Annual Recurring Revenue in brow business (research results: 9.2%)

Background

A Fact-Based Approach Centered on Studies From 2020 to 2023, we've conducted annual systematic studies to understand customer acquisition and retention in the Powder Brows, Hairstrokes, and Microblading industry. Over 2352 customers have participated in these studies, which primarily involved online surveys and more than 410 in-depth live client interviews. These surveys and interviews covered various locations, primarily the United States, the United Kingdom, and Europe. While regions like Russia and Asia weren't included, the consistency of results across the surveyed areas suggests that geographical factors have less impact on customer loyalty than demographic or psychographic attributes. Factors like the customers' nature, age, wealth, and interests seem to play a more significant role in determining loyalty than their location.

What Artists Think About Their Replaceability Our research has asked over 400 artists about their perceived replaceability. Interestingly, more than 67% of those specializing in Powder Brows, Hairstrokes, and Microblading believe they are "hard to replace" and that their existing customers would "seriously think before turning to alternative artists." This belief is common, yet it's important to note that individuals often have an optimistic bias regarding their abilities, a tendency documented in various studies. This self-perception can skew artists' views of their indispensability, suggesting the need for a more objective examination, as we will explore in the next section.

93% Believe They Are Better Than Average In 1980, Swedish psychologist Ola Svenson conducted a study on self-assessment, focusing on how individuals perceive their driving skills. He surveyed 81 American college students and 80 Swedish graduate students, asking them to compare their driving abilities to their peers.

The findings revealed a common tendency to overestimate one's abilities, consistent with what we've observed in the artist community. A significant 88% of the American participants and 77% of the Swedish participants considered themselves in the top half of drivers regarding safety. Moreover, regarding overall driving skills, an overwhelming 93% of the Americans and 69% of the Swedish students rated themselves as better than average.

This phenomenon, where individuals often overestimate their capabilities, is well-documented and prevalent in various life aspects. While many artists might see themselves as "harder to replace" than they might actually be, this self-perception is not the sole reason for the relatively low repeat business rates observed. In the following sections, we'll explore this topic and the psychological phenomena related to those.



Actual ARR

Actual ARR in Powder Brows, Hairstrokes, and Microblading Many might find the Annual Recurring Revenue (ARR) in the Powder Brows, Hairstrokes, and Microblading business surprisingly low: only about 9.2%. ARR refers to an artist's revenue from existing clients after the initial procedure and any follow-up retouching. This percentage is relatively stable across various Powder Brows styles and Microblading techniques, with slight differences depending on the specific procedure. Further discussion will reveal certain factors that might influence these minor variations. Importantly, this number doesn't tend to increase significantly in the second or subsequent years, consistently staying under 10%. This finding has significant financial implications for artists in this field.

The Small Number Explained: What Does It Mean? The relatively modest 9.2% Annual Recurring Revenue (ARR) in the Powder Brows, Hairstrokes, and Microblading business might initially seem alarming. However, it's essential to understand what this figure truly represents.

This low percentage doesn't necessarily reflect client dissatisfaction with the artist's work. Rather, it relates more directly to the intrinsic characteristics of the procedure itself and the individual circumstances of each client. Further discussion will delve into the specific elements that contribute to this figure and what it signifies for artists in this industry.

**The Nature of the Procedure
In the realm of Powder Brows, Hairstrokes, and Microblading, it's imperative to recognize that these services differ fundamentally from those that typically engender customer loyalty. These procedures are more akin to infrequent medical treatments, like shoulder surgery than to recurring beauty services such as eyelash extensions or nail care. The time interval between potentially necessary sessions is considerably longer, altering the dynamics of client return rates.

Eyebrows Still Satisfactory - Approximately 50% of Clients Many clients don't feel the need to revisit within a year. Many are content with the appearance of their brows even as the color fades. The urgency for a touch-up or redo isn't pressing for them. This perception is highly subjective and varies widely depending on age, lifestyle, and personal preference.

Younger clients, particularly those between 25-34, maybe more attuned to subtle changes and feel a greater need for prompt touch-ups. Older clients might not share the same urgency. However, returning for additional procedures is predominantly based on the client's assessment rather than any standardized measure of fading or healing.

On average, around half (50%) of clients find themselves in this category, feeling no immediate need for a follow-up procedure within the first year. This factor significantly contributes to the lower Annual Recurring Revenue in this industry.

Experience vs. Expectations - Nearly 19% Disappointment Approximately 19% of clients feel that the procedure didn't meet their initial expectations. This sentiment isn't typically due to dissatisfaction with the artist's skill or customer service. Rather, it stems from a mismatch between their envisioned and the actual outcome. Often, this disconnect arises because clients are exposed mainly to immediate post-procedure images, which look significantly different from healed brows. These "fresh look" photos are more common and appealing for marketing, leading about one-fifth of clients to expect sharper "pixels" in Powder Brows, clearer lines in microblading, more natural look in Hairstrokes, or simply more enduring results.

Life Changes - Affecting Over 21% of Clients Life's unpredictable nature accounts for over 21% of clients not returning within a year or sometimes at all. These factors are diverse and unrelated to the artist or the procedure's quality. They include major life events such as breakups, relocations, pregnancies, health issues, financial constraints, or even changes in personal grooming preferences and priorities. While this results in lost potential revenue for the artist, it's typically beyond their control and not a reflection of their service quality.

Different Alternatives - Approximately 18% Beyond the usual options, about 18% of clients venture into different treatments that the original artist might not offer. For instance, some may switch from Microblading to Como Brows or Powder Brows (including Hairstrokes). If the initial artist isn't skilled in the new desired technique, these clients will likely go elsewhere. Additionally, a minority might return to conventional brow grooming if they have sufficient natural hair or opt for removal methods like saline or laser treatments if they're dissatisfied with the semi-permanent results. Hence, artists not offering a broader range of services might see these clients looking for alternatives elsewhere.

Synthesizing the Data Adding up all the reasons clients might not revisit within a year astonishingly exceeds 100%. Logically, this would imply no repeat clients annually, yet that's not the case in practice. To make sense of this, it's crucial to understand that individuals often face multiple simultaneous factors. A client could, for instance, be dealing with personal changes, have misconceptions about the procedure, and simultaneously be intrigued by a different brow technique. The true challenge for artists lies in understanding these statistics and in discerning actionable steps to enhance client retention despite these varied and overlapping reasons.


Artist’s personality

Influence of the Personality of the Artist On Repeat Business? Surprisingly, the artist's personality plays a relatively minor role in repeat business. Customer feedback suggests that only when an artist's personality is significantly deficient does it deter clients from returning. Specifically, an "awful personality" is the primary reason for approximately 1% of clients not returning for a retouch, assuming they otherwise have the desire, means, and need. In simpler terms, out of every 100 clients who consider refreshing their brows, only one might avoid doing so primarily because they find the artist's personality particularly disagreeable.

It's worth noting that most brow artists tend to have agreeable personalities. However, when examining data related to overall satisfaction with the procedure, an interesting and subtle correlation emerges between the artist's personality and the client's perceptions and decisions. This underscores the multifaceted nature of client retention and the importance of considering various aspects, including personality, when aiming to understand and improve client return rates.


A Triad of Satisfaction
When evaluating why clients choose one brow artist over another, three key criteria emerge, especially relevant for artists in the beauty industry and customers seeking clarity in their preferences.

• Professionalism of the Artist and Procedure Set-Up. This encompasses the artist's expertise, knowledge, professional demeanor, and the physical environment where the procedure occurs. Considerations include the cleanliness of the treatment area, the artist's proficiency and conduct, and the overall ambiance and quality of the salon, studio, or treatment room. Essentially, it's about the entire experience and setup surrounding the procedure.
• The End Result - The Brows. This factor is directly related to the outcome of the procedure. It includes the precision of pigment application, the suitability of the brow shape, and the appropriateness of the color chosen. Clients evaluate this aspect based on how satisfied they are with the appearance and durability of their brows.
• The Personality of the Artist. This aspect focuses more on the artist's characteristics than their professional skills. It considers the artist's likability, kindness, politeness, and ability to make the client feel cared for and comfortable. While this factor doesn't typically determine whether a client will return, it significantly contributes to the overall satisfaction and experience.

These three aspects form a triad that collectively influences client satisfaction and loyalty. Understanding and optimizing each can help artists enhance service quality and build a more robust, loyal client base.


2 out of 3 is enough!

An Amazing Result - You Have to Get 2 out of 3 Right! Our analysis revealed an astonishing insight: an artist only needs to excel in 2 to 3 key areas to prevent becoming the reason a customer does not return.

This means that your likability isn't as critical if you create superb brows with an outstanding outcome and conduct the procedure with total professionalism. On the other hand, if you're a genuinely warm and likable person delivering excellent brows, clients might overlook a bit of unprofessionalism. These findings align with what might be expected logically and what customers find acceptable.

However, the third combination was quite surprising. Contrary to our initial skepticism, statistics indicated that a highly professional and exceptionally kind artist could compensate for less-than-perfect Powder Brows, Hairstrokes or Microblading. Clients were as satisfied with this combination as with the others. This challenges the notion that technical perfection is the only path to customer satisfaction. While it doesn't excuse major mistakes, it shows that the combination of professionalism and personal charm can mitigate some technical shortcomings.

Becoming the Problem: Get Two Out of Three Wrong Conversely, failing in two of these areas can become a deterrent for repeat business. If an artist is unprofessional and unfriendly, even perfect brows might not encourage a return visit. Similarly, a nice but unprofessional artist who doesn't deliver satisfactory results is unlikely to retain clients. Understanding these dynamics is crucial for artists aiming to build a loyal clientele.


Conclusions

From our analysis, we arrive at three key conclusions.

Building a Repeat Customer - Challenging with One Procedure Entering the Powder Brows, Hairstrokes, or Microblading business with the expectation of easily building a loyal customer base is unrealistic. The reality is a perpetual endeavor to attract new clients and market oneself continuously. Even if you deliver exceptional services, the nature of the industry means that repeat business is limited, often for reasons unrelated to your quality or personal attributes. Constant marketing and reaching out to new potential clients are critical components of success in this field.

Your Character and Personality Matter Your character and personality significantly impact customer satisfaction and your ability to market to new clients. While a captivating personality alone may not drastically increase repeat business, it can lead to higher customer satisfaction, even if some technical aspects of the procedure aren't perfect. Moreover, being a personable and professional artist helps with word-of-mouth referrals and maintaining a positive reputation. In this industry, how clients perceive you can greatly influence their decision to recommend your services to others.

Expanding Skills Increases Repeat Business Consider expanding your range of services to significantly enhance the likelihood of repeat business from the same customers and potentially increase your annual recurring revenue by 200-500%. For instance, if you specialize in Powder Brows, learning Hairstrokes, lip pigmentation, eyeliner, removal techniques, or other related services can make you a more versatile and sought-after artist. Relying on a single procedure limits your opportunities for repeat business and overall growth. Diversifying your skill set increases the likelihood of existing clients returning for different services and broadens your appeal to new clients looking for a range of offerings.