
Whether it's a transformative new hair color, a new styling technique or a new cut that turns heads, the magic behind these hair trends and client transformations depends on the success of your business. Unfortunately, success is becoming more complicated than in years past, but the hair and beauty industry is innovative at adapting to challenges. Thankfully, a client's reliance on their hairstylist isn't going anywhere. While consumers are lowering their budgets in other categories, they still spend on beauty and personal care needs. Beauty pros around the world are taking notice, changing the game when it comes to marketing, loyalty programs, elevated experiences and new techniques. To break down what you need to know to build a successful hair and beauty business in the year ahead, Square is sharing its Future of Beauty Report for 2025. Read on for 13 key takeaways from the report.
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Whether it's a transformative new hair color, a new styling technique or a new cut that turns heads, the magic behind these hair trends and client transformations depends on the success of your business. Unfortunately, success is becoming more complicated than in years past, but the hair and beauty industry is innovative at adapting to challenges. Thankfully, a client's reliance on their hairstylist isn't going anywhere. While consumers are lowering their budgets in other categories, they still spend on beauty and personal care needs. Beauty pros around the world are taking notice, changing the game when it comes to marketing, loyalty programs, elevated experiences and new techniques. To break down what you need to know to build a successful hair and beauty business in the year ahead, Square is sharing its Future of Beauty Report for 2025. Read on for 13 key takeaways from the report.
1. Consumers have pulled back their beauty spending.
While just over half of consumers Square surveyed said they’ve cut their spending on beauty purchases (51%), there’s a silver lining: people still put their beauty needs first and ahead of other discretionary expenses.
In comparison to restaurant and retail purchases, in which consumers have cut back spending by 63% and 58%, respectively, beauty consumers aren’t pulling back nearly as much. But that doesn’t mean beauty sellers aren’t feeling financial pressure.
Decreased consumer spending, increasing wages and new wage laws have made 63% of beauty leaders (beauty business owners and managers) say that they’ve felt some financial pressure, with 16% describing that pressure as significant.
All things considered, it’s not surprising that 71% of beauty leaders plan to increase their prices in the next 12 months. While some owners will cringe at asking their customers to pay more, this is actually a reasonable and healthy response for an industry that usually holds off raising prices to maintain customer relationships.
Price hikes can be healthy, and beauty leaders shouldn’t be afraid to make changes over fear of straining vital client relationships. While beauty customers generally respond to higher prices by going a few extra weeks between appointments, they’ll likely return to their normal patterns as the months go on, just as they did after the Great Recession in 2008.
2. Beauty leaders are embracing the upsell.
Of course, raising the costs of a hair service isn't the only way to boost your salon's revenue. Diversifying revenue streams, such as by adding new products or implementing in-person classes, are tried-and-true ways for beauty leaders to grow their businesses. More than a third of beauty leaders said they’re doing this by introducing loyalty or rewards programs (42%), adding new products or services (40%) or offering memberships or clubs (34%).
To take the point further, more than four in five beauty leaders said expanding their offerings beyond traditional services by adding things like classes or increasing retail product sales was important to their growth plans. Consumers seem on board with that; 55% percent of consumers said they purchase products or adopt practices their beauty specialist recommends, with shampoos and cleansers topping the list.
The survey also shows that consumer purchase volume appears there for sellers who want to create new revenue streams that appeal to both their core clients’ broad and localized tastes. Forty-six percent of consumers worldwide said they purchased retail items from a local beauty business at least once in the last year. Going even deeper, about 20% said they purchased retail products four or more times in the last year, and 4% of that group made at least 10 purchases.
If you’re not diversifying revenue streams, you’re missing out on two fronts. While the obvious opportunity is to boost your sales, the second opportunity is to identify and cater to those core customers who’ll make an extra purchase on almost every visit, which could change the trajectory of your business. Identifying and nurturing those relationships can create a small army of brand ambassadors for your work. Keep them happy, and watch your appointment slots fill up.
3. Memberships and subscriptions have potential.
Businesses that aren’t in a position to expand their products or services may want to try a different approach: memberships.
Eighty-five percent of beauty leaders said memberships and subscriptions provided a positive return on investment for their businesses. In the past year, 34% of beauty leaders said they’ve offered memberships or clubs that offer discounts for paying for services or product deliveries in advance, and 24% who haven’t offered memberships said that they’d consider adding similar programs in the future.
There’s a sizable audience waiting for these businesses. Several consumers told us that they’d be interested in paying for memberships or clubs (18%), online tutorials (13%) or subscription boxes (9%) created by a beauty business.
Subscriptions and memberships can create a situation in which your best customers lock into a contract with you that’s paid up front, with the bonus of offering them exclusive upsells throughout the year. Think of it this way: How much better off would your beauty business be if it had 20% of its revenue in the bank on the first day of each month? How many of those consumers who are willing to make 10 or more extra purchases a year could you sign up quickly?
4. Beauty businesses are starting to test new tech.
More beauty businesses are turning to technology like automation and AI to run the parts of the business that go beyond their specialties. In fact, more than a third of survey takers said they’re already using automation in their businesses to save time in eight areas, with the average beauty leader using the technology in more than three areas.
Beauty businesses are buying into technology most on the marketing front. Forty-three percent said they use automation to help with email marketing, while 42% said they’re trying out AI-generated social media posts. Technology also boosts salon and spa operations. Forty percent of businesses use AI to analyze business reports, and 35% use it to automate staff scheduling.
No matter how you slice it, beauty businesses are experimenting. Ninety percent of leaders hope to invest in business-boosting tech – from marketing and appointment-setting to tracking orders and taking payments.
You don’t need to be a technology expert, but sitting on the sidelines while other businesses embrace technology that their customers’ appreciate will cost you time — and perhaps a chunk of your customer base — in the long run. Ask your fellow hair pros what they’re doing, then pick one technology you’re comfortable with trying and start experimenting.
When you’re ready to think about the bigger picture, invest in an integrated system that manages multiple parts of your business, from marketing and loyalty to appointment scheduling and payments. These all-in-one services are critical for beauty business owners who want to boost their business performance.
Consumers at a beauty salon or spa preferred using or engaging with the following technology:Courtesy of Square
5. Know your customers when investing in technology.
Broadly speaking, beauty consumers want specialists to use the latest technology to talk to them, book appointments and process their payments. When you take a closer look, opinions start to divide as clients get older.
Gen Z and millennial consumers are far more likely to engage with what have become fairly common technologies at beauty businesses — mobile apps, automated appointment scheduling, automated payments — than their Gen X and baby boomer counterparts.
While that’s not necessarily a bad thing, beauty pros can use this knowledge to position their businesses for the broader community. For instance, if residents in your area skew older, it’s likely not the time to shift to an online-only booking system. Nor is it the time to consider other technology-first moves, such as going cashless. On the other hand, if you haven’t served a client under 50 in six months, you can feel more comfortable going all in on time-saving tech.
Online bookings and mobile app interactions will only grow in popularity. However, thinking about your clients’ comfort with technology — whether with a data analysis of how you book appointments and get paid, or with a poll that gauges your best clients’ booking, messaging and payment preferences — can help you decide how many tech integrations your business needs.
Technology, consumer sentiment and consumer engagement by generation.Courtesy of Square
6. More payment options help beauty businesses grow.
Taking a payment directly from the salon chair or even before the customer arrives has obvious business benefits. It helps facilitate deeper customer relationships, decreases lines at the front desk and creates frictionless experiences. Most importantly, it makes it easy for your staff to get paid.
While four out of five beauty leaders found every payment offering we asked about convenient, there were two surprises. First, mobile wallets (89%) were seen as more convenient than cash (87%). This is a clear validation that tap-to-pay setups, whether at a front desk or on a stylist’s phone, have become an industry expectation.
Second, 80% of beauty leaders said that buy now, pay later (BNPL) is a convenient option for their staff and employees to use. Buy now, pay later presents a big opportunity to differentiate your payment offerings, opening the door to clients who crave your products and services but don’t feel they can pay the $100-plus price tag all at once. This is especially relevant for salons and spas that cater to Gen Z or millennial clients, who are more likely to use buy-now, pay-later products.
7. Traditional register services are still seen as the most convenient option.
Traditional registers still reign supreme for beauty consumers, presumably because it’s been standard across industries for decades. However, it’s worth noting that nearly half of consumers said in-app pay is convenient too. And 59% of consumers said they weren’t likely to return to a salon or spa that doesn’t offer a convenient payment method.
The good news: Salons and spas seem to be embracing consumers’ emerging digital preferences. Online checkout (88%) and in-app pay (86%) are seen as convenient for staff use by a large majority of beauty leaders. Beyond the convenience of not having to process the order physically, these payment methods are ideal because they let beauty businesses collect payments in advance and charge no-show fees when appropriate.
Before you switch all your payments to an app, there’s one exception to consider. Gen X and baby boomer consumers haven’t gotten on board the payment technology train in the same way as their Gen Z and millennial peers. In fact, consumers aged 44 and older were only half as likely to see in-app pay and mobile POS as convenient, compared to the feelings of Gen Z and millennial consumers.
The shift toward tech-powered payments is good for the growth of the beauty industry. Online checkout and in-app pay – which open the door to sell multiple products simultaneously – can help beauty business owners increase ticket size (specifically if you sell additional retail items or classes through your online presence) and lock in payments either before or at the exact time of service. According to Square data, businesses that sold both products and services, rather than services alone, saw 57% more in annual sales.
Percentage of consumers worldwide who found the following payment methods at a beauty salon or spa very or somewhat convenient:Courtesy of Square
8. Loyalty programs are a valuable investment.
It’s cheaper to retain a customer than to acquire a new one. That makes loyalty programs a valuable investment for any business. They’re a particularly good fit for the beauty industry, in which clients have recurring appointments for personalized services. The data show that beauty leaders agree.
Seventy-nine percent of beauty leaders said their businesses have a loyalty or rewards program. The majority of beauty leaders said their loyalty or rewards program successfully drives key business metrics, including increased spend (85%), repeat visits (85%) and positive ROI (83%). With so many beauty businesses finding success with loyalty programs, it’s no surprise that 81% of beauty leaders plan to increase their investment in their loyalty or rewards programs in the next 12 months. Even beauty businesses that don’t currently have a loyalty program see the value and plan to join the crowd. A staggering 97% of beauty businesses that don’t have a rewards or loyalty program plan to add them in the near future.
Customers’ and businesses’ embrace of loyalty programs is likely connected to the desire for more personalized experiences. When given the ability to select multiple options, most consumers worldwide (69%) found personalization to be one of the most valuable parts of a loyalty program, right behind exclusive discounts (84%) and earning rewards (83%). When you consider that 65% of consumers said they felt either positive or neutral about businesses using their data to customize products and services, you can assume that many of your customers will appreciate (or at least won’t mind) getting targeted offers based on their past behaviors.
If you haven’t started a loyalty program, now’s the time. Consider your customers’ desire for personalization as an invitation to deepen your business relationship with them. You already have great conversations with them during their services, so why not let your loyalty program software build on that connection and discover what keeps them coming back?
Consumers said the most valuable aspects of loyalty programs are:Courtesy of Square
9. Social media marketing is still vital.
For many in the beauty industry, their TikTok or Instagram pages might as well be their resume, so it’s not surprising that social media (48%) is the top way beauty leaders encouraged customers to return to their businesses.
Using social media to connect with and retain an audience can look different for every business. For example, 82% of beauty leaders said they use educational initiatives, like how-to videos, focused on at-home beauty and wellness practices to help their clients between appointments.
Creating content for beauty consumers, like online beauty tutorials, helps establish trust with your customer base and can position you as a leader in your industry. Plus, this kind of educational outreach helps you connect with and show prospective and current customers what you care about.
10. Email and text remain important touch-points for consumers.
Beauty business leaders are putting most of their marketing energy into social media, but consumers still want one-on-one communication.
Sixty-three percent of consumers said they’d like businesses to communicate via email, and 44% said they preferred communicating over text messages. Unlike other responses, communication preferences are consistent across different age groups. In fact, 40% of consumers aged 60 and older noted they prefer text messages for communication.
Social media is still supreme in the beauty industry for many reasons, and there’s a difference between showing the world what you can do on TikTok to grow your customer base and talking to your clients over text before their afternoon appointments. Still, email marketing can be an overlooked revenue opportunity for smaller- and medium-sized beauty businesses that don’t have the time or ability to create something more polished. That’s because there are several industry-savvy software providers available to automate a lot of the work, whether it’s emails with upsell offers or simple appointment reminders and confirmations.
11. Beauty leaders believe tech will help them save time.
While your clients might think you just do blowouts all day, the reality is it’s hard to do everything you need to do on a daily basis to run your business.
At least 72% of beauty leaders said they spend more time now than a year ago on marketing and social media (84%) to managing finances (80%) and hiring (75%). Based on these stats, it’s no coincidence that 81% of beauty leaders said they’re researching or implementing new technology to help.
It becomes even clearer they’ll lean on tech in the future when you look at their investment desires. At least 76% of beauty leaders said they want to invest in AI or automation to improve all aspects of their businesses, from inventory management (84%) to vendor management (83%) and taxes (78%).
Activities where beauty owners said they are spending significantly more or somewhat more time compared to a year ago:Courtesy of Square
12. Social media tutorials and trainings aren't just for clients.
With rapidly changing styles and trends, as well as a varied set of skills across your team, beauty leaders can’t afford to brush off the continuing education needs of their businesses.
Most beauty leaders (85%) saw training or coaching their employees as key to their salon’s success. But that training can come in various formats. While on-premise and in-shop training was a close second (46%), beauty leaders told us that social media tutorials (47%) were the most important thing their employees could do for professional development.
Many salon and spa owners look at training as a way to educate their future competitors, as today’s employee could be the person running the shop across the street in six months. There are very few ways to stop that from happening in the long term, especially as the Federal Trade Commission is now closely scrutinizing non-compete agreements. Instead, beauty leaders looking to build a strong in-house team should embrace advanced learning as an opportunity to stand out above their competitors.
13. Many beauty business leaders are thinking about expanding.
It’s true what they say: When you look good, you feel good. Beauty business leaders are taking this to heart. When asked about their optimism about the future compared to a year ago, the results were overwhelmingly positive: 32% of beauty leaders said they were much more optimistic, while 53% said they were somewhat more optimistic.
That’s a more upbeat outlook than any other industry we surveyed. This group of generally bullish beauty business leaders are also looking to make long-term plans, with 72% saying they hope to expand their number of business locations.
Your peers and competitors say they’re ready to make moves in 2025. Industry leaders tell us they’re considering big long-term investments – such as opening new shops or investing in online stores – despite the pullback in spending. If you haven’t yet, it’s time to think about your business’s next big step, as consumers find their footing more and more in this economy. This way, you’ll be better positioned when they start to spend more.