"We were excited to get the integrated AppCard for Retail Pro solution up and running so we could compete with Sephora and Ulta."
- Lynn Osgood, VP
The Cosmetic Market & Private Edition increased average transaction size by 35%. Here's how.
Company Background
The Cosmetic Market & Private Edition are a high-end luxury cosmetics retailer offering an array of beauty products and accessories to the discerning customer.
With 7 retail locations across Tennessee and Georgia, The Cosmetic Market provides customers with aesthetic services by fully licensed professionals. Services include facials, peels, waxing and spray tanning. The Cosmetic Market carries over 250 prestigious and contemporary brands, including their own line of beauty products through their brand Therapy Systems.
Challenge: Competing against Big Box retail
In the luxury cosmetics industry, prices are set by manufacturers and wholesalers that traditionally left slim margins for retailers, preventing purchasing incentives for shoppers. In recent years as big box retailers like Target and Walmart have entered the industry, pricing on these products has become more competitive.
Big Box retailers have used their immense buying power to drive down prices and provide shoppers with incentives through loyalty and rewards programs.
The Cosmetic Market's leadership took notice of the changing environment and decided to give the Big Box retailers some competition.
"There's so much competition in the cosmetics industry right now. In the past, there used to be no discounting on cosmetics. We don't set the price, the wholesalers do. Through their rewards program, retailers like Nordstrom and Saks Fifth Avenue offered customers 1% or 2% cash back on all their purchases, including cosmetics, so we needed to be competitive with that in mind," says Lynn Osgood, Vice President of The Cosmetic Markets, Private Edition, and Therapy Systems.
Osgood and her team launched a loyalty and rewards program of their own, leveraging its own luxury brand -- Therapy Systems. They offered shoppers a punch card designed to save them money in exchange for exclusivity in their cosmetic purchases.
The program brought surprising results and soon The Cosmetic Market & Private Edition looked to expand on and enhance their marketing and reward system with a more automated and personalized method of communication that would allow them to build a true relationship with their shoppers.
"We created a bonus club card, in which customers would buy 12 items and they would earn an item free up to $68. It was just a card with stickers, and we had looked into doing something more professional. When we heard about AppCard's integration with Retail Pro, we realized that this was something we could use to make this kind of program easier for customers by automatically punching their card when they purchase Therapy Systems brand items," Osgood explained.
The Solution: Fully integrated rewards
"We had looked at other rewards programs, but it would have been a completely separate system because none of them integrated with Retail Pro's CRM, which we had been using for a number of years," said Osgood. "We were thrilled to hear that AppCard is fully integrated with Retail Pro, so we could simply add the customer's phone number to the Retail Pro CRM and they would automatically earn points for their purchases.'
The Cosmetic Market & Private Edition set up a program that allows customers to earn 1 point for every dollar that they spend. Customers that accrue 100 points are able to redeem them for a $3.00 reward.
This allowed The Cosmetic Market to control their margins and provide customers with a sense of choice, spending their $3.00 reward on the products and services that are most valuable to them individually.
Choice is akin to personalization.
"We decided to test the program at one of our most established stores, Private Edition, which has been around for 37 years. The test went really smoothly, and both cashiers and customers found the program very easy to use,' said Osgood. "Because customers didn't need to download an app, all they needed was to provide their phone number to participate, we quickly realized that customers were really happy to provide their number to participate and earn their points. We were excited to get the program up and running at our 6 The Cosmetic Market locations so we could compete with the likes of Sephora and Ulta.'
After a brief training with their AppCard Success Manager, cashiers were comfortable enrolling customers and redeeming rewards. "Really and truly, AppCard is simple enough that anyone can do it. Everybody I've talked to and worked with has been super nice and very responsive and supportive. The entire process working with AppCard has been extremely positive,' comments Osgood.
Bottom Line
After just 5 months, The Cosmetic Market and Private Edition have over 8,000 members enrolled across their 7 locations. 56% of transactions and 62% of sales are now attributed to loyalty members.
"I love to look at the reporting, and I can see enrollment trends at each individual location and even by each cashier. For example, if I see that one particular cashier hasn't enrolled many customers, I know that store managers can reach out to that cashier for more training. The program has been really well received by the customers and the cashiers. The program's simplicity is great for both sides,' comments Osgood.
ROI from Customer Behavior
A lot of businesses see loyalty and rewards programs as just discounting their products and services. In the past this belief might have been close to the truth.
Today advanced systems like AppCard use customer transaction data from Retail Pro POS to track individual customer transaction history and behavior. This allows the retailer to personalize promotional content to each customer with the right promotion at the right time and through their preferred communication channel.
Using this formula, The Cosmetic Market has been able to leverage their customer data to increase their average transaction size through rewards and promotions by 35%.
Customers that participate in the program on average redeemed rewards or promotions once every 83 days. During these transactions, customers spent an average of 35% more than they do during normal transactions.
Compounding the participation rate of 62%, The Cosmetic market is seeing 62% of its customers spending an additional 35% once each quarter of the fiscal year.
