POSTED : October 29, 2015
BY : PK

The prestige beauty industry in the U.S. has a conundrum on its hands. Dominated by three retail channels – department stores, “pure play” retailers (online only), and direct-to-consumer – there is a constant debate over which should lead. Which is more important – volume or profitability? What’s the most efficient way to build a relationship with the consumer – at the department store beauty counter or direct to consumer? And what is the impact of all of this on consumer loyalty?

Prestige beauty is growing, albeit slowly, at a rate of 3% to $11.2 billion in 2014, according to a recent NPD report. Roughly 11% of sales occurred online, which is notably higher than the overall split in retail where around 7% of sales were online. What makes prestige beauty a stronger online play than general retail? The answer is omnichannel loyalty.

Those of us involved with B2C retail talk a lot about the importance of having a strong omnichannel strategy. So getting back to the conundrum of prestige beauty and what’s important, the answer is “all of it.” All of the channels are important – and it comes down to understanding the intersection of these channels and how your consumers participate in each of them. Because they DO participate in each of them, often in different ways.

Customer journey mapping is an effective methodology for understanding the intersection of your channels. And it’s not necessarily a linear process. In the case of prestige beauty, it might look something like this (a real-life example):

  • A customer is looking for a new lipstick.
  • Her favorite brands are Lancôme and Clinique.
  • She starts with online research to learn more about any new lip products they have launched.
    • She reviews the color trends and might view a video or two.
  • She also pays attention to current offers – free samples, gifts with purchase, etc.
  • She spots a few new colors that are appealing, but it’s so difficult to know what it will look like on you.
  • She goes to her favorite department store to check out the colors in person.
  • Both brands have colors she likes, so how does she choose? The beauty advisor at the Lancôme counter reminded her about Elite Rewards, Lancôme’s loyalty program.
    • Even if she purchases at the department store, she still earns points in the program, which she can redeem for products and experiences.
    • Appreciative of the beauty advisor’s help, she purchases the Lancôme lipstick at the department store.
  • And now that she has a new color she loves, she’ll make her repurchase at Lancome.com where she can receive samples and free shipping – and continue to earn her Elite Rewards points.

This example illustrates two points:

  • Having a strong omnichannel strategy means driving consistency and education at each touch point, and
  • An effective loyalty program can impact the purchase decision.

If the Lancôme beauty advisor had not mentioned Elite Rewards, then the customer’s purchase could have gone to Clinique. But the added benefit of the rewards program helped tip the scale in this instance. And the customer’s loyalty will continue with Lancôme as she repurchases that lipstick online and continues to sample other Lancôme products.

What makes Lancôme’s Elite Rewards program unique is its omnichannel presence in an industry where loyalty programs are scarce – and if they exist, they are exclusive to direct-to-consumer channels. When considering a loyalty program strategy, whether in prestige beauty or any other industry that faces the multi-channel conundrum, try to reward interaction and purchases at each touchpoint. Make points earning agnostic to the channel – or weight the earning according to where you hope to achieve the most growth. By following the journey of your customers and understanding the bigger picture of their purchase behavior, you’ll more effectively drive overall growth and a greater shift to more profitable channels.

For more reading about how to successfully use customer journey mapping as a tool to drive customer loyalty, download this presentation onCustomer Experience in an Omnichannel Environment. 

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