Of the 98 million consumers who dye their hair in the United States, roughly 52% do so exclusively at home, 48% do so exclusively in salons, and about 20% cross over between at-home hair coloring and having it done at a salon, says Amy Errett, CEO and founder of Madison Reed, a hair color products retailer.
Appealing to the roughly half of consumers who it wouldn’t otherwise sell to is why the retailer, which operates hair coloring salons called Color Bars in New York and San Francisco, plans to have 25 such locations by the end of 2019. To meet that goal and continue growing its online business, the retailer today announced it raised $25 million in a funding round led by Comcast Ventures. Existing investors Norwest Venture Partners, True Ventures and Calibrate Ventures also participated in the funding round.
Madison Reed’s aggressive offline push corresponds to roughly one Color Bar opening each month. To determine locations for the shops, Madison Reed draws on data it gathers from its customers and its database of more than 700,000 email addresses.
Because a large share of consumers don’t want to color their hair at home, the Color Bars were always part of Madison Reed’s business model, Errett says. “We launched three years ago,” she says. “We spent three years scaling the online business, now we’re seeking to address the rest of the market.”
The Color Bars attract a mix of consumers who weren’t familiar with the brand, some who knew the brand but hadn’t bought the product and some regular online customers.
The retailer’s marketing strategy assumes that some of its existing customers will spread word of the Color Bar to other consumers. For instance, when it opened the Color Bar in New York it leaned on email marketing for the 20,000 consumers in its database who live in the area. With the physical presence itself and the word of mouth marketing, the retailer barely increased its marketing budget to drive consumers into the salon.
That’s a sign that the Color Bars are paying off, Errett says.
“I just want to meet customers wherever they are,” she says. “If they want to shop online, that’s great, awesome. If they want to come into our store, that’s awesome. If they want to do both, that’s awesome. We’re simply looking for multiple ways to scale our business.”
Just as technology plays a critical role on Madison-Reed.com to help consumers find the ideal color for their hair, technology also does so in the Color Bars, which help the retailer continue to learn about its customers.
The vast majority of Madison Reed Color Bar customers make their appointments online and select from one of the four service options—root only, root reboot, roots + gloss and color reviving gloss (they can also choose to add a blowout). Then, once in the Color Bar, they take a color quiz online that helps them find the ideal color shade, which they can then discuss with the stylist.
“The algorithm is amazing, but having a human there to make sure it is doing its job is crucial,” Errett says. The retailer’s data-heavy approach has helped shape the Color Bars. For instance, a few months after the two salons opened, the retailer found that 35% of customers don’t want their stylist to blow dry their hair. That led the retailer to offer a free blow-dry station, where a consumer can quickly dry her own hair before she leaves.
The retailer also leverages the data it gathers about its customers to offer product suggestions in the Color Bar, as well as in follow-up emails. The approach has led roughly 33% of shoppers to buy additional products, such as color-protecting shampoo and conditioner, in the store and another 7% to make an additional purchase online.
“The kiss of death for most offline retailers is they have no stake in the ground around data—their level of clienteling is neophyte,” Errett says.