One of the tricks of investing in consumer brands is gauging where the prevailing winds are blowing and, most importantly for us, if they will build into a gale or peter out in 5 to 10 years’ time. Unpicking this is a fine mix of gut-inspired instinct based on 30+ years of working with brands, and consumer insight.
We spend a lot of time getting under the bonnet of new trends – national studies and online surveys exploring customer habits, focus groups untangling attitudes and emotions, and digital and CRM analytics tracking behaviours. A lot of the time we come to the conclusion that a trend is actually a fad, but of course sometimes we get it wrong…who knew flowery patterns, smoothies and fresh sandwiches would become so big!
Based on our insight work, we felt very confident in our decision to invest in Neom Organics with their focus on providing 100% natural essences to support consumers’ skincare and wellbeing. All the trends indicated that consumers interest in wellbeing and pure, natural beauty were here to stay.
Most importantly for us was the way customers described Neom as a humble, personable, caring and transparent brand – one that gives them the permission to indulge and treat themselves. Both its customers and stockists perceive Neom as a trusted and empowering expert in wellbeing, bringing the spa into their homes.
We invited Nicola Elliott of Neom to tell her impressive story at our annual Beauty Founders’ Collective.
Nicola took the 20 entrepreneurs in the room through five things that she has learnt over the last 13 years in growing the Neom brand.
Firstly, it’s about staying true to your brand – ‘don’t constantly look at what others are doing and stray from your original purpose. Keep telling your story and if you are genuine people will buy into it. It’s important to have a benchmark of what you would do and wouldn’t do as a brand – blue shirts outsell white shirts 2:1 so The White Company should sell blue shirts, but they don’t, they stay true to the brand’.
Secondly, know your customer – ‘it’s ok to create and market to your aspirational customer, but focus on your real customer. Don’t lose focus’. Thirdly, don’t spread yourself too thinly – ‘there are lots of interesting things that you could do, but focus. Just do 2 things really well.’
Fourthly, get the right people – ‘99.9% of the mistakes I’ve made are bringing in the wrong people into the business. Hire people from businesses of a similar size and not people who have worked in L’Oreal. Bigger business people often can’t handle an entrepreneurial environment where they need to be much more fleet of foot, independent and work to a tight budget and with little support. Most importantly, don’t undermine them and make sure to trust their expertise – you can’t know everything.’
Lastly, know how long it takes, switch your mind and be prepared for a long and winding journey – ‘be mentally prepared for a long and sometimes protracted journey that typically gets built brick by brick. You need to be resilient. This is how future-proofed businesses get created’.
We’ve always been fans of the power of QVC.
One of the channels that Neom has had success on is QVC and so we invited Sandra Vallow, QVC’s Beauty Buying Director, to speak and dispel some of the myths around TV shopping.
QVC really know its customers’ tastes and preferences better than any other retailer. This has allowed them to build up new premium brands from scratch, launching Liz Earle, bareminerals and Deciem – ‘a dashing Deciem guy on a motorbike used to drop off a different product in a box outside our office every day, which triggered our attention’. Skincare is now their biggest (20%) category in the UK.
The products that do really well are the ones with a technical side to them – ‘products that don’t sit that well on shelf and are harder to use or explain on a box are perfect. The Dyson Air is a great example, it’s been flying out. We bring experts into people’s homes’. It can also be really powerful for new product launches and campaigns. As an example of QVC understanding its customers, QVC encourages the ‘on-air negative sell’ as they want to be transparent when products are not right for certain people.
More recently, having realised that they weren’t attracting the Millennial customer and instead of trying to force them to use QVC, they launched a sub-brand called Tili (try it, love it) – ‘it’s for Millennials that don’t watch live TV. We are sending out 10k boxes with various products every quarter, all marketed via social media. We have a very high email open rate of 44%’.
Amazon has become a really important channel for our brands.
Amazon is another important and fast-growing channel for Neom – our research shows that 29% of ABC1 women aged 25-54 in the UK have ever bought home fragrance and 25% bath & bodycare products from Amazon. Research shows that 55% of people in the UK and US now start their search for product information on Amazon versus only 7% on search engines.
With that in mind, we invited an Amazon expert, Marc Bonn of Expert Edge, to take us through the benefits and pitfalls of working with the retailer. Like any channel, it’s important to understand who the customer is – ‘there are two types of Amazon customer, the lazy customer that loves the speed and convenience and the one that wants to research and explore new products’.
It’s also important to know how to work with Amazon (there are lots of different partnership options) and ensure that your products are making their way to the first page of the search results – ‘90% of customers start their purchase with a keyword search and only 30% make it to the 2nd page. You need to make sure that you have enough orders and reviews for the algorithm to prioritise you so, for example, starting off by paying for ads can help this. This is all not an exact science and requires careful trials’.
Irrespective of what the channel strategy is, it’s really important to control your brand’s content on Amazon as other sellers will do a poorer job of representing your products and brand. At Piper, we don’t see Amazon as just cannibalising your own online sales. If done in the right way, it can be complimentary, incremental and lucrative.
As we hoped, there was plenty of debate around the table, and we look forward to more debate at our Founders’ Collectives in 2019.
For more information, please contact:
Yasha Estraikh, Associate Partner
Phone +44 (0)207 727 3842