THE STORY

Complete bottom-up redesign and modernization of the go-to-market strategy for a legacy beauty manufacturing and distribution company in order to facilitate its sale.

New Avon LLC sells beauty products. The Company offers skincare, color cosmetics, fragrance, and personal care products, as well as provides watches, earrings, necklace, bracelet, body lotion, shampoo, gel, hair removal cream, and other related products. New Avon serves customers in the United States, Puerto Rico, and Canada.

The company was acquired by Cerberus Capital in 2015. Cerberus invested $435 million in Avon in exchange for just shy of 20% equity interest in Avon Products. The partnership included the separation of Avon’s North America business into a privately-held company that was majority-owned and managed by an affiliate of Cerberus. The North American business operates under the name New Avon LLC. Avon Products, Inc.,

THE SOLUTION

The BoCG team was engaged in 2018. After 3 years of unsuccessful turnaround efforts, the management team felt that it was time to bring in outside resources. The first order of action was to interview all department and sub department heads to understand the cause of the challenges at the company. The interviews unearthed major structural and personnel challenges that were preventing the turnaround efforts.

In addition to ailing infrastructure, over-staffing due to declining sales, lack of a clear pricing strategy and outdated distribution practices; the company was rife with management infighting. The BoCG team set about implementing a turnaround plan that would address a majority of the pain points.

Lyon Kassab was placed on the executive team in charge of sales strategy, operations and business intelligence to have 360 degree insight into the company. The BoCG team took over the reporting function of key metrics for the company to ensure that all executive decisions were made based on facts. As part of this initiative, all sales forecasting, distribution analysis, inventory and demand planning was structured under BoCG. The goal was to implement an infrastructure modernization plan and 360 transparency into company processes was imperative.

Part of the modernization plan was a complete digital transformation of the company’s go-to-market strategy. The company relies on a 100,000 person strong independent sales force who sell the company’s products. The selling process relied mainly on brochure sales where the representatives distribute the brochures, take orders and fulfill products. The process was outdated and as a result, revenue had been declining by double-digits for years.

The BoCG plan aimed at transitioning the efforts from the current manual sales process, to a highly efficient and transparent digital process. Under the new plan, the representatives still would refer customers to the company but purchases, fulfillment and followup would be the responsibility of the company. The goals of the plan included reduced manual work for representatives, increased customer acquisition through direct marketing efforts and improved customer service times by direct-to-customer fulfillment. To track results of the online transition, the company’s revenue centers were divided into “traditional” and “online” segments and daily sales update reports were sent out daily.

A modern web and mobile experience was imperative to achieving the prescribed digital transformation. The team re-designed the company’s representative incentive plan to reward online sales. The web and mobile experience was redesigned to prioritize a seamless transition to mobile. In addition, sales promotions and events were initiated to simultaneously momentarily reward and educate sales representatives for online sales. To facilitate direct-to-customer fulfillment, a complete technology stack modernization was initiated.

The company had a culture of product launches and the representatives were used to 3-4 product launches yearly followed by heavy discounting afterwards. Simultaneously, the representatives did not respond well to SKU discontinuations. As a result, the company’s SKU assortment continued to grow along with ballooning inventory levels. The BoCG implemented a price increase initiative across all product lines to increase revenue along with a significant SKU discontinuation plan to improve company profitability. The plan also included staff reduction commensurate with scheduled product line reduction.