Beauty and cosmetics ecommerce: How to use loyalty to put your best face forward

The beauty market is really taking off. The global cosmetic products market was valued at around $532 billion in 2017 and is expected to reach approximately $863 billion in 2024. Meanwhile, the overall beauty products industry is expected to continue growing rapidly, at a rate of 6.4% per year.

It’s a thriving, competitive market where newer brands are going head-to-head with legacy brands like L’Oreal, whose revenue grossed a massive $31.2 billion in 2018. Younger consumers are increasingly ranking ethical sourcing and social responsibility as crucial when making decisions about which brands to buy from, spurred on by social media and influencers.

Several commentators suggest that the beauty industry boom is due to the rise of ecommerce stores, social media channels and other online outlets and their effectiveness at attracting buyers.

82% of women believe that social media now drives beauty trends, with social media feeds acting as a constant channel of communication and information – not only from celebrities and influencers but family and friends as well. The fact that 97.1% of Glossier’s total sales in 2017 were from online sales speaks volumes to the rise in ecommerce shopping in the wider beauty and fashion industries.

What’s going on in the world of beauty and cosmetics?

While the potential in the beauty industry is exciting, there are still some hurdles to overcome.

Brands are either sinking or swimming in the saturated beauty industry and influencer marketing is playing a key role in making success stories happen. A 2017 report found that for every £1 spent on influencers within the beauty industry, brands received an average return of £8.81.

Meanwhile, shoppers are increasingly turning to conglomerates to satisfy their beauty needs. Platforms like Amazon are becoming more of a destination for online beauty shoppers than own brand websites like Sephora or Ulta. In an AT Kearney study called “Beauty and the E-Commerce Beast”, 69% of online beauty customers reported searching for and purchasing beauty and personal care products on Amazon in the past year, while only 41% reported the same for Sephora and a mere 37% for Ulta.

The beauty market is large and fiercely competitive with many stores competing for the same customers. These buyers are increasingly choosing to shop with beauty brands that are more environmentally friendly and socially responsible; as a result, the organic and natural beauty market is also flourishing. Organic products, in particular, are forecast to grow faster than the overall industry at 96.92% year on year, driving sales from $11.06 billion in 2016 to $21.78 billion in 2024.

As a result, premium beauty brands will need to raise prices to remain socially conscious while mass-market manufacturers who compete on pricing will need to slash their costs even further to continue being noticed and purchased.

Simply put, to differentiate themselves, beauty brands must find new ways to appeal to customers.

Put your game face on

Making your beauty and cosmetics store stand out regardless of the challenges is no small feat. Here are some good places to start:

  1. Make your customers feel special
  2. Share your mission
  3. Harness the power of multichannel marketing
  4. Utilise user-generated content to build trust

1. Make your customers feel special

LoyaltyLion research shows that, on average, over 53% of a store’s total revenue comes from only 20% of its customer base.

In such a competitive industry, retaining loyal customers should be a priority for beauty and cosmetics ecommerce brands. A simple way to increase your retention rates is to make your existing customers feel valued and appreciated. Try placing these VIP shoppers in an exclusive tier in your loyalty program where they can redeem points for rewards.

Using your loyalty program to reward these stand-out customers is crucial. These are the shoppers who purchase from you often, have high customer lifetime value and will tell others about you. Treat them well and give them a reason to return to you.

2. Share your mission

Use your loyalty program to position yourself clearly and communicate your brand values. This is incredibly important considering that 65% of customers buy on the basis of their beliefs. Beauty shoppers are more mindful than ever about who they spend money with. More and more beauty brands are differentiating themselves in the beauty landscape by highlighting their USPs and their company standpoint, such as being cruelty-free and vegan. If brands turn their back on their purported values, they are at risk of being boycotted.

For instance, beauty brand Nars came under fire in 2017 for putting forward cruelty-free brand messaging and then entering the Chinese market where animal testing on beauty products is compulsory.

Identifying and communicating your larger purpose gives customers a reason to align with your brand story. United customers will feel as if they have found their niche and will be excited to engage with a brand that shares similar worldviews.

3. Harness the power of multichannel marketing

According to Google “about 85% of online shoppers start a purchase on one device and finish on another”. Delivering a seamless, integrated experience across multiple channels is crucial for the multichannel beauty shopper – especially when social media plays such an important role.

It’s no longer enough to have an online presence on many different channels – those channels need to be integrated. This needs to happen through consistent branding, tone of voice, design and payment methods. From social media to your website, PR campaigns to influencer outreach, your messaging and brand identity needs to be consistent and tell the same story.

4. Utilise user-generated content to build trust

Today, many beauty consumers share snippets of their lives on social media and this extends to the products we love and use on a regular basis.

Photos taken by real people act as an authentic endorsement and showcase how your product looks, functions or fits in real life. This is especially important for beauty products where the texture and colour are best demonstrated through real-life examples on individuals – and making a judgement on the packaging or lookbook imagery alone is not enough.

84% of millennials report that UGC on a company’s website has an influence on what they buy and that they trust it 50% more than brand-created content. To generate more of this kind of content, use your loyalty program to reward customers for sharing their experiences with your brand on social media or as photo reviews. Reviews from real people can serve as a powerful source of inspiration to others and even legitimise a brand for someone who hasn’t purchased with them previously.

Dare to be different

With worldwide revenue from beauty ecommerce expected to rise to $863 billion by 2024, it is no doubt thriving, but there are still some challenges to face head on.

From finding the right influencers to promote your brand to competing with the boom in organic, natural products, it might seem intimidating and hard to get ahead. But by focussing your sights on loyalty, beauty ecommerce merchants, like you, can outmanoeuvre the competition and reap the rewards of strong, long-lasting relationships with their customers.

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