In a sea of beauty retailers, e-commerce businesses need to work harder to win new customers, and gain their loyalty.
Senior loyalty and retention manager at Australian beauty retail leader Adore Beauty, Miranda Bliss, understands this better than most.
Over the course of several months in 2020 — and amid preparations for a highly-anticipated IPO — Bliss launched the online beauty empire’s loyalty program in March 2021.
The program, Adore Society, has attributed to growing the brand’s subscriber base by 200% over the past 12 months alone, and also contributed to 18% revenue growth in the past six months.
“It definitely exceeded all expectations,” Bliss tells SmartCompany Plus.
Loyalty programs are becoming big business, especially in e-commerce where touchpoints that incentivise ongoing purchasing behavior are essential. Off the back of its launch, the program has contributed to significant revenue growth for Adore Beauty.
Founded in 2007 by Kate Morris and James Height, the beauty retailer reported $113.1 million in revenue in its recent half year earning report, marking growth of 18% in the past six months.
Kate Morris, founder of Adore Beauty. Source: Supplied.
The retailer credits much of this to its strengthened active customer base, which has grown 56% to a total of 876,000 active customers. Returning customers now represent 71% of revenue, the business reported.
Beyond undeniable revenue and customer growth, the program has attracted international recognition, with Adore nominated by Inside Retail, Power Retail and the International Loyalty Awards.
Internally customer feedback has also been “really positive from both existing and new customers.”
Bliss says this is because the program was structured to have a range of benefits “that appeal to a much wider customer base,” rather than simply focusing on discounts.
Adore Beauty gained 497,000 new customers in the 2020 calendar year, up from 251,000 in 2019.
“Within the first three months [of the program], we signed up over 90,000 [Adore Society] members,” Bliss said.
The explosion of e-commerce over the past two years is now a well-told story.
Australian e-commerce overall reached an all-time high in 2020, as the pandemic changed consumer behaviour and drove eye watering growth in online shopping.
Almost 5.2 million households shopped online in April 2020, and 2021 saw 57% year-on-year growth in online purchases.
Adore Beauty was similarly swept up with the e-commerce wave.
The loyalty program was “something that Adore had been thinking about for many years,” Bliss says.
But the meteoric customer growth the business experienced in the first year of the pandemic sharpened its focus on the customer retention strategy.
“Adore was very focused on acquisition of new customers,” she said, and now it was more important than ever to focus heavily on the retention of these highly valued customers.
“It really became clearer …[that it] was critical that we introduced a program to ensure we were retaining this huge number of customers we’d acquired.”
Adding to this were concerns around Google’s so-called “cookie crumble”, set to come into effect in 2023, which will see the internet giant cease employing user-tracking technology for the purpose of selling advertising.
For retailers with marketing strategies built around tracking and targeting consumers across platforms as they browse the internet, it means internet users will be able to opt out of allowing these kinds of practices.
For many online retailers — including Adore — organic and ‘brand-owned’ marketing funnels will become crucial to acquiring and nurturing customers into the future.
Bliss, who drove the development and rollout of the loyalty program, tells SmartCompany Plus she began with competitor analysis across local and international markets, including department stores.
Next came testing, where the company partnered with Melbourne-based market research agency T garage to carry out over a single, intensive month.
While Bliss’s strong background in marketing and strategy, along with Adore’s secure customer data, meant she was confident in the structure, she says one of the biggest pitfalls for loyalty programs are programs that look good on paper, but simply aren’t used by the majority of customers.
Adore Beauty products. Source: supplied
A lot of loyalty programs that are points-based are “very confusing to a customer,” Bliss explains.
“90% of customers would never earn enough points to actually redeem anything, so [don’t receive] any value,” she said of some of the market research that crossed her desk during the development process.
Instead the retailer leaned hard into the program’s mantra, which promises a loyalty program that “rewards you for being you”.
The program offers three tiers of membership: Level 1 for those spending up to $399 annually; Level 2 for shoppers investing between $400-$1499 in Adore products per year; and Level 3 for VIP customers spending $1500 or more.
Along with a reward system that provides access to programs like online beauty masterclasses, exclusive offers and early access to new brands, Bliss intentionally built in perks that speak to common shopper peeves.
If you’ve shopped with Adore before but haven’t yet signed up as a member, the loyalty program retroactively rewards customers for their past 12 months of purchases.
Customers feel seen and recognised by the company from the moment they join the program, she explains.
It also offers benefits that aren’t linked to buying that reinforce the value of each individual Adore customer.
“Some of the research we undertook [showed] that customers wanted a reward that wasn’t tied to a reason,” Bliss said.
Level 3 loyalty members are able to choose any day once a year to receive a reward that “wasn’t because they spent a lot or they reached a certain threshold”.
“That is probably one of our highest converting campaigns,” Bliss said, because Adore can recognise customers’ commitment to the brand outside of spending incentives.
Another benefit of the program has been in further developing customer intelligence.
In the past two years, spending on Korean skincare products and sex toys has risen in general, but particularaly among loyalty members.
The growth of the sexual pleasure category has been fascinating because it reflects not just “people feeling more empowered”, but the shift in buyer perception when these kinds of products can be shipped discreetly to your door, Bliss explains.
“They feel more comfortable,” she says, when “ people just think you’re getting your moisturizer or your shampoo” delivered.
Beyond specific insights, data shows the loyalty program has led to more cross-category shopping overall as they gain more awareness and curiosity about new products.
Having the program and the tech behind it in place with a long runway to 2023 means the company is consistently growing its personalisation tools.
When the customer’s experience is “personalised, and more relevant”, stronger customer engagement and spending follows, Bliss says.
Bianca Healey is the startups and tech reporter at SmartCompany, with a particular interest in regulation, the creator economy and the growth of the Australian tech sector. You can follow her on Twitter at @biancahealey.
