The 90% Problem: Why Beauty Brands Fail (And How to be the 10%)
90% of beauty brands fail within the first few years. That’s staggering when you consider that 50% of small businesses fail within 5 years.
So, what I would like to do with you today is explore what the beauty brand survivors know that others don’t.
I call them survivors because there are times in entrepreneurship where you feel like all odds are against you but you take the time to figure it out. And you come out on the other side with a business that’s still open and steady.
Research shows the failure is caused by 7 major factors:
Inadequate Market Research: products need to meet the needs of the customers. It’s ok to take an idea to market based on what you believe you are solving but dive deep and really get to know your customer beyond demographics.
Poor Product-Market Fit: Specific customer segments must experience the value your product delivers. Build alignment, trust and results with the customer.
Pricing Issues: Pricing should be aligned with the value of the product and market demand. Adjusting your prices to maintain profit margins and sustain loyalty from customers is not easy. Pricing too low can put you out of business and pricing too high can slow sales significantly.
Execution problems: From manufacturing to marketing channels, sales and delivery. I’m a big board game fanatic and I think of Operations when I think of execution. All parts are connected. So putting systems in place and having metrics in signal disconnects or inefficiencies early can help protect profits.
Lack of differentiation: there are a thousands of shampoos or facial cleansers but what makes your brand stand out. Later on I’ll share my story on beauty products I chose as a customer (at a very slow pace) because I was looking for value alignment in product and brand.
Customer Retention: Competition is heavy on social media. Customers have core problems. If they feel themselves going through a journey, it helps build retention. Prioritize building loyalty while adding new customers. It’s no longer sustainable to do one or the other.
Celebrity Fatigue: If you capture the support of a celebrity. Make sure you brand is bigger. This requires a strategy to ensure there is partnership with you and the celebrity and not just a promo of your product by the celebrity with you brand in the background. It will wear down pretty quickly along with your profits.
When I discovered these issues I found it intriguing. Immediately, my mind started solutioning. So, if this intrigues you too, then I would like to invite you on a deep dive on each of these areas in my upcoming posts for “The 90/10 Data Glow-Up: a beauty brand audio series”. Right here on this audio blog.
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The truth is most business owners focus on marketing and never pivot their strategies on other parts of the business until it’s too late. Some don’t truly understand the unit economics of their business model or have metrics setup that provide the signals to make key decisions (start, stop, maintain, terminate) and it often results in disrupted operations and stunted innovation.
It’s time to truly understand what to keep, kill or scale in your business to maintain profitability and deliver value like no other beauty brand can!
