New York - For cosmetics companies like
Estée Lauder, the window of time to capture an online customer is approximately 5 seconds.
After that, most shoppers’ attention will flutter away, says Larisa
Kitt, a communications executive at Estée Lauder’s Clinique brand,
during a recent training event for employees at a New York hotel. So the
company is trying to make sure those seconds count.
Its tactics include enlisting social-media influencers to upload
how-to videos to YouTube and having beauty consultants chat with
customers on Facebook. Local-language content focuses on different
tastes in different regions, while digital tools let consumers do
virtual tests of lipstick and eye shadow.
These are the nuts and bolts of the Estée Lauder’s “digital first”
mindset - an effort that appears to be paying off. Sales growth has
accelerated in recent quarters, sparking a share rally that has exceeded
60% in the last 12 months. Twenty-one analysts
recommend buying the company’s stock, while seven say hold. None advise
“They’ve done a great job of foreseeing the change,” said
Jason Gere, an analyst at KeyBanc Capital Markets, referring to the
industry’s pivot onto the internet and away from traditional points of
sale, such as department stores and drugstores. The company has been
ahead of the rest of the industry in its digital efforts for five years
now, he said.
Estée Lauder's shares rose as much as 1.9% to $136.90 on Monday.
reported last week that sales continued to accelerate through the
holiday season, powered by ecommerce and rising demand in Asia.
The recent New York event, which was attended by 200 local employees
and about 650 more who connected from remote locations, was part of
Estée Lauder’s bid to keep its brands above the growing din of the
internet’s chaos, where new indie labels are constantly popping up and
price competition is fierce.
“One thing about digital is that it’s an extremely noisy
Stephanie Wissink, an analyst at Jefferies. “You need something
that’s snapable, shareable and actionable. How do you rise above the
underlying vibration? It’s a challenge.”
Estée Lauder’s performance contrasts with that of Revlon, which has seen sales growth falter. Revlon faces
upheaval after being caught flat-footed by the market’s rapid changes.
“With online sales at only 3%, Revlon is anywhere from five to
10 years behind other vendors on the online game plan at this point,”
Mark Kaufman, a senior analyst in distressed debt at brokerage firm
Ramirez & Co.
A successful digital strategy depends on first grabbing consumers’
Fabrizio Freda, who has served as Estée Lauder’s chief executive officer
since 2009. After that, companies need to be creative in maintaining
“Just creating awareness of a brand is not sufficient. You need to
engage the consumer today to get the purchase - and repurchase - and
to get the consumer satisfaction with the product,” Freda said in an
This requires editorial content on how to use products - such as how
to carry out a three-step facial cleansing or how to remove acne. The
company, which says the content improves the chance of making a sale by
85% if it can grab a shopper’s attention for five minutes, also
teams up with internet personalities in local markets to offer video
To mold a digital-friendly workplace, Estée Lauder is doing more
educational events, such as the one where Kitt spoke at the end of last
year. In the past year, Freda said more than 2 500 workers have received
The company’s executive team also visited Facebook’s
headquarters for insights on how to drive business through the social
network. And some employees are studying digital marketing developed by
Google - a program that’s set to expand this year. At the New York
event, an Instagram representative gave a presentation on using the
website to promote products.
As the bulk of new hires skew towards web and social-media roles, the
company wants to make sure it understands how the younger generation
shops and thinks. Its online team is made up of 80% women, while
60% could be classified as millennials, Freda said.
The company’s online team has also developed its own apps, and has
replaced the comparatively stodgy work email with tools that more
closely resemble the platforms that are being used to connect with
Dennis McEniry, who oversees the company’s web operations.
“Since we are creating experiences for our consumers on social media,
our day-to-day culture needs to be infused in social media,” he said,
adding that the preferred device is the phone, rather than the laptop.
“We try to live the culture of sharing on our phones. We work in the
way our consumers play.”