Beauty Store Business

MAR 2017

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30 March 2017 | THE BEAUTY EXPANSION While Derma E has been in mass beauty for a number of years now—and in Ulta Beauty since 2011, it has paved a new road from the natural health world to find its place in beauty—and it continues to pull every marketing lever to further reach beauty consumers because there are real differences between the two markets. For example, while occupying space in natural health retailers, the active ingredients were mentioned in the name of the products because that is an ingre- dient-driven market. "While we stayed in the health food industry, that worked pretty well. However, as we have gotten into the beauty aspect of it, you need to tell them what it is for—the benefit besides the ingredient. You have to tie the benefit to it. So it changed how we named the products," Stearn explains. They changed their packaging last year, methodically, based on market research. "We are now talking to the consumer in an appropriate way for them not only to understand the benefits of the products but also the key ingredients. Those two things are really important to actually communicate at shelf," Miles adds. Starting in 1995, the company began making changes to prepare for signifi- cant expansion. They hired their first marketing director. No longer a two-man management show, both Stearn and Miles realized they needed a smart, capable executive team that had skills and expertise beyond their own in key areas. They added talent strategically over time. Stearns believes they've done a great job at hiring the right people at the right time to take the company to a whole new level. One of those hires is Jeff Carducci, who is now the vice president of sales, North America. "Jeff Carducci coming on board with us, having served as a vice president at Neutrogena for many years, brought a wealth of experience to this company," says Stearn. "He forced us into the data mode," Miles adds. Prior to Carducci's arrival, Miles and Stearn admit that they didn't look at out- side data—only internal data. Now they rely on data and market research. They've become a market-driven company. Data has helped them expand their reach too. Both Stearn and Miles credit data show- ing Derma E's strong performance in mass beauty as the main incentive for Ulta Beauty picking the line up. Miles is quick to point out that although they spent many years laying a great foundation for the company that has allowed them to expand gradually and steadily, they have made mistakes, of course, but all in the realm of normal entrepreneurship. "If I have one regret, maybe not David [Stearn], but me, I regret that we didn't put better people in place quicker. I think the company would have grown faster had we done that. That's the only thing. We've done all the right things just maybe a little slower than what would have been a good thing to do," she says. Most recently, they recruited Barbara Roll in March of 2016 to fill the marketing director role. Her leadership has helped catapult Derma E firmly into the beauty community through social media and work with beauty influencers. "Barbara is exceptional. Every time she opens her mouth, I learn something new," Stearn says. Roll has helped make Derma E a recognizable name and trusted beauty brand for millennials by bringing the brand to the online spaces they visit. Few true, natural skincare lines are doing this, making Derma E an exception. Speaking to Roll directly, she notes the results she is seeing by focusing on reaching beauty consumers through digital marketing. "The engagement has been growing. We see that with fig- ures from earned media value. We see that with impression and engagement rates on our social media pages. We've doubled our following on Instagram and Facebook. It's really exciting for us. Of course, I'd love it to go faster! Another indication that shows me we are becom- ing more well known in the beauty sphere is how many influencers, blog- gers and vloggers reach out to me—to us, Derma E, on a daily basis saying, 'I've heard about your products, I'd love to talk about them.' That number is increasing each month." AUTHENTIC & ETHICAL A large part of what makes Derma E such a strong natural brand—and what has made it successful outside of the natural market—is that the line has a very clear identity and it has always stayed true to its roots. When the brand first ven- tured outside of natural health to mass beauty—they would only agree to be in stores that featured natural sets, which is a designated area for natural products. "That was one of our definitions of entry into any account. They had to have a natural section. If they didn't have a natural section, we were not going to be sold there. We would never be found sit- ting next to Oil of Olay and Neutrogena," Stearn says. And the brand takes their "eco-ethical" moniker seriously; it's not simply a mar- keting buzzword. From the start, Stearn and Miles made a commitment to select ingredients that are natural and organic whenever possible. With few exceptions, they have kept this commitment. They use only recyclable packaging, even though it is often extremely difficult and challenging at times. (The company once spent 18 months in order to obtain a recyclable package for their biodegrad- able wipes!) "It is a design challenge to make the prettiest packaging out there but still be recyclable," Miles explains. In the most recent packaging update, market research indicated that consumers wanted "pretty"—something they would want to have on their countertops. So that's exactly what they did. They made the packaging softer and prettier. However, making it recyclable, was indeed a challenge. "We "You never know where a good idea is going to come from. And you never know whose mouth it is going to come out of. And it surprises you a lot!" —David Stearn, Cofounder & Chief Executive Officer Beauty infl uencers enjoying a yoga session at a 2016, Derma E-hosted, 2-day retreat in Malibu called Zen in the Bu—one way Derma E builds relationships with beauty bloggers and vloggers.

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