According to a McKinsey study (2020), members of loyalty programmes are 30 percent more likely to spend more on the brand after subscribing. Even more, Ourself, a beauty brand recognised for its tech-centric products, attributes 40 percent of its sales to its rewards programme (Morris 2023). Research shows that loyalty programmes are also a crucial step in enhancing the share-of-wallet (Leenheer et al., 2007). Many brand managers have yet to fully realise the great potential of loyalty programmes, given the significant number of brands that resort to unoriginal, standard loyalty approaches like basic point-collection systems for discounts, which may not engage consumers effectively.
The cosmetics industry represents a vital area for studying loyalty programme usage, as it remains ahead of many other industries in digital marketing innovation. While smaller companies can greatly benefit from well-designed loyalty programmes, they face the challenge of competing with established programmes from major players like Sephora, as consumers often hesitate to engage with multiple loyalty schemes. This article aims to persuade brand managers of the critical role loyalty programmes play in accelerating business growth and provides advice on effective implementation. While the focus is on luxury beauty, the findings are applicable across various consumer markets.
COMPARATIVE ANALYSIS OF LOYALTY PROGRAMMES
We conducted a comparative analysis of loyalty programmes in the high-end beauty segment. To create a representative sample, we gathered all brands available on the websites of the three most prestigious retail stores in the Western world: La Samaritaine Paris, Bergdorf Goodman New York, and Harrods London. Our objectives were to gain insights into the usage rates and designs of loyalty programmes.
Our findings revealed that the high-end beauty segment is driven by 247 entry-prestige to ultra-luxury beauty brands. Among these, a quarter of the
