Beauty brands have been bullish on loyalty programs—among the 88 brands present in L2’s 2015 and 2016 Digital IQ Beauty Indices, beauty loyalty programs increased 50% year-over-year. Estée Lauder Companies brands had the greatest increase in programs—Estée Lauder, M.A.C., Origins, Smashbox, and Clinique all added or revamped their programs within the last year, according to L2’s Beauty Loyalty Insight Report.
Last month, the conglomerate announced it would acquire Indie beauty brand Too Faced for $1.45 billion, the largest purchase in Estée Lauder’s 70-year history. Does it make sense for Too Faced to follow in the footsteps of its new sister brands and introduce a loyalty program post-acquisition?
To stand apart from from retail giants like Sephora and Walgreens, Too Faced must consider a range of factors like existing infrastructure, distribution channel, and brand loyalty to determine whether investment in a loyalty program will have a positive return.
Following the acquisition, Too Faced is well positioned for loyalty program success. As a direct-to-consumer brand, Too Faced—named as a top five beauty brand among US teens in 2016—already has a direct relationship to a very loyal customer base, as well as a fairly high frequency of purchase through consistent product replenishment. Because the brand will now also have support from a large parent company with deep pockets, Too Faced has the resources to update their existing CRM infrastructure to prime it for successful loyalty program execution.
Too Faced can also learn from the success of Estée Lauder brand loyalty programs, piggybacking off of existing features and integrating them into its own program. For example, Too Faced can look to Clinique, which recently launched its Smart Rewards tiered loyalty program. Like many of the other Estée Lauder brands, Clinique has focused on program visibility, advertising the program via texts to their SMS subscribers and incentivizing signups with a full-screen popup to new site visitors that offers a 15% discount for new members.
However, before Too Faced gets swept up by the recent Beauty loyalty hype, the brand must think critically about what the program will accomplish—in order to be a sound investment, the loyalty program must have a clear value proposition that addresses a source of friction in the beauty consumer experience.