Cosmetics is an ever-growing, billion-dollar industry. With 70% of shoppers preferring to purchase their cosmetics online, many companies are bumping shoulders in an effort to secure new business.
So how do you keep these profitable customers choosing your store purchase after purchase? With loyalty, of course!
1. What Makes Cosmetics a Good Industry for Loyalty?
Cosmetics are extremely well suited to loyalty for several reasons:
- People love to share their favourite brands with friends and family. This means referral rates are high.
- High purchase frequency increases odds of creating a lifelong customer. Since customers purchase cosmetics frequently, the chance of creating a customer for life is much higher!
- The margins support its investment. Any margin of over 10% is ideal to running loyalty and since the average cosmetics company runs a margin of about 80%, cosmetics brands are more than qualified!
We know cosmetics is a great industry to support the use of a loyalty program – so how do you do it?
2. Designing Customer Loyalty for Cosmetics
We’ve already established that cosmetics are the perfect fit for customer loyalty. So what are some of the things to keep in mind when developing a strategy for your loyalty program?
When designing your program, ensure that it strives to acquire, retain, and nurture your customer base. Outlining the purpose of your program will allow you to better track success, and make valuable changes later on.
- Acquire. At this stage of the process, it is you versus your competitors. Give customers a reason to come to you specifically, whether it’s a free product, a sale, or something else entirely! The key to this objective is making your rewards attainable. The easier it is to be involved, the more likely people are to participate!
- Retain. You now have a customer! Loyalty will help you keep those fickle first-time shoppers, so congrats! At this stage of the process, it’s about giving them a reason to stay. The customer experience doesn’t end after the purchase is made. How else can they engage with you and keep getting something back? A loyalty program has the ability to create a community that’s an extension of your brand. It provides an outlet for customers to engage with that also engages them back! It’s this back-and-forth conversation that creates an emotional bond between a customer and a brand, and this goes beyond each individual transaction. Having a strong brand community here is important.
- Nurture. Actively invest in these relationships with your loyal customers, and you’ll be building a level of trust that doesn’t just keep them coming back – it brings their friends back, too. Rewarding customers encourages them to endorse your brand and involve others.
Now that we know how to get things organized, let’s look at some health & beauty companies that are doing this really well:
- One Love Organics recently launched a basic loyalty program for their growing brand, making it easy to get involved and rewarded. They’ve started off with a simple reward structure that includes referrals and points per dollar spent, making it easy to understand and encouraging to new members!
- Glow Recipe, another Shopify store, also launched their new loyalty program, Glow Miles, in 2016! Choosing a tiered approach, they’ve included benefits customers can unlock (like exclusive new product previews) when they’ve engaged more, whether that’s through spending or sharing on social media.
- e.l.f. Cosmetics approaches these objectives extremely well with their loyalty program, Beauty Squad. Firstly, they provide points for joining the program! This gives customers an easy motive and means to be involved. They immediately get something for doing (almost) nothing! Once they become a member, shoppers are introduced to a tiered program that allows them to get more back if they engage even more. Not only do customers get more value back for every dollar they spend, but they unlock additional benefits like early access to sales, or voting on new lipstick colours.
The tiered program that e.l.f. Cosmetics is running encapsulates simplicity of use with complexity of rewards that gets people involved, keeps them motivated to stay and allows them to participate in brand decisions (like voting on a new colour for a product), promoting their brand community. As you can see, these elements work together to acquire, retain, and nurture every single customer. Well done e.l.f.!
3. Industry recommendations
At this point, we know why loyalty works in general, what strategies to employ, and what general objectives we should seek. Now let’s get into some specifics of what we recommend for brands in the cosmetics industry specifically. Since it’s one of the world’s best loyalty programs, I’m going to use Sephora’s VIB Rouge program to help illustrate.
- Free Products. A great way to exceed your customer’s expectations is by offering them free products as rewards. People are typically hesitant to try new products when they’re already comfortable with what they have, so being given the opportunity to try something risk-free is very appealing. Gift cards and store credit is another great way to do this because it gives customers the power to choose a free product that appeals to them most.Sephora does this with it’s VIB Rouge program:
Here you can see customers are able to use points to exchange for any free product they’ve unlocked! It’s a very enticing way to expose customers to new products you’d like them to try. What’s great about Sephora’s strategy is that they offer each customer a wide range of products that aren’t necessarily in a customer’s loyalty points range. So if though you might not have enough points to redeem every single one, you’ve now been exposed to them all and been motivated to earn enough to get them. Well done Sephora!
- Status-Based Rewards. Tiered programs are an excellent way to do this, particularly in the cosmetics industry. As a vocal community, cosmetics customers are incentivized by gamification, and will strive to reach each new tier so that they can tell others about it. Many cosmetic shoppers are actually more motivated by prestigious status than the rewards offered.
People love showing off their exclusive status, especially when you can share it with an easy hashtag like #VIBRouge!
- Build a community. As mentioned earlier, building a strong brand community is also very important for cosmetic loyalty programs because people love to talk about cosmetics. The more people talk about something the more likely other people will want to get in on the conversation. Encourage your customers to engage with each other by rewarding them for referring others to your business and/or sharing their experience with your products across social media channels. Applications like Instagram are perfect for this because it allows customers to share their opinions and personal experiences with you and others! These are some examples of what Sephora’s VIB Rouge members have to say:
The transparency of the program through social media is essential to cultivating such a strong community. The ability of members to interact with each other naturally amplifies their involvement and advocacy for the brand.
Want to know more about Sephora’s VIB Rouge program? Click here.
In summary, while every company is different the recipe for cosmetics loyalty remains the same:
- Acquire customers by differentiating yourself from the competition. Give them a reason to choose you right off the bat, like welcome points or outstanding rewards.
- Retain your customers by creating ongoing incentives for them to keep engaging. Tiered programs are a great way to motivate customers to spend more by allowing them to get more money back and unlock experiential rewards! Whether that’s exclusive free products or status-based rewards, keep customers engaged by giving them something to work for.
- Nurture an open community for customers to engage with each other. Encourage customers to use their social media channels, and other means of communication to express their feelings about your products. Whether that’s a close community (family and friends) or a wider community (the general public), let your products and experience speak for themselves through your brand advocates.
Congratulations! You’re now ready to launch a loyalty program that will put a little polish on your customer experience.
Want to know more about launching loyalty in the cosmetics industry? Click here to download a guide written by one of the leaders in loyalty, Sweet Tooth.
Author: Elaine Sloboda manages agency partnerships at Sweet Tooth – the most used platform to build stunning online loyalty programs.