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Euromonitor International Interview Series: Pavlina Marinova, CEO and Founder of Pick N Dazzle on the Online Subscription Model

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By: Irina Barbalova

Euromonitor International is pleased to present an interview with Pavlina Marinova, CEO of Pick N Dazzle, a beauty subscription service grounded on the principle of personalised recommendations. With the rising proliferation of beauty subscription boxes, longer term prospects for the model will increasingly necessitate greater focus on expert curation, unique differentiation and a routine-based approach to the service proposition. Pavlina tells us more about the core aspects of a successful ‘tailored subscription service’, the technology behind it and the best win-win strategies moving forward.

How did you start the venture and why did you choose this particular model in beauty?

The Pick N Dazzle business model combines a beauty service, product recommendations and beauty advice, with the delivery of recommended products by way of monthly subscription. It’s a curated beauty subscription service, delivered with a little bit of technology. A number of years ago, I subscribed to a healthy meal plan with daily delivery. Signing-up was done by answering two questions: the number of calories I wanted to have per day, and the number ofmeals per day. From there, the company took over to create a daily personal meal plan and to deliver it. I felt that this was a fantastic proposition, quick and easy for the customer, compared to the option of selecting dishes myself every day for five intakes, calculating calories, and combining foods. I wouldn’t have been able to do it without in-depth knowledge, and I certainly wouldn’t have done it better than the experts on the matter in the company. Could this work in beauty, which is very much subject to emotions and impulse purchases? We believe (also on the basis of market research) that there is an underserved customer segment, which is seeking guidance, recommendation, and a shortcut in finding suitable products to match their personal needs and preferences. So we created Pick N Dazzle based on two fundamentals:

  1. Personalised service: Recommendation, individual curation, and experience
  2. Value: Savings (time and money), convenience, and an extra treat

We also fundamentally believe that beauty is a journey and a long-term relationship. From this perspective, it is surprising that subscription models did not emerge earlier in beauty. We know that most women stick to the same beauty routine or hair salon for years, so the repeated nature of their shopping behaviour is there.

Which are the current markets you service and what are your expansion plans for the future?

We are still in test markets as we made the decision to develop most of the functionality and the platform while serving customers, to ensure that we mature and adjust based on customer behaviour and feedback. We have already converted our website and prepared for multi-language, multi-currency and multi-market operations. In the last six months, we ran a dual-market operation to adjust processes in communication, marketing, operations and customer service. We have ambitions to deliver to more European markets in the coming quarters.

What is the main criteria for your brand selection process (eg pricing tiers, positioning, image, etc)? And what do most brands want to achieve through the partnership (greater marketing exposure or an extra sales tool, or both, and how do these vary by brand)?

We partner with brands long term and we contract directly. The partnership is about high marketing exposure through social networks, true product ratings and reviews, and targeting products to specific customers based on the consumer data we have. We also serve customers long term, and it makes sense to feature brands long term. Indeed, we have cases of customers who have shopped with us every month ever since the start. They have found new favourite products and brands through our service, and they stay with them. We are very enthusiastic about new brands; they have modern concepts and often use natural or organic ingredients and packaging. They need higher marketing exposure, consumer outreach and feedback on product performance. We do that very well! We offer a mix of discovery brands and well-known brands with already broad distribution networks. In the latter case, customers shop with us because of the convenience; more conservative customers stick to brands they have already tried and know. In terms of price tiers, we are in the mass, upper-mass and masstige segments, and exclude the value, bottom-priced segment of the market. There are a number of criteria for brand selection; however, a key factor is quality. No matter the price tag and positioning of the brand, we do not compromise on quality as we put our image behind each product we recommend. The product ratings we get are fairly high. On average 88-95% of products, selected through our recommendation engine and our experts, are loved by customers. One reason is the targeting. All of the above shows the great value we create for the brands we sell.

There has been a huge proliferation in the beauty subscription box space. What would you say are Pick N Dazzle’s point of differentiation and USPs against your competitors?

Pick N Dazzle is a beauty tech company rather than a beauty box company. We have created a recommendation algorithm, which is giving great results. Customer satisfaction rates are rather high and we do not experience product returns. Most subscription box offers come from a supply-side mind set, with fixed, pre-selected sets ofproducts, offered for sampling/marketing purposes in a discovery journey for the consumer. There are also travel size versions from aspiring brands, delivered at affordable prices for budget-cautious customers. In these models, customers will switch products and brands every month, and it is likely that the usage of samples, to some extent, replaces the buying of full-sized products. We believe that the sample box customer segment has little overlap with customers who buy and use full-sized products in the long term. Pick N Dazzle works from the perspective of the consumer, and, in this sense, is more demand-side oriented. Each and every set of products is individually tailored to each customer every month. This level of personalisation with full-sized products is rather new. We also derive great insights from customers’ personal beauty profiles and preferences, and we buy products and partner with brands based on that. Businesswise, we believe that this is also a healthier approach, as customer demand is driving our product portfolio and overall business decisions, as opposed to brand or product marketing requirements. Subscriptions boxes are usually broadly classified into Discovery journey and Replenishment/supply services. I would say that Pick N Dazzle is in the Tailored box subscription service market: The first and only personal beauty box with full-sized products, curated individually for every customer every month. We offer product discovery based on personal recommendation, with a high-degree of product suitability, for customers who want that. We also facilitate recurrent product ordering for tried and tested products, from a channel our customers trust, and in an easy and convenient way. There can be interesting aspects to this model, for example in product planning and management: Customers who select products themselves (as opposed to using our recommendation service) tend to do so a month or two in advance, which allows us to plan for having the right products at the right place and time. This generates savings in our operations and inventory management, which we deliver back to the customer in the form of loyalty discounts. This creates a win-win situation. From the consumer’s perspective, the core of Pick N Dazzle’s offer is the personal curation, the individual recommendation, the convenience and value. To deliver this, we focus on gathering and analysing consumer data, and targeting via our recommendation engine; this process being constantly adjusted and enriched with customer feedback on product performance. We would like to continue excelling in this direction.

What are the three key aspects sustaining customer loyalty and re-subscription rates? How do you acquire new customers and how do you retain existing ones as the novelty wears off?

Customer loyalty is sustained as long as the model is solving pain points like choice paralysis: too many products, too many options, not enough time. Beauty is a noisy space. Filtering, focusing, making it effortless to choose saves time and makes the journey easy, especially when this is happening with the individual customer in mind. Filling knowledge gaps with recommendations and advice is a key benefit that helps make us different. Giving customers the ability to overcome uncertainty about ingredients, quality and suitability of new products and brands, via recommendations from a trusted source and from other customers like them, is highly appreciated. For time-poor customers, impulsive, on-the-go shopping can sometimes lead to disappointment and unnecessarily wasted time. The customer journey at Pick N Dazzle is replicating, to some extent, the bricks and mortar shopping experience. Entering a new shop, one is likely to seek guidance and assistance. Additionally, with bricks-and-mortar beauty stores, shoppers tend to return to the same store and pick the same brands; it is similar online. At Pick N Dazzle, we often help customers with product selection for their first box. This is appreciated, especially in the case of new brands and products, for which we, at the company, have greater insights. Some customers continue with the Curated box service because it is easy and they are happy with it. Others move to the option of making all their product selections themselves, quickly and easily, with the help of our recommendation engine. Our customers also have the option of choosing some of the products in the box themselves, while still using our curation service and leaving the selection to us for the others. This is an exciting option for those who wish to retain the surprise and excitement element of receiving new products, while also serving their immediate needs for known products. Maintaining novelty is key in fashion and beauty. It’s a challenge for brands, as well as distribution channels, to innovate in the customer journey.

Do you believe there is room for further customisation as part of the subscription model? If yes, how do you think this can be achieved?

A subscription model is a cycle of repeating transactions, usually for the same amount of money, but not necessarily. Everything else can be customised in our opinion. This includes the cycle of subscriptions, which can and should be customised, weekly, bi-weekly, monthly or otherwise. This provides greater flexibility to the consumer and helps increase customer and subscription retention. Lately, there have been new ideas about the mobility of subscriptions. For instance, families might no longer buy cars, but they could have transportation available on-demand through a subscriptionservice. So it may turn out to be more cost effective, in the end, to spend a fixed amount via a subscription with additional on-demand consumption, provided the subscription price is reasonable. It would take more effort and investment to continuously seek the best price for a product or service at a given moment in time.

On the whole, a successful subscription service is just one aspect of a broader retail offering. How do you see the company evolving and creating additional revenue streams and advancing the product offering (eg through further social engagement and reinforcing relationships with brands)?

Indeed, buying on subscription is one option and it doesn’t preclude from offering a classic one-time sale for individual products. This is still our target as we develop and refine our recommendation engine over time for anonymous users. From a social engagement standpoint, we have had several successes engaging with and reaching new customers through major social networking platforms, organising various events, creating content, as well as working with prominent fashion bloggers in our markets. We are seeking to continue developing communication through social networks; however, interaction and experience on platform is a priority. In terms of brand partnerships, we have already been working with a number of brands and are in the process of expanding this activity, as the main focus so far has been on platform development.

Do you believe the business model holds any potential in the future and if yes, why and how can this be sustainable?

Do I believe in close customer relationships, personalisation, advice and recommendation? I clearly do. It is not enough nowadays to come up with product offerings online by showing static product pictures and price. Many online shops today, and even malls, are quite impersonal, and customers are on their own, often buying with one main criteria in mind: price. I believe that the experience of buying beauty products should be beautiful, whether online or in a specialised store or beauty studio. Customers want to get a feel of the product experience even before buying a product, through product stories for example, combining information and content, engaging content and advice. I believe that there is a market for a personalised beauty service, which starts from the customer’s needs perspective: making their lives easier by saving time and money, and by selecting beauty products that are specifically tailored to their uniqueness, individual features and beauty needs. Our mission is to help and facilitate the process of matching each customer to the right product, being supported by constant consumer experience feedback, and with an option for a long-term journey! Through Pick N Dazzle, new products find the right customers to love them and use them long term. Isn’t that the dream of every product designer and brand?

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