Lessons in Beauty Loyalty with Ethique

The beauty industry on Shopify is a thriving and competitive market, with thousands of stores vying for customer attention. As of 2024, Shopify hosts over 4.4 million businesses, and a significant portion of these are dedicated to beauty and personal care. 

The beauty sector is particularly dynamic, characterized by rapid changes in consumer preferences and intense competition. One of the primary challenges beauty brands face is the high cost of acquiring new customers, who often make their second purchase from a grocery store rather than returning to the brand directly. In a saturated market, standing out means putting significant investment in marketing and advertising. Paid ads, influencer partnerships, and social media campaigns are essential but expensive strategies to attract new customers. These costs can quickly add up, particularly for smaller brands or startups with limited budgets. The increasing competition for digital ad space often drives these costs even higher, making it difficult for brands to achieve a positive return on investment.

Innovation is another critical challenge for beauty brands. The industry is driven by trends, with new products and formulations constantly emerging to meet evolving consumer demands. Brands must continuously innovate to stay relevant and competitive. This involves not only developing new products, but also improving existing ones and adapting to changing market conditions. The pressure to innovate can be intense, requiring substantial investment in research and development, as well as a deep understanding of consumer needs and preferences. 

Converting one-time shoppers into loyal customers is perhaps the most crucial challenge for beauty brands. While attracting new customers is important, long-term success hinges on building a loyal customer base who choose to shop directly. This requires creating a compelling brand experience that encourages repeat purchases and fosters customer loyalty. Brands must engage customers beyond the initial purchase, providing exceptional service, personalized experiences, and consistent value. However, achieving this level of engagement is not easy. It involves understanding customer behavior, building strong relationships, and continually delivering on brand promises. Without effective strategies to retain customers, brands risk losing them to competitors, making it difficult to sustain growth.

Ethique stands out as a pioneering brand within the beauty market. Founded by entrepreneur and chemist Brianne West in Christchurch, New Zealand, Ethique has grown from a passionate startup into a globally recognized name. Their mission has always been clear: to revolutionize the beauty industry by creating effective products with minimal environmental impact. Today, Ethique’s solid beauty bars are sold in over seven countries, and the brand continues to push the boundaries of sustainable beauty.

We recently spoke to Liz Fedorak, their Director of Digital Marketing, at our Loyalty Connect event to find out more about why they decided to work with LoyaltyLion for their customer loyalty program, and the benefits they’ve seen so far. 

When is it the right time to launch a loyalty program?

Launching a loyalty program can significantly enhance your customer retention and engagement – a vital goal for many businesses. Ethique were looking for a way to build more of a community around their already strong brand ethos. Their decision to launch a loyalty program was rooted in their desire to reward their loyal customers and deepen their connection with the brand.

Ethique has always been a community-centric brand. The loyalty program was a natural extension of their values, aimed at celebrating and rewarding customers who made the switch from plastic to their sustainable bars. By offering perks, rewards, and exclusive incentives, Ethique could foster a sense of belonging and excitement among their most dedicated customers.

What does a good beauty loyalty program look like? 

Any successful beauty loyalty program needs to be simple, engaging, and aligned with the brand’s values. Ethique’s loyalty program includes several key elements:

Simple and clear points structure

One of the fundamental elements of their loyalty program is its simple and clear points structure. Customers earn one point for every dollar spent, with 500 points equating to $5 off their next purchase. This straightforward system is easy for customers to understand, track, and engage with, which is crucial for the program’s success.

This simplicity removes any confusion or ambiguity about how points are earned and redeemed. Customers can easily calculate how many points they will receive for their purchases and how those points translate into rewards. This clarity encourages participation, as customers know exactly what they are working towards and how they can benefit from the program.

Promotion of advocacy

Ethique’s loyalty program is designed not only to reward customers for their purchases but also to encourage activities that promote brand advocacy. This strategic approach incentivizes customers to engage in behaviors that spread the word about Ethique and strengthen the brand community. By offering points for referrals, reviews, and social media engagement, Ethique turns loyal customers into active brand ambassadors.

Collection of zero-party data

Ethique also incorporates interactive elements like its hair quiz, which helps customers find the perfect products for their needs. This quiz not only enhances the customer experience but also provides valuable data to the brand, meaning they can tailor their offerings more effectively.

What metrics are important for a beauty loyalty program?

Tracking the right metrics is crucial for measuring the success of a loyalty program. At Ethique, they focus on several key performance indicators (KPIs):

Average Order Value (AOV)

Monitoring AOV helps Ethique understand how the loyalty program influences spending behavior. An increase in AOV indicates that loyal customers are purchasing more with each order.

Repeat Customer Rate

This metric shows how often customers return to make additional purchases. A higher repeat customer rate represents how strong their customer loyalty and satisfaction are.

Customer Lifetime Value (LTV) vs. Customer Acquisition Cost (CAC)

Balancing LTV and CAC is essential for ensuring the long-term sustainability of the loyalty program. By focusing on retaining customers and maximizing their lifetime value, Ethique can offset the costs of acquiring new customers.

What advice would Ethique give to other brands who want to launch a loyalty program?

Ethique’s loyalty journey has provided them with valuable insights that can guide other brands looking to launch similar initiatives. Based on the success that they’ve seen with their own scheme, Liz offers a few pieces of advice for other brands that want to follow in their footsteps.

• Progress over perfection

One of the key principles Ethique followed was “progress over perfection.” Rather than waiting to launch a perfectly polished loyalty program with every conceivable feature, Ethique started with a basic version and iterated over time. This approach allowed them to get the program up and running quickly and begin reaping its benefits without unnecessary delays.

By launching their loyalty program in phases, they could gradually introduce new features and enhancements based on real customer feedback and performance metrics. This phased approach meant they could test what worked, identify areas for improvement, and make data-driven decisions to refine the program. It also reduced the risk and cost associated with developing a comprehensive program from scratch, allowing for flexibility and responsiveness to changing customer needs and market conditions.

• Customer feedback

Listening to customers is at the heart of Ethique’s loyalty program strategy. Ethique places significant importance on understanding what their customers want from a loyalty program. By actively seeking and incorporating customer feedback, they ensure the program meets and exceeds customer expectations.

Ethique utilizes various methods to gather feedback, including surveys, direct customer interactions, and data analysis. This feedback loop helps them identify what rewards and features are most valued by their customers, what aspects of the program might need adjustment, and how they can enhance the overall customer experience. By aligning their loyalty program offerings with customer preferences and needs, Ethique can foster a stronger connection with their audience and encourage ongoing engagement and loyalty.

• Achievability

For a loyalty program to be effective, it must be achievable for customers. Ethique designed their loyalty tiers with careful consideration to ensure customers can realistically progress through the program and feel a sense of accomplishment and reward.

The program structure is crafted to be inclusive and motivating, allowing customers at different spending levels to participate and benefit. Ethique’s approach ensures that even new or occasional shoppers can see value in joining the program, while more frequent customers are rewarded proportionately. This balance prevents frustration and disengagement, as customers are more likely to stay motivated and loyal when they perceive the rewards as attainable and worthwhile.

Conclusion

Loyalty programs can be a powerful tool for beauty brands, helping to build a dedicated community and a loyal fan base. Ethique’s success story demonstrates just how impactful a well-designed loyalty program that aligns with the brand’s values and focuses on customer engagement can be. By rewarding loyalty, fostering advocacy, and using customer data effectively, beauty brands have the ability to enhance their relationships with customers and drive long-term growth.

Ethique’s approach to their loyalty program – emphasizing progress over perfection, actively listening to customer feedback, and ensuring the program is achievable – provides a great roadmap for other brands who are looking to do something similar. 

If you’d like to find out more about how we can build out a customer loyalty program that answers all your needs, we’d love to hear from you. Get in touch with our team today.