3 Retailers Winning in Customer Engagement

The $84 billion U.S. beauty market (as of 2016) has one of retail’s most complex customer experience challenges. While direct-to-consumer (D2C) e-commerce is growing quickly, as is Amazon’s foothold in the space, there is still a unique relationship between beauty sales and the in-store experience. Research has found people who use cosmetics buy these products primarily for emotional reasons—how the product and brands make them feel. And the in-store experience and brand affiliation are both key components of how a beauty brand makes the consumer feel.To capture the spending of the well-informed, highly engaged, and loyal beauty customer, beauty brands must look to new ways to create innovative customer experiences across their omnichannel buyer’s journey.

The Key to Crafting a Personal Shopping Experience

Some retailers are investing heavily in in-store technology to create a personalized interaction for every shopper. Although this fills a need for self-service, brand-loyal customers, many others are seeking a unique experience with one-on-one, human interaction at its core. The beauty purchase is more than just a transaction—it’s an experience in itself. Despite the increased talk of same day delivery in e-commerce, plus buy online and pickup in-store (BOPIS), beauty is still very much a hands-on, impulse purchase. Consumers want that makeup counter experience of trying the product and leaving the store with the branded shopping bag in-hand that proclaims their shopping experience to the world.Savvy beauty retailers are attempting to find more ways for physical retail experiences and digital ones to blur, which is a significant challenge in a segment as high-touch and personal as beauty. AR apps like Sephora’s Virtual Artist are attempting to synthesize this experience in the convenience of the shopper’s phone. Technology like this allows a beauty brand to create a holistic customer experience across their channels, better integrating the online and offline customer experience.

Despite the increased talk of same day delivery in e-commerce, plus buy online and pickup in-store (BOPIS), beauty is still very much a hands-on, impulse purchase.

Beauty Brands Doubling-down on Customer Experience

Here are three examples that showcase some of the more innovative and interesting recent examples of the beauty industry putting a focus on customer experience:

• Ulta. This mass market beauty retailer is seeing significant online growth (48% digital sales increase) go hand-in-hand with a large store expansion plan. With $139 billion in sales in 2017, Ulta recently made the Fortune 500 list for the first time. What’s driving this growth? A combination of exclusive product and a robust loyalty program. Ulta’s 25 top-selling makeup items are not available from Amazon directly, with those sold by Amazon third-party sellers typically listed at a 35-40% higher price. Their strong loyalty program allows them to deliver brand fans a personalized touch, rather than focusing on discounts and promotions.
• Glossier. A DTC darling with a cult-like following, Glossier recently launched a pop-up and a physical store, each focused on customer experience over sales. The pop-up took over a San Francisco cafe, providing social media-savvy customers with a one-of-a-kind experience where they could get their hands on the latest Glossier products over a meal of comfort food with friends. While the fleeting nature of a pop-up like this wouldn’t work for every brand, for the Glossier customer base, this feels right. Not to be outdone, their new permanent Los Angeles shop on Melrose Avenue is also focusing on experience over sales-per-square-foot with its Instagrammable “selfie canyon” (#glossiercanyon)—complete with day-to-night lighting and real-life desert sounds. This brings new meaning to the idea of consumers preferring to spend money on experiences instead of things.
• Saks Fifth Avenue. In an unexpected change for the department store, longtime NYC staple Saks is moving the beauty department from the foot-traffic and impulse-buy intensive ground floor (where it’s been since they opened in 1924) to the second floor. This is a major update to their flagship store to create a spa-like, luxe beauty experience. As department stores are struggling, and their beauty counters lose ground to indie brands and specialty retailers, it will be interesting to see if Saks can capture this luxe shopper, who may be ultimately more valuable than the in-and-out impulse customer and one-time tourist shopper who’s likely not as loyal.

Building Customer Engagement Into Online Transactions

It’s no surprise that beauty innovators like these are focusing on customer experience to build long-lasting relationships. At Narvar, our data tells us that beauty customers are among the most engaged customers. On average, beauty customers engage with the Narvar tracking page 60% more than non-beauty customers. And those tracking pages are doing more than providing utility—with the ability to showcase new arrivals or local in-store events and to serve up content related to the purchase, they are driving consumers to brand websites to shop, engage and share. In essence, these personalized online experiences are transforming the transactional part of the online retail experience into one with the same emotional impact as handing the customer a shopping bag in a physical store.

Our data tells us that beauty customers are among the most engaged customers.

To see for yourself how these personalized landing pages are driving results for beauty, learn how Urban Decay saw 700% ROI with Narvar.