Why are Beauty Retailers launching their community in 2023?

Beauty retailers are building some of the most advanced communities we have at TokyWoky. We see two reasons behind this:

1. The beauty market in general is quite mature when it comes to communities. Most retailers have seen first-hand how engagement and interactions between customers directly impact loyalty.

2. Beauty customers have a relatively high re-purchase rate. They come back frequently to the community and website, which helps drive community engagement.

Let's dig into how these beauty retailers are developping their owned customer communities:

Why are beauty retailers building communities in 2023 ?

How do beauty retailers build their communities?

What results do beauty brands see with their community?

Why are beauty retailers building communities in 2023 ?

• Increasing customer loyalty: beauty customers like to share their questions, concerns and passion for beauty with their peers. Offering a community experience on their website allows beauty retailers to retain customers and build brand preference.
  
  
  
• Scaling reviews & UGC generation: most beauty retailers have identified that a minority of their customers write the majority of their UGC. Their community allows them to spot and incentivize these customers to scale UGC onsite and on socials.
  
  
  
• Adding a new line of revenue via brand campaigns: mature beauty retailers are now leveraging their community to drive “retail media” revenue, charging brands to run product testing campaigns, contests, surveys and live shoppings on their community platform.
  
  

To dig into this last point: like other retailers, beauty retailers can count on the brands they distribute to help animate their community. This powerful virtuous relationship between retailers, brands and customers is something we strive to set-up in all beauty retailer communities.

The  Retailer - Brand - Customer Community virtuous circle.

How do beauty retailers build their communities?

• Recruitment: leveraging their existing CRM and socials to invite customers to the community is what works best.
  
  
  
• Animation: the experiences customers enjoy the most are:
  • Product testing and contests hosted by brands
  • Participating in global theme-based UGC contests & challenges
  • Asking and answering chat/forum questions.
  • Interacting in theme-based member groups.
  • Attending masterclasses, live shopping and round tables with beauty experts/brands
    
    
    
• Resources & organisation:
  • The customer community is almost always owned by the retailer’s CMO/marketing director.
  • The project itself is mostly handled by the CRM/loyalty teams.
  • Brand campaigns (and therefore the community) develop a lot quicker if the community project manager has easy access to the brands they distribute.

What results do beauty brands see with their community?

For beauty retailers, community ROI comes from three sources: member revenue, UGC on product pages and brand campaigns.

• Revenue: +15 to 50% yearly AOV for community members compared to equivalent non-community member segment.
  
  
  
• Reviews, visual content and UGC: Community members generate between 30 and 50% of the retailer’s UGC.
  
  
  
• Brand campaigns: the pricing (and the business model) behind these brand campaigns differs a lot from one retailer to another but the objective we give ourselves is for these campaigns to offset the cost of the community after 9/12 months.

For more some concrete examples, check out our use cases. 

Example of UGC generated on Beauty retailers.