Function of Beauty’s chief executive officer Alexandra Papazian addressed the evolution of customization, sharing how the brand is using personalization to create efficacious products and a sustainable business model. She also discussed the company’s expansion into retail.
The hair care brand, which was founded by two MIT grads and a cosmetic chemist in 2015, “creates a fully customized regimen and a fully customized formula” based on a proprietary algorithm customer quiz, explained Papazian. To date, Function of Beauty has developed 3 million unique formulations and Papazian said it is capable of producing upward of 27 trillion.
The brand’s business model aims to meet consumer demand for targeted hair products, as NPD reports nearly 50 percent of consumers are willing to pay more for something that works for them and their specific needs.
“Since its founding, the brand has harnessed its unparalleled level of data and very deep consumer understanding…to identify whitespace opportunities,” Papazian said. For example, one discovery was that when consumers are given several days to update their subscription-based formula (rather than triggering an automatic reorder right away), they are more likely to update their product and remain loyal members. By delaying replenishment production by a few days, Papazian said the company is also more sustainable overall.
Papazian said while Function of Beauty can attribute much of its success to personalized formulas and data usage, the company has also customized every part of the experience for the consumer. Purchasers can add their name to the bottle, for example, choose the color and fragrance of their formula (and its intensity) and opt for sulfate-free formulas. And all of this personalization takes 45 minutes from the initial order to being ready for shipment.
While the brand relies heavily on its direct-to-consumer subscriber model, it expanded into retail in 2020 with Target and recently launched customizable styling products in an effort to bring personalization to brick-and-mortar. In retail, consumers can purchase goal-focused booster shots to add to shampoo, conditioner and styling products in order to customize them. Papazian said that with 18 stock keeping units at retail, there are upward of 3,000 custom formulas the consumer can create.
Papazian explained personalization is a consumer demand across the board, both online and in retail. In recent years, the consumer has become more educated than ever, researching ingredients, exploring sustainable options and seeking brand transparency.
“Only customization can give you so many data points that you can actually continuously improve your products and your process,” she said.
This data and population research is driving the future of the brand. Papazian explained the growing need for customized products is reflected by the fact that “in less than 10 years, nearly half of the population will be non-Caucasian….There definitely needs to be a solution out there to address all this variety that keeps increasing and becoming more and more complex,” she said.