About the Company

Dermalogica, a Unilever-owned subsidiary, is a professional-grade skin care brand founded in 1986 by skin therapist Jane Wurwand. Dermalogica sell their iconic skincare products online, in their own select stores and department stores, as well through their network of professional skin therapists worldwide, for whom Dermalogica is the number one choice.

  • Products used
    PriceBot
    Price Optimization
  • United States
  • Beauty

The Goal

During the COVID pandemic, stores and beauty salons closed for months, meaning that 100% of Dermalogica’s sales went online. Shoppers who would usually shop exclusively in stores or at their local Dermalogica skin centers were now flocking to the site, and unwilling to let a crisis go to waste, Dermalogica took advantage of this opportunity to try something new that they had previously convinced themselves was impossible to do: price testing.

The Strategy

Working hand-in-hand with Tontine’s Price Optimization Experts, both teams collaborated on a multilateral strategy that focused on conservatively price testing the lowest hanging fruits (i.e. the best sellers like the Daily Microfoliant) to capture incremental gains on gross revenues, while at the same time, deploying a much more aggressive strategy when it comes to price testing the long-tail products. This decision was based on Tontine’s expert analysis, powered by data from PriceBot, that although the long-tail products drove only a tiny fraction of the revenue mix, they were products that appealed to a niche but fiercely loyal audience — which, in turn, implied significant pricing flexibility that has yet to be exploited.

The Results

This intricate but comprehensive strategy worked phenomenally, and allowed Dermalogica to increase overall gross revenue by close to 6% — beating virtually every internal forecast as well as the conventional wisdom that due to the WFH/”new normal”, they’d see a drawdown in demand. As an example, one of the serums Tontine’s experts have identified to be a prime candidate for material price increases due to its consistent repeat purchase rate (i.e. indicating a loyal base) sustained a 1,300% price increase without ever seeing a dip in conversion rates. After working together for a month, Dermalogica saw the real benefit of working with Tontine: increased revenues, without having to add any additional costs or even ship an additional unit. Now, they’re getting more out of every order and customer without much additional effort.

19%
Revenue Lift
26%
Profit Margin Lift
18
Products/Mo.

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