3 Business Lessons From California Tattoos’ Turnaround

3 Business Lessons From California Tattoos’ Turnaround

California Tattoos (PPAI 111028, S5), a supplier specializing in custom temporary tattoos and promotional products, was experiencing financial turmoil in 2021 when Paul Lage, former president of IMAGEN Brands and a past chair of the PPAI Board of Directors, got a call. Beyond facing the typical pains of the COVID-19 pandemic, the board of California Tattoos knew the company needed serious adjustments.

• What was left of the company after a series of layoffs was a team that had excellent knowledge of proven products but lacked experience in other areas of the business.
• Sales dropped 50% in 2020.

Lage was brought on as a consultant, then briefly served as interim president and eventually became a board member.

“At the time, I was planning to retire,” Lage says. “So, I had time, and I love to learn and help businesses in our industry whenever possible.”

• Shortly after joining California Tattoos, Lage brought in Christopher Duffy, who has worked in marketing roles with IMAGEN Brands, Ariel Premium Supply and Bag Makers Inc., on a consulting basis before eventually being asked to stay with the company as vice president of marketing.
• Of the nine members on the executive team, only three had been part of that team prior to Lage and Duffy joining the company. Those three are all in different roles than they previously were.
• After serving as interim president for three months, Lage promoted Chris Huff, previously the company’s COO, to president.

“Chris has forgotten more about tattoos than I’ll ever learn,” Duffy says. “So, he’s the right guy for that seat.”

Joining the newly organized California Tattoos team, Lage and Huff brought their own guidance to the table for the turnaround of a company that “was on the verge of not being a company,” as Duffy put it.

Below are three business lessons that can be gleaned from California Tattoos’ turnaround.

Don’t Skimp On Marketing

Many companies with reliable products tend to take a “If we build it, they will come” mentality and forgo the importance of marketing.

“I have been with the company for 25 years,” Huff says. “Looking back, I can confidently say that we have had zero marketing presence prior to Christopher coming on board.”

Duffy’s promo experience allowed him to reorganize things from a marketing perspective.

• He introduced the concept of brand managers.
• He introduced the concept of marketing coordinators.
• He began the process of integrating data into the company’s marketing programs.
• He helped create a new product development team.

Have A Solid (And Evolving) Sales Strategy

A sales strategy can’t be static. It needs intention but it also must react and shift.

• A few months prior to Lage and Duffy’s involvement, the California Tattoos hired a new CFO.
• Later, the company “repriced everything” under the new administration.

For example, with Dollar General as a top client, the company previously felt that only low-cost (under one dollar) products were viable. Under Lage’s guidance, $3 and $5 products were presented to Dollar General under the logic that the worst-case scenario was a polite rejection.

“The PO came in at almost a million dollars, and almost a third of that was $3 and $5 products,” Duffy says.

Know Your Strengths

Temporary tattoos are a proven product with little competition in North America. Focusing on the strength of the product was a no-brainer decision for the new team.

• Both Duffy and Lage had to take a “crash course” in the retail aspects of the company, learning from the team around them.
• California Tattoos invested in technology and automation in 2022, both calculated risks to help streamline processes.

Early Results

So far, it seems Huff and the leadership team’s extensive product knowledge, combined with Lage and Duffy’s marketing savvy approach, has been a positive combination.

“I’m an operations guy at heart, so I have learned a lot from Paul and Christopher about the promo industry and how it is largely marketing-driven,” Huff says.

• The company’s goal was to break even in 2022. “We are on track to do that,” Lage says. “We are looking to build on successes with a meaningful profit in 2023.”
• The company is on track to grow top line sales by more than $1.5 million versus 2021, according to Huff.
• Duffy has noticed a rise in company morale since the leadership team began putting together a new approach. In 2020 and 2021, 30% of the company’s workforce was jettisoned. As of last summer, California Tattoos is now in hiring mode again.

According to Huff, the company’s newfound vision – looking past its ability to manufacture a strong product and focus on the other aspects of business that will help sell those products – has already paid dividends and will continue to bring California Tattoos to “new heights.”

Duffy estimated that about 30% of 2022’s sales would come from promotional products. That may not be a huge number, but a promo mindset has played a large part in the company’s turnaround.

“Being that the end users are not our customers, we need to educate and inspire distributors to promote our products to their customers,” says Huff. “You cannot be top of mind if you are not talking to distributors regularly.”

Source: 

“3 Business Lessons from California Tattoos' Turnaround.” PPAI Media, 31 Dec. 1969, https://media.ppai.org/ppai-newslink/3-business-lessons-from-california-tattoos-turnaround/.