As the Pandemic Rattles the Global Economy, This Beauty Company's Sales Are Booming

Madison Reed CEO and Founder Amy Errett on running a business that's thriving, despite (and because of) the pandemic.

The global economy — and retail, in particular — is struggling. With the pandemic bringing uncertainty to virtually every industry, this is a period in which many entrepreneurs are overhauling their businesses, reassessing their priorities and figuring out how to survive.

For direct-to-consumer, at-home hair color company Madison Reed, though, business is positively booming.

Like Clorox wipes and Purell, it turns out that Covid-19 has created massive demand for DIY hair color options that allow consumers to skip the salon. That's putting it mildly, if you consider Madison Reed's recent sales figures: According to a representative, over the past several months, the company experienced 12 times the number of new customers it normally would. In February, Madison Reed sold a Radiant Color Kit every 24 seconds; by May, that stat had reached one kit every five seconds, per the rep. The company is now projecting topline sales for 2020 to be more than double that of the previous year, with revenue exceeding $100 million.

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What's it like to be running a company that's thriving, despite (and in many ways, because of) the pandemic? Fashionista turned to Amy Errett, the founder and CEO of Madison Reed, for her insights, including why she believes customer service and community building are more important than ever, how the company has sought to create opportunities for out-of-work salon colorists and the ways in which the pandemic will forever change the beauty industry. Read on for the highlights of our conversation.

Tell me a bit about Madison Reed's business model and how things were going pre-pandemic.

At the start of 2020, we were operating 12 Color Bars with plans to open more, Ulta was carrying our product lineup in all 1200 stores and its own online business continued to deliver.

In just six years, Madison Reed has become an omni-channel business. We started out with a mission to bring better-for-you hair color and transparency to an industry where so much traditionally had been behind the curtain.

Walk me through the sales trajectory over the months that the pandemic and quarantine was setting in. What kind of increase in sales was Madison Reed seeing? Was this something that the company had prepared for?

We saw the beginning of our surge during the week of March 9th. But, it wasn't until March 16th, when shelter-in-place announcements were officially making their rounds across the country, that we knew something big was happening. On one of our biggest days yet, May 1st, we sold 11 Radiant Hair Color Kits per minute, which is one kit every five seconds. Ultimately, over the course of the last few months, we saw a surge in sales of 12 times our usual numbers.

We'd prepared for a growth year with additional inventory. But when you grow by 12 times, you throw out the playbook.

How did Madison Reed pivot its business due to the pandemic, quarantining and stay-at-home orders?

Like most other businesses, we closed our headquarters and our then 12 Color Bars. As our products are formulated in the Lombardy region of Italy, an area that was hit hard by the pandemic, we worked with our partner to convert half of the operations to making hand sanitizer. We then opened another fulfillment center during the pandemic to keep up with the surge in volume.

As customer demand increased, we transitioned all of Madison Reed's Color Bar employees to our customer service operation 'Color Crew' to handle call volume, which jumped from 700 contacts per day to 4,500. We developed a new, efficient, intensive process that allowed us to expedite training while maintaining the same standard of service.

We've always sought to provide quality customer education and support through our Color Crew, a team of colorists accessible by phone, chat and email to help customers coloring their hair at home. But, as we saw more salon goers attempt home hair color for the first time, we knew we had to ramp up our home hair education. We hosted Facebook Lives where customers could ask questions and get tips for home hair color, and hosted virtual 'Hair Color House Parties.'

As states re-open and Madison Reed continues to expand its brick-and-mortar footprint, what concerns are there and what safety measures is the company putting in place for employees and clients?

The health and safety of our clients and team members is our number-one priority. As we reopen Color Bars across the country, we are upgrading our cleaning and safety protocols in accordance with CDC guidelines to protect our clients and our team members. We have opened with limited scheduling to maintain social distancing in all Color Bars; masks are required; strict cleaning and disinfecting protocols are followed; we require temperature checks of both clients and team members before entering a Color Bar; if a client is feeling unwell, they can cancel an appointment at any time; and we have upgraded to hospital-grade ventilation systems.

How would you say the pandemic transformed Madison Reed's business overall? What are the most significant ways it altered things?

We essentially became a much bigger company in the span of a few short months. We are making investments in technology and infrastructure that once seemed a year or two away. Growth puts a spotlight on everything. Beyond that, we are asking new questions about where we take the company.

Do you think consumers will be more likely to continue embracing at-home hair color even in a post-Covid-19 world?

What we're seeing now is 52% of women coloring their hair at home, 48% going to a salon and about a 20% crossover, meaning women are stretching out salon appointments and coloring their hair at home to supplement. So instead of having to go to the salon every four weeks, they're going every seven weeks and in between appointments they are touching up once at home. We have always had very substantial groups of those crossover customers.

Even as salons re-open, we're seeing these dualists extend the time between their appointments, as well as more salon-goers opt for home alternatives, especially in areas of the country where Covid cases continue to rise. There are fewer appointments available because of limited operating hours and altered capacity. About one third of women tell us they feel safer coloring their hair at home —and now that they've proved to themselves they can color their own hair, many plan to continue to make color at-home part of their regular self-care routines.

We've also launched two new products in the last several weeks: Madison Reed Mr. Hair Color for Men, demi-permanent hair color to give men more pepper, less salt; and Color Therapy, which refreshes tone in five minutes. Both are performing extremely well, so we know at-home hair color is growing in popularity among men, too.

Why is Madison Reed continuing with its expansion into more brick-and-mortar retail locations?

Madison Reed's topline is growing dramatically and we want to continue to give women confidence as salons start to re-open in selected areas. We believe that women eventually will return to salons. We believe having both an online and physical presence contributes to trust in the brand.

How do you think COVID has changed (and will continue to change) the beauty and hair markets as a whole? Where do you see things heading in the future?

What we're seeing is a greater willingness and confidence to color your hair at home. While women previously might have hesitated, committing to frequent salon visits, they now have been forced to try home hair color, realizing its ease of use, salon-quality results and money-saving capabilities. To the same regard, we'll also likely see a greater number of dualists — those who go to the salon, but touch up their hair at home between appointments.

Customers will also expect more from beauty and hair brands in the future when it comes to customer service and engagement. We've had to get creative in the last few months, meeting customer demand with virtual Zoom events and Facebook Lives. These kinds of intimate customer touchpoints will become more and more expected.

Hairstylists and colorists have been among the hardest hit when it comes to job loss and instability during  the pandemic. Are there any measures Madison Reed has taken to provide assistance, training, tools, grants, job opportunities, funding or affiliate revenue opportunities for stylists and colorists?

It’s been so humbling to have so many people turn to us at this moment. With so much loss around us, we see every day just how fortunate we have been and it reminds us of our obligation to take good care — of our clients, of our team members and of our communities.

When we closed the doors of our Color Bars due to the pandemic, we kept colorists from our then 12 salons across the country on payroll by transitioning them to the Color Crew — a team of colorists accessible by phone, chat and email to help customers coloring their hair at-home.

Then we started the Colorist Cooperative initiative to support non-Madison Reed colorists. Colorist Cooperative is an ongoing affiliate program where professional salon employees earn commission on new customers. Colorists receive a custom link to share with their clients for online orders, receiving a $25 PayPal payment should the customer use the link to purchase Madison Reed products. To put this into perspective, a single box of Madison Reed color averages $22 or $25.

Has Madison Reed participated in Pull Up For Change's call for transparency regarding BIPOC employees and leadership? How is the company striving to be more inclusive in its product offerings, education and marketing materials and internal culture and structure?

We pledged to go beyond words — and set in motion the steps we are now taking to work toward continuous, actionable change. The steps are far from perfect, far from complete. But we can't wait any longer to fight for a world where there's no question that Black Lives Matter. In addition to making a corporate donation to the NAACP Legal Defense and Educational Fund, we are donating $100 in the name of every team member — $12,800 so far and counting — to local organizations that are working to combat systemic inequality in the communities that our employees call home.

We took immediate action within our organization to re-evaluate our hiring process to ensure our headquarters team represents diversity and inclusivity in all departments; Madison Reed's workforce is 50% people of color.

We're developing listening circles, safe spaces where our team members can continue deep learning, sharing and honest discussions. We are reevaluating our marketing, committing to representing more diversity in our advertising and in our content. We have established a Diversity, Equality and Inclusion committee which meets weekly and we will be scheduling DEI training for all employees.

Madison Reed observed Juneteenth Freedom Day; Madison Reed team members were given the day off with pay to take time to learn and honor a day that celebrates the emancipation of remaining African Americans still enslaved in 1865. We have also signed on to Time to Vote, and have announced that Election Day will be a paid day off for all Madison Reed team members.

What other priorities and goals do you have for the company right now?

We wouldn't have made it through these past six months without our people and our culture. Juggling home schooling and work from home, it's been our people who have been the heart and soul of Madison Reed. We know the stress has taken a toll on everyone — we all are worried about so much — and we have looked for ways to help. We're now offering Talkspace, access to teletherapy and mental health services, for all employees and their families. We are partnering with One Medical to help make primary care more accessible to our team. And we have instituted half-day Fridays to try to signal that we are serious about the need for self-care.

This interview has been edited for clarity.

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