The most effective marketing strategies in the SME hair & beauty industry (report)

Dojo is a payments solution expert, helping more than 75,000 small, medium and micro businesses across the UK take payments more effectively. We’re always trying to better understand how our customers like to do business so we can provide better solutions to help businesses make better sales.

As part of our research, we surveyed a sample of 197 small and medium business owners, and key decision makers within these businesses, to give an indication of how businesses use different marketing strategies. The research also looked into how effective their chosen channels were at generating sales.

This research is part of a wider investigation we’re doing into how small and medium businesses market themselves. The survey focuses specifically on SME personal service businesses including hair salons and barbers, beauty clinics and massage parlours.

Key takeaways:

• Marketing their business to attract new customers is the number 1 thing that owners of these businesses tell us is important for their business to do well.
• Overall, more than half (55%) of business owners tell us that in an ideal world, marketing their businesses to attract new customers (e.g. managing social media, planning events, creating adverts) is something they'd like to be able to spend more time on.
• The biggest challenge faced by this sector is understanding what tools and content their competitors are having success with.
• Learning how to create a successful influencer marketing campaign is also any area that over 1/4 (26%) of these businesses told us they'd like support with.
• On average these businesses are using up to 3 channels to market their business - influencer marketing was the most commonly used channel after traditional social media marketing via Instagram, Facebook and Youtube, with over a 5th of claiming to use it as part of their core marketing strategy.
• Amongst those that use it to market their business, influencer marketing was the most effective marketing strategy for generating sales, according to hair and beauty SME business owners.

The UK hair and beauty industry is worth billions

In fact, a survey released by IBISWorld in August this year found that the industry is worth around £4 billion in the UK alone [1]. However, it’s also highly competitive.

IBISWorld’s research also indicates that increasing cost consciousness between consumers could see industry revenue contract by 0.8% over 2023 and 2024. An estimated 45,097 businesses in the industry and a workforce of 146,458 strong, coupled with the economic climate, has only made competition more fierce making the need for businesses to stand out and market their services more important than ever [1].

Despite this, the UK still loves to spend money on hair and beauty. According to a Censuswide survey commissioned by Gee Hair in May this year, a typical adult spends an average of £400 on hair and beauty treatments and products a year. Of this, it’s 16-24 year olds, more commonly known as GenZ, who spend the most with an average of £67 a month. That’s a whopping £807 spent a year. The survey found that 25-34 year olds followed suit with an average of £636 a year (£53 on average per month) [2].

It’s also these generations that are actively using social media. Statista’s latest report on social media usage in the UK found that there are 57.1m active users in the UK, with a 91% penetration rate. Of these users, 25% of users were 18-29 years old and nearly half (49%) of all social media users were aged 30-49 [3].

With such an active audience, it’s no surprise that hair and beauty brands and service providers are looking to capitalise on marketing strategies that could help them reach these customers. However, in a world of shortening attention spans and timelines saturated with brand accounts, organic posts aren’t always enough to stop the scroll.

Enter, influencer marketing.

What is influencer marketing?

Exactly when influencer marketing first came into fruition is unclear. Some sources say it started all the back in the Roman Empire with successful gladiators endorsing certain products like wine. Others refer back to 1760, when Wedgwood coined a collection of their pottery ‘Queen’s Ware’ after making a tea set for Queen Charlotte. But what exactly is influencer marketing in modern terms?

The Oxford Dictionary defines influencer marketing as:

“A person or thing that influences somebody/something, especially a person with the ability to influence potential buyers of a product or service by recommending it on social media”.

So now we know what influencer marketing is, but which businesses can use it?

Which types of businesses use influencer marketing

The answer is most businesses and brands. It’s become a staple for brands in almost every sector, especially B2C. From the lifestyle space with travel, fashion and beauty influencers to finance influencers focussing on budgeting and investment. But it’s not just the big brands that can make the most of this marketing tactic.

There are various types of influencers. Larger brands like international conglomerates often choose to work with influencers who have millions of followers. This tactic partly relies on the quantity of these influencer’s followers to get the most eyes on their products and services. However, there’s also a growing opportunity for smaller brands to work with nano and micro influencers who often have a much smaller but more engaged audience.

Let’s explore the different types of influencers in more detail.

Types and sizes of influencers

Definitions of influencers will vary depending on the source but generally influencers fit in the following size categories:

We’ll go into more detail on how to know when you should use influencer marketing for your business later, but as a general rule of thumb you should make sure you have a clear goal and budget for this activity.

The most effective marketing strategies in hair and beauty SMEs

To better understand how SMEs in the hair and beauty space approach marketing, and influencer marketing in particular, Dojo surveyed 197 small and medium business owners and key decision makers on which marketing strategies they utilise. We also asked which strategies they found to be most effective in sales generation.

Note that here, hair and beauty is an umbrella term for hair salons and barbers, beauty clinics and massage parlours.

A quarter of hair and beauty SMEs want support in running successful influencer campaigns

It’s no secret that hair and beauty is a highly competitive industry so it’s no surprise that understanding the competition and the content they’re producing was the key area where hair and beauty business owners struggled the most, with 30% of respondents saying they wanted more support here.

This was closely followed by knowing which marketing tools were available for them, with 27% of beauty and hair businesses saying this was a key area they would benefit from.

Influencer marketing ranked joint third for the marketing activity where beauty and hair SMEs wanted the most support. Over a quarter of respondents (26%) said that their business would benefit from support in creating a successful marketing campaign signalling a clear appetite for education.

Influencer marketing is the most highly prioritised strategy after Youtube, Facebook & Instagram

YouTube was the most used marketing channel with nearly a third (28%) of respondents prioritising this strategy. As hair and beauty is a hugely creative industry, a crucial element of marketing is showcasing the service, expertise and result of product use through visual assets. A huge part of this is creating clips and tutorials so prospective customers not only see what they could achieve with the brand but can also try it at home. YouTube tutorials in particular have become a great thought leadership tool and help brands connect with their customer community.

Overall, 79% of the businesses surveyed said it is important for their business to stay on top of the latest trends which includes keeping up to date with new treatments and styles that clients want, or that their competitors are offering. A further 37% of businesses said that YouTube was the most popular channel they use to do this.

After Youtube, 26% of the businesses surveyed chose Facebook as their preferred marketing channel, with Facebook’s visual sibling, Instagram, following next (23%). According to Statista, a fifth of the UK population stated Facebook was their preferred social media platform, so it makes sense that SMEs also chose to focus on trying to reach customers through this channel [4].

Influencer marketing ranked fourth with 21% of the beauty and hair businesses surveyed saying they actively use this channel.

Influencer marketing was the most effective marketing strategy for generating sales

According to the 197 businesses surveyed, influencer marketing was the most effective marketing channel for generating sales amongst those that use it as part of their marketing strategy. In fact, businesses that use influencer marketing find it more effective than traditional social media marketing like organic social posts on Instagram.

How to know when to use influencer marketing for your business

Remember, you need to be really clear on what you’re trying to achieve with influencer marketing. To help break it down we’ve pulled together a list of five key points to consider before you spend your hard earned money on influencer marketing:

1. Objectives

Understanding your goal is the first step. Are you trying to increase brand awareness, generate sales via social media or get prospective customers to your website or store? The size and type of influencer you choose to work with will depend on your end goal.

You also need to understand how you’re going to track and measure your goal so you know how successful the influencer marketing activity was.

2. Budget

After you’ve decided your objective, you need to work out if you have the budget to achieve your goals. Different categories of influencers charge different influencer rates - those with larger followings are likely to charge more. An influencer rate is the amount of money you’ll be charged per post to work with your chosen influencer. The rate is based on engagement and follower count but can also be affected by access to niche audiences and their talent. Depending on the rate or ‘package’ your chosen influencer offers, you may also get a story, or highlight plus a static grid post.

To give you a rough guide on cost, Influencer Marketing Hub predicts that for Instagram nano influencers can charge anywhere between £0-£100 per post, micro £100-£5k, macro £5k-£10k and mega/celebrity influencers anywhere upwards of £10k. Different channels will have different costs but you can also use an earnings calculator like this one from Influencer Marketing Hub to give you a baseline. Note that this is not an official Instagram tool and gives estimated earnings in USD.

3. Expertise

Once you’ve decided on your goal and set your budget you should have a good idea about which size of influencer you want to work with. Now it’s time to look at the type of influencer. We’ll cover how to find specific influencers in more detail later but when choosing an influencer you need to consider how authentic, relevant and credible the influencer is in their niche. For example, if you’re trying to sell beer you’d most likely need a food and drink influencer, it’s unlikely you’d get the same product fit or cut through with a fitness influencer.

4. Audience

You need to decide if your chosen influencer’s audience matches the prospective customers you want to target. For example, if you’re a sustainable goods brand you’ll want to find a sustainability influencer whose followers resonate with that cause and messaging.

This is where you’ll want to look into influencer engagement rates. The engagement rate will tell you how engaged the influencer’s audience is. The higher the engagement rate, the more influence and sway over purchase choices the influencer is likely to have. So, if your goal is generating sales, you’re likely to need a nano or micro influencer who typically have higher engagement rates.

5. Platform

Finally, you need to consider your own audience. Where do your current customers hang out digitally? Are they TikTokkers, prefer static visuals on Instagram or enjoy forums on Facebook? Depending on where most of your target audience interact, you’ll want an influencer that creates content for that channel. For example, if you’re a learning and development coach and your target is other businesses, LinkedIn may be a better place to market your services.

Finding an influencer for your brand and business

Free influencer marketing tools

There’s a plethora of free tools you can now use to find influencers to fit your brand but to get you started Influencer Marketing Hub has a useful list of 23 tools you can try out.

Competitor research

If you want to try researching manually, you can start off with competitor research. If you know who your competitors are, you can try the below to find out if they’re actively using influencers:

• Search for their profiles on your chosen platform e.g. Instagram
  Go through their profile and see if they have already partnered with an influencer
• Check their followers and following to see which influencers they’re taking notice of
• Use the Instagram Discover function to search for your competition and see which posts appear e.g. search ‘#[brand]hairsalon’
• You can also go onto their profile and look at the ‘tagged posts’ tab to see if any influencers have tagged the brand

If you don’t know who your competitors are you can try searching on Google with relevant keywords. For example, if you own a hair salon, you can search ‘hair salons near me’ to find your local competition. Once you have the top results from Google, search for their profiles on your chosen social media platform and follow the above steps.

Keywords and trends

You can also look for keywords and trends using hashtags and the discover/explore options available on most social media platforms. A keyword is exactly what it says on the tin, a word that is highly relevant to your business or describes your industry or work.

Keeping with our hair salon example, some keywords might be:

• ‘hair salon’
• ‘hair salon [location]’
• ‘hair salon near me’
• ‘hair salon [location] affordable’
• ‘best hair salon [location]’
• ‘hairdressers [location]’

You can search these keywords on Google or add a hashtag in front of them and search on Instagram or TikTok. You can usually search by accounts, tags and places to name a few.

Summary

In summary, the best way to find relevant influencers is to really understand the niche your business is in. As a passionate business owner or marketer, no one will understand their industry better than you so lean on that knowledge and take time to do your research and consider your options.

Remember, set goals, stick to budgets, stay relevant and most importantly, measure success!