This Cosmetics Company CEO Turned a $1 Million Packaging Fail into Quadrupled Sales. Here's How.
Carisa Janes, founder and CEO of Hourglass Cosmetics, had to pull more than 10,000 units of foundation off Sephora's shelves in 2012. She went into fix-it mode and turned things around.
In the Women Entrepreneur series My Worst Moment, female founders look back on the most difficult, gut-wrenching, almost-made-them-give-up experience they had while building their business -- and how they recovered.
How do you go from a $1 million packaging issue to quadrupling your product sales? Just ask Carisa Janes, founder and CEO of Hourglass Cosmetics. Janes first debuted Hourglass Cosmetics at Barneys New York in 2004, and since then, she's expanded into the likes of Bergdorf Goodman, Sephora and Nordstrom. But after launching a new foundation formula for oily skin in 2012, Janes started seeing a spike in customer complaints. Upset and defeated, she pulled the product from Sephora's shelves, missed out on fall season profits and narrowed down the issue to find that the bottle's pump wasn't functioning properly. Here, Janes tells us how it happened -- and the fix-it strategy that later led to a significant spike in sales.
This interview has been edited for length and clarity.
"One of the worst moments I've experienced was in 2012, when we launched a product called Immaculate Liquid Powder Foundation. I had problematic skin when I was younger and was never able to find a foundation that worked for me, and a team of chemists and I had spent years working on a breakthrough formula for oily skin. Initially, our customers loved it, but about four weeks later, after a July heat wave hit, we saw a surge in customer complaints. It totally caught me off guard.
I like to read Hourglass customer service emails -- I've always made this a priority and value what people are saying about our products. Unfortunately, we started getting a high number of complaints saying the product wasn't coming out of the bottle and the pump wasn't working correctly. I was reading these either in my office or on the couch in my living room, and I saw probably 20 complaints in the first week this was happening. You get a sense pretty quickly that something's wrong.
We pulled the product from the website, then took it off the shelves at Sephora, which was our number one retailer at the time. That meant pulling about 10,000 units from the store at $55 a bottle, plus backup stock -- and that compounded with the loss of sales every month. I missed all of the fall season. We probably lost about $1 million.
It had been nearly 10 years since I started Hourglass. At the time, it was still a small company, but we were growing rapidly. I invested everything I had into my company for nearly a decade, so when I saw customers had a negative experience with Immaculate, I took it personally.
We were a small, committed team, so everyone knew what was going on. From the marketing team to the sales team to the customer service team, we were all struggling together. We prepared for the worst, because we all knew it was going to be a big hit to the company, but we were all invested in addressing the problem as quickly as possible.
This level of problem was a "911' -- I had to be involved in every single aspect of fixing it. This is not something you delegate -- this is something you address head on and get your hands dirty. That meant meeting with the manufacturers of the pump, the bottles and the formula, as well as looking at the raw materials. It was a forensic. We had to dissect every aspect of the product.
Finally, we found out exactly what was causing the problem. It wasn't the foundation itself but an operational issue with the packaging. Immaculate has a sensitive formula, and when it was exposed to abnormally hot temperatures (like the severe heat wave across the country that summer), it had an effect on the pump.
It was the first time I had experienced a packaging failure. I became fixated on reading reviews about Immaculate online. I was devastated each time I saw another person complain about the pump not working. As a product developer who had spent years on this foundation, I was upset because I knew the formula itself was amazing, and I wanted customers to experience it.
The fix was about moving quickly -- communicating with your customer, being transparent and providing that luxury-client service. We issued refunds and offered to send replacement pumps to all the customers who experienced quality issues with the packaging. As far as the pump, rather than completely revising the design, we made small adjustments to the existing packaging.
But during the months when the foundation was out of stock, something amazing happened. I had women sending in emails and calling our customer service line, desperate to get their hands on the product. Some even offered to purchase the product knowing it had faulty packaging. We set up a separate phone line for these women to call so we could sell them the product.
I learned that the foundation was particularly helpful for customers with problematic skin. Not only did it combat oily skin, but people were experiencing fewer breakouts the more they used Immaculate -- and their acne scars were less noticeable.
I went back to one of our chemists to talk about it. These kinds of results are usually seen from an over-the-counter drug product, and I wanted to know if it was possible for Immaculate to have the same effect. Looking through the different ingredients in the formula, our chemist confirmed that the positive results could be attributed in part to Cashmere Kaolinite Clay, an ingredient that served as a powerful oil-controlling agent. The silver lining here is we learned things about the foundation that we wouldn't have known otherwise (or would've taken a very long time to discover).
After that, we sent out a survey about the effects of Immaculate and got a 90 percent response rate. Then, we posted on Facebook that we were going to film a video in L.A., encouraging women to show us their "befores" and "afters." A few weeks later, I had three women from different parts of the country in my living room filming a testimonial video about the results of the product. When we posted the video, our sales quadrupled overnight. We seized this opportunity to not just fix a big problem -- a disaster -- but also to take advantage of what we were learning in real time about our product."