How Cosmetics CPGs Can Build Customer Loyalty

Like other consumer packaged goods companies, beauty brands struggle to build customer loyalty due to challenges that include no direct relationship with consumers and disintermediated purchase channels. These challenges also make it difficult for beauty brands to track marketing efficacy across channels and prove a product’s worth to retailers. In this blog post we’re taking a closer look at some ways that beauty brands can overcome these challenges and cultivate deeper, more profitable relationships with their customers.

How to create a direct relationship with customers & overcome a disintermediated purchase channel

Many beauty brands rely on retailers, drugstores and other indirect methods for sales of their products. In order to create a direct relationship with customers and overcome disintermediated purchase channels, cosmetics brands need to have access to customer data. How can cosmetics brands keep track of multiple data sources to gain a complete understanding of the customer journey?

For starters, they need a way to motivate their customers to lean in and identify themselves. A loyalty program is one of the most effective ways to do this. Let’s run through some benefits of a best-in-class loyalty program and some program features for cosmetics brands to consider.

Benefits at a Glance

  1. Enhance brand value
  2. Cultivate long-term relationships and product ownership
  3. Deepen love for your brand
  4. Enable partnerships

Consider These Loyalty Program Features

Incentivize non-transactional behaviors

Most loyalty programs focus on rewarding customers for the amount of money they spend, which is fine, but makes it difficult to differentiate your program from a competitor’s. In order to stand out, while also identifying other potentially high-value customer behaviors, brands must create additional opportunities for consumers to earn rewards.

For example: motivate your frequent customers to refer-a-friend. This means a lot among cosmetics consumers, as a survey conducted by Corra research revealed that 69.3% of consumers viewed recommending brands or products to friends as a top expression of brand loyalty.

Besides creating deeper customer relationships, rewarding people for non-transactional behaviors also gives brands opportunities to engage with customers between transactions, as well as increase the chances they’ll purchase from you in the future.  

Get personal

There’s a real need in the beauty industry to retire traditional mass, generic discounting. According to a survey of 800 beauty shoppers conducted by A.T. Kearney “Sixty percent of respondents say they regularly receive email or text offers from beauty brands or retailers, but only 9 percent of them feel these messages accurately target them,” and “Forty-eight percent say the messages they receive are generic.” Instead, beauty brands need to leverage historical data to determine which products a particular customer is most likely to purchase and then incentivize a customer to buy those products. Personalization not only makes customers happy, but also increases reward redemption, generates incremental activity and decreases margin erosion.


Reward with experiences

If you’re going to leverage a loyalty program it’s likely going to be points and tier-based. Differentiate your program from your competitors’ programs by offering unique ways for customers to redeem their points. The occasional discount is fine (as long as it’s personalized and relevant), but cosmetics shoppers are looking for more. Sephora–although not a cosmetics CPG–demonstrates a great understanding of beauty-minded customers with their Rewards Bazaar. Members of their famed Beauty Insiders rewards program can redeem their points for various products (smaller point values) or for experiences like spending a day with Josie Maran, the creator of the eponymous makeup and skincare line; or a boutique beauty masterclass at Make Up Forever.

Easy to understand benefits

In order to motivate people to sign up for your loyalty program, it’s important to make it easy for customers to understand the value of the program. Whether you’re working with a transparent or opaque loyalty model, ensure the program’s rules and guidelines are simple and straightforward.

Omnichannel hasn’t killed customer loyalty, but it has radically altered the type and level of effort that is required for brands who want to create and maintain it. Motivate high value behaviors and advocacy in addition to transactions and spend. Take an integrated omnichannel approach to create a frictionless experience that customers will love.