Quentin Lebeau, CEO and co-founder, TokyWoky
Following the meteoric rise of brands like Glossier, “community” is no longer the new buzzword or niche brand strategy it once was. In 2021, both legacy and up-and-coming brands are increasingly turning to community, as loyalty and advocacy programs get a much-needed revamp. And with community-driven brands primed to win market-share, beauty brands increasingly see community as their next big growth channel.
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User-generated content capitalizes authenticity and emotional engagement
The pandemic and influencer-fatigue have accelerated the community-led model in the last 18 months. But even before 2020 that shift was already well on its way with two major trends: Authenticity and emotional engagement, both in high demand by consumers.
Communities generate more authentic interactions and advice, and user-generated content (UGC) is now 10 times more influential in the purchase decision than influencer or branded content. According to Carola Lundell, CMO at KICKS (the beauty leader in the Nordics), what consumers want most is “authentic interactions, inspiration and advice from both our brand experts and other beauty shoppers.” KICKS launched their Beauty Talks community earlier this year.
Many brands see community as the human, experiential and emotional element that their loyalty or advocacy programs lack. Brands get to reward their best customers beyond purchase and move away from the transactional nature of traditional loyalty programs. According to TokyWoky research, active community members have a retention rate that’s 4 times higher than regular customers and convert 4 to 6 times more.
The strategic switch to community-led brands is only just getting started, as industry giant L’Oréal invests heavily in social commerce and heritage brands quickly catch up. Lancôme and La Roche-Posay are good examples of brands becoming more community-centric with their recent community launches.
Traditional beauty forums are shifting to UGC- and co-created communities
As community-led approaches develop, the way communities are built is also evolving. Traditional beauty forums are making way for increasingly integrated communities. Communities today are creating UGC that is displayed on a brand’s website, they co-create products, post content on social media to drive acquisition and more. New tools and modern community platforms allow brands to measure a community’s business impact more effectively.
One brand that’s had great success with this new community-led model is Superdrug, a top beauty retailer in the UK.
“This was our first time bringing our community into our online shop. The ROI on key e-commerce targets and the customer insights being cascaded back into the business have been key to the success of this project,” said Hannah Neumann, head of customer relations at Superdrug.
The Superdrug beauty community, which was awarded Best Community Hub by Glossy in 2020, impacted three key metrics for the brand: Customer questions answered, UGC creation and online conversion and LTV uplift.
The Superdrug beauty community answers thousands of shopper questions every month. This not only helps shoppers convert, it also generates plenty of insights on in-demand products, frequent questions and consumer trends.
The community also shares makeup tutorials and skincare routines, generating hundreds of quality UGC instances every month and increasing conversion by 60% for those who interacted with the community.
Loyalty isn’t at the core of Superdrug’s community strategy, but active members convert 4 times more and spend more time on the website (time spent on site went up 30% for community members).
Adopting a test and learn strategy when building communities is crucial
Each community will have its own unique strategy, but great communities have a few best practices in common: A focus on ROI, a test and learn approach and strong community visibility.
Successful communities have a clear business goal. That goal can vary considerably between UGC creation, generating insights, helping customers and advocacy — as long as there is a clear way the community can generate measurable business results like ROI.
Adopting a test-and-learn mindset and having the resources to iterate in the first few months is key as community-building is tricky to get right — it can take six months to a year to reach a community’s cruising speed.
Once a brand has found the type of contribution their community can create at scale, they share these contributions for maximum impact. For example, Monki, H&M’s Gen Z brand, lets customers play with its product catalogue and create outfits. The most popular looks are added on product pages and drive significant increase in online revenue.
According to a16z, community-led companies have several advantages over their competitors — better engagement, retention and defensibility. With more brands turning to a community-led approach, the ones to watch are those who make it their new growth channel.