"Would I have preferred the growth to come from products with our name? Yes," says Rubin. "But that just wasn't going to happen. We couldn't develop our name at retail. We didn't have the money. We needed a well-known name."
Sassoon's certainly was that, and one that would allow Rubin to expand. That brought Rubin to his second problem. Vidal Sassoon owned the name. Helen of Troy didn't.
So off Rubin and Shenkman flew to Los Angeles, where Sassoon was auditioning companies, trying to decide which should send him checks. Among the suitors were Clairol and Gillette. Faced with the overwhelming size of their rivals, Rubin and Shenkman did the only thing possible. They talked about the quality of their products, and stressed that by going with their small company, Sassoon could be sure that his products would get a lot of attention.
All this was fine, but ultimately it was money that carried the day. Helen of Troy offered the best deal: $100,000 upon signing, plus 10% of sales, compared with the standard 6% royalty.
"Sure, it was a lot of money," says Shenkman, "but what choice did we have? We needed the name.'
They got it. And it got them shelf space. "Sassoon is a very recognizable name. If there is one person who is the embodiment of hair care in the United States, he's it," says a buyer for one major retail chain, who has cut down the number of Clairol products he carries to create space for the Vidal Sassoon line.
This same buyer had previously turned down the chance to carry Helen of Troy-branded products, which are virtually identical to the ones with the Vidal Sassoon name. That doesn't trouble the buyer in the least. He wanted the name -- and so did consumers. In its first year, Sassoon-labeled products produced $10 million in sales, and they have climbed ever since, helped in large part in recent years by an interesting turn of events.
Shortly after Sassoon signed the contract with Rubin, he sold his company -- and with it, his name -- to Richardson-Vicks Inc., the company producing his shampoo. Then in 1985 Procter & Gamble acquired Richardson-Vicks and decided to spend $30 million a year -- about double R-V's budget -- advertising Vidal Sassoon shampoos and conditioners. And every time Vidal came on the screen saying "If you don't look good, we don't look good," Helen of Troy's products got a plug. In the two full years since the Richardson-Vicks acquisition, Helen of Troy's revenues jumped by two-thirds, to nearly $68 million in 1987. Earnings nearly tripled.
The result of all this has Rubin talking about sales of more than $90 million this year and earnings of about $8.5 milllion. (Wall Street apparently has yet to catch on. Recently, Helen of Troy traded at about $13, or 8 times earnings, compared with multiples of 12 for Windmere, another hair-care products retailer, and 15 for Gillette.)
While Rubin is bothered by the low stock price, he has no intention of changing a thing.
"The Sassoon line is growing at 30% to 40% a year. We are going to ride it as long as we can.'
TAKING NAMES
What to look for in a license
If you're looking for a quick and relatively painless way of breaking into a mass market, licensing can work wonders. You gain instant name recognition in exchange for a percentage of your sales. But for this marketing strategy to work, you have to know whose name to use and how to use it. Here's the approach that founder and chairman Gerry Rubin used at Helen of Troy Corp.:
* The name must fit. Both Brooke Shields and Pierre Cardin put their names on hair dryers. You can still find some of them in liquidators' bins.
"The problem was," says Rubin, "consumers asked themselves, what do Brooke Shields and Pierre Cardin know about hair dryers? And the answer was not much. The name has to carry with it some expertise, and the expertise has to fit." For example, Black & Decker may know about small electrical appliances, and hair dryers may be small electrical appliances, but we don't know of many people lining up for Black & Decker-branded items to dry their hair.
* Control. The way to handle the control issue, says Rubin, is clear. You can't give it up.
It's their name, but it's your product. While you might let the licensor decide how his name will be displayed, you have to be the one who decides how the product is made, packaged, and shipped.
* How long does the marriage last? ``You have to make sure you're covered, if it turns out that the license creates a monster business," Rubin says. In other words, the license is an asset, and, as always, you want to make sure your assets are protected. This can run into serious money. Helen of Troy has paid a total of $6 million -- over and above royalties -- to retain its rights to the Vidal Sassoon name until the year 2030.
* Partners today, competitors tomorrow? One of the things you're going to do when you license -- through your sales force, advertising, and promotional efforts -- is build up the value of the licensed name. The name Roy Rogers is worth a lot more today than it was when the cowboy was cantering about on Trigger, thanks to Marriott's effective promotion of Roy Rogers restaurants. If you are going to make that kind of investment, be certain that the licensor is not going to turn around at some point and compete with you.
