BOOST BEAUTY BRAND PROFITS: Unleash the Power of Loyalty

Loyalty is the next stage of repeat purchases in the marketing funnel.

Ideally, it’d be best if you studied & focused on the >50% repeat purchase year over year consumer with multiple orders every year.

The difference between repeat purchase and loyalty is that repeat purchase is mainly around the purchase frequency. It is more transactional, whereas loyalty is about the higher share of consumption occasions for the consumer with a broader assortment of products for routines, lesser discount-induced sales & lack of switching during high sale seasons.

The following metrics should be on an ascending curve and are in the order of becoming more loyal with each sub-stage to reach the next and final step in the brand funnel of advocacy.

$/loyal consumers:

Loyal consumers increase their dollar consumption with your beauty brand over time when you compare a current period versus a previous one. This indicates a higher share of consumption occasions or higher usage per occasion.

Purchase beyond hero products:

Loyal consumer is usually delighted by the results and the whole brand experience, and they experiment with buying products beyond the hero products. The metrics around new products purchased by the loyal consumer, whether new launches or within the assortment of existing products, should track upward.

Routines and bundles:

This is the final check which tells you that the loyal consumer is now ready to enter the advocacy stage of the funnel. Brand bundles have become a part of her routine, meaning she uses multiple products during the same and different occasions as part of her daily routines.

Here’s a 2×2 matrix illustrating the relationship between the number of loyal consumers and the profitability of a loyal consumer, with strategy & initiatives for each quadrant.

Low # Loyal Consumers-Low $/Loyal Consumers

• Nurture: & convert into loyal consumers through targeted innovation & better assortment
• Targeting: Improve your targeting to attract the right consumer

Low # Loyal Consumers-High $/Loyal Consumer

• Cross-sell Hero: Understand the cross-sell gap between repeat purchasers & loyal to build a desire for hero products amongst repeat purchasers
• Alternative Products: Segment repeat buyers into categories & cross-sell to A/B test the responsiveness of each category and then pull the most responsive into loyal

High # Loyal Consumers-Low $/Loyal Consumer

• Rewards: Implement loyalty programs and incentives to retain & reward
• Personalize: Offers & recommendations based on individual preferences
• Encourage referrals and word-of-mouth marketing: To attract new
• Invest in an innovation factory: To increase the assortment of hero products to increase $/loyal consumer

High # Loyal Consumers-High $/Loyal Consumer

• Exclusive: Perks and Benefits to drive advocacy
• Targeted marketing campaigns: To further engage & retain high-value loyal consumers
• Ritualize consumption: With routines & bundles to become a part of their life
• Leverage for advocacy: With campaigns & inclusivity for the most loyal as an integral part of the extended brand family

How can you trend upwards on the above metrics?

You develop your value/loyalty hypothesis; not validating the same is one of the mistakes beauty founders make.

Loyalty Hypothesis: 

You start with why your consumers are repeatedly buying the brand. Then you validate by focusing on increasing the value of the causal driver and checking if the above loyalty metrics show an increase or not.

Challenges to Loyalty as a Growth Engine: 

Newness affected by competition: 

Humans have a bias for novelty. With the continuous influx of emerging beauty brands, there is always a danger of your loyal consumer’s exposure and trial to a new brand which puts them on the path to becoming lesser loyal.

Cure:

-Perceived Value: Perceived Value=Quality/Price. Your beauty brand must offer at least 30% higher value than the competition, especially if your brand does not offer an emotionally affective experience and is not a prestige beauty brand. Even for prestige beauty brands, you will face some heat from other beauty brands in the same price range as you.

-Creative Redefinition or Brand Story: Creative redefinition of the problem allows you to move along the spectrum of a new solution to an existing problem or solve an unsolved problem.

Example: 

Dove Real Beauty’s transformation from a functional soap brand to solving the issue of society and corporate-induced insecurity in women by redefining the brand around inculcating confidence in women.

For details on three other challenges to your beauty brand loyalty and how to overcome them, with examples of different beauty brands, read the full article here!

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