Dramatic cat eyes and red lips may not be an everyday look for most beauty product consumers who often rotate cosmetics and shades by season, event and even mood. But skin care is part of the typical woman’s daily regimen. So, when the digital team at beauty brand e.l.f. Cosmetics Inc. was prioritizing items on its wishlist for improving site personalization, it made sense to start there.
“Our thought was skin care is a very personal category, and you really don’t change it up much,” says Ekta Chopra, vice president of digital at the 16-year-old company. “Plus, we were seeing a lot of growth in that segment, so the question became, ‘How do we use this as a lever to connect with our consumers and create longer-term relationships with them?’ That can only come once you know more about each individual person.”
Enter the skin care finder tool.
In April, e.l.f. launched a quiz on its ecommerce site to guide shoppers to the products that best fit their needs. A message on the landing page encourages visitors to help the brand match them with the right items: “Find your skin care: We want to help you discover what works for you and your skin! Answer the questions below, and we’ll recommend product with your top concerns in mind.”
Visitors are asked a series of questions for the site to determine their age range; preferred look (natural, trendy, full face, pro or don’t wear makeup); product needs (cleanser, moisturizer, treatment, mask or full routine); skin type (normal, oily, dry or combination); and skin concern (acne, aging skin, dull and uneven skin tone, dry skin, large pores or redness and inflammation). After a consumer enters all five answers and hits the “get my results” button, she is taken to a page that reads, “Your simple regimen: Based on your answers, here’s what we recommend” with thumbnails of products tailored to her requirements along with prices and an “add all to bag” button.
The brand has been stunned by the “crazy success” of the feature, Chopra says. Traffic and time spent on ElfCosmetics.com have had a “huge” spike, and consumers are engaging more with product recommendations. More importantly, site visitors who complete quizzes like the skin care finder have a conversion rate that’s 120% higher than overall users, Chopra says. The boost in revenue is particularly promising because skin care has a high replenishment rate, meaning once shoppers find items that are effective for their complexion and products become part of their beauty routine, they’re likely to reorder.
E.l.f., which sells cruelty-free vegan cosmetics, had previously offered shoppers a quiz, but Chopra says it wasn’t effective. Users were dropping out of the tool halfway through or completing the quiz but not purchasing the recommended products. Questions weren’t framed properly, and recommendations were a more manual process done through tagging, leading to what Chopra deemed “less-than-solid” matches. But once e.l.f. made the move to a product recommendation platform and relaunched the feature with Dynamic Yield, a personalization technology provider, it became a powerful selling tactic.
Given how the skin care finder performed, the retailer aims to launch two additional quizzes before the holidays: one in the primer category and another for makeup tools because consumers often need help understanding the differences among brushes so they can find the right one for contouring or other specific use cases.
Health and beauty retailers are turning to interactive product-match tools like e.l.f.’s quiz in greater numbers than merchants selling other items online. 17.6% of health and beauty retailers ranked in the 2020 Digital Commerce 360 Top 1000 offer a similar feature—the highest share of any tracked merchandise category.
It’s no surprise. The beauty industry often has been at the forefront of personalization. Retailers have invested heavily in creative initiatives to help pair shoppers with the perfect pout or eyeshadow palette through a number of channels, such as product recommendations via the homepage, product detail pages, email, mobile apps, virtual/augmented reality and other spaces. Typically, retailers have implemented personalization behind the scenes, using browse, search and purchase history—among other contextual clues—to covertly gather information about site visitors without them noticing. But some retailers like e.l.f. have challenged those assumptions, opting instead to just outright ask shoppers for personal data instead of solely relying on algorithms guessing areas of interest.
“Data is the currency that drives the digital ecosystem. Full stop,” Chopra says. “Consumer insights help you holistically look at your consumer’s experience and how you’re serving them. What are their likes and dislikes? What are they clicking on? What are they not clicking on? What are they buying? What are they not buying? Where are they dropping off? How do you take action against that?”
Yet, gleaning that information isn’t always easy. The digital team at e.l.f., which is ranked No. 936 in the Top 1000, is methodical about comprehensively harnessing data, and that helps inform the brand’s strategy on how to go after consumers, Chopra says. But data analytics can be tough for a number of reasons. With governance around APIs and new laws on data collection that retailers have to adhere to, access to data has been more restricted lately, she adds.
Posing direct questions to shoppers—a technique that has been “very successful” for e.l.f. and others like apparel subscription retailer Stitch Fix Inc. (No. 40)—is a savvy way for merchants to steer clear of violating privacy laws, says Sucharita Kodali, vice president and principal analyst at Forrester Research Inc. Plus, consumers much prefer explicit personalization over the “creepy” behind-the-scenes method of data collection, she adds.
Yet over and above the benefits of being transparent with shoppers, e.l.f. needs explicit personalization to tap into the buying patterns of part of its customer base. With more than half of the company’s total revenue coming from e.l.f. products sold through Walmart Inc. (No. 3) and Target Corp. (No. 12) both in stores and online, it’s hard for the brand to get a complete picture of its omnichannel shoppers. Retail chains typically don’t share customer data with their wholesalers and suppliers, Chopra says, and the brand wanted a window into its shoppers’ other buying habits outside of the e.l.f. ecommerce site and app.
After e.l.f. launched a new loyalty program in August 2019, the receipt-scanning capability has steadily become a “game changer” on the retailer’s personalization roadmap, Chopra says. Members of the free e.l.f. Beauty Squad loyalty program can scan or upload photos of their in-store or online receipts from other stores on ElfCosmetics.com or in the app to log their purchases of e.l.f. products. Shoppers earn reward points that can be redeemed for dollars off of future purchases. And e.l.f. learns valuable information about its consumers, helping the brand build customized profiles and better curate product suggestions.
The more transparent ask is paying off. Since actively marketing the receipt scanner in April, the number of consumers using the feature has grown by triple digits—an indication that people are willing to share their personal data when given an incentive, Chopra says. The receipt scanner—coupled with other campaigns to encourage shoppers to sign up or sign in when they visit e.l.f.’s site—has ballooned the number of “identified users,” or site visitors who the brand recognizes and has some data on, by 187%.
With that added transactional data, Chopra says her ultimate vision is for e.l.f. to make nuanced distinctions among the different customer personas for Ekta, Jane and Derek, for example—each of whom have different journeys. Chopra expects ElfCosmetics.com to know that a shopper also regularly shops at Ulta Beauty (No. 69), only likes liquid foundation, favors brown lipstick hues and gravitates toward advanced beauty tools for her experimental phases.
“Once I go to the e.l.f. website, instead of just detecting that I’m in New York and welcoming me back, all of a sudden, the assortment and content I see on the homepage is very individualized to me,” Chopra says. “And the messaging is specific, too: ‘Hey, you bought your skin care nine months ago. Is it running out? Buy today, and you’ll get X.’ ‘Tell us—has your skin changed over time? If your skin has gone from oily to dry, here’s what you should try.’ That’s when things come into focus.”
The difficult part is keeping up with what Chopra calls the “content supply chain,” which encompasses actual products, images, how-to instructions, messaging and more. Content can be more generic when retailers are personalizing at a larger 18-32 segment level. But once merchants evolve to more one-on-one personalization that requires unique responses to site behavior, then the content production needs increase by five times, Chopra says.
The image and description on a product detail page or a search results page will change based on what a shopper says her needs are. For example, a consumer who says her skin has gone from oily to dry should see how the product should be used with dry skin while a shopper whose skin is oily would see different product details and instructions. All of these content permutations for one single product to target different consumers has kept e.l.f.’s creative team very busy.
While Chopra declines to give specifics about the cost of recent investments, she says the brand has more than recouped the money it spent on various personalization strategies in the seven months since migrating to the Dynamic Yield platform. She attributes much of that success to improved A/B testing, which previously was a weakness for e.l.f. Overall, personalized recommendations also drove an 8.5 return on investment in that period, according to e.l.f., meaning the tactics led to direct revenue gains that were more than eight times greater than expenses related to the personalization platform. Smaller behind-the-scenes tweaks have made gains too, she says.
Given the limited real estate on mobile screens, e.l.f. also personalized its mobile navigation menu based on each shopper’s browsing history to allow mobile visitors to get to likely areas of interest more quickly.
The retailer shows generic categories like skin care to new visitors while returning visitors are shown subcategories of the category in which they have previously expressed interest. If a consumer browsed the skin care category during a prior visit, the top-level menu bar options include cleanser, face masks and treatments. Conversely, a shopper whose browsing landed her in the “face” audience segment sees concealer, blush and foundation in the menu. With the navigation optimizations, e.l.f.’s mobile menu clicks increased 17.6%, according to Dynamic Yield.
Enhanced product recommendations on PDPs also improved sales: The beauty brand’s personalization initiatives resulted in a 4.2% uptick in revenue per user. But e.l.f. is far from done retooling its personalization tactics.
Chopra also wants to enhance the brand’s interactive quizzes by adding a live camera to its app-based augmented reality experience that could take facial measurements and spot problem areas. With the camera, the brand could give the consumer a virtual evaluation and alert her if e.l.f. spots problem areas, such as dark circles or redness, and recommend products to help treat those issues. The brand currently is exploring options with its augmented reality provider, Perfect Corp.
“We’re only scratching the surface,” Chopra says. “Personalization is no longer a nice-to-have—it’s a must-have. The only way to drive your business is by unlocking these insights.”
Kodali and other experts say personalization will become even more important for beauty retailers in the age of COVID-19 because in-store, high-touch samples and testers will become a thing of the past, and consumers will need to find the right products in other ways. Chopra anticipates augmented reality will be a big focus for beauty retailers in the next year because of that and will likely fuel digital growth.
The brand launched its virtual makeup try-on tool in its app in April within two weeks of the pandemic picking up steam in the United States, and app downloads increased by triple digits without any marketing while the try-on feature received “millions” of views. Shoppers who used the virtual try-on tool converted at a rate that was 70% higher than those who didn’t, Chopra says.
During the pandemic, the brand has “fared extremely well” online and in stores, beating out competitors in the industry, which has seen uneven results lately, Chopra says.
E.l.f. grew net sales by 8% year over year in its fiscal first quarter, which ended June 30, with the jump “primarily driven by strength in digital.” However, the gains were partially offset by the store closures of retail partners during the pandemic, according to the brand’s earnings press release. In the fiscal year ended March 31, e.l.f. hit $282.9 million in total net sales, with direct-to-consumer ecommerce sales accounting for 8%, or roughly $22.6 million. When figuring in e.l.f. product sales on Amazon.com Inc. and the ecommerce sites of retail partners, the digital channel represented about 11%, or $31.1 million, of the company’s total sales. In the prior year, e.l.f. didn’t break out ecommerce sales with the same specificity.
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