4 Lessons CPG Brands Can Learn From L’Oreal’s New Loyalty Program

Customer loyalty has long been a challenge for consumer packaged goods (CPG) brands. Often at the mercy of retailers to incentivize customers to purchase, CPG marketers sometimes struggle to implement effective, data-backed strategies that entice customers to keep buying their products when surrounded by a glut of other options on the store shelf.

That’s why leading CPG brands are experimenting with new ways to encourage customer loyalty. For example, L’Oreal recently announced the launch of its largest loyalty program yet: “Worth It Rewards.”

L’Oreal’s program runs into the familiar hurdles every CPG brand faces when developing a loyalty program, but it also offers a host of unique rewards for members. For CPG brands looking for creative ways to generate customer loyalty, there are a few lessons they can learn from L’Oreal’s new program.

Engage Shoppers on an Emotional Level

Consumers prefer to shop with brands that care about more than just the bottom line — in fact, 84 percent report they actively seek out socially responsible brands. L’Oreal’s “Women of Worth” program addresses the desire for corporate social responsibility, while also allowing shoppers to engage with the specific causes they care about most. And while not every customer will interact with the loyalty program, even infrequent L’Oreal shoppers are more likely to buy from a brand that makes an effort toward social change.

Offer Flexible Rewards

L’Oreal’s program allows users to redeem points in multiple ways, with prizes like gift cards, magazine subscriptions and beauty consultations. This is a smart move since experiences often stick with customers longer than free products. The program rewards shoppers with five points per dollar spent, giving the brand greater flexibility with its offerings than would a purely discount-focused approach. This engages customers with L’Oreal by giving them control over what they want and providing a more personalized experience. Additionally, L’Oreal offers rewards to customers that interact with the online community — a solid way to create more personal relationships with shoppers beyond the transaction.

Create Opportunities to Collect Customer Data

CPG brands are often left in the dark about customers’ specific preferences and behaviors once they hand over their products to retailers. Direct data supplied by retailers is often limited, and varies widely. Some retailers provide data to CPG brands only monthly, quarterly or not at all, and others might charge for access.

L’Oreal’s loyalty program provides data by nature. Members must upload receipts from retailers to earn points, giving the brand a more accurate picture of which customers tend to buy which products. By collecting this data, L’Oreal can glean better insights into its customer base to improve product offerings and marketing strategies.

Prioritize Simplicity and Reduce Friction

Even the most loyal customers are less likely to engage with a loyalty program if they have to jump through hoops to do so. While L’Oreal’s program is simple enough, it requires that customers upload receipts after purchases — a common issue with CPG loyalty programs that tends to turn shoppers off. Additionally, customers can only redeem purchases from participating retailers, which may alienate shoppers who are already loyal to other retailers.

When designing your own loyalty program, strive to eliminate friction for customers earning and redeeming points, and avoid unnecessary complexities.

Cultivating customer loyalty isn’t always easy, especially for CPG brands that are typically sold through a third-party retailer. And in a crowded marketplace, the stakes for retaining customers are higher than ever. CPG and manufacturer brands are wise to look to L’Oreal’s loyalty program as a model for crafting a strategy that will keep their brand on the shelf and in the hands of customers.

Pamela Sullins is the vice president of retail client services at Kobie Marketing, a company that specializes in customer reward programs and loyalty marketing solutions.