The beauty and cosmetics industry has been growing rapidly from $483B in 2020 and is expected to surpass $716B by 2025 at a compound growth rate of 4.75% annually worldwide.
This is because people now focus on self-care and prioritize their overall well-being, resulting in them buying beauty products regularly. So, if you’re a brand in the beauty and cosmetics space, generating revenue through loyalty programs can be a significant source of income.
Of course, beauty brands have been running loyalty programs for a while now. But lately, these companies have kicked things up a notch to keep up with their competitors, engage customers more, and keep them coming back for more. These rewards programs have been a game-changer for beauty brands, helping them grow faster.
Let’s explore the evolution of these programs and how you can build a loyalty program for your beauty brand.
What is a customer loyalty program for beauty and cosmetics brands?
Customer loyalty programs in the beauty and cosmetic sector are reward systems tailored to address the specific needs of the beauty industry. The beauty industry sees customers making frequent purchases but with relatively lower spending per transaction.
To tackle this challenge, beauty rewards programs are designed to keep consumers coming back for more by offering incentives and rewards while encouraging them to explore and invest in premium products.
72% of consumers said they liked brands that send free samples so that they can try the products before making a purchase.
Beauty brands have a unique approach to rewarding their customers. Instead of relying on discounts or coupons, they greatly emphasize physical gifts. For instance, a customer might receive a surprise lipstick in their order or get a sample of perfume or hair mask as a welcome bonus for reaching a higher tier. They also have a sizeable offline presence and, hence, boast various omnichannel capabilities, which help boost both offline and online engagement.
Why is a customer loyalty program essential for beauty and cosmetics brands?
Let’s take a look at why we insist beauty, cosmetics and skincare brands should focus on customer loyalty programs:
Repeat purchases
Beauty and cosmetics are products that consumers use regularly and require replenishment frequently. By offering incentives like rewards and discounts through a loyalty program, brands inspire customers to return to their favorite brands and products, boosting sales, encouraging repeat purchases for long-term relationships, and ensuring a steady revenue stream.
Customer retention
The beauty industry is highly competitive. With numerous brands popping up and vying to grab consumers’ attention, it is complex yet crucial for brands to retain customers strategically. 82% of companies agree that customer retention is cheaper than acquisition. A well-designed loyalty program can place a brand at another level and distinguish it from its competitors. Offering unique rewards, discounts, or exclusive access to products enhances brand loyalty and customer retention in the long run.
Data insights
Loyalty programs can help brands gain valuable insights into customer behavior, purchase preferences, and demographics. Brands can use this data to personalize marketing strategies and product offerings, helping them stay relevant and responsive to customer requirements.
Brand advocacy
Satisfied and loyal customers are perfect brand advocates, as they share their positive experiences with family, friends, colleagues, and followers, if any. A brand’s loyalty program can incentivize referrals and social sharing, increasing brand awareness and attracting new customers via word-of-mouth marketing.
5 examples of beauty and cosmetics brand’s loyalty programs
While there are several examples of customer loyalty programs, here are some we absolutely love:
1. Ulta Beauty – Ultamate Rewards
Ulta Beauty is a US-based beauty store chain with a fantastic loyalty program for its customers. The program has exciting features like birthday rewards, double and triple-point purchase bonuses, and loyalty tiers. You can use the Ulta Reward points like actual money, which is super flexible and convenient. But there’s a catch – the points will expire, so users must use them before that happens.
The Platinum tier is the ultimate level in the loyalty program, giving you more points for the same level of expense. Plus, with the mobile app integrated into the program, you can check your points balance and search for products using your voice for a hands-free experience.
2. Lancôme – Elite Rewards
Lancôme has an excellent loyalty program called Elite Rewards. In addition to rewards for purchases, it also rewards you for non-purchase activities. For example, you can watch videos about skincare or write a product review and earn points. This keeps you happy and engaged even when you’re not buying anything.
And there are so many rewards to choose from! You can get cool desktop backgrounds for Facebook cover photos, and everyone can find something they like. You can access exclusive rewards like beauty consultations with makeup artists if you’re a high-class spender. They also have partner rewards like Uber credits, spa gift cards, and charity donations. Finally, there’s an activity feed where you can see what others are doing in the program. It’s a great way to build a sense of community and trust.
3. Sephora – Beauty Insider
Sephora, a popular beauty retailer, has an excellent loyalty program called Beauty Insider. The program establishes a new loyalty program standard beyond a simple earn-and-burn system. It offers exciting perks like early product access, birthday rewards, and multiple tiers. Beauty
Insider has three different levels of membership. The first level has limited benefits, making spending money more appealing and reaching the VIB (Very Important Beauty Insider) level, which offers additional benefits.
The Reward Bazaar is another feature that sets Beauty Insider apart. It provides exclusive gifts and services that are only available to high-ranking members. VIP and Rouge members can redeem their points for full-size products or trial samples. Members who achieve the Rogue tier status can enjoy premium perks such as free shipping or early access to upcoming products unavailable to the general public.
4. Debenhams – Beauty Club
Despite being a well-known British clothing retailer, Debenhams offers many beauty products and a rewards program called the Beauty Club. They have a transparent points system: You’ll earn 3 points for every GBP 1 you spend. The points you earn act like real money; you can use them to pay for your purchases when checking out. In addition to your birthday present, you also get a special gift from Benefit, one of their beauty partners.
Who doesn’t love free shipping? Debenhams loves its loyal customers so much that it offers free shipping for life by just entering a code from your monthly statement. Debenhams also loves treating its customers to special in-store and online events each year where you can earn double or triple points on cosmetics purchases. This is perfect for omnichannel retailers who want to increase curiosity and participation.
5. Birchbox – Loyalty Program
Birchbox is a New York-based monthly subscription service for makeup and beauty products. Customers customize their boxes through a profile and receive 4-5 samples from new and popular brands. There is a standard membership, where every dollar spent earns one point, and free shipping is offered for orders above $50.
A $300 annual spend gets you an Ace membership, which has benefits including early access to new product samples, promotions, and events, free standard shipping on all orders, and priority customer service.
How to create a customer loyalty program for beauty, cosmetics and skincare brands
Here’s a quick step by step on how to create a customer loyalty program using a solution like Appstle:
1. Design a loyalty program that aligns with your brand
There are many ways for organizations to incentivize their existing customers, such as offering discounts, money-back guarantees, freebies, and more. Businesses must craft a loyalty program that aligns with their core offerings, incentivizing and appealing to their customers.
Here are a few common examples of loyalty programs:
- Points-based loyalty programs: These reward customers based on specific actions like referrals, repeat purchases, and subscriptions.
- Tiered loyalty programs: These offer customers different benefits based on their spending level.
- Paid loyalty programs: These require customers to pay a fee to receive specific benefits.
- Value-based loyalty programs: These programs showcase a brand’s values by donating a portion of sales to specific charities or causes.
- Gamified loyalty programs: These offer games or challenges to keep customers engaged.
2. Implement omnichannel customer service
One of the best ways to build customer loyalty is to be there for them when they need help. Implementing a multi-channel customer service system is a great way to connect with customers, especially when they need support. With multiple channels, you can interact with them more often, positively influencing their experience.
Offering an omnichannel experience across different platforms, channels, and devices can enhance customer satisfaction and make your customer service more accessible. This is particularly helpful for frustrated customers in need of support. Using a help desk and live chat tools or chatbots can reduce the workload of organizing and distributing incoming requests for smaller teams.
3. Personalize the customer loyalty program
Businesses can use gathered data to personalize upcoming offers for their existing customers. They can use data to understand what customers like and how they shop and offer rewards, incentives, and perks that suit their needs and interests.
With the help of data analytics, businesses can gain insights into each customer’s purchasing history, preferences, and engagement patterns. Whether recognizing milestones such as birthdays and anniversaries or providing personalized recommendations based on past interactions, loyalty programs must be designed to nurture a long-term connection with the customers.
For instance, if a beauty brand retains data from previous purchases, it can draw insights from a customer’s past engagements, including the frequency and scale of those interactions, to enhance the effectiveness of future communication efforts.
4. Prioritize customer over competition
To create a successful loyalty program, it’s essential to prioritize your customers’ needs and wants over your competitors’ strategies. One way to do this is by personalizing rewards to reflect individual preferences, purchase history, and engagement.
Another vital aspect is implementing a transparent points system that rewards various interactions, from purchases to referrals. This helps create a sense of community by encouraging interactions among customers.
Continuously gathering customer feedback is also essential to refine the program and ensure it meets their changing needs. By placing the customer at the center of your loyalty program, you’ll nurture stronger connections, strengthen brand loyalty, and stand out from the competition.
5. Pick a meaningful name
The name you choose for your brand’s customer loyalty program should be meaningful, so much so that it raises their curiosity and appeals to them to participate. It is crucial to ensure that the name stands out from all the other loyalty programs that customers might already be part of.
The name should inspire and excite the customers to be a part of the program without having to explain about discounts or rewards.
6. Offer various rewards for different customer actions
One way to show your customers that you value their loyalty is by rewarding their actions beyond just making purchases. Customers who engage with your brand by watching product videos, using your mobile app, sharing social media content, and subscribing to your blog add value to your brand, so rewarding them for their engagement is important.
Don’t rely just on discounts to reward the customers for the value they provide. For instance, customers who spend a certain amount or earn enough loyalty points could redeem them for free tickets to events, complimentary subscriptions to additional products and services, or even donations made on their behalf to a charity of their choice.
7. Promote program enrollment
Develop a marketing strategy to promote your loyalty program and encourage customer enrollment. Use various channels such as email marketing, social media, in-store signage, and website banners to raise awareness and incentivize sign-ups to encourage multiple enrollment opportunities and actively promote its benefits. For instance, when customers shop on your e-commerce platform, display the potential points they could earn next to the product price.
Consider a scenario similar to being at a coffee shop where, after making a purchase, the cashier mentions that customers could earn double loyalty points if they sign up for the store’s app. Use social media platforms to spread awareness about your loyalty program and its perks, increasing participation, customer retention, and satisfaction.
8. Make the experience like a game
Display potential points next to product prices on your e-commerce site, transforming shopping into a rewarding challenge. Offer bonus points at checkout for signing up, which excites customers to unlock achievements.
Use social media to hype the perks and add on-site pop-ups celebrating points earned, creating a sense of accomplishment. By gamifying enrollment and participation, you engage customers fun and interactively, driving loyalty, retention, and satisfaction.
9. Communicate consistently and gather feedback
Consistency is key in designing and implementing loyalty programs. While modifications may be necessary for optimal results, maintaining a consistent approach ensures a positive customer experience. However, changing engagement strategies frequently can confuse or frustrate customers.
Effective communication goes beyond just promotional content; it also involves gaining feedback from engaged audiences. Surveys, customer events, and direct inquiries help businesses gather valuable insights to refine their programs, products, and services.
Wrapping Up
The beauty industry’s revolution has shown that loyalty programs go far beyond transactional interactions. They demonstrate the power of customer-centric thinking, engagement, personalization, and even social impact.
You need to create well-designed loyalty programs that go beyond mere points and discounts, developing a dynamic relationship between brands and customers. That’s where Appstle comes into play.
With Appstle, brands can increase customer retention while offering personalized experiences to every customer.
Get started to understand how Appstle can help you take your loyalty programs to the next level.
