The Beauty & Wellness industry was hit hard during the pandemic, yet the stories of resiliency and rebound throughout the last 18 months were nothing short of extraordinary.
Now the Beauty & Wellness industry is thriving, with big-box retailers doubling down on their partnership investments to capitalize on this momentum. Some analysts are going so far as to declare the industry ‘recession-proof’. An ambitious claim to be sure, and one that will be put to the test with inflation wreaking havoc and a global recession on the horizon (or already upon us).
Marketers and CRM teams will once again be asked to play a critical role in driving stability and growth during unsettling times. And like they did in response to the pandemic, they must embrace a mix of innovation with tried and true tactics to ensure their programs are recession-proof.
For some inspiration on how to navigate the challenges ahead, we turned to our very own Beauty & Wellness expert Lauren Sadler, CRM strategist at Ometria.
Lauren has spent the majority of her career in the industry, most recently in 2018 as CRM & Loyalty Manager at Feelunique (recently acquired by Sephora), where she was responsible for the execution of core automation campaigns; driving loyalty initiatives across multiple channels to turn new customers into advocates and ultimately increasing CLTV.
Q. Marketers face an upcoming challenge with uncertainty in the market. Take us back to your time as a CRM manager during the peak of the Covid-19 pandemic. How did your role and priorities change during that time?
A. My role shifted into crisis management. We wanted to be sensitive to the needs of our customers and show empathy for what everyone was going through. That meant improving the little things in the customer experience, like launching more transactional messaging and doing a better job of keeping the customer in the loop on their order when we were confronted with supply chain issues and shipping delays.
Over time, as things started to rebound, we realized we were acquiring a large number of first-time customers. All of a sudden we had to switch priorities again and the new challenge became converting those new customers into repeat purchasers. One of the main initiatives we implemented to encourage that behavior was to subscribe and save. When customers signed up, they got a discount and the convenience of getting their products delivered at a defined frequency and we got our repeat purchasers.
Q. An economic downturn could mean marketers will once again be strapped for resources. What is your top recommendation for CRM teams on how to streamline their approach?
A. I’ve been in those shoes and it’s all about getting creative and doing more with less. Focus on the tactics and channels that drive revenue with a lower investment, like email.
For example, something as simple as using category affinity to personalize your messaging. Small tweaks from a small team that maximizes impact on how the customer feels about you and drives results. Engagement and revenue were significantly higher when we started utilizing category affinity and all we really had to do was swap some imagery and the subject line. Minimum effort, maximum results.
Q. In addition to economic headwinds, are there any other challenges you see facing the Beauty & Wellness industry?
A. Yes – a big one for me is the rise of Dupe Culture. You have these TikTok and Instagram videos where influencers are not only advertising the ability to get cheaper ‘alternatives’, they are getting social clout for doing so! There is a mind shift happening that I think will have a tremendous effect on how consumers buy, particularly for millennials and Gen-Z.
Unfortunately, I think this trend will only continue, which makes it that much more important to employ Loyalty strategies that create long-term advocacy for the younger generations. A loyal fanbase will respect the quality and originality of what you offer and reward you for it in the long run.
Q. With respect to Millennials & Gen Z – data suggests they prioritize Beauty & Wellness over every other generation. Where do you see the most opportunity for them in the next 12 months?
A. It’s more important than ever to cater your program to the younger generations since they are creating a lot of demand right now.
There’s an opportunity for CRM teams to think about loyalty programs differently in order to drive wider appeal with this group.
Q. Moving away from discounting to more experiential rewards can be a challenge when consumers are conditioned to expect discounts. How do you suggest CRM teams take the first step down the path?
A. First off it’s a bit of a pipe dream to completely eliminate discounts, isn’t it? You know you have to protect margins but then ultimately in that weekly planning meeting on Monday there’s always going to be that pressure to drive immediate revenue, and the majority of the time this is with a discount. Particularly in the Beauty and Wellness industry where pricing is so competitive.
Ideally, there is a top-down shift in focus from revenue to profitability, but that won’t happen without the data to support it. When we engage a new client at Ometria, one of the first things we do is a Data Audit as part of our Retail Success Model process. We use five proprietary algorithms to identify key opportunities to help teams achieve value more quickly, focusing on the four key revenue drivers:
From there, we identify interesting segments of customers. In this case, it could be a segment of customers that always shop full-price and don’t need discounting incentives to drive them to purchase. This can be fairly obvious, but I find that a lot of the time, CRM teams are subjected to so much pressure from above to drive short-term revenue goals, they lack the time and often resources to really drill down into their customer data and unlock valuable customer segments.
So don’t forget that even if you’re not defining the goals, once you have that insight into your data and identify where you need improvement on those four key revenue drivers, you are in a better position to decide the tactics to accomplish them.
Read more about tactics to wean customers from discounts here
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