The bigger they are, the harder they fall. Those words may have been a lesson to many a schoolyard bully, but it seems today’s beauty leaders are taking heed of the old saying and not resting on their laurels — not even for a minute.

Susan Arnold, vice chairman of P&G Beauty & Health, took the summit’s theme “Bigger Than Beauty” and turned it into a challenge for the audience — especially the big players — who she dared to think bigger about beauty. Specifically, Arnold asked her peers to build better relationships between brands and consumers, develop inspiring products and, perhaps most important, be honest.

Arnold recalled a time when big companies could talk to consumers and consumers would listen. Now, these companies need to listen to their consumers and, in turn, respond to their needs.

“We need to pay attention to her. We need to rekindle the flame, to romance her with our products and our brains. And we need to talk straight to her,” said Arnold, who recently took on P&G’s health business, in addition to overseeing the company’s $20 billion beauty division.

Beauty executives must first pay attention to a consumer’s needs. By knowing what matters to her and what’s going on in her life, Arnold argued, a company can better produce products she’ll love. She pointed to Apple and eBay as companies to learn from.

“Apple was certainly paying attention when the record industry wasn’t. They paid attention to the way people were using the Internet and how it was changing their relationship with music. People no longer wanted to hear an entire CD, they wanted to download individual songs and then burn their own personal mixes,” Arnold said. “Now, 42 million iPods, about a billion songs and over $9 billion later, iPod is bigger than music.”

EBay is another company Arnold said invented itself by paying attention to how people use the Internet. But a recent chat with eBay’s chief executive, Meg Whitman, taught Arnold that no company is too big to rededicate itself to listening to its consumers.

“Despite all the safeguards and rules, a few people find ways to cheat,” Arnold said. “So eBay is reinventing the way it responds. They just added over 1,000 trust and safety experts,” Arnold said.

This story first appeared in the May 26, 2006 issue of WWD. Subscribe Today.

To better listen to consumers, Arnold suggested utilizing blogs. By visiting Technorati.com, a search engine that tracks blogs, Arnold said one can track the number of blogs created about a certain topic — and what consumers think about that topic.

“Bloggers tell each other what they like and what they need, which mascara really works and which to avoid. And while their influence on purchases may still be small today, we’d be foolish to ignore it,” she said.

Arnold took a stab at Technorati.com by typing in “Pantene” as a keyword. The site turned up over 12,000 references to the leading P&G hair care brand, Arnold said.

While women may turn to the Web as easily as they do a girlfriend to discuss beauty, men, on the other hand, have a ways to go. Arnold hopes that new ways to communicate with them will help manufacturers crack this market, as well as breathe new life into other categories, such as anti-aging products, a market she said is still only defined as women between the ages of 40 and 55 years old.

In addition to communicating better with consumers, beauty companies need to inspire them, too. Arnold recalled a time when women anticipated the newest colors of the season and even stood in line to buy some of them.

“We were the envy of other industries. They marveled at our ability to form emotional connections, to go beyond merely transacting business,” she said.

So what happened?

“In the past 10 years, we seem to have focused more on proliferation than ‘gotta have it.’ Our counters, store shelves and Web sites are stuffed with a lot, and I mean a lot, of product. And you know what? She really isn’t buying that much more of what we have. In fact, our share of her wallet is shrinking somewhat, while industries like consumer electronics and organic foods are growing,” Arnold said.

While Arnold believes beauty executives need to squeeze out more must-have items, she does point to recent successes: lip plumpers, self-tanners and color highlighting shampoos.

She even cited a P&G success: Olay.

“When we evolved Olay into a beautiful line that ‘Loves the Skin You’re In,’ the business took off,” Arnold said.

The third piece of advice Arnold shared with her peers was the importance of honesty with consumers, in the form of better information and clear, well-documented, transparent claims.

“Beauty has seen an explosion in new products and solutions, from nanotechnology and cosmeceuticals to natural oils and herbs. More companies are offering and promising more stuff. Sadly, that means more snake oil, and we all know that’s true,” she said.

A product’s ingredients are as important as proof that they work and are safe, and that companies stand behind what they sell. Arnold noted the challenge is a bit steeper for beauty companies, seeing that instant validation isn’t always practical or measurable (such as how well a wrinkle cream works), and since information needs to stand up to regulatory and legal scrutiny.

“My company has not been perfect. No company has. We all need to improve. But anyone who doesn’t play fair hurts everyone who does. I challenge my company, my competitors and all of our partners to work together to set the bar high.”

Inspiration, in Arnold’s view, means spending less time on product proliferation and more time focused on creating products that truly delight and create demand.

“And that, ladies and gentlemen, is bigger than beauty,” she said.