Your beauty brand can use beauty loyalty rewards as a strategic tool to grow your business by leaps and bounds.
The beauty category differs from other CPG categories in that the absolute consumption amount per user is low, consumers buy an assortment of products from different brands, and the product needs to perform outrageously well or deliver out-of-the-park value for it to be consumed fully and not get stored in the closet for posterity.
Table of Contents
Goal of Loyalty Rewards Program
- Profitability
-Increase no. of loyal consumers
#1 Overcome Block: How To Increase Enrollment in Loyalty Program
-Increase consumption
# 2: Overcome Consumption Blocks: How to increase profitable consumption
#Ritualized Consumption: Loyalty Rewards Program to overcome consumption blocks-Engagement & Redemption Stage Initiative
-3 Enablers for Ritualizing Value-Added Loyalty Rewards around engagement & redemption
:Consumer self-identification and segmentation
:Acquiring Zero-party data
:Guiding consumer usage and spending behavior
-6 Ways your beauty brand Loyalty Rewards can drive & sustain high engagement
:Ease of gaining points
:Engaging and inviting redemption options
:Initiatives & Touch Points
:Value-added Rewards
:Incentivising Redemption
:Communication
2. Advocacy
-Word-of-mouth marketing strategy
-Apply your buzz or word-of-mouth marketing strategy to 6 ways of driving engagement & redemption
3. Leveraging Your Beauty Brand Loyalty Rewards Program as a Growth Engine for Profitability & Advocacy
-Collect data to inform growth & loyalty hypothesis
-Focus data
-Segment by stage
SUMMARY
Beauty Brand Loyalty Rewards Program Strategy
The chart above shows how a loyalty rewards program strategy can help deliver the ultimate goal: Increase profitability by becoming a growth engine, specifically,
-Increasing the profitability of loyal consumers and
-Moving the potential superfans into generating advocacy (which will ultimately feed the funnel back and further improves profitability)
+
–Helps Preserve Brand Value and Future Profitability
- Avoiding excessive discounting that could diminish the brand’s perceived value, erode profits or train consumers to expect frequent discounts
1. Profitability
Determined by
-Volume* (Price-Cost) of products sold to loyal consumers
-Volume=No. of loyal consumers*Consumption/Loyal consumer(usage/occasion*no. of occasions)
-Price=Average price paid by loyal consumers
Let’s first tackle volume:
To increase volume, we can
#1: increase the number of loyal consumers or
#2: increase the consumption of loyal consumers.
Increase the number of loyal consumers
To increase no. of loyal consumers, we need to enroll more and move more consumers from the repeat purchase segment to the loyalty program. We can accomplish the before by overcoming two blocks:
#1 Overcome Block: How To Increase Enrollment in Loyalty Program:
Since we are talking about the loyalty program, the answer to increasing the number of loyal consumers in the loyalty program is
A Compelling Value Prop:
When creating a loyalty program, you must create a compelling value proposition that helps recruit loyal consumers.
Two parts to your offer: Overall offer: Value + Emotional Association
Your brand must provide attractive and value-enhancing rewards to attract consumers to your loyalty program. You could offer cost-effective rewards perceived as valuable, e.g., digital rewards, virtual currencies, and personalized benefits that appeal on an emotional level.
Example:
Sephora Beauty Insider Loyalty Rewards Program
It makes a simple but super compelling value proposition around savings + samples + experiences, and the higher the tier, the higher the benefits fans can enjoy.
The first tier, Insider, is free to join, which is a smart move to make people experience the brand’s community and perks with their first purchase. This also helps overcome the enrollment challenge by lowering the barrier to entry.
Increase Consumption
# 2 Overcome Consumption Blocks: How to increase profitable consumption
a. Block 1: Repeat Purchase affected by usage per consumption-
Consumption amounts are a fraction of an mm, whereas the bottle or packs are a minimum of 30 ml to 50 ml, and thus the consumer needs months, if not three-six months on average, to finish a product. Compare this to health food, where consumption of units can happen over 2 minutes to drive repeat purchases. Repeat purchase is a precursor to loyalty, and hence this step matters.
We could debate this step in light of sustainability and argue for less shipping and carbon emissions. Since that is the direction the beauty industry is taking, you can impact repeat purchases by cross-selling newer products rather than increasing usage/consumption occasion with the same product.
Example:
Besame Cosmetics, a Jump portfolio brand, has a concentrated mascara that loyal fans use for years before purchasing again. The brand has remained faithful to long-lasting and sustainable products but has many hero products beyond its super-popular mascara.
To compensate for usage amount/consumption occasion, your beauty brand can get a higher share of more occasions, which brings us to our next block to consumption:
b. Block 2: No. Of Usage Occasions-Frequency of the problem
Another significant opportunity to drive repeat purchases is to have a higher share of more occasions for consuming your beauty brand. You can understand these occasions with great detail in the consumer’s everyday life, with the relevant functional outcome and the emotional meaning attached.
Example:
JustUs Skincare, another Jump Portfolio brand, offers climate-proof skincare that provides custom solutions to any climate in any region of the planet Earth.
The brand is slowly becoming a ritual and increasing its share of different usage occasions for consumers across seasons and for frequent travelers.
-The first step is identifying challenges to your beauty brand’s consumption in different occasions & then overcoming consumption blocks to loyalty with
-Ritualized Consumption for Up-selling & Cross-Selling by assisting in achieving the desired functional & emotional outcomes & by increasing the perceived results and relative advantage.
The number 1 reason for loyalty is desired results, which is seen as a relative advantage over other solutions in overcoming the core problem. Relative advantage hinges on “How to Use,” the easier it is for a consumer to achieve desired results at home, the stickier your beauty brand.
When designing the ritual, you must keep the above in mind.
Now, coming to the price part of profitability:
For margin increases, you need to up-sell them to the more premium products and assortment again by creating ritualized meaning for their consumption occasions, with the more premium products marketed for more meaningful occasions, offering higher functional value.
#3 Ritualized Consumption: Loyalty Rewards Program to overcome consumption blocks-Engagement & Redemption Stage Initiative
Example:
Suntouched, another Jump Portfolio brand that sells hair lighteners to bring your best hair and self to light, is a go-to brand for its loyal consumers since it takes a few seconds to use, saves hundreds of dollars over visiting salons and enhances your best hair for your best hair day, every day without the results becoming patchy ever.
Suntouched ritualizes consumption occasions aligned with the core promise of using travel-size products that fit the lifestyle of its target consumers, whether they are traveling by the beach or going for a coffee. The brand has been growing close to 100% year on year with only 2 products in its assortment.
3 Enablers for ritualizing value-added Loyalty Rewards around engagement & redemption
1. Encouraging consumer self-identification & segmentation
- Motivating consumers to share their information voluntarily, allows brands to gather transactional data and measure responsiveness to marketing campaigns.
Example:
JustUs Skincare asks consumers to take quizzes based on their location and then uses custom email flows for rewards sharing custom skincare routines by weather and climate.
2. Acquiring zero party data
- Persuading & Incentivising consumers to willingly provide personal details, lifestyle information, and survey responses enables brands to gather valuable insights.
Example:
Suntouched incentivizes its fans to share their daily moods and feelings to understand them better and serve them with relevant content.
3. Guide consumer usage and spending behavior
- Providing incentives that drive behavioral changes in consumption and shopping affects purchase frequency, cart size, premiumization, etc.
Example:
Besame Cosmetics incentivizes accumulation with redemption around red-carpet events, thus enabling the proper usage and results for influencing loyalty.
You need to create a loyalty program and also make it successful with flawless execution:
6 ways your beauty brand Loyalty Rewards can drive & sustain high engagement
-Easy to gain points with activities that help the brand’s acquisition, loyalty, or growth strategy
Example:
Suntouched allows you to earn points even when someone subscribes to the site, getting them interested in the benefits even when they have not purchased.
-Engaging & inviting redemption options
- Offer appealing sign-up bonuses and diverse redemption choices, such as partial or complete payment with loyalty points, points-to-gift-card conversions, or points transfers, to enhance the attractiveness of the loyalty program for consumers
Example:
Pacifica Beauty’s team recognized a chance to enhance average order values by implementing In-Cart Rewards and a points system within the shopping cart. By manually eliminating the requirement for customers to enter voucher codes during checkout manually, Pacifica Beauty simplified the process, enabling customers to view and redeem rewards while browsing and making purchases effortlessly.
Brands need help maintaining consumer engagement after enrollment in a loyalty program. Authentic engagement is crucial for creating positive experiences that foster deep loyalty toward the brand.
Engaging Initiatives & touch points
Fun & engaging initiatives leveraging every touch point aligned with your core promise and offer a chance for the member to connect to the brand & community.
The ultimate goal is to play a broader and more significant role in the consumers’ lives throughout all the touch points on the consumer journey from before to after purchase.
Example:
Honey Sweetie Acres, a Jump portfolio brand, uses an engaging game to match goats with their details. It has increased the time spent on the site, recruited new consumers into the loyalty program, and a higher number now redeem their points since the points are substantial.
Valued Rewards -aligned with the core promise
Instead of being purely transactional, the rewards should offer higher perceived value aligned with the core promise.
Example:
Besame Cosmetics achieves the same with custom looks for your unique self exclusively for its higher-tier loyalty program fans as well as surprise benefits and offers during the red carpet events, along with regular email flows that are personalized for the segment and relevant to the time of the year.
Communication
Frequent:
A loyalty program will only survive with communication, even with suitable activities, promotions, and rewards. Lack of, infrequent or irrelevant communication can all be deadly to a loyalty program.
Use a separate email flow for your rewards fans.
Personalized:
Segment your rewards beyond tiers into different self-identified groups and create custom flows.
Relevant to Daily Lives & Special Occasions:
The flows can become boring. We need to have both regular and expected information along with the freshness of custom rewards, initiatives, and email content for special occasions relevant to your consumers esp., fans
Example:
Blume, a brand founded by a woman of color, has been revolutionizing the world of skincare, body care, and period care while fostering a vibrant community. Through their rewards program, “Blumetopia,” which embodies the principles of confidence, friendship, and self-love, Blume warmly invites customers into their exceptional brand community. When customers encounter the elegantly branded explainer page featuring the program’s name, “Blumetopia,” they understand that it goes beyond mere rewards. The clever wordplay on “utopia” assures customers they have arrived at an ideal destination.
As a brand, it is crucial to reach out to customers on their preferred platforms, and Blume excels at this by engaging with their audience through social media. Blume leverages its loyalty program to cultivate a strong community beyond their website. Within this program, the top two tiers enjoy exclusive benefits such as being featured on Blume’s ‘Close Friends’ Instagram story and receiving an invitation to their private Facebook group. This approach showcases a remarkable demonstration of effective exclusivity. Instead of adding extra coupons or VIP tiers, Blume provides customers with rewarding incentives that genuinely resonate with their desires, motivating them to actively participate and strive towards achieving them.
Incentivize redemption
Your goal should be to have them target certain benefits with accumulated points by a certain period, latest by the end of the year and ideally by a quarter.
Having the loyalty points carried over to the next year is a sin.
Example:
Facetory’s consumers can redeem their points to get better subscription rates, upping the likelihood of frequency of repeat purchases. Consumers redeem points for free products, furthering their consumer’s usage of the brand and not diluting their brand with free trials for their new products.
The solution lies in a multifaceted approach that includes effective engagement and promotion activities, earning opportunities, relevant rewards, consistent communication, and opportunities for redemption. You want them to refrain from accumulating points and then doing nothing.
Let’s get on to the second objective of your beauty brand loyalty rewards program,
2. Advocacy
-Word-of-mouth marketing strategy
An alternative to going viral, word-of-mouth marketing is a deliberate approach to creating buzz.
-Apply your buzz or word-of-mouth marketing strategy to 6 ways of driving engagement & redemption
You need to design multiple initiatives that are helping you repetitively seed the conversation catalyst for facilitating word of mouth marketing.
3. Leveraging Your Beauty Brand Loyalty Rewards Program as a Growth Engine for Profitability & Advocacy
-Collect data to inform growth & loyalty hypothesis
This data will be specific to the loyalty rewards program tiers and would include absolute numbers for a period as well as trends around average dollar value, average order value, cross-sell/loyal consumer, up-sell by loyal consumer, average price, volume of products bought etc.
-Segment data
By different segments into the virtuous advocacy funnel, starting from advocacy to trials to repeat purchases to loyalty to advocacy. The objective is to create a circular funnel and then optimize the same for increasing profitability.
-Focus by stage
Focus on one stage at a time but tweak for others too
Example:
L’Oreal examined the purchasing behavior and preferences of their loyalty program members and uncovered a noteworthy trend indicating a strong desire for customized skincare routines. This valuable information prompted the creation of “My Skin Track,” an innovative initiative that provided personalized skincare recommendations tailored to individual skin concerns, objectives, and product preferences.
By utilizing the insights gained from their loyalty program data to offer personalized skincare suggestions, L’Oreal significantly enhanced customer satisfaction and experienced a substantial increase in sales. This personalized approach proved instrumental in assisting customers in discovering products that specifically addressed their unique skincare needs, resulting in greater engagement, repeat purchases, and heightened customer loyalty.
Moreover, L’Oreal harnessed the data obtained from their loyalty program to identify prevailing skincare trends and gain valuable insights into customer preferences. This invaluable knowledge guided their product development and marketing strategies, enabling them to introduce new products that resonated with their target audience and effectively target their promotional campaigns.
SUMMARY
Your Beauty Brand Loyalty Rewards program’s goal is to increase the profitability contribution of loyal consumers and move the potential super fans into becoming brand advocates, who will feed the funnel back and generate more profitability.
Profitability is impacted by the volume of loyal consumers and the price premium paid by the same.
You must create a compelling value proposition offering both functional and emotional value to increase enrollment into the program.
To overcome the blocks to consuming products, you need to create rituals for your loyal consumers that offer a higher perceived functional and emotional value.
3 factors block the loyalty program’s goals: usage amount per consumption, no. of usage occasions and desired results. Out of these three, the lack of the desired results is beauty brands’ biggest block.
Your beauty brand’s loyalty program can help overcome the blocks to loyalty by helping increase the desired results showing a relative advantage over other solutions, by educating on the right amount to use per occasion(not significant), and by ritualizing the meaning of usage occasions.
By ritualizing the usage occasions and by making it easier to get results, and by inspiring the potential super fans to become advocates with word of mouth marketing campaigns if not a strategy, the loyalty program can help achieve advocacy.
There are 3 enablers that a beauty brand loyalty rewards program can use to help ritualize the consumption
-Consumer self-identification and segmentation
-Acquiring Zero-party data
-Guiding consumer usage and spending behavior
Then, there are 6 ways your beauty brand loyalty program can sustain and drive high engagement:
-Ease of gaining points
-Engaging and inviting redemption options
-Engaging Initiatives & Touch Points
-Value-added Rewards
-Incentivising Redemption
-Communication
The second objective of your beauty brand loyalty program is to generate advocacy and you must create a tribe strategy and then consistently execute word-of-mouth marketing initiatives to create buzz.
The final step is to leverage the loyalty program as a growth engine by half-yearly if not quarterly, review of the performance as well as by studying data to design initiatives around content, products, and promotion to step further change the implementation of the loyalty program in delivering higher profitability and advocacy for your beauty brand.
Also, read this article to find out how your beauty brand can avoid failure and the 11 common mistakes made by a beauty founder.
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