret all the relevant SaaS metrics to scale your business, it’s time to face what the CEO calls “the human challenge”.

“You have to find the right people who understand how to translate to a larger scale the things that work well in small teams and on Excel,” says Tom. This is, of course, a challenge for any company but it is even more important for companies in the process of scaling where the impact of every employee can have significant implications for the company’s future growth.

Importantly, this is also the moment when startups have to raise capital and learn how to interface with investors and what story to tell about their product and their mission.

“You have to be able to sell the story of your vision and get investors excited about what you’re trying to achieve because without capital you will be severely limited in your capacity to grow fast,” explains Tom.

Execution is key

While there is very little guarantee that following the same steps as Salonkeeone can replicate its success, it can’t hurt to try. And if it does not work out, one can always blame it on a lack of execution.

“In the end, an idea by itself isn’t worth much and I think it all comes down to the execution. There’s no secret and we are not smarter than anybody else. But finding the right people, creating an excellent product and executing everything as well as possible has certainly helped us achieve today’s scale,” says the CEO. 

Keen to continue its expansion efforts, Salonkee hopes to grow its team to 180-200 employees by the end of the year. 

“It’s still very early for Salonkee. Today we are already way more than a booking platform, but our vision goes much further. Our goal is to be the core operating system of hair- and beauty salons across all of Europe,” says Tom.

This article was first published in the Silicon Luxembourg magazine. Get your copy.

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