Lessons in Resilience & Perseverance: How Purplle Went After What It Believed in, and Kept the Focus on Sustainable Success
Lessons in Resilience & Perseverance: How Purplle Went After What It Believed in, and Kept the Focus on Sustainable Success

When you listen to Manish Taneja talk about his journey with Purplle, and introspect, a lot of what he says seems like common sense- things you’d expect business leaders to know and practice as they build their brands. But Manish interestingly points out that the obvious is not often practiced in the industry. Many business leaders are swayed by market dynamics, competitor pressure, and investor pressure, etc., keeping aside that common sense- and fail to be honest with what they believe in and had set out to achieve. 

Purplle’s story is a masterclass in sustainable business growth. Manish and his two co-founders started by evaluating their business idea with pragmatism, and fought every single stereotype founders and investors back in the day were conditioned to accept. 

In the recent episode of Brick by Brick: Building Insurgent Brands hosted by DSG Consumer Partners, Manish discusses the extraordinary story of Purplle’s success. In the earlier days, the Purplle founders were rejected by many investors who felt that three men, with no experience or expertise in beauty, could not run a brand like Purplle. From there, they have worked together to disprove this and break many other conventions related to building successful businesses at every step of the way. Not only have they become a phenomenal success in Tier II and III cities by making products from FMCG giants accessible in these markets, but they have also launched their own product line- which offers great quality at affordable prices. This has garnered immense customer love and strongly established the in-house brand nationally. 

Here are some of the most fascinating lessons from the session: 

  1. Pragmatically Evaluate your Business Idea

For Manish and his co-founders, starting Purplle was purely a business call. There was no personally motivated goal they were trying to fulfill. They had identified that beauty and wellness were all set to be a large category in the next 15-20 years in Tier II and III cities in India, which had high gross margins, and high repeat purchases. All these three factors made the beauty category a favorable choice to go after. All three Founders were from Tier II cities and understood the customer profile in these markets well. So, even though they didn’t really have any experience with the category, they could relate to their core customer and effectively look to address their needs. 

Manish advises that if founders are able to establish the existence of a large market, high gross margins, and high repeat purchases, they should be able to find success in bringing their idea to life, provided a clear brand voice and differentiation are established in their customers’ minds. 

  1. Founders Must Have the Courage to Follow their Own Convictions

Manish advocates strongly that Founders should find what excites them and what they’re convinced about, and go all out to achieve it. They should not get pressured by market norms. Investors may push for contrarian decisions, competition may raise a whole lot of capital, or offer things like deep discounting to grab market share. But Founders should focus on building their businesses based on their own values. They should keep their minds clear of the external clutter and cultivate a razor-sharp focus on their own goals, allowing common sense and data-led logic to guide their decisions. A longer time to get to success as compared to the competition is totally acceptable as long as they are building long-term value for their own selves. When they do that, investor value will automatically follow. Founders must trust their capabilities and have conviction in their goals. If they don't, no one else will. 

  1. The Power of Data is Unmatched and Invaluable

Back in 2017, things were bleaker for Purplle, as they had only under $100,000 in the bank and about $200,000 in receivables from large FMCG companies. Empowered by the insights they got from the consumer data they had amassed over the years, the team at Purplle decided to stop doing business with these FMCG majors, and instead use their limited funds to create and launch their own line of products that were lower on price points and yet high on quality, as compared to what was generally provided to these markets. This move turned things around for their business. From a low-margin, working capital-negative business, they instantly became a high-margin, working capital-positive business. Just by harnessing the insights from their data, they could turn around the fortune of the company. 

Here is an example of the impact- the lipstick they launched as a replacement to a low-quality product like Elle 18 (but with a cheap price point of Rs 100), got them a 7X jump in lipstick sales within a single day of launch.

  1. Quality of Customers Trumps Quantity of Customers

Manish and his team have always focused on reaching out to customers who are likely to make purchases more than once and have a higher CLTV. Customer acquisition for the sake of inflated numbers in investor reports has never been the goal. They believe that tactics like high discounting might get you some traction in the short term, but will most definitely lead to poor CLTV in the long run. 

This belief comes through in the way they have established their loyalty program too. Most businesses create free loyalty programs that reward customers with loyalty points, which are quite useless to the customer and are hardly ever used. Purplle instead has a standout loyalty program. Customers are asked to pay for it upfront and are offered real tangible benefits in return, i.e. real value is offered to the customer in exchange for the membership fee. Today, the members of the loyalty program contribute to one-third of the company’s revenue, and 50 percent of its repeat revenue, and all this is only from 6 percent of the total customer base of the company! Imagine what this could mean as the memberships go up!       

  1. The Smart Way to Keep Customer Acquisition Costs Under Check is to Work on your Conversion Rate   

Manish is cognizant of the fact that competition is always going to increase, and the general advertiser pool is also always going to get bigger too. CPCs are bound to go up with ad spaces being limited and advertisers competing for them constantly going up. The only way to counter this is to make sure your marketing, tech, and product teams are constantly looking at improving conversion rates. For Purplle, while their cost per app install has become 2.5X in the past couple of years, the customer acquisition cost has only effectively gone up by about 20 percent, because their team is constantly working on optimizing the conversion rate. 

It is essential to constantly be in touch with the customers and understand their evolving needs so that Founders can bring products and innovations their customers are looking for. If they don’t keep themselves on top of their customers’ expectations, their offerings will soon be outdated, while media costs keep rising. 

The goal, therefore, always has to be to offset the rise in media costs with an increase in conversion rates. 

  1. Attract Top Talent by Empowering Them to Share in the Success

In the initial years, finding top talent for any Founder is hard. Manish recommends finding good people via referrals and making the offer attractive to them by way of generous and transparent ESOPs. At Purplle, stocks offered to employees vest equally over four years, and there are no hidden clauses. 

The founders at Purplle truly want their employees to be fairly rewarded as the organization grows. They believe that the wealth they are all creating as a team should be shared, and is not an exclusive right of the Founders and investors. 

  1. Build a Culture of the Velocity of Experimentation

Manish points out that human beings naturally have a lot of biases, many of which are incorrect. He encourages his team at Purplle to run experiments constantly to be able to eliminate these biases and make the right business decisions. 

His teams are nudged to write down their hypothesis, run the experiment on one set of customers ( while ensuring that this set of customers is not being exposed to any other such experiments), then look at the data, evaluate the results, and present the findings. Data-driven decision-making is a key pillar for Purplle’s success. 

In this regard, Manish advocates the necessity of a good data science team that is constantly vested in running these experiments on different customer sets. 

Manish’s journey with Purplle is fascinating and inspiring. From a banking background to building a beauty business, Manish has picked up several skills along the way. These days, he says he spends over 70 percent of his time on his talent- helping them find what drives them, and motivating and empowering them to achieve their goals. He has delegated the daily decision-making to his phenomenal team, while he sets the overall vision and culture for the organization.

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