Beauty and personal care brands are positioning loyalty programs as the next way to farm customer data.
The beauty brand ecosystem relies heavily on media clout to retain supremacy and relevancy in the market. But with issues like GDPR, CCPA and Google’s plans to block third-party cookies on its Chrome browser by 2022, the traditional modes of marketing and advertising via lookalike modeling are threatened. As a solution, companies like Maybelline, E.l.f. Beauty, Glow Recipe and Kiehl’s have developed loyalty programs as a means of gathering and encouraging first-data sharing while simultaneously reaffirming value to their customers.
For a mass brand such as Maybelline, which sells through retailers like CVS and Walmart, but does not have its own DTC e-commerce play, the elimination of third-party cookies is a more acute issue. Maybelline spent $227 million on advertising in 2019, but pulled back in 2020 to $102 million based on Kantar data. Despite the pullback, Maybelline has to capture more first-party data and understand the end consumer in order to remain relevant. To do that, Maybelline launched a rewards program called Maybelline Express in Nov. 2020.
“We wanted to own the connection with our consumers and personalize experiences, and become less reliant on third-party media companies to provide consumer data for us,” said Marnie Levan, Maybelline vp of integrated consumer communications. “In order to maximize our competitive advantage, which is our ad dollars, we needed to build out our customer databases.”
Levan said that before having a loyalty program, customers did not have much incentive to visit Maybelline’s website; Maybelline.com had 1.3 million million visitors in Nov. 2020, but dropped to an average 533,000 visits between Dec. 2020 and Feb. 2021, according to Comscore data.
At the moment the program is still in beta, but Maybelline has tested paid social media ads to direct people to the website and program. The loyalty program collects emails and birthdates, but also skin tones, skin concerns, preferred beauty products and shades and favorite retailers. Maybelline Express can then take that information and use it to personalize email marketing, programmatic ad targeting and retargeting and personalization on the website.
“Personal data that somebody is opting to give us is [better quality information] than making assumptions based on who visits the website, goes to a makeup foundation page and then we retarget them,” said Levan.
Tom Caporoso, CEO of loyalty program developer Clarus Commerce, anticipates that when third-party cookies disappear from Chrome, more brands will look to reward programs to compensate for the data loss. The number of inbound requests it got this year did not significantly increase. In the meantime, Clarus Commerce has in the last 12 months pushed out more surveys and questionnaires with incentives in order to get people to participate and share more personal information.
“We have strategically done more [questionnaires and quizzes] because clients have asked for them and we have seen success with driving engagement rates with [loyalty] members when we do get more personalized and segmented,” said Caporoso.
Effectively, customers are willing to share personal data if they feel they are receiving back something of value, and loyalty programs easily offer that relationship. Ekta Chopra, E.l.f. Beauty Chief Digital Officer, said that brands in a post-cookie world can shift from lookalike modeling to contextual-based advertising, though contextual doesn’t provide the type of data that might be useful in improving targeting.
In this scenario, brands would know very little about new customers they are trying to acquire and it may plateau the effectiveness of their marketing. Additionally brands would be forced to reinvest heavily in their customer management systems, said Chopra.
Additionally, brands without first-party data access may become more dependent on retailers like Amazon and Walmart who are building up their advertising services.
E.l.f Cosmetics has over 2.5 million members, a relatively healthy size for a single pure-player company. Information from the five-year-old loyalty program helps expand the brand’s SMS text message marketing, personalize product recommendations on its DTC e-commerce and form the bedrock of its lookalike audiences.
Chopra said that in its latest loyalty program update, E.l.f. Cosmetics allows customers to upload their store receipts to receive points, informing the brand of who shops through which retail partners. The loyalty program offers perks like a free birthday gift, points accrual for future discounts and early access to product launches among other features. With diminishing reliance on third-party cookies, E.l.f Cosmetics is aiming to build out its own media-style platform native to its e-commerce to more directly engage with customers and therefore create its own continuous data ecosystem. However, Facebook and Instagram will continue to be its top two advertising channel, said Chopra.
“The discussion about cookieless-world is not something that happened overnight. It’s been a concern ever since GDPR and CCPA went into play,” said Chopra. “If brands don’t have a CRM strategy or an approach on how to build their first-party data, they’re going to have a lot of challenges navigating these [internet privacy] changes.”
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