Lancome's Loyalty Program Provides a Foundation of Data
Can you provide an overview of your auto-replenish program?
Lancome sells through retailers like Macy's, but we don't our own stores so the only retail presence we own is Lancome.com. In 2012, [around] October, we launched what we call the auto-replenishment program, which lets you put in auto-replenish with whatever items you like. It's about convenience and service.
Why did you launch the program when you did?
This is a natural response to how our customers use the website. We analyze the purchase behaviors of customers and if you take the traditional path for a new product, we see tons of people coming to the website and learning about a new amazing product we might have. They get additional material and are engaged but they don't necessarily shop online.
What are the usual buying patterns of Lancome customers?
[Where they] shop for a new product is in the store. Then a couple of months later, when the product is done, they replenish online. We wanted to offer better customer service. We started with the iconic collection, the mascara, foundation, basic moisturizers—items that you as a customer would use on and on. [Through the online auto-replenishment program] for the same price and with free shipping, you could set the frequency and you'd keep receiving it. Customers can vary the frequency. It's a user-friendly. You can add more than one item, and have everything come together.
What did you do to promote the program?
We started with certain users and with certain products. We didn't completely blow out the program in the beginning because we wanted to adjust it a bit. In 2012 we had 20% of the entire catalog available.
We also went to our Lancome.com subscribers first and foremost. We used CRM to communicate to customers through email and direct mail that this new product was available and they responded very well. Then we extended it to other elements of the catalog where it made sense. We have skin care, makeup, and fragrances and if you think about makeup, that's where auto-replenishment is more challenging. Shades and colors vary because they're seasonal.
We use auto-replenishment in a strategic way because if you like a shade, we might think you'll like another one [and cross-sell it]. We're treating you like a special customer because you are a special customer: If you're in auto-replenishment, you're very loyal to us.
How do you anticipate what type of makeup a customer might like?
This is modeled out, and it's a creative, subjective choice. Say you wear pink gloss in 2012. And we discontinue that pink but we introduce a different type of pink, so we'll expose you to this program with new shades coming up, or we do smarter sampling. We'll send you the last batch of the shade that will be discontinued and we send you a sample of one that might replace it.
How do you decide whether to reach out via email or direct mail?
Some of the database can only be emailed and some can only be direct mailed. So when we don't have a choice, the direction is giving by whatever means are given to us. When we do have a choice, because we have both email and direct mail, we tend to prefer email because it's more intimate, faster, and a less expensive form of communication.
I always thought direct mail was more intimate.
We have dozens of data points embedded in our email. Every email is different. If you shopped with us in a campaign and you selected seven samples out of 30 that are available, the follow-up emails you will receive will be tutorials specific to you and will only speak to you. When we send you samples [hoping for] conversions, we'll ask you to post a review. Our products are extremely personalized.
How do you accomplish this level of personalization?
It's challenging. Finding the perfect balance of the message you want, that you want everyone to see, and the personalized part—it's something you do over time. We use data to see what customers respond to. We worked on this through the first part of 2013 and we see great results with personalization, but we're not through. You need to stay ahead of the curve.
How do you accomplish this?
We deploy a lot of technology and do a lot of experimentation and we know this is the beginning and not the end. In 2014 our focus is where we can bring personalization and what's the next level of personalization?
What do you have today?
Today we have several personalization tactics. We have landing pages, so when you click through an email we know where you're coming from and we merchandise the website and give you personalized content, promotions, and products that are consistent with who you are and based on what you've done.
We also have a Facebook log-in button if you don't have personalized email. Depending on where you are on our CRM database, the website changes. We might want to increase the average order value or improve activation rates or increase the prospect-to-customer conversion rate. Depending on who you are, the website changes.
Today it changes in terms of promotions. Tomorrow it will change in terms of content, promotions, services, and visual merchandise. The ideal scenario is where we have a one-to-one relationship with the consumer, so we abandoned the typical classification that CRM gives you. Basically, you fall into a class of clients but you remain a unique individual. We want to take the uniqueness and understand that it's different for each customer.
What do you mean by “abandon CRM's typical classification?”
CRM is the core of everything we do, [but] the fact that you fall into a top customer segment doesn't tell me enough about who you are. We want to be more granular than that.
We've leveraged what the typical CRM architecture can give you, but we'll bring the CRM expertise to the next level and that will be reflected in the website.
Is the auto-replenish system helping with this personalization?
Seeing customers through auto-replenishment gives us tremendous opportunity in terms of understanding how to cross-sell and what we can do better. And if a customer loves a product so much, what else might she love? It increases loyalty, but gives us a whole new set of data. What's the frequency [with which] she's using a product? What's the value in auto-replenishment? It's a unique tool to remain in constant touch with the consumer and to give additional opportunities to the one-time shopper.