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More informationby our Co-CEO Jutta dos Santos Miquelino
“The future is faster than you think. It's not about whether you need to change, it's about how fast you can do it.“- this quote from author Peter Diamandis, whom Forbes Magazine named one of the 'Top 50 Leaders of the World', describes how sustainable change is happening at a breathtaking pace; what was previously thought impossible is becoming the new reality. Technology continues to change our world much faster and more extensively than we can currently imagine. Many of us today have access to resources that were only available to a few people decades ago. Fast computing capacity has become affordable through increasingly powerful computers, access to capital is facilitated through crowdfunding, digital processes and high connectivity save time, and platforms enable people and companies to communicate concretely and directly about ideas and products thus exert influence on audiences of millions in a matter of seconds.
What do these revolutionary changes mean for companies? Are they on the right track? What measures are most urgent? What changes result from unprecedented needs of target groups, also as a consequence of the pandemic? These are the questions that innovation consultants ... and dos Santos investigated on behalf of a luxury cosmetics manufacturer. They came up with exciting findings that might prove useful for many other companies in the beauty industry. Here, we focus on three key areas: Customer Centricity, Transparency and Data Driven Experience.
One thing is clear: awareness of our own needs has increased greatly. The more options we have, the more we need to focus on what really matters to us. And the more threats we fear, such as unstoppable climate change or the loss of our health to invisible but deadly viruses, the more we need to look inward to find what reassures us and connects us with others. How can companies respond to this trend? By reflecting on their core values, communicating them clearly and investing in a direct connection to their target group. To do this, it's worth reflecting on what you've already placed value in previous years. When we talk to our customers in a consulting capacity, they often say, "We are actually already much more sustainable in the manufacture of our products than our customers realize." Or "We only have skilled workers in our production and no temporary workers, because quality is our top priority." These are commendable statements. Why are they not communicated?
In any case, consumers expect a clear stance - particularly on socially relevant issues such as climate or inclusion. Embodying values with determination means standing up for life. Companies that exploit people, animals or the planet are increasingly being publicly punished. One example of this is the fast fashion chain Forever 21, which had to deal with fierce protests from Peta activists in 2020. The issue was company‘s mistreatment of sheep for the production of wool sweaters.
But there is another way: for example, designer Stella McCartney proves that luxury products can be produced considerately, and more and more consumers are getting excited about this. Global corporations are also launching initiatives worth billions of euros to work for the future of our planet. Microsoft, for example, is aiming to be CO2-negative by 2030 and to revise its previous CO2 emissions since its foundation by 2050. To this end, the technology company invested one billion US dollars in a climate innovation fund. And Amazon founder Jeff Bezos has invested ten billion US dollars in the creation of his Earth Fund to promote developments that can slow down climate change.
Of course, not all companies have the same financial resources as the big players. So what options are left for beauty companies that aren’t able to invest billions? They should reflect on what has already been set in motion, align themselves with the UN 2030 goals and build initiatives. In doing so, it‘s important to strive for maximum transparency in communication. For example, La Mer provides information on which projects have been supported by the Blue Heart Fund, which is dedicated to protecting marine habitats, since2010. Ambassadors such as French environmental activist Philippe Cousteau ensure credibility. Furthermore, the company clearly communicates that animal ingredients such as mussels and crabs cannot be excluded if the formula contains marine silt extract.
This transparent statement is important, because initiatives must be truthful. Young target groups in particular want exact information and often research very carefully before buying. When companies engage in greenwashing, they are increasingly punished by consumers, and even their own employees feel uncomfortable. This may not yet be reflected incurrent sales figures, but the growing awareness of climate protection is increasingly influencing consumer behavior.
Companies can score points not only with regard to transparent communication of their environmental initiatives, but also clear communication about ingredients which is of utmost importance to consumers - not least because, according to PMG Presse-Monitor, health has become the dominant topic among young and old since 2020. This is where companies should respond, as consumers want less 'ingredient jargon'. Up-and-coming brands in the U.S. such as TheBeautyCounter, for example, are advertising their 'Never List,' ingredients they completely ban from their cosmetics. Lancôme has responded to the desire for clarity with a series of videos explaining the ingredients in its Advanced Génifique serum, discussing the importance of probiotics and encouraging consumers not to mindlessly use products without knowing what's in them. To keep track of the raw material supply chain, technologies like blockchain can help ensure a secure footprint.
Brands that play their cards close to their chest will certainly not be preferred in the future. Paula's Choice is considered a pioneer when it comes to ingredient transparency and explains in detail what selection standards it applies. The brand is showing steady growth - a limited edition peel with alpha- and beta hydroxy acids sold out in a very short time and had a waiting list of 11,000 people at Sephora.
We can also look at examples on the topic of data-driven experiences. Let's stay with Sephora for a moment: online sales reached an all-time high in 2020 and are about to overtake Amazon's sales in the beauty sector in the USA Sephora's loyalty program, with 25 million members, is built on a world-class CRM system and is particularly targeted at millennials interested in luxury items. The partnership with Zalando is another smart move to become even more successful in Europe and target customer loyalty.
A native of Oldenburg is another example of data-driven experiences who shows how rapidly niche brands can establish themselves. Influencer Jeremy Fragrance reached over 4.5 million followers on social media, holds the title of 'Best Fragrance Influencer of the World' and entertains his followers with unvarnished statements about fragrances as well as nutrition and motivation. Together with his brother, he runs Fragrance One and achieves eight-figure sales with six fragrances that are only available online. The clincher? Jeremy relies on the 'power of the crowd' to recommend his fragrances. The names of the creations also correspond to Google search queries. People search there for fragrances for the office or the first date, for example. Jeremy promises his customers that the fragrance for that occasion will bring them the most compliments. So while others spend a lot of money developing concepts and product names, the two brothers simply ask the world's biggest search engine what is in demand.
Let's move on to a final important point: If you are a company operating in a global environment, you already have your sights firmly set on Asia. If you want to win over the target group of affluent millennials there, you have to understand Asian cultures and address them specifically. Almost nine out of ten millennials already live in emerging markets. Chinese millennials alone exceed the total population of the USA and they will permanently change our Western society with their motivations, preferences and choices.
"The center of gravity of the world is no longer the Atlantic, but the Indo-Pacific," says former Foreign Minister Sigmar Gabriel. Those who want to win on this terrain should ideally bring the relevant expertise directly into the company, because in Asia, data-driven experiences have long since reached a completely different dimension.
PerfectCorp, the world's leading augmented reality company, has integrated its 'YouCamMakeup AR' virtual try-on technology into online shopping experiences with Alibaba Group. Just six months after launching the AR technology, Alibaba announced that it had increased conversion rates by four times. Innovative technologies improve the product and shopping experience for customers "In the next three years, innovative technology will be the key to more sales. Especially in the beauty industry, technology will bring the biggest change for younger generations to buy products!" said Mike Hu, head of Chinese B2C platform Tmall Beauty from the Alibaba universe.
Many companies are already experimenting with personalized cosmetics with the help of AI: L'Oréal, Olay, Clinique as well as niche brands such as Proven Skincare. Insights into consumer preferences and customer relationship nurturing through data are more important than quick profits because people today rely heavily on data and science to make decisions. For them, it's much easier and cheaper to fill out a survey questionnaire than to visit a dermatologist.
Companies therefore need to adjust their thinking and transform their sales analytics tools into design analytics tools. Only then can they understand what consumers expect from and value in their products. McKinsey also recommends, "Invest in analytics and the power of consumer data-driven sales now, or the cost will be too high."
So what specific actions do companies need to take to avoid missing the boat? As mentioned at the beginning, the future is moving so fast that the only answer is to be prepared for constant change - and to focus on the essentials. It is crucial to deal with the future now.
Brands need to consider: Where do we want to go? What relevance do we as a company want to have in the lives of our consumers in ten years' time? And how can we succeed in transforming ourselves into a better future? It‘s important to answer these crucial questions concretely and individually.
Links for further reading Bloody 'Sheep' Protest Forever 21Microsoft will be carbon negative by 2030Jeff Bezos will spend $1 billion a year to fight climate changePMG Themenrennen – Diese Themen bewegen DeutschlandNearly 100% of consumers call for an end to beauty ingredient jargonThe Never List8 Beauty eCommerce Trends That Will Define the Industry In 2021
Literature tip
Peter H. Diamandis: The Future Is Faster Than You Think: How Converging Technologies are Transforming Business, Industries, and Our Lives. Simon & Schuster; 1. Edition (28. Januar 2020).
Photo Prostock-studio-stock.adobe.com
Publication Markenartikel Das Magazin für Markenführung, Ausgabe 09/2021
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