More than skin deep

Loyalty scheme in retail

Loyalty schemes have been a way for beauty retailers to increase share of wallet as well as protecting profit margins for some time. Whilst consumers are loyal to brands, they shop around for the lowest price, leading to intense competition amongst retailers and distributors. So, with the rise of new entrants, subscription services and the ease of comparing prices online, how do beauty retailers ensure their loyalty scheme is relevant to the modern consumer and encourage engagement?

Keep it simple
The foundation of any successful loyalty scheme is to keep it simple but many retailers get drawn into adding extra levels of complexity to lure new members. Customers prefer loyalty schemes with easily understandable reward structures.  US beauty retailer Sephora has one of the most highly regarded loyalty schemes in the market. Benefiting from a clearly explained three-tier system, it encourages customers to increase their spend for more rewards. Simplicity also extends to a seamless omnichannel loyalty experience where a card exists in a digital form, whether on an app or just linked to an online account, requiring little customer effort.

Personalise it
Retailers need to be able to harness the data collected from loyalty schemes. By offering personalised discounts, content and product recommendations, customers have a distinct shopping experience, and they are offered curated products that are relevant to them.  Boots has trialled an initiative which allows loyalty members to pick their five favourite brands to receive a discount on. Online pureplay Feelunique takes it one step further, asking customers to enter details about skin, hair and body concerns when signing up to their loyalty scheme, My Feelunique Platinum, enabling it to tailor its homepage merchandising to the customer’s needs.

Treat me
The beauty market is driven by the feeling of pampering and indulgence. Customers want schemes to reward them for their loyalty and not just offer savings. For example, NDULGE, Space NK’s loyalty scheme, offers members gifts on their birthday. Increasingly, consumers are looking for experiences and relationships with retailers. Free makeovers, skincare consultations and private shopping events are some of the ways to reward customers and encourage visits to stores.

Any approach needs to be easy, convenient and rewarding in order to appeal to time-poor, experience seeking consumers. As systems and technology evolve, there are further opportunities for retailers to develop the relevance of their loyalty schemes. Advanced behavioural analytics will improve personalisation and predict when products need to be replenished; in store technology and mobile apps will become increasingly integrated; and gamification will be used to encourage engagement with the traditional points model.

Caroline Pollard