In this article, we’ll scrutinize Sephora’s loyalty program, its latest update, how it works, and why it works. The Beauty Insider Initiated in 2007, The Beauty Insider was designed to offer a sense of exclusivity to its loyal customers. The program is updated from time to time in order to stay relevant and offer better … Read more
It’s no mystery that Sephora has seen major wins in the beauty industry. Since 1969, this cosmetics brand has sold millions of units in retail stores worldwide and continues to thrive today. But what is it about Sephora’s marketing strategy that sets them apart from similar companies like Ulta and Glossier? What is it about them that other brands just can’t keep up with? The short answer is loyalty. More specifically, how they use personalized loyalty to build a community of beauty advocates.
Unique Customer Loyalty Structure
What differentiates Sephora’s marketing strategy is its approach to rewards. Though they do have a points-for-purchase model, there is so much more that goes into it. For example, in their rewards bazaar, they have new incentives every Tuesday and Thursday and customers can browse a massive gallery of available products. And their unique collection offers limited edition and exclusive product releases solely for its rewards members. With more perks like free makeovers and complimentary birthday samples, it’s easy to see why so many beauty enthusiasts rave about Sephora.
To get a better understanding of why people are so loyal to the brand, I asked long-time customer and beauty enthusiast Erin Duff her thoughts on Sephora. “I’ve been a Sephora member for over 11 years and it’s because they have such high quality products from so many different brands. I love that you have the option to spend a few rewards points for a sample of something or save up and get big like a custom makeover.”
User Generated Content
Sephora has set the standard as far as what cosmetic brands should be doing with their user generated content. Take the Insider Beauty Community, for example. It consists of forums surrounding beauty tips, live chats with influencers, and stunning photo galleries. But what I think they do really well in UGC is visual commerce. With many gated channels like Makeup is Life and Best Hair Ever, users are able to post and see pictures to help them guide their purchase decisions. All of this has helped grow Sephora grow and sustain a massive presence with over 15 million subscribers on their website and social media.
Whether it’s online sales, in-store, or at events, Sephora uses creative ways to retain its customers among all channels. They do a great job of advertising their loyalty program to their network and it’s evident by their impressive online sales and growing list of retail locations. Their unique spin on omni-channel is the work they do with live events. They are constantly advertising beauty classes, makeover events, and of course their epic annual conference Sephoria.
Sephoria is a one-of-a-kind live forum where influencers, patrons, and celebrities all collaborate and discuss what’s happening in beauty. Their events and creative marketing strategies help reach a more engaged community and turn Sephora’s avid followers into brand advocates. “By fostering personal connections and generating brand love over the years, it’s only natural that we leverage their input and further strengthen our program beyond just perks and discounts,” says Deborah Yeh, senior vice president of marketing and brand at Sephora.
Sephora’s network is continuing to grow and there’s a reason for that. They have implemented many of the right marketing and loyalty strategies to not only grow their customer base, but to retain it as well. Annex Cloud believes that the right combination of customer loyalty, user-generated content, and omni-channel strategies are the keys to retention. We work with many similar beauty and fashion brands and use loyalty to help them nurture and build real relationships with their customers. If you have any questions about marketing or loyalty, contact us or schedule a consultation today!
TABS Analytics’ study on cosmeticsfound that there is no true loyalty in the beauty industry. Heavy buyers opted to purchase across multiple brands. The study found that, on average, frequent buyers are purchasing across 8.6 brands while medium buyers are purchasing across 4.7 brands. The average buyer purchases more than 5 brands per year, both in-store and online. Of course, this relatively abysmal state of omni-channel loyalty for beauty brands is not the only problem that the industry is grappling with. The following is the brief list of some real problems.
Challenges for Beauty Brands: Data Deprivation
As cosmetics brands have been traditionally relied on multiple retailers to get across the sales cycles, it has made it very difficult to keep the track of each and every transaction. This is especially true if the brand is bigger and has a presence in multiple states and countries.
When a consumer shops at a department store, drug store, or other retailer, they give their email to the store, rather than to the brand. Even if by some mechanism brands try to extract that data, that database will be enormously complex due to the multitude of data silos. In short, cosmetic brands have been serving unknown customers.
Challenges for Beauty Brands: Cost
Remember that many cosmetic products have unique requirements regarding handling and storage. As they require specific temperatures, both retailers as well as manufacturers have to have varied levels of refrigeration. If this refrigeration condition isn’t fulfilled, the cost of waste becomes a major issue, even before you take into account the lost orders and drop in brand reputation that inevitably follow. This problem has become even more acute as very few new preservatives are allowed in the market. The whole process, thus, becomes a costly affair. The understanding that can be drawn from this is crystal clear.
The industry wants a tool, or a way out, which will ensure the steady rise in loyalty, and that too, not at the expense of severe cost. It also needs a customer engagement device to safeguard customer interest by keeping them in a loop of constant communication. Thus, loyalty, specifically omni-channel loyalty for beauty brands appears to be the near perfect solution to these troubles. Here’s why.
Omni-Channel Loyalty for Beauty Brands: The Process
Loyal behavior from the customers’ end can never be an outcome of a magic wand. It has to be slowly and steadily etched in their minds. For that, understanding the customer’s buying journey becomes incredibly valuable. But with the avalanche of digitalization, multiple touch points have come to the fore, like mobile phones, laptops, tabs, and NFC. Naturally, going to the store isn’t the only way of interaction by any means.
According to one study,millennial women (ages 18 to 34) are the heaviest buyers of beauty products. Millennials are twice as likely to be heavy buyers and account for 47% of all heavy buyers. Clearly, millennial women should be at the helm of your efforts- then be it to make them more loyal and vocal about your brand or trying to get more sales from them. And that’s precisely where the omni-channel loyalty for beauty approach begins to matter.
The relation between millennials and smart phones is well established and thoroughly discussed. As per Bank Of America, 39% of millennialssay they interact more with their smartphones than they do with their significant others, parents, friends, children or co-workers. Even if we look at how they are using mobiles in the core context of shopping, look at the following statistics:
62% of millennials use mobile phones to shop
30% make online purchases on mobile devices
59% use their phones to check prices in-store
It’s quite clear that mobile is cosmetics brands’ mainstay in tracking the customer journey. Allowing them to utilize mobile in availing the loyalty functionality, thus, should be the top priority. Making them to come down to store for registration and points redemption doesn’t make sense. Because it’s much more effective to be there where customers are…and they are on digital devices!
Omni-Channel Loyalty for Beauty Brands: Multiple Touchpoints
Content on digital platforms has been the prime tool for beauty marketers to spread their message as of late. In June 2016, beauty-related content generated more than 5 billion views per month on YouTube alone. Besides, Mexican beauty YouTuber Yuya ranks first in number of subscribers with just over 16 million as of late 2016.
Now, what this means in the prospect of omni-channel loyalty for beauty is the fact that there is tremendous potential to generate engagement on digital platforms. That’s why 29% of heavy cosmetic buyers report that blogs are very important in helping to determine which cosmetics to buy. That number for YouTube is 28%.
Clearly, putting across the loyalty program’s communication across multiple digital channels becomes a key strategic move as from there the majority of the purchase decisions are springing up. Moreover, there are many ways to connect to communicate with customers.
Aside from more traditional loyalty program solicitation methods like email marketing, on-site promotions, social media campaigns, and so on, you should make sure to advertise your program on your packaging, on your product pages, and more. Through the loyalty program, you can communicate with your loyal customers about the new offers or new products. As they are waiting for beauty related content on digital platforms, the chance of missing this communication by them is almost negligible. The immediate impact of this can be felt on the widen reach of your communication, for which brands spend ample money. An omni-channel loyalty is a serious cost cutter in this aspect.
Omni-Channel Loyalty for Beauty Brands: Data Collection
Without an omni-channel approach, it’s almost impossible to keep a record of customers’ information who may interact with the brand through multiple ways. As customers channelize their loyalty program on multiple platforms, cosmetic brands can extract the customer data from all the channels to transform it into a singular view. It’s like unifying online and offline data. Apart from getting the minute details of customers’ whereabouts, this data also mirrors their preferences and behavioral details.
One groundbreaking way of gathering data is with Annex Cloud’s Native Receipt Scanning. Thanks to this new technology, shoppers in a brand’s loyalty program can submit their receipts to the company in order to gain points, either by uploading images to a website or forwarding e-receipts via email or text message. The Native Receipt Scanning then reads all the text from the receipt, stores all the retailer and purchase information, and awards points based on the products that are purchased.
Customers benefit from a convenient process that lets them earn points for their purchases, while brands and manufacturers gather data from yet another very significant touchpoint. Moreover, because the receipts being submitted are from third-party retail partners, brands have access to third-party purchase data. In other words, you can see what other products your customers are buying.Solutions like the Native Receipt Scanning open the way to precise personalization. It’s true that personalization has always worked in all sectors, but in the beauty sector, it has a special importance. The reason is, beauty is a very personal thing and different customers have different needs.
Omni-Channel Loyalty for Beauty Brands: Coherent Communication
A combined interaction of print, online, broadcast, mobile, retail point-of-sale, gaming, kiosk, outdoor, direct mail, and social media with customers is the reality of modern times. A same communication with the same power has become a need, as same customer might be receiving your loyalty communication via multiple platforms. The variation in the tone, experience and overall communication can put the customer in a phase of irritation. That’s why seamless, consistent and equal experience, which should be a device or channel agnostic, is a need.
Regardless of the channel through which they are using your loyalty program, everything- and that includes communication, complaint mechanism, registration, rewards redemption, and inquiry of the reward points should be “differenceless”, i.e, the same. But providing this seamless experience is the biggest strength of omni-channel loyalty program. And remember that having this seamless experience is the desire of the customers. The following numbers show that need.
The majority (87%) of consumers believes brands should work harder to provide a seamless experience.
Though most companies operate on a fragmented channel-by-channel view, 84% of global retailers indicated they think a consistent customer experience across channels is very important.
All in all, it is reminding me of Peter Drucker’s quote: The aim of marketing is to know and understand the customer so well that the product or service fits and sells itself.
Of course, omni-channel loyalty does more than that, as it is giving you the complete picture of your customer. But, its major success point is its ability to elevate the customer experience at a much higher level. Relevant communication, ability to use reward points anywhere and anytime, monitoring the real-time points situation…all these get accumulated in a “rich” customer experience.
Considering that 89% of marketers are competing primarily on the basis of customer experience and each 1% improvement in customer experience quality results in an additional $15M to $175M in annual revenues, according to a Forrester report, omni-channel loyalty is a must for every industry- including the cosmetics industry.
Hi! I’m Eliza Fisher, Annex Cloud’s Marketing Strategist and Editor. I live and breathe retail, and I have tons of thoughts about how I, as a female millennial consumer and too-frequent online shopper, should be marketed to. For another blog post from my personal perspective, check out “I’m a Female Millennial and This is How eCom Sites Need to Market to Me.” Now here’s my take on how Black Friday went wrong, and what retailers can do to fix it next year.
Black Friday broke e-commerce records this year, with online sales up 21% year-over-year according to Adobe. Beyond that, mobile sales contributed to $1.2 billion of that on Friday the 25th alone. Needless to say, there’s a lot to celebrate here, and as I write this Cyber Monday is still in full swing, promising even more profit for thousands of businesses. Even sellers outside the US are benefiting, with spending and in-store traffic at UK chain stores up across the board.
Of course, all is not well in the land of pumpkin pie leftovers and 60% discounts. By now you’ve probably heard of the ransacked Nike store near Seattle.
In terms of metrics, the numbers aren’t very clear yet for in-store traffic in the US, but it looks like the overall trend is that online is “cannibalizing” in-store sales, and with good reason. Here’s where my story of where Black Friday went wrong starts.
Ulta Online: Not So Ultimate Beauty Deals
As you’re probably aware, many companies took the route of offering promotions all week long, or at least Thursday though Monday. Ulta Beauty, a large cosmetics retailer and arguably Sephora’s only real competitor, was one of them. I was perusing their online offers on Sunday morning, and found myself intrigued by some of them and baffled by others.
While some items were legitimately discounted, e.g. 30% off, many more were crafted for the upsell and had tons of preconditions. Buy one, get one 50% off; free gift with purchase; spend $35 on X brand and get a free sample…
Some of the “free” gifts with purchase were so unrelated to the purchase it was almost laughable…
There was one very smart offer that I noticed, though: if you spent $75 with them on Cyber Monday, you qualified for a bag of samples. While beauty product samples can be totally free if you look in the right places, businesses like Birch Box and Ipsy have lasted for years on just them. Ulta’s offer is totally mindless, just a collection of minuscule-margin items of which I’d use about 50%, but it’s placed at just the right price point to tempt shoppers.
The main difference between this offering and the other ones mentioned are that this one is site-wide and doesn’t apply to a specific brand or product. It’s general enough to be vaguely useful.
Despite my complaining here, I ended up putting about a dozen items in my cart on Sunday morning. They were mainly a combination of purely discounted products, as well as buy one get one 50% off deals on products I already use and know I’ll need to replace in the somewhat near future.
Because I’d already spent so much money on gifts for others and myself this past week, I decided to stave off the purchase, but ended up going to the closest Ulta store later that day. This is where their Black Friday went wrong to a whole new degree.
Ulta In-Store: Where Is Everything?
I went to Ulta’s store to try on products, which is one of the major limitations of beauty e-commerce. As soon as I walked in, I was struck by the towers of pre-packaged gift sets, which are generally not good gifts due to the smaller size of the products and the fact that you have less choice in what you get.
Really, they’re only good presents for (1) friends who legitimately love these sparkly gift sets (I don’t know very many), (2) people you don’t know very well, or (3) when the set happens to include or be based around a product you really believe in.
Other than these types of sets–and their “free” luxury bathrobes–Ulta’s store really didn’t have anything in the way of Black Friday discounts. I noticed a set of hand moisturizers from Bliss that I’d been eyeing online. It turned out they were twice as expensive in-store due to a seemingly misguided online-only special.
Beyond that, I was on the lookout for two products that they didn’t even carry in the store. I walked out after about 10 minutes, confused about why Ulta wouldn’t want to have a more exciting in-store experience that matched up more with its online presentation. Maybe their numbers will be fantastic, but this potential customer was disappointed.
Takeaways: Where Ulta’s Black Friday Went Wrong
In essence, Ulta’s missteps boiled down to two major factors. Their offers weren’t straightforward, and their in-store deals weren’t nearly as good as their online ones. Like I said earlier, perhaps the labyrinth of buy two get one free, free 5-piece travel set with $50 purchase, and so on attracts tons of shoppers who pay a little less attention to what they’re actually getting when they reach those purchase thresholds, or who just have more money to spend. For me, though, there are too many products but paradoxically too little choice and not enough value.
Furthermore, if Ulta’s aim is to drive online purchases over in-store ones, they’re probably doing a good job. However, if they’re concerned about foot traffic, it seems like a simple enough fix would be to at least get rid of the online-only promotions, if not to go further and heavily market exclusive in-store deals. While Black Friday went wrong for Ulta, I was impressed by certain other retailers’ approaches to it.
Where Black Friday Went Right
As both a consumer and a marketer, I was attracted to companies whose promotions fell into a variety of categories…
Cause-Based Marketing: You probably heard of how Patagoniadonated all the proceeds of their Black Friday sales to grassroots environmental organizations. This is highly laudable and I’m positive that it boosted their social capital and trust factor, priming shoppers for future, full-priced sales with them.
Not all companies can afford to take this approach, though. I was struck by the amount of small- and mid-sized businesses that I follow who were practicing some sort of Good Karma Friday approach on a smaller scale. Many retailers were advertising that a smaller portion, usually 10%, of their profits were going towards the charitable organizations of their choice.
While this probably put off certain shoppers who don’t agree with the stores’ chosen causes, other consumers were definitely emboldened to spend more.
Straightforward and Sitewide Discounts: I also noticed a fair amount of sellers doing a very straightforward sitewide sale, often 20% to 30%. If I’m curious about a new brand, 20% may not be enough to fully pique my interest. However, if I’m already a loyal customer, this range of discount will assuredly motivate me to shop.
British fashion site ASOS did 30% off their whole site from Thanksgiving through Cyber Monday. I’ve been buying from them for at least about 8 years, and at this point it’s a given that I’ll buy something from them any time there’s a sale. The selection is always spectacular, and I know I can find show-stopping clothing and shoes there. I actually ended up making two purchases this past weekend!
Direct-to-consumer beauty brand Glossier also had a sitewide sale, but only for 20% off. Loyalty definitely drew me in, as I like their products and think that they’re fairly priced even when they’re not on sale. However the biggest motivator here is that Glossier never, ever does sales.
Pure Necessity, With an Upsell: The only successful in-store shopping I did over the weekend was at Target. It’s right next to my local Ulta, and I wandered in there in search of beauty products after being so disappointed by them. While I would have made a certain amount of purchases at Target regardless of any promotions, I was definitely encouraged to buy more due to a 15% discount on all in-store purchases that day.
I wasn’t even aware of the promotion before I came in, but it’s one that I’m sure helped increase average order size at their brick-and-mortar locations. 15% is the sort of discount that usually doesn’t make a huge difference for shoppers at the end of the day, but it seems sizable enough to encourage additional purchases.
Furthermore, many people, despite having their smartphones with them at all times, aren’t great at doing the math for 15% off either in their head or on the go, so they don’t have a great understanding of how insignificant it is. And let’s be honest, I kind of fell for it!
Honorable Mention: Discounts for Buy Online, Pick Up In-Store: Last and pretty much least, Macy’s gets an honorable mention. My mom and I were looking at Tempur-Pedic mattress pads online on Friday, and they had the best price. Beyond that, they had an offer to take off an additional 20% if we picked up the mattress pad in-store. It seemed too good to be true, especially for a product that’s normally quite expensive. And, it was: It turns out that no Macy’s in Los Angeles had one in stock. Still, if this is cost-effective for your business’s logistics, it’s a really alluring offer for customers and could also prompt more in-store shopping.
Going back to our earlier topic of irrelevant gifts with purchase, though…My friend bought a Chloe perfume at Macy’s over the weekend and ended up getting a free…set of plates!
User Generated Content, as the name suggests, is the content created by users in the form of ratings and reviews, questions and answers, and images while using your products or services. As this content is created by customers themselves and not by brands or ad agencies, it’s considered to be 12 times more trustworthy in the eyes of everyday shoppers. The level of people’s trust is always high when they see that someone from their own league is really loving a business’s products. And that’s precisely why UGC works in all kinds of industries and all sorts of marketing efforts. The cosmetics industry isn’t an exception–indeed, due to the intimate nature of beauty products, their sometimes-high price points, peculiarities of color and texture and more, UGC and cosmetics are a necessary combination for e-commerce. Let’s understand how cosmetics industry can be enormously benefited by the unbridled potential of UGC, and take a look at some examples.
UGC and Cosmetics: User Generated Photos
A major limitation of online buying is the lack of direct contact with the products. That luxury of touching and feeling the products lies with the physical stores. Obviously, people would prefer if they can touch and feel the product, or even try them. It is emphatically true for beauty products whose worth from the customer’s point of view depends on how it will look on him or her.
Even if the quality of the product, let’s say of a certain lipstick, is good, it doesn’t mean that every woman will buy it. Simply because the decision to buy a lipstick cannot be taken without considering her complexion and other features. That’s precisely why she needs to see a woman of her complexion and features wearing that lipstick. It will give her an idea about its suitability. This is where user generated photos can really pull the trigger by assuring her about the suitability of the lipstick!
A second major benefit of customer photos for beauty companies is that they can often work an aspirational angle. When a potential buyer sees all the different scenarios and looks that your products work in, your brand’s versatility and appeal are heightened.
One of the most straightforward ways to loop in customer photos with your marketing strategy is to use them with visual commerce software. A good visual commerce solution will automatically pull pictures and videos with a certain hashtag from Instagram and other social sources, and will also allow for direct uploads on your site. From that point, you can configure versatile galleries, use the content in marketing emails, put images on your PDPs, and more. Here’s an example from Sigma Beauty.
You can also use visual commerce to enable Instagram shopping. Since Instagram is such a huge hub for beauty aficionados, it’s smart to make the journey from following to liking to buying as simple as possible.
The reason why ratings and reviews have always worked in every business segment has to do something with the human tendency of being cautious before buying anything. People want an assurance of the quality of the product that they are about to buy. And as we have already discussed, people cannot touch and feel the product on e-commerce websites to make even a rough opinion, they want something solid and strong as a proof. Ratings and reviews fill that void, and consequently boost conversion.
Just like with customer photos, if you have a loyalty program you should consider incentivizing the contribution of reviews. Ever since the hair care brand Ouidad started doing it they’ve seen a significant uptick in review submissions!
UGC and Cosmetics: Questions and Answers
Irrespective of the amount of information that you put on your product pages, certain shoppers will still want to know more. They might have questions like: What are the ingredients of the product, can it be allergic to a specific type of skin, and can it have side effects if used with other products, availability of the product, its durability and much more. If these questions remain in their minds, it’s likely that they’ll abandon their carts. Nobody buys when he/she is in doubt!
Questions and Answers effectively tackle this problem as by establishing a platform for your consumers to ask both specialists from your company and other consumers. Besides, it also helps in creating a community around your products where people can discuss and share their experiences. Naturally, it fillips the online presence of your brand. It goes without saying that the daily submissions of fresh questions and answers are key for your SEO prospects. It’s a clear cut win-win scenario!
Here’s a peek at what Murad’s Q&A solution looks like.
UGC and Cosmetics: Takeaways
1- Don’t let the photos shared by your customers go to waste. Put them on your social media pages, website, and other marketing campaigns.
2- Ask your customers to write what they really feel about your products. Even if some of those reviews are negative, they help in making your website authentic and boosting conversion.
3- Create a questions and answers platform where customers can ask their queries. That makes them more secure about their buying decisions and heightens engagement.
The mammoth $500+ billion per year cosmetics industry has been growing at an intense pace over the past few years and is in danger of over-saturation. While product quality is crucial for success, no one can deny the importance of marketing as well. Due to the nature of makeup and skin care products, the need for differentiation, and the necessity for customer engagement, cosmetics loyalty programs are a great bet. Let’s take a closer look.
Cosmetics Loyalty Programs: The Basic Parameters
Before running a loyalty program, a business in any industry has to look at the basic parameters that defines the feasibility of their would-be loyalty program. These basic parameters are purchase frequency, customer lifetime value and average margin. Now, let’s see how cosmetics loyalty stacks up.
Common sense and observation tell that cosmetics need to be replaced semi-frequently, as they are used on a daily basis and they have a short shelf life. Naturally, then, repeat purchase percentages are high It has been observed that once a customer has made more than 4 purchases with your store, they are likely to become a lifetime customer. Besides, a high rate of a repeat purchases ensures that the purchases will have a high order value. What it eventually means is there is a much higher customer lifetime value in the cosmetics industry than in many other industries.
A loyalty program shares a percentage of your margin with your customers. Thus, you must have margins to support this. As per the industry standard, any company with margins above 10% is suited for a loyalty program. This margin with cosmetics is 80%. It means that cosmetics loyalty programs are much more feasible than many others. In short, the cosmetics industry in general meets all the conditions that decide the feasibility of running of a loyalty program…and this is what ensures the successful proceedings of future steps.
Cosmetics Loyalty: The Switch Barrier
Unlike fine jewelry or the luxury car market, the cosmetics industry is not a niche market. It’s a cluttered and open market with a cut throat competition. Thus, if you’re marketing the same beauty brands that are available at other stores, in-person or online, customers know they can look elsewhere based on price or a better shopping experience. Customer retention here becomes an absolute necessity…almost like a sole element of survival! Of course, steep discounting is a solution. But that won’t lead you far ahead–it’s an unsustainable model.
A loyalty program, then, looks like a more logical and robust solution, as it allows you to put value at the center of your customer retention strategy via rewards.These rewards don’t necessarily have to be financial gains for the customers. It can be more than that. Of course, a discount of a few dollars may be hugely appealing to your audience. It’s worth testing and seeing.
However, you should also test to see how using products, special access to events, and more motivates them. Known as product and experiential rewards, these are the rewards that give the feeling to the customers that they are getting more than a product from you. This will not just make them happy, but engaged too! Devising such experiential rewards doesn’t need a Herculean task. It can be achieved by very simple things…like giving free samples of your products. People are generally hesitant to spend money on a new cosmetic product, as they are not sure about it. But people will love to try it if they don’t have to spend a penny on it.
You can also offer gift cards or store credit as rewards, empowering your customers to choose whatever they want/ need to incorporate into their daily beauty routine. And of course, other tried and tested rewards of offering an early access to your exclusive products or gifting them to your loyal customers on their special days are always there to step in. If you look at it clearly, you will realize that through these rewards, you have created a switch barrier in the customer’s mind by pinpointing the cost of switching.
The message is clear here: You will lose all those rewards if you decide to choose a competitor over me for your next purchase. It is human nature to maximize value and leaving points behind is counterintuitive to that nature. It will make customer to think twice before he decides to leave you and embrace your competitor. Cover FX’s rewards program is one such cosmetics loyalty program that doesn’t just rely on monetary rewards. It caters to the experiential level of customers too.
Cosmetics Loyalty: Elitism
Though many people, especially women, have made cosmetics products an integral part of their lives, you must not forget that it’s not among the basic necessities of life. Among many social circles, cosmetic products are a way to judge the disposable income of a person. Along with buying a cosmetic product, there is a hidden desire to buy a status. Of course, this statement might not apply to each and every cosmetic buyer, but while designing such programs, you have to think about collective consciousness and the majority’s thinking. And the fact of the matter is that the majority of cosmetic buyers associate certain brands with status and higher social standing. It’s perfectly possible to fan this need of elitism by creating a structured layer of rewards…where awards will be different for different people based on where they stand in the loyalty category.
MAC Cosmetics rolled out its Select Rewards loyalty program in the UK this year. The cosmetics loyalty program divides customers into three layers: Seduced, Devoted and Obsessed. The more a consumer spends, the higher he can climb up and the greater privileges he can unlock.
Rewards range from free product samples to limited-edition products for Seduced members; free express make-up application and complimentary two-day fast-track shipping for Devoted members ($150 spend or more in a calendar year); and first access to new products and a deluxe annual gift for Obsessed members ($500 spend or more in a year). As you can see, the customers are categorized based on their level of spending. The sense of elitism begins from this point. The higher the spending, the higher the category. Someone in an Obsessed category will feel more elite than those who are in the Devoted category. And believe it or not…it can become a motivation for many people to shop more from you.
Cosmetics Loyalty Takeaways:
1- Whether it’s purchase frequency, customer lifetime value or average margin, the cosmetics industry overall fulfills all the criteria that are necessary to decide the possibility of a loyalty program. It’s a proven fact now. So, instead of thinking about its feasibility, think about executing a loyalty program.
2- A cosmetics loyalty program with innovative and experiential rewards certainly acts as a deterrent to the customer’s decision to move away from your brand. He will think about the loss of the value proposition that your loyalty program has been offering to him through rewards.
3- Don’t forget that many cosmetics shoppers are often very motivated by prestigious status. Always keep this in mind while deciding a reward structure.
Note:For a great illustration of a cosmetics loyalty program success, check out Murad’s story. After combining UGC with a loyalty program, Murad saw an 18% increase in the conversion rate along with the acquisition of 150,000 loyal members in only 6 months. Don’t forget to learn about the power of referrals for cosmetics, either! For even more loyalty insights, take a look at some of the following white papers and posts, too!
Since time immemorial, people like to see the best version of themselves when they look in the mirror. Not much has changed in that wish. That explains the core reason behind the size of the cosmetics industry. With an estimated annual worldwide turnover of USD $170 billion, it’s a venerable industry. Given that word of mouth marketing is also one of the oldest and most proven selling techniques, referral marketing for cosmetics makes perfect sense.
Besides, if you go through this infographic, you will learn that Americans are the heaviest spenders when it comes to beauty products. What this highlights is the enormous potential of the cosmetics industry when it comes to enhancing customer acquisition.
Referral marketing for cosmetics also makes sense when you consider the intimate nature of beauty products. Customers are terrified of using a foundation that will make their skin break out, wasting money on an expensive hair treatment that does nothing for them, or buying a lip color online that looks lifeless in person. This extra sensitivity that consumers have for beauty is what makes them need recommendations and reviews. And when they see with their own eyes that their friends, relatives, neighbors have been using a particular brand or product with great results and no side effects, it becomes visual proof of the quality of the product. When those people recommend some beauty product, a fewer traces of doubts remains in shoppers’ minds.
But as I always say, every industry is different with its own positives and negatives. Every industry has a different way of functioning and thus every industry has a different quotient of appeal. As a marketer, you need to understand that appeal and try to weave all your communication around it. Hence, your referral program also needs to be augmented accordingly. The beauty industry is no exception. Because what has worked for one industry may not work for some other industry. We will look what referral marketing for cosmetics should do to leverage its unquestionable potential.
Referral Marketing for Cosmetics: A Personal Connection With Customers
The importance of word of mouth carries more weight in the beauty and cosmetics industry. After all, these are the products which decide our look and come in direct contact with the body. Thus, a personal communication in the form of tips about which hair color might suit someone or what gel might be effective for oily skin can bolster the relationship beyond the temporary and cold business transaction. It’s like you are giving more than a mere product to your customers. And unless and until this bone of connection doesn’t get developed, it’s hard to convince consumers that they should recommend your products to their friends. It’s like a prerequisite to your referral program. First, create a ground and atmosphere for referrals and then give them the medium, i.e. a referral program, to do it! You can even add such tips in your communication of referral program as well. Consciously or subconsciously, this will act as a motive for people to share more about your products.
Referral Marketing for Cosmetics: The Right Rewards
We have seen enough referral programs falling flat due to illogical ways of rewarding people. And a lot has to do with the old wisdom, which says that cash benefits act as biggest motivation for people to refer any brand. But with the changing times, this wisdom has faded. A study conducted by the University of Chicago found that non-cash incentives are 24% more effective at boosting performance than cash incentives.
Consumers are more liberal spenders when it comes to cosmetics, and besides, beauty products fall into a category of costly products anyway. Thus, if your product price is $50, a $5 off has no allurement in it. Instead, marketers can invest in creating experiences that linger on customer’s mind for a long time. You can still keep a points reward system. But you should make your best customers and advocates feel special by giving exclusive access to special products. Or you can invite them to the special events such as a launch of the product or the success party of your products. These are the events whose access have been traditionally given to journalists and eminent personalities from various fields.
Giving your customers, who have shared the most about your product, the opportunity to rub shoulders with such bigshots does a lot to their experience level. There are simpler ways too. What if you give the referring client a free service or a product after 3 referrals? Is it too extravagant? Absolutely not. Let’s do the math here. Assume that your product cost is $100. If you reward a client with a free product after 3 referrals, you will get $300 in additional sales – plus repeat business when the referral comes back. Rewarding your advocate generously will give a strong incentive to your customers to refer new customers. These new customers may also want to get a free product for referring 3 new customers…and thus, the snowball effect may get ready to roll.
And don’t forget to A/B test these incentives! This blog post will guide you through which variables to consider when testing and optimizing your program.
Referral Marketing for Cosmetics: Don’t Miss Out on the Men!
Of course, beauty is usually considered the domain of women, but men are also getting in this groove. There has been an increasing tendency of men to care more about skin and look. That’s why they are buying various cosmetic products. In America alone, men’s skin care products’ sales have increased from $2.2 billion to $3.2 billion in just a span of 6 years (2006 to 2012). Cover Girl also just named their first male spokesmodel!
So, if you have men’s products on your shelf, do not hesitate to carve out a referral program for them. They are becoming conscious about beauty and thus there are high chances that they will refer your products to their friends. Even if you don’t deal with men’s products, it’s a wise idea to have something for men too to have their participation in your referral programs. Consider something like a family scheme where he can get rewards for sharing with his sister or wife.
Referral Marketing for Cosmetics: Takeaways
1- The beauty industry works on the intimate connection that customers share with the brand. Try to foster it to see a better performance of a referral program.
2- Innovative rewards are needed to really give some strong motive for customers to refer your brand to their friends. Think beyond cash incentives.
3- Don’t make the mistake of excluding men from the whole beauty business. They do care about such things. Involve them too in the environment of your referral program.
On a more granular level, our latest case study shows that our Sharing and Referral and Social Login solutions grew a footwear client’s email list by 20% and boosted orders by 38% over a year! The seller, Vivobarefoot, saw a 10:1 ROI.
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