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Emotions and Tech Help Madison Reed in Hair-color Market

Madison Reed ceo Amy Errett uses Google Hangouts, a mobile-first strategy and Amazon Payments to tackle the $50 billion hair care market and help women have good hair days.

To better know her customers and meet them wherever they are, Madison Reed chief executive officer Amy Errett isn’t afraid to geek out on technology.

For the two-year-old hair color startup that she cofounded in San Francisco to tackle the $50 billion hair-care market, Errett doesn’t shy away from holding focus groups on Google Hangouts, designing her e-commerce site with a mobile-first strategy and heeding customers when they asked her to incorporate Amazon Payments into the checkout process.

After all, lacking the human touch that characterizes traditional focus groups meeting in small rooms with marketers is an advantage for Google Hangouts, she said. “People don’t have to see each other and they can tell you the truth. They don’t have to make eye contact with you in the room,” she said.

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Aside from using Google to avoid potentially awkward situations, Errett is dealing with consumers who are on the go. Errett said 52 percent of traffic for her San Francisco-based company comes through mobile gadgets. The larger screen on the iPhone 6+ enables easier transactions, even though iOS 9 software is a more challenging environment, she said. Nonetheless, she pointed out, “We’re getting more and more traffic, not less.”

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Still, she conceded she could improve her rate of converting visitors to buyers. “I think it should be higher,” she said, since the consumer is visiting the site “with interest.” To get to the bottom of the problem, she polled people to find out what would help convert customers. Of the respondents, 85 percent said to implement Amazon Payments. After doing so, Madison Reed reported that 48 percent of all transactions were made through Amazon’s system. The reason is because women have memorized their Amazon Prime log-ins, Errett said.

Errett found an unexpected way to meet the potential customers for her brand, which, in addition to hair-coloring products made without harsh ingredients such as ammonia and parabens, now includes shampoos, conditioners, styling creams and brush-on powders for root touch-ups. Her employees crammed themselves with cameras into 55 bathrooms to film women who colored their hair at home. Since launching as a digital-only company 18 months ago, Madison Reed has evolved into a wholesale business on the strength of its hero product, the powder compact that Errett dubbed “makeup for your hair.” Its products are now available on Sephora’s Web site, the specialty beauty chain’s 224 stores and salons. The core customer is a professional woman older than 35, who’s finding her first gray hair. Errett is satisfied if the customer buys from Madison Reed four times a year, plus some product extensions.

As it grew, Madison Reed also raised more money, pulling in $4 million at the start and $22 million in 18 months from True Ventures and Norwest Venture Partners. The funds allowed it not only to diversify its product portfolio but also to advertise on TV. Errett doesn’t advocate hiring celebrities for endorsements, however. “When a celebrity signs on, many customers are extremely cautious. What they believe is that person gets paid a lot of money to say something is good.”

Instead, Errett relies on technology to give customers access to its professional colorists via text, Web chat, e-mail and by phone. Even though Google Hangouts has worked well for Madison Reed by limiting human contact with focus groups, “hair is emotional” and some women’s moods are predicated on whether they’re having a good or bad hair day, she said. And the emotions go beyond hair.

“Your brand has a soul,” Errett said. “Your customer wants an emotion, your customer wants a connection, your customer wants to know that she deserves the best.”