Despite the tough economic conditions in the UK, businesses in the beauty industry offer many reasons for optimism – and lessons for businesses in other sectors, too. Thanks to the so-called lipstick effect, the sector tends to fare better than most in a recession. The argument goes that, while big-ticket items become unaffordable when consumers are feeling the squeeze, little treats such as beauty items are within easier reach, so people spend on these instead.
That’s not to say that firms in this industry are finding life easy. Brands at the luxury end of the market could well see their bottom line eroded as some of their customers seek cheaper alternative products. Similarly, customers may shop around more and/or simply buy less often.
For many brands in this sector, shopping around has become a serious threat to the customer loyalty they have built. The range of ecommerce sites offering products at deep discounts gives customers a strong incentive to move away from brand-owned sites or authorised retailers.
Here, three experienced marketers in the beauty space reveal how they’re formulating a range of loyalty offerings to keep hard-won customers in the fold.
The biggest challenge facing most industries is economic – everyone is feeling the pinch. In the beauty sector, there’s a real issue with competitor shopping. Loyalty has to be very finance-focused.
There’s also a real feeling in our sector that certain brands represent a movement that consumers can get behind. When it comes to skincare, people are almost becoming campaigners. They want to belong to something that shares their ethos. That comes from how we’re influenced by social media, where you declare your values, holding up a beauty product that clearly stands for body positivity or sustainability.
There are a few things that smaller brands can do to hold on to their customers. One is to have a great loyalty scheme (ours is constantly under review). People who want to get behind something that they believe in are very helpful to a loyalty programme. You’re rewarding them financially and they feel that they belong to a community. What is it that’s bringing them all together? How do you help people with that and empower them to use that community to improve their quality of life?
People dealing with very difficult skin conditions sometimes come to us simply looking for something that helps. We have put an amazing amount of extra information on our website, or you can pick up the phone and talk to us. We do have an automated customer service where we provide standard answers, because many of the questions we’re asked are quite similar.
Using the latest technology is a great idea generally. I’m not 100% on board with AI, but you must be able to scale up your business, so some things will need to be automated. We’re putting in a skin quiz that can filter people to the right place, segmenting their details and sending them curated content.
Above all, though, you need to really communicate your brand’s purpose. Your business must become something that people can believe in, belong to and want to shout about, because it matches their values.
It’s important to consider all the different profiles of customers you might have. The great thing about having an online business is that it gives you more data to really think about your buyers and understand their purchasing behaviour and every stage of their journey through your website.
We have lots of customers with varying habits – some buy a lot but infrequently, for instance, while others make smaller purchases more often. Understanding those spending patterns is useful, because you can think about what’s likely to excite a certain set of customers and tailor your communications to them. The secret to running a healthy business is maintaining newness and excitement but also investing in telling great stories about what makes your brand and its products so special.
Our insights show that we’re seeing an increase in loyalty, but we’re having to work very hard for that. We’ve relaunched our loyalty scheme and communicated it better, so members old and new are starting to use it more. The ability to spend points freely has proved appealing to them. Whether you have 150 or 137 points, you can redeem them, rather than having to save up and remember how many you have.
Consumers have become particularly conscious of the need to obtain value for money. That could come in the form of a cost saving or the feeling that you’ve made a high-quality purchase that won’t be going into a drawer full of partially used inferior items. But ensuring that people can find the right product for them isn’t easy when there’s plenty of choice, so it’s crucial to provide great customer care. You can speak to our customer care expert on the phone or take a skin quiz. You can also book a 15-minute skincare consultation. If you do end up with the wrong item, there’s a 90-day money-back guarantee, which is reassuring if you’re spending on beauty.
The biggest challenge for developing loyalty within beauty is that it’s a category hugely driven by newness. Consumers in this market could easily fall for the next big thing, whichever company is selling it.
Standalone beauty brands, as well as retailers such as Space NK, are using their customer relationship management systems and email marketing to offer shoppers incentives to keep buying from them. For instance, if they fall in the right bucket, customers may be contacted by these loyalty schemes and invited to community events or exclusive product launches. They can be offered many things, linked to how much they’re spending with those brands.
Space NK, for example, does its promotions via text and email. Text messages are a highly intimate way to connect with consumers, while emails are considerably less so. We all receive lots of emails from businesses. But, if you’ve really bought into a brand and you know that the rewards it typically offers in its emails are generous, you’re clearly more likely to open any that it sends you.
With the costs of customer acquisition rising, retention is so important. You might have spent £20 on acquiring a customer, but also offering the occasional discount to keep them is likely to be worthwhile, given that it might cost you £30 to replace them.
Ultimately, though, it’s about how you communicate with the customer. Are you talking about features and benefits? Or is it about offers, subscriptions and related benefits (which can be a huge way to retain business)? Thinking about the bigger picture is important too. Wasteful packaging is a huge problem in the beauty industry, for instance, so brands that provide refillable containers could generate customer loyalty.
Key lessons for marketers
Loyalty takeaways for beauty marketing leaders
Adapt to the economic
Marketers often warn against discounting in such a price-competitive market, but loyalty with a financial element is almost a given in the beauty industry. There is obviously a cost to offering discounts, but the cost of replacing a lost customer is likely to be higher.
Give customers something to believe in
It doesn’t need to be a lofty purpose. Beauty is a highly personal issue and speaks deeply to people’s self-esteem. Whether products are medicinal or purely cosmetic, consumers want to feel part of a community.
Celebrate your heroes
Keep communicating about your old favourites as well as the latest releases. Although beauty is a notoriously novelty-driven market, hero products still have a huge role to play in engendering customer loyalty. Offering a product that they know and trust is vital, but don’t rest on your laurels just because your customers have a go-to purchase.
Add value in ways beyond price and product
Beauty is a community issue. Bringing people into the fold by offering them behind-the-scenes access to your brand or partnering with them as a trusted advocate can create super-loyalty.
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Disclaimer: The views, information and opinions expressed in this article are those of the people interviewed and do not necessarily represent or reflect the views of Intuit, Mailchimp or any of its cornerstone brands or employees. The primary purpose of this article is to educate and inform. This article does not constitute financial or other professional advice or services.
Despite the tough economic conditions in the UK, businesses in the beauty industry offer many reasons for optimism – and lessons for businesses in other sectors, too. Thanks to the so-called lipstick effect, the sector tends to fare better than most in a recession. The argument goes that, while big-ticket items become unaffordable when consumers are feeling the squeeze, little treats such as beauty items are within easier reach, so people spend on these instead.
That’s not to say that firms in this industry are finding life easy. Brands at the luxury end of the market could well see their bottom line eroded as some of their customers seek cheaper alternative products. Similarly, customers may shop around more and/or simply buy less often.
For many brands in this sector, shopping around has become a serious threat to the customer loyalty they have built. The range of ecommerce sites offering products at deep discounts gives customers a strong incentive to move away from brand-owned sites or authorised retailers.
