3490: How Zenoti Is Redefining Guest Experience With AI

[00:00:03] I want to take you on a journey today. I want you to think about spas, salons and studios. The kind of brands where the human touch is absolutely everything. But high staff turnover makes consistency hard and revenue leakages inevitable. Well my guest today is the founder

[00:00:26] and CEO of a company called Zenoti. And he's going to explain today how AI is quietly standardizing the guest experience. And doing that by answering every call 24-7, personalizing upsells, being more empathetic and arming front desk teams with the right context at the right moment. And do all of that without losing the human touch. And he will argue that sometimes AI is more empathetic towards

[00:00:55] other people than we are as humans. So we'll also dig into Zenoti's AI receptionist and hyperconnect and why missed calls equals missed revenue. I think we've all been, I don't know, having our hair cut and you can hear that phone ringing but nobody can pick it up. And also more practical ways why any service business can use automation to boost retention without losing its soul. And as someone

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[00:02:44] So with that scene perfectly set, let me introduce you to today's guest. So a massive warm welcome to the show. Can you tell everyone listening a little about who you are and what you do? Yeah, I'm Sudeer Koneiru. I'm the founder and CEO of Zenoti. I, you know, come from an enterprise

[00:03:08] software. We build software for large brands, which have chain multiple stores, which are spas, salons or med spas, like laser weight loss, you know, that kind of treatment. So beauty and wellness, and more recently also into the fitness category in terms of gyms and, you know, yoga classes and that kind of stuff. Awesome. Now I've got to ask, because we're both men of a certain age, what originally inspired you to create Zenoti? And how has that vision evolved as the company

[00:03:38] has scaled globally? What's the origin story behind the company? There's got to be a story, right? Yes, yes. In fact, I was never going to start Zenoti. I worked for eight years at Microsoft coming out of college, was very lucky in life to be at Microsoft at the prime days where, you know, you made a lot of money for stock. And I was a senior leader at Microsoft, but I quit. And I started a company in the Seattle area for about eight years, which again, focused on software

[00:04:04] for very large companies. It was successful, got to about a hundred million plus in revenue. And after that decided, okay, I'm done working. I had little kids and financially, I was not aspirational beyond the money I had made. And I said, I'm going to retire. And for two years, I did nothing. I just focused on my health, my wellness. I got very passionate about well-being. And then I realized how 16 years of my life, I was so heads down doing what people normally do, running their professional

[00:04:33] lives. And I wanted to build a wellness business geared to making people open up to making wellness part of their life along the way. So I actually ran a chain of centers, which were focused on a gym, yoga, spa, salon, all integrated wellness kind of stuff. And I was doing well, actually. And then, but I realized that the industry didn't have good software as I was growing. I had seven stores and

[00:04:58] I was struggling to run my business. And around the same time, I had this definition of what wellness is. Wellness is all about being in a zone where you live life to your full potential. And I felt, while I'm doing a fine job running these stores, my potential license software, and I ended up, so I said, let me go back and work. I mean, and officially started Zenuti and focused, of course, because of my background and experience building software for the larger businesses,

[00:05:25] because I come from enterprise software backgrounds. So what a great story. And before you came on the podcast, I was doing a little research. And one of the things that I quickly learned was high turnover is such a constant challenge in spas and salons, et cetera. So why does it have such a direct impact on guest experience and revenue? Because these are problems that a lot of people probably blissfully unaware of, but tell me more about that. Yeah, I think, see, turnover is a big issue because,

[00:05:55] see, it's a very personal experience going into spas and salons. If you think of it, there aren't many places where you go, where you let somebody come into your personal space. Somebody is going to touch your hair, somebody is going to touch your face and skincare and all kinds of things. And so you are very, most people are very particular about saying, I want to know, well, not just the provider, of course, they're particular about the provider in terms of the quality of haircut they get, and they want to stick to the same person.

[00:06:20] And even in terms of reception staff who greets them, who hosts them, just the familiarity helps them know that, okay, I'm going to a safe place, you know, because I'm submitting myself, my body through something with these people. And so I think staff retention is very important. And unfortunately that does, there is a lot of high turnover and it costs businesses, you know, there's a direct correlation. We put this data together at Zenoti which said,

[00:06:44] businesses with the best retention, you know, outperform those with lower retention by a huge margin. You know, it's like, you know, growth is like they grow at a 30% rate over the three years, whereas the other ones went downhill kind of stuff. So the data clearly shows strong correlation for those who can figure out how to retain staff better. Can you also expand on that and how AI tools like Zeni and Hyperconnect are helping businesses

[00:07:14] deliver consistency, even when the staff changes frequently? And one of the reasons I was excited to ask you this question and get you on here today is we're talking about AI a lot at the moment. There's a lot of hype. There's a lot of things caught in pilot phase. There's a lot of things struggling to deliver ROI, but you've come across something here that seems to be delivering on all of those things and making a real difference. So tell me more about these AI tools and the impact that they're having.

[00:07:40] Yeah. So see, AI can't necessarily change or affect the quality of care that a professional is providing fundamentally. How well you do haircut is a creative art which only the stylist possesses. So I wouldn't go there to say that AI is going to solve that. But there are other ways that AI is helping. And, you know, one is we have launched a full-fledged AI receptionist. It's like an agent. And most people

[00:08:06] will think of an AI receptionist as, okay, it's just going to be a robot talking kind of stuff. But, you know, we've recently, we've worked on it for more than a year. And, you know, actually, it's better than your best receptionist. It never misses a call, the quality of conversations, the velocity of conversations and AI. A human will say, oh, when do you want that? Let me check again. And they're trying to get distracted and trying to figure stuff out. Whereas AI is very precise. We

[00:08:34] have found that the call time goes down by 50% because an AI is handling the call kind of stuff. It is decisive and it'll never miss a call. The AI will always ask like things like, do you want fries with that? Like, you know, employees always have bad days. So they forget to ask, do you want to blow dry along with your haircut? And, you know, because they're just busy. There's people in front of them, right? They're dealing with. So the AI is really delivering a very consistent

[00:09:01] guest experience. And I do think consumers are going to be more and more comfortable with that. So, you know, we are finding it's working well and it gives the staff, see, what happens is many businesses start off with saying, okay, I'm just going to give the missed calls to the AI because staff is busy often dealing with a guest in front of them and they can't pick up the phone. So there's less pressure now on the staff and they can deliver that personal care for the person

[00:09:27] who's right in front of them. But over time, number of missed calls is increasing, which shows that the staff is confident because the AI is performing well. And so there's consistent. That's one way. The other way is AI is doing is that it is also smart, even if a human picks up a call and is talking to somebody and you're a new employee because there's just a turnover that happened. The AI provides all the information that the staff needs right there when the call comes in

[00:09:52] for the guests without them having to search you with based on your phone number or find you in a system. The AI knows who's calling it, whatever the receptionist has access to. It puts it up right there. So they are able to provide the personal care, even though I'm a new employee. I just showed up two days ago kind of thing. Well, I just love it what you've created here. And I guess to to further bring this to life, are you able to share maybe a few real world examples of how

[00:10:20] and where Zanote's AI has improved things like retention or even reduced misrevenue opportunities for clients? Because this really moves the needle, this stuff, doesn't it? Yeah. And we've had some good brands like there's a brand in the US called Skin Laundry, which went fairly aggressive with the AI early kind of thing. And, you know, for example, there are zero missed calls at Skin Laundry. It went from 30% calls being missed to zero calls

[00:10:48] being missed. And then in our dashboards in the system, we do show what percent of those missed calls which the AI took was it able to convert into revenue. And we are finding 70% of calls which come in, the AI does end up processing into whether it's a revenue or any other action which was successfully taken care of by AI. So there is direct correlation by having the AI there that they're getting the

[00:11:14] revenue tied to it. Now, some of those missed calls, people can always say, hey, the guest will call me back again because they like my business. But then in today's world, there's quite a few people, there are new guests who are calling, there's a mixture of people. So there's a portion of that revenue, which definitely is an increased revenue for the business. And that's one. Second is, the AI is very consistent in terms of all the upsells. So we report the revenue, which says, how much did the guest call

[00:11:42] for a hacker? And the AI asked, would you like a blow drive with that? And then, you know, we put it into a report which shows how much was there. And then you compare that with the average of the upsell that the business is doing outside of the AI. And then you can show clearly that the AI is actually delivering 50% more upsell than the rest of the businesses. And so I think businesses are realizing AI isn't just about, oh, it's convenience, it just takes care of it for me, and it helps my staff so that

[00:12:11] they can do, you know, do that. It's actually impacting top line revenue for these businesses. Yeah. And I think many owners will be listening, and they might be worried that automation and AI could run the risk of making an interactions feel less personal. And as we know, this industry is all about being personable. So how do you ensure AI enhances rather than replaces that human touch that

[00:12:37] makes these places a success? Yeah, that's a good question. Because that's where I went recently, we had our conference called Energize. And we emphasized the fact that, look, AI is not hijacking our industry anytime soon, because it's a very human touch industry. And so, you know, if anything, people will still rely on the connect with a stylist or a skincare provider, etc. And so,

[00:13:02] but what the AI is doing really is one is, as I said, people want that personal touch when they come into the store, you know, but if your staff is so busy with running the phones all the time, they're rushing through the personal touch, the quality of care is missing kind of stuff, right? So there is helping in the quality of personal engagement that people can do in the store, that's for sure. And then in terms of online, as I said, both ends, people think AI is not personal.

[00:13:30] If you recently talked to ChatGPT, it is more empathetic than an average human being, you know, it will actually empathize with you. You know, we have seen our own AI when somebody calls and says, well, I went on a bike ride and so I was calling for a pipe, calling for a massage. You know, a normal human may just say, okay, okay, I can give you these two massages. The AI actually empathizes saying, oh, bike ride, that must have been a lot of fun. And it's jovial and interesting.

[00:13:55] So I think, see, when you're just talking on the phone, it is fine, AI can handle it. But when you come in person, then AI empowers the person with all the information. So when you walk into a store, so that they can deliver that personal engagement and say, hey, thanks for that Google review. How often, you know, you would have left a Google review for some restaurant or some place you love. Next time you walk into that store, the restaurant isn't telling you, hey, Neil, thanks a lot for that

[00:14:23] review. You'd be shocked if they did that. You'd be like, how the heck did you know that I did a review and I walked into your store. But Zenuti has AI tools, which are at the fingertips of the staff, where they know the next two guests who came, who gave a Google review, who gave a referral to a friend, whose buddy came in and how was the experience. So it encapsulates all the information for the staff. So, you know, they're able to make more personal bonds with their people.

[00:14:50] And to give people listening an idea of the scale that we're talking about here, Zenuti supports businesses in over 50 different countries. So I'm curious, are there any differences that you've seen in how service-based operators around the world are adopting AI and adopting your tools? Because you will create it in the US with a certain use case in mind. But then as that spreads around the world, people find different use cases and different strengths. Are there any differences?

[00:15:19] Dr. Raghuram Yeah, there are some differences. One, I would say is that see, in the countries like the US, the cost of labor is very high. So there's more anxiety to see if AI can solve some problems efficiently. So there are some cost savings as well. Whereas when you go to countries like, let's say we also operate in India, as an example, or in, you know, Malaysia, the cost of labor is not as high there. But they don't have the consistency of

[00:15:46] delivery of, you know, any engagement with the guest, because they're in those places. Also, the staff changes all the time to keep training them. Did you upsell this? Did you do this? They keep training again and again. So they are looking forward to AI for the reasons we discussed earlier, which is around revenue drivers, then cost savings associated. But I think the drivers are there no matter where you go. Having said that, I do think we find it challenging to be able to deliver

[00:16:13] in every country because, you know, there are integrations involved in AI. You have to integrate with your phone line. Who do you use as your telecom so that when the phone rings, the AI has to be integrated into it. So we have more work as we go into some of the other countries, but the main countries like the US or the UK or, you know, Australia, it's super, we are, you know, well integrated with all the telecom systems and, you know, we can deliver in a timely way. Some of the other countries,

[00:16:41] it takes us a little longer to make sure we can provide them access to all the AI tools. And as a profitable unicorn that is still growing, I think 40% annually. So kudos there. I've got to ask what has been the biggest driver of your success here and continued success? It seems you've really struck gold here, but what's the secret? Yeah, I would say our secret is making hard choices in the sense that, you know, many companies will sell

[00:17:09] to anyone who walks in the door and says, hey, I like your software. Can I buy it? And we have been very diligent. Honestly, we turn away in our entire history, 70% of the people who come and fill out a form on our website, we tell them, sorry, we're not designed for you. We're, you know, because we as a company focused on the larger brands, which have like, or whether it's 10 stores, 100 stores to, you know, but if you're a single store running a small business,

[00:17:37] we tell them, look, we are a little more complex, maybe for you. So you should just, you know, there are a lot of other solutions out there, which will work. So we believe in being honest upfront because, and that's very rare, by the way, that companies, when you start also, they're very hungry for revenue. So whoever comes in, let's sign up. And we have just remained true saying, we don't want to sign up someone who we don't think we will be a good match for, because we don't want to see them again, go through a software change,

[00:18:05] which is very painful for anybody to go through. So I think we've been very deliberate, but at the same time, we've been deliberately making those choices of coming down. Like we started with saying, we'll work with people, we're 100 and more stores. Then we said, okay, 20 and more stores. Then we said, because our company is getting better at being streamlined, how it works with people. And so now we do work with even single stores. But again, when we look at single stores, we look at meaningful operations who will benefit from Zenoti's richness of software,

[00:18:33] right? So I think choosing your customers carefully has been our core mantra, I would say. And I think we've gone, what, three years now since ChatGPT first arrived. We've seen a lot of hype, a lot of big changes. I think we're starting to see the real value now. We're starting to see some real cool things happening. So looking ahead to what, 2026 and beyond, how do you see AI further

[00:18:58] shaping the future of guest experiences in industries like wellness, fitness, beauty, et cetera? There must be so many things that you're excited about. But how do you see this evolving? Yeah. So at the core, I would say, see, AI is not going to immediately from my visibility, my perspective, impact the human touch. That is, I don't think it's going to cut hair as beautifully. I don't think consumers are going to submit themselves to AI robots doing hair and skincare,

[00:19:25] etc. So providers are still going to be doing the job. And I think their jobs are more secure than software engineers. Right now, AI is replacing software engineers rapidly kind of stuff. But in terms of how it's going to transform, I think anything non-service related, any effort, like all the businesses in the wellness industry have a lot of non-service work. They have receptionists, they have marketing people, they have folks managing inventory, ordering inventory, getting the

[00:19:52] products in. So I think AI is going to take away all the non-service labor because I see Zenoti also changing from a company which sells software so that you can use our software to do work to saying, no, we sell you people, rather we sell you agents who are going to do the work for you. So we'll sell you an inventory manager, we'll sell you an accounting manager, but these are the AI agents which are doing your accounting, which are doing your marketing, which are doing it. So we replace all non-service labor

[00:20:21] with agents. And I think over the next two years, you're going to find agents are going to do most work so that these businesses are probably going to be a little bit more profitable. But also, I think the providers in the industry will make a little more money because the businesses can afford it. I'm conscious we've been very forward-looking today. We've been looking at your huge success success and well-deservedly so. But I think very often we only focus on the person at the top of the

[00:20:50] mountain, the summit there, celebrating the success. But we don't talk about enough the journey up to the top of that mountain. And of course, none of us are able to achieve any degree of success without a little help along the way. Very often somebody will see something in us, invest a little time. So are there any, is there a particular person or people that you're grateful towards who, who maybe helped you get you where you are today, that they might be unaware of that we can give a little shout out to? Anyone spring to mind there?

[00:21:19] Yeah, sure. I mean, of course, I think success always involves perseverance of the entire organization and all the people, but it does involve learning from key folks. And I think my, I would share a couple of examples. One is, and I had a board member who was a senior Microsoft veteran who had quit Microsoft and was investing. So he taught me the value of listening in the sense I used to go to these board meetings with him and two other people. And every meeting he would tell me,

[00:21:46] Sudhir, you don't know how to listen. And I would get frustrated. Every meeting, it was the same thing. You don't know how to listen. And like, what do you mean you don't know how to listen? I'm listening to you. Right. So, but I think I really learned that skill. And I still see a lot of senior folks who don't listen carefully at boardrooms and everything, what people are saying and acknowledge what they've heard. Because most people like me, I would jump into action. Like, you know, okay, I heard you, now I'm going to tell you what I'm going to do versus saying, no, I just heard you. That's all

[00:22:15] there is to it. And so that was one good thing, important thing that the art of listening is so important for growth in your career. And the second was much earlier in my career, in the early days at Microsoft, when I came out of college, I was a very aggressive kid who used to do his job and be very passionate. And my manager, I would get great reviews, but my manager was very frustrated saying, what do I do with this guy? He's just like doing good work, but then he picks fights with everyone. Right. So he had to teach me this notion that life isn't all black and white. There's

[00:22:44] lots of shades of gray. You need to let some things go. You don't need to pick every battle bit stuff. So I think that was the thing. Life's not all black and white. And art of listening is what I learned from these two folks and Laura. Oh, what a great story. I absolutely love that. And talking to you today, you're such a very calm, relaxed, and you know, positive individual. I would never think there

[00:23:09] was an angry young man inside of you all those many years ago. Yeah. But so for everyone listening, anyone that want to find out more information on anything that we talked about today and dig a little bit deeper on this, where would you like to point them? Where can they find out more information on all things Zenoti? Yeah. The best place to go is zenoti.com. Our website is the best resource of

[00:23:34] all information that we provide for the industry at large. Yes. Awesome. Well, I would put a link there for everyone and urge everyone listening to check that out because as I said in the conversation earlier there, you served in more than 50 different countries supporting over a thousand spa and salon brands. And I was also reading another big stat here before I let you go. Estimated annual bookings

[00:23:57] through Zenoti are approximately 76 million. Just mouthwatering figures. So anybody looking for ROI from their AI and tech project, I think there's plenty of examples there. But just thank you for shining a light on this today, especially because you've been able to do it all without sacrificing the human touch. Great story. Thanks for sharing today. Yeah. Thank you, Neil. And glad catching up

[00:24:21] and glad being part of this. Well, it's time for Neil's one big takeaway. I think AI should never replace the human touch, but it should protect it. So yeah, if bots can handle the repeatable work, you know that answering calls, scheduling confirmation, smart upsells, your people can focus on the important

[00:24:43] stuff, care, their craft, and building that connection with their clients. And so there's examples of zero missed calls, 70% call to action completion, and consistently higher upsells. These things show how standardizing CX can measurably lift revenue and guest loyalty. So ask yourself this week after this

[00:25:08] podcast, how many calls do you or your organization miss? What percentage of interactions include a thoughtful upsell without being salesy? And what context do your teams see before they even greet a guest? Answer these with AI and you'll feel the difference, not just in your rebooks, but in your bottom line too. So I think we've been able to shine a light on the difference that technology, AI

[00:25:35] specifically, can make on a service business here in ways that we probably didn't imagine before. I know I didn't, but I'd love to hear if you've got any similar stories. I'd love to get you to share them on here. And please email me techblogwriteroutlook.com, techtalksnetwork.com, at neilcehughes on the social channels. But thank you for listening as always, and I will speak with you all again bright and early tomorrow. Bye for now.