The background details of this case study are the following. Melody McCloskey was the leader of the beauty business StyleSeat, which is a company that provides marketplace services to hairdressers. Essentially, the clients of this business were hairdressers who could use this marketplace to connect with new customers, schedule appointments, and accept payments. The main challenge for this company in 2016 was the transition from the lead generation model to a subscription-based model, which means that previously hairstylists paid based on the number of clients that this service provided to them. Moreover, initially, the growth of this brand was primarily organic, while in the following years, there was a requirement from the investors to expand the services nationwide. The new approach required them to pay a flat fee between $25 and $35 per month.
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Figure 1. SWOT analysis (created by the author).
The SWOT analysis below shows some of the major challenges that the leadership has faced, displayed in Figure 1. The strength of this brand is that it is a one-of-a-kind offer, as there was no nationwide competition when the platform was launched. However, competitors on the local level have emerged, which means that this business should focus on securing its market share as quickly as possible. Additionally, the investors insist on expanding both the supply and demand, but this approach requires a lot of investment and some new leadership challenges that the CEO has not faced before. Finally, the transition to a subscription model was not supported by the majority of the hairstylists who already use this platform, which could mean that a transition will have adverse effects. Hence, based on the analysis of this case study, several recommendations can be provided to the management. Firstly, the company could test the different revenue models, mainly comparing the subscription-based approach to the fee-for-service one. This could be done through A/B testing, where some hairstylists receive access to the platform through a subscription and others through the second model. Next, the data from this research can be used as a reference point to convince the board and the hairstylist that one model is more beneficial than the other.
Another recommendation is regarding the expansion, which was the main challenge for McCloskey as she realized that such efforts would require substantial investments in her business. However, without expansion, the existing competitors or new players can secure the needed investment and increase the nationwide presence and market share. Therefore, it is essential for StyleSeat, to expand quickly. The focus, in this case, should be on securing the demand, meaning that StyleSeat should attract more customers to its platforms. The hairstylists will be attracted through the referrals program and word of mouth since this brand has proven to be effective for managing a hairstyling business and already has a sufficient number of customers.