Best Practices For Building A Beauty Loyalty Program

Learn how to build an effective loyalty program for beauty brands that encourage repeat purchases, increase lifetime value, and more.

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Chapter

Introduction

From makeup palettes to hair accessories, the beauty market drove US$625.7 billion in revenue in 2023. Notable trends in the beauty industry include the surge in custom products for different skin and hair types, the increase in number of brands aimed towards men, the rising popularity of Korean brands worldwide, and the growing demand for eco-friendly beauty products.

To stay competitive, beauty brands need to keep these opportunities in mind:

  • Increased purchase rates, high repeat rates, and high lifetime value are linked to social media consumption and influencer marketing
  • High number of SKUs and lengthy consideration phases create a critical need for reviews and loyalty programs in order to boost brand consideration
  • Low barriers to brand switching negatively impacts retention rates
  • Subscription services help improve the precision of inventory and shipping cost estimates

Loyalty programs help beauty brands make the most of all of these opportunities - they encourage high purchase frequency and lifetime value, give brands a way to reward customers for subscriptions, and turn product reviews, user-generated content, and social media interactions into key drivers for purchase decisions.

Today’s top beauty brands also use loyalty programs to drive revenue, increase average order value, and boost basket size, resulting in the following:

  • $100,000 average dollar value earned from loyalty per year
  • 205% increase in average order value (AOV) from loyalty orders
  • 176% in basket size from loyalty orders

Disclaimer: To create this guide, we assessed the top beauty brands using Stamped Loyalty to identify common success factors by looking at their loyalty program set-up, execution strategy, and performance metrics. While these best practices are based on methodical quantitative and qualitative research, they are only recommendations, not requirements. They also do not guarantee the same results or level of impact demonstrated by these brands. We always recommend that brands assess their own needs, goals, and outcomes to determine what will work best for them.

To do so, brands should look to Stamped's analytics dashboard, which helps brands assess their loyalty program's performance by evaluating critical metrics like loyalty program revenue, changes in basket size and Average Order Value. Brands should regularly assess and optimize their loyalty setup by visiting the Program Health section.

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