It turns out we Americans didn’t spend the last few months just packing on “The Quarantine 15” with comfort food. We were moisturizing our way through the COVID-19 crisis as well. Probiotic and superfood-based skin care brand Tula didn’t just see its sales soar. As CEO Savannah Sachs tells Brand Insider this week, the company’s online sales even made up for its lost brick-and-mortar sales at premium retailers like Ulta. Credit Tula’s DTC roots. ROAS drives every penny of marketing spend. She tells us how applying accountability to emerging channels like influencers and OTT helped the company ride the “self-care effect” among locked-down consumers.
MediaPost: Did Tula start as a pure-play D2C and then move into physical retail or vice versa?
Sachs: We knew from the beginning that we wanted to be omni-channel and we started with being digitally native and social first as a brand and Tula.com is our largest channel today. It is the majority of revenue and has been on a wild growth trajectory over the last few years, and especially this year, given the impact of COVID-19 and general momentum of the brand and business. But we also work with great wholesale partners. Counter to how some other digitally native and D2C brands have thought about going into brick and mortar and doing so with their own retail footprint and their own stores, we thought about where does the customer shop for skincare and beauty. She shops multi-brand and cross-category. For that reason, we decided to partner with Ulta as our top wholesale, retail partner because that's how the customer is shopping.
MP: Omni-channel is daunting for media planning, though. Where were you putting your marketing money and deciding where and how to drive people where?
Sachs: For Tula.com, we are focused on all of the performance channels online. Search, Facebook Snapchat, Instagram as one of our key channels. And of course, having a thoughtful and very ROI-driven performance marketing strategy. The thing that sets us apart is our largest performance channel in terms of revenue driven and also our most efficient: influencer marketing. We run that entirely in-house. We almost see it as a distribution channel. We are partnering in long-term strategic ways with content creators who get a percentage of sales. They get a commission. Incentives are aligned, we see them as real entrepreneurs and almost as if they're digital storefronts. We run that influencer marketing channel like a performance channel, entirely based on ROI and we're tracking those sales directly through those influencer partners. That has been our top growth driver and top customer acquisition and revenue channel. That has further accelerated this year, given the shift in buying behavior from offline to online.
MP: That's almost like a digital version of the classic Avon model.
Sachs: Exactly. We see it as a distribution channel. We see these content creators as entrepreneurs, and they've been an incredibly powerful growth engine for us.
MP: When the crisis hit, how did you pivot away from physical retail?
Sachs: When Ulta brick-and-mortar network shut down, we retained our entire retail sales team and we cross-trained them to be digital skincare advisors on chat, live chat, on Tula.com. They could give that same consultative selling experience that they do normally in store or at an event online.
That's just an example of how we've had to pivot and something we've been seeing really strong results. When customers engage with that online chat, their basket size is typically 20% higher. That's a great win-win. We're able to retain our team, translate that offline customer experience to online and also drive business results.
MP: So, COVID hits. What happens both on the sales side and to your customer base?
Sachs: We feel very lucky. We've been very well positioned and our business is outperforming our wildest imaginations. We are well above budget. We're re-forecasting everything up, including retail.
One of the key insights here is that while previous generations have seen the “lipstick effect” during difficult economic times, what we're seeing is what we're calling the skincare or self-care effect, where consumers are increasingly focused on that small ritual of skincare routine.
Not only have we been able to capitalize on that consumer demand, but also make up the lost sales from brick and mortar. You need to sell fewer units as a DTC business to make up that shortfall wholesale.
For context, in April our DTC business was up 6X year every year and more than double March and we saw May revenue right in line with April and June off to a strong start as well. What's interesting is that, using April as an example and microcosm, the majority of sales were driven by new customers, first-time purchasers of Tula and also AOV, basket size was up.
MP: So, you've got spiking demand and some challenges on the supply side. What did your marketing mix look like then? Did you start turning certain channels off altogether?
Sachs: We were in the right channels to begin with. It was about leaning in and being more aggressive in spend. Particularly in April and May and, still to some extent, in June, we saw dropping CPMs online. We think of return on ad spend. What we say is if we can hit our ROAS target, there is no cap on spend. We were very fortunate that we had originally planned to test into TV, specifically streaming and OTT this year. We had two great creatives in the market starting from early March, and the results have been even stronger than we anticipated because of the shift in consumer behavior and more folks being at home watching streaming TV.
MP: About the creative and the messaging, did you feel under the circumstances you had to change your pitch?
Sachs: It was an interesting discussion internally. What we ended up doing was polling our audience on social. In March, we asked them how are you feeling, what sort of content and messaging do you want from us? We heard back overwhelmingly from our customers that they were interested in Tula continuing to be Tula and be a source of positivity and escape for them in the midst of the pandemic.
We launched our new product in April, which was our first SPF, called Protect and Glow. The way we think about it is that it's not just sunscreen, it's skincare. Knowing the consumer psyche, knowing what most customers were experiencing at that time, we switched up the messaging. So it's a product that protects you from sunlight and from UVA and UVB exposure. It also has blue light protection. As you're sitting at home on endless Zoom calls or on your phone, this product helps you protect you from blue light. What we did was shift that marketing campaign messaging to speak to the benefits of the product both indoors and outdoors, and it was well received. It was by far and away our most successful product launch in the history of Tula. And it's pretty remarkable to think that it was an SPF that we launched in April, when everyone was locked down.
MP: What surprised you most during this experience? What do you know now about the brand, your customers, your partners, maybe that you didn't know or appreciate, say, four or five months ago?
In terms of the consumer psyche and channel shifts, the results of our DTC business have completely taken my breath away. More generally, this proved who is a strong partner. Who will
be with you in the trenches thinking through how to quickly pivot and evolve the partnership as needed when there's drastic shifts in the market.
MP: Are there particular areas of partnership that you mean? Ad tech? Marketing tech? Or simply retail partners or your influencers?
Sachs: Our influencer partnerships have become even deeper and closer through this. That channel is working incredibly well for us. We've been very impressed by Ulta and how they've handled everything in terms of how they've treated their teams, how they've communicated to us, how they've continued to lean in on a brand like ours and submit purchase orders and send-through payments.
We are going to expand even faster in our brick-and-mortar locations with them this year than we originally thought. They've been very strategic and are well positioned coming out of it. Where we've seen some more challenges is that this made us realize it's time to graduate to a new warehouse and a new 3PL partner. That's an example where we want to proactively prepare if there is a second wave of COVID-19. We want to graduate to a larger 3PL that has multiple D2C locations across the country so that we have more contingency and redundancy in the operation side of the business.
MP: Any other long-term change that you think will take place as a result of this, that will be permanent?
Sachs: It's really been about accelerating our business. One of the things we're very focused on is hiring and building the team of the future and continuing to bring in great talent, particularly in areas of the business like the D2C side of the business, bringing our entire tech team in-house, leaning in on social media and digital content, those things that we now have even more conviction around being critical growth drivers today and in the future.
We're very much in hiring and team building mode, and it's also a pretty remarkable time to be in market. There's a lot of great talent out there looking for adventure.