L’Oréal Paris launched the You’re Worth It loyalty program this month, giving users incentive to earn points as they spend on L’Oréal products. For long, loyalty programs seemed to be the territory of prestige beauty brands, but mass brands are taking advantage of this opportunity to encourage repeat purchases, collect data, and incentivize sharing on social media and referrals. And these loyalty programs are paying off. E.L.F for example, experienced a 34% increase in site visits and 15% increase in average site visit duration after implementing its Beauty Squad loyalty program. Furthermore, E.L.F was able to leverage data collected from its program members for better targeted emails, increasing traffic volume from emails 185%.
Loyalty programs have proven to be lucrative for many prestige brands, which is likely why mass brands are catching on. L’Oreal-owned Lancôme, for example, has achieved a 60% action rate (i.e. 60% of its loyalty program members have completed at least one step to gain points) just a month after launch.
However, loyalty programs must be executed well to deliver results. L2’s report on Data and Targeting in Beauty Loyalty finds that as more brands are creating these programs, engagement rates are remaining stagnant. Just half of loyalty program accounts are ever interacted with, meaning the other half are silent accounts members create and never visit. As shown in the graph below, clear differences separate loyalty programs that pay off from those that don’t. Sophisticated targeting, a clear value proposition and control over distribution channels are among factors that can improve a loyalty program. In addition, brands should be thinking about their program’s visibility (on their own site and distributing retailers), rewarding digital interactions like reviews and social sharing, and how to integrate with mobile phones.