The beauty market is booming, and it demands more attention from the brands having a tight hold on the customer’s base. Loyalty programs have proven their worth. Learn more.

1. HOW BEAUTY BRANDS ARE WINNING
CUSTOMER RETENTION THROUGH LOYALTY
PROGRAMS
The Beauty Industry has been growing at an incredible rate post-pandemic. As
the industry grew from $483B in 2020 to $511B in 2021 – and at a compound annual
growth rate of 4.75% worldwide – it is expected to surpass $716B by 2025. Some new
brands have emerged as customers’ favorites amidst the pandemic because of the
shifting priorities of the audience.
Even during the pandemic, some beauty brands found a way to capture users’
attention. Beauty rewards programs have been the reason behind the accelerated
growth of these brands. It tells that customer retention has become the most crucial
KPI amidst rising competitors.

2. Loyalty programs are a wonderful way to build customer loyalty and keep customers
coming back for more. Depending on which loyalty platform your brand uses, you can
increase repeat purchases, user acquisition rate, referral rates and push revenue to
higher numbers.
Not only this, the personalization you deliver within loyalty programs has helped
brands develop a unique identity in the market. It is helping them in better brand
positioning and clear differentiation from the competition.
Biggest challenges faced by the beauty industry and ways to tackle them!
The market has been evolving all the time. But, the pandemic has accelerated the
evolution. It created new challenges & demanded an upgraded user experience. Not
just customers are spending more time on digital platforms. They are expecting
advancement from brands too. Here are the top challenges:
1) Differentiation in the marketplace
Priorities and choices of customers have changed in recent years. Pandemic facilitated
this process of change. It created a challenge to maintain a differentiated brand
position in the market.
The success of Lancome Elite Rewards is due to its understanding of its target audience
while staying true to its brand’s core values. In the process, they have optimized what
matters to their customers and shaped their future in the industry.
2) Enhanced value
Days are gone when customers just want to buy a product seeing a celebrity
endorsement. Beauty Brands must deliver a more engaging experience. Customers
want to know about experiences from real people and not just celebrities.
Sephora launched a program, especially for beauty influencers as #SephoraSquad, and
inspired real people to be part of it. Integrating the loyalty program with this campaign,
Sephora gained popularity among millions of followers of every beauty influencer.

3. 3) Changing Seasonalities
The next challenge is winning customers throughout the changing seasons. Customers
have more information, and they do not want the same solutions for different
problems. Brands need to consider every need as a separate problem and produce a
unique solution. By creating seasonal options, brands have a chance of building year-
round loyalty.
Liberty has launched products based on specific seasons. Their Autumn beauty refresh
has attracted new users in a specific period of the year. Liberty also runs a loyalty
reward program sending gifts to users 4 times a year. Getting gift cards at the start of a
season ensures that more customers are shopping at that period.
4) Personalized Experiences
Users spend most of their time on social media these days. It has elevated the
expectations of customers. Customers expect unique experiences and buying
processes catered specifically to them.

4. Aveda Plus Rewards offers members greater benefits in a more personalized manner.
To encourage more frequent redemption of rewards, they now offer members birthday
gifts and free (or discounted) services.
5) Omni-Channel Experience
These challenges require brands to step up and deliver seamless integration across all
touchpoints & channels – eCommerce, app stores, 3rd party channels & call centers.
Brands are collaborating to deliver the omnichannel experience. Target and Ulta
Beauty collaborated to form “Ulta Beauty at Target”. It enables millions of guests to
enjoy Ulta Beauty’s best-in-class beauty authority along with Target’s one-stop
shopping experience.
A loyalty program is a perfect answer to these challenges!
Focus on ‘Organic Beauty Products’ has attracted new customers and created a buzz in
the market. Brands are being loved for their social media actions, stand on cultural
values like Saks Fifth Avenue, measures against animal cruelty like not testing on
animals anymore like KVD Vegan Beauty, shifting from the conventional beauty
standards, and making products within reach of all people, here, Dove with
its #ShowUs campaign featuring photographs of “real women” stands out. CSR has also
helped a few brands to increase customer acquisition rates.

5. Truly, as a beauty brand, you need to deliver a complete 360-degree experience for
customers to ensure they stay connected with you. And unless you do this with an
existing customer base that already has a strong relationship with your company, it’s
going to be extremely challenging to achieve higher retention rates.
A practical example of this is Essence Royal’s implementation of loyalty rewards. They
achieved 84% increased repeat purchase revenue within three months of
implementing the loyalty program. Customers can earn points by referrals, account
creation, sharing on Facebook, and purchases across a wide range of cosmetics. They
were able to reduce discounts. Replace discounts with reward points promotions.

6. That’s just one example where Loyalty Programs have helped beauty brands boost
their revenue amidst tough times.
Isn’t that what all beauty brands are trying to do? Making customers feel elated while
using their products or engaging with the brand.
So, beauty loyalty programs are the enabler of sustainable growth and growing
revenue.
Best loyalty program features to help your cosmetics and beauty company stand out
Customers love products they can trust, and they love brands delivering a personalized
experience. Beauty is a cut-throat market, and customers can be swayed by marketers
making the most of it. Loyalty programs have helped brands pass these hurdles and
create a sustainable market position. Let’s uncover them briefly.

7. There are two types of loyalty programs:
1) Short term loyalty programs
Customers can earn wallet balances or discounts on a single purchase through these
programs. Typically, customers get discounts, free products, or gift cards.
2) Long term loyalty programs
Long-term loyalty programs are a great way to keep your customers coming back.
Providing rewards for frequent visits encourages customers to come back more often
and spend more money. When designing a long-term loyalty program, there are a few
things to keep in mind: communicating the benefits, focusing on data for decision-
making, and high customization of the loyalty program. These crucial aspects can be
covered when you find the perfect platform for your loyalty program. A platform that
focuses on data-driven processes, an omnichannel approach, and gamification of
loyalty programs can be a good fit. Nature’s Fusions increased the repeat purchase rate
by 66% after the perfect implementation of the rewards program.
Inspiring loyalty programs for cosmetics and beauty brands
There have been breakthrough loyalty programs hitting the sweet spot. Not only were
they able to increase the revenue, but they helped brands build a community of users.

8. With correct messaging and targeting, beauty loyalty programs can deliver results at
the right time.
KPS Essentials
KPS Essentials is a premium, organic skincare brand that strives to be performance-
driven and charitable. The founders of the company founded the company on the
principles of using performance to reshape the organic skincare industry and giving
abundantly to causes close to their hearts.
They faced the challenge of improving Customer Retention and Increasing Repeat
Purchase Revenue.
With a data-centric approach and customization in the loyalty platform chosen by KPS
Essentials, they could connect with customers easily. Consequently, KPS Essentials
increased repeat purchase revenue by 46% within three months.

9. Yon-Ka Paris
Yon-Ka Paris is a French skincare brand, pioneer, and leader in aromatherapy. They sell
in the Business-to-Consumer (B2C) segment by targeting the beauty needs of an
individual consumer.
They faced two major challenges- improving customer retention and increasing sales
during slow months.
A modern-day loyalty rewards platform was implemented with the aim of improving
customer retention, strengthening relationships with customers, and maximizing
revenue for Yon-Ka Paris.
The brand was able to achieve its business objectives of increasing revenue and
customer retention with the help of this loyalty program. The beauty brand saw
increased revenue by 48%.
The race to retain more and more customers is getting tougher each day. The beauty
market is booming, and it demands more attention from the brands having a tight hold
on the customer’s base. Loyalty programs have proven their worth. Increasingly,
beauty brands are taking advantage of loyalty programs. After all, every brand loves
loyal customers.