Estée Lauder: Selling as a Craft

What can an owner learn from a cosmetics saleswoman?

Many owners of small businesses dislike selling. They see selling as talking people into things and regard their own skill as the better reason to be hired. The problem is that a customer often cannot judge that skill before placing the order. He has to rely on a promise.

Estée Lauder faced the same problem, only with face cream. Whether a cream lives up to its promise, a customer notices only after days. Lauder developed a way of selling from this that is well documented in business history. That raises one question: what made her way of selling effective, and how much of it carries over to a business that sells machines, services, or skilled trades?

To answer it, I first trace her path, then present an economic model that explains her method, examine the numbers and two readings, and finally derive what an owner can take from it. The portrait relies only on publicly documented information. Where I am interpreting, I say so.

Who was Estée Lauder?

Estée Lauder was born Josephine Esther Mentzer in Corona, in the New York borough of Queens. Her birth date is usually given as July 1, 1908. Her parents were immigrants from what was then Hungary; her father ran a hardware store above which the family lived. Her uncle John Schotz was a chemist whose company, New Way Laboratories, made creams and lotions. The young Estée sold these creams in beauty salons and hotels.

1. 1930: Marriage

   She marries Joseph Lauter, who later changes the name to Lauder. After a separation the two marry a second time in 1942.

2. 1946: Founding

   With her husband she founds the company, according to the company with four products.

3. 1947: Saks Fifth Avenue

   According to the company she wins the first large order from the New York department store. Other accounts give 1948.

4. 1953: Youth-Dew

   A bath oil that doubles as a fragrance. According to widely cited figures, 50,000 bottles sell in the first year.

5. 1958 to 1995: The next generation

   Her son Leonard joins in 1958, opens the first counter abroad at Harrods in London in 1960, and later leads the company as president and CEO.

6. 2004: Death

   Estée Lauder dies on April 24, 2004, in Manhattan. In the same year, according to the company, she receives the Presidential Medal of Freedom.

In 1978 she was made a knight of the French Legion of Honor, and in 1998 Time magazine included her as the only woman on its list of the 20 most influential business geniuses of the 20th century. Her autobiography "Estée: A Success Story" appeared in 1985. These dates are the outer story. More interesting for owners is how she sold.

Search goods and experience goods: why cosmetics are hard to sell

In 1970 the economist Phillip Nelson introduced a distinction that explains Lauder's method well. Search goods are products whose quality the buyer can check before buying, such as the dimensions of a shelf or the color of a fabric. Experience goods are products whose quality shows only in use, such as a restaurant meal, software, or a skin cream. A third group was added later, credence goods, whose quality customers can hardly judge even after use, such as tax advice.

With experience goods the buyer has an information problem. Advertising cannot replace the experience, because he knows that every supplier says good things about itself. What helps him is the chance to have the experience earlier. Huang, Lurie, and Mitra (2009) showed in an experiment and an analysis of usage data that in traditional retail, consumers find it considerably harder to judge whether an experience good is good than a search good. Online the difference blurs, because reviews and reports from other users replace part of one's own experience.

Lauder's entire way of selling can be read as an answer to this problem. She did not promise more loudly than the competition. She made sure the customer had the experience before buying.

How did Estée Lauder sell? Trying instead of praising

In her autobiography Lauder describes her early years in a New York hair salon. The journalist Nina Munk quoted the passage in a detailed 1998 report in Fortune magazine. Women under the hair dryer were bored. Lauder offered to apply a cream free of charge and then made up their faces before the hairstyle was finished. When the customer saw the result, the questions came on their own, and by Lauder's account most left the salon with some of the products.

Munk describes the same attitude for the year 1950. Stanley Marcus, then president of the Neiman Marcus department store, remembered that Lauder came to his office without an appointment, had her merchandise with her, and the next day, at a small counter, approached every visitor to try something. Munk renders his verdict like this: "It was easier to say yes to Estee than to say no." (Munk 1998)

The personal method later became an instrument. Lauder is regarded as a pioneer of the gift with purchase. Anyone who bought a product received samples of other products. The next experience was thus already in the customer's bag before she thought about the next purchase. According to the company, she saw sampling as a cornerstone of her approach and relied heavily on word of mouth.

Recent research shows that the form of such gifts matters. Yao and Chen (2025) examined in three experiments how consumers evaluate sample gifts with a purchase. Samples that matched the purchased product were perceived as more beneficial than mismatched ones. The study looks at consumers in laboratory settings, not business customers. It does support the reading that a sample works only if it connects sensibly to the purchase.

If you sell something whose value shows only later, bring the experience forward instead of enlarging the promise.

What do the company's numbers show?

How much effort stood behind this method is shown by the 1998 Fortune report. At the time the company expected sales of about 3.6 billion dollars and an after-tax profit of 236 million dollars. According to Munk it controlled more than 45 percent of the cosmetics business in U.S. department stores. The family held 77 percent of the common stock and 96 percent of the votes.

The numbers are instructive. The products were cheap to make; the gross margin was 77 percent. What remained at the end was 5.8 percent, because the company spent 980 million dollars on advertising, training, and free samples. Research and development received 35 million dollars. Munk also describes so-called link selling: anyone who wanted to buy a lipstick often went home with lipstick, lip liner, and lip gloss. The beauty advisers were trained for this, and one rule of the training was never to open with "Can I help you?" because the phrase sounded like selling.

The last figure fits the model. The company was then replacing glass counters with open displays where customers could touch and test products without asking. According to Munk, sales rose 22 percent in the first department store with the new format. Whether that was due to the format alone cannot be derived from the report.

Craft or performance? Two readings

There are two readings of this success. The first sees mainly performance. Munk reports that in 1998 a TV news magazine compared a 6-dollar drugstore lipstick with a 16-dollar Estée Lauder lipstick and found hardly any difference. According to one brand head, the advertising sold aspirations, not ingredients. In this reading the company lived off getting people to buy more than they needed.

The second reading sees a craft. Lauder took her customers' information problem seriously and gave them the chance to judge for themselves before paying. A customer who tries a cream under the hair dryer is not deceived. She decides on the basis of her own experience.

My interpretation: Both readings capture something, but at different levels. The performance concerns the later corporation's advertising, the craft concerns personal selling. For a mid-sized business only the second carries over, and it is the more valuable part. A business customer who sees a machine demonstrated or receives a pilot order also judges from his own experience. The line runs where trying turns into pressure. Lauder's own training rules excluded exactly that: according to Munk, whoever becomes pushy has lost.

What does this mean for your sales?

Most services in mid-sized businesses are experience or credence goods. Whether a new installation runs reliably, whether a service provider is punctual, whether advice holds up, shows after the order. This leads to the same task Lauder solved: pulling the experience as far ahead of the decision as possible.

The Trial Test: five questions for your offer

• What about my service can the customer not judge before the order?
• What is the smallest form of the service he could experience beforehand: demonstration, sample, test run, pilot order?
• Which additional service connects sensibly to the first order, the way a matching sample connects to a purchase?
• Which existing customer would openly tell a prospect about his experience?
• Where do I rely on persuasion today when the customer really just wants to see something?

Link selling has an honest equivalent in a mid-sized business: the matching additional service that solves the customer's problem more completely. How to do that without being pushy is shown in the article Growing existing customers. How customer testimonials can replace a prospect's missing experience is described in Customer testimonials and references.

The next step

You do not need a department store counter to use Lauder's method. Four steps are enough to start.

1. Answer the five questions of the Trial Test in writing for your most important service.
2. Define a form in which a prospect can experience this service beforehand, and name it explicitly in your next proposal.
3. Ask two satisfied customers whether they would be willing to have a short conversation with prospects.
4. After every first meeting this week, write a short personal message with the agreed next step.

If you dislike selling, the guide Selling as an owner shows how structure replaces persuasion. Why the owner is the most credible seller at first is described in the essay Founder-led sales.

Conclusion: what made Estée Lauder's selling effective?

The question at the start was
made Lauder's way of selling effective and how much of it carries over. The answer: she solved the information problem of an experience good by pulling the experience ahead of the purchase. Sample, demonstration, and gift with purchase were not tricks but ways of letting the customer judge for herself. The corporation later supplemented this method with a great deal of advertising money, and that part is neither necessary nor affordable for small businesses.

The core does carry over. A business whose service shows only after the order gains more by making it tangible beforehand than by describing it better. Selling as a craft, in this sense, means making the customer's decision easier, not making it for him.