by Maggie Yu & Davy Huang
[This is an authorized translation with original Chinese copy released by Tencent’s 2021 Smart Retail Growth Guideline whitepaper]
As one of the early adopters of private domain operation, Lancôme is leading the WeChat Ecosystem development in the beauty industry and generating significant revenue. During this year's annual 618 shopping festival in June in China, the GMV of Lancôme’s WeChat Mini-Program Mall grew 97% year-over-year, and the livestreaming transaction of WeChat Channel exceeded 10 million RMB (more than $1.5 million US). The success of Lancôme shed light on a new path of growth for beauty brands, which is highly valuable for those who are also developing their own version of private domain operation.
In China's unique Internet environment, Lancôme has always been facing challenges from both internal and external pressures. Internally, they need to rapidly respond to market changes and make effective localization decisions. Externally, under the impact of emerging new brands, Lancôme is facing challenges to retain, nurture and convert loyal customers.
International brands are doubling down on the Chinese market, but many are encountering trouble to keep up with the rapid pace of competition, or more often cannot truly localize their offerings to align with the Chinese market. Lancôme entered China in 1993 and has since evolved into a market leader for more than 20 years. Let’s explore Lancôme’s success from and learn how the beauty brand is deploying private domain operations to achieve rapid growth.
Lancôme takes the lead in deploying WeChat private domain in the industry
In reviewing Lancôme’s success, we see the brand has adapted well to the Chinese market and rapidly responded to environmental changes, while gaining deep insights and vision of the entire business environment in China. Take the WeChat Mini-Program as an example. WeChat is an incredibly popular social media platform in China. In March 2018, WeChat launched the Mini-Program advertising component for internal testing. Brands can place advertisements for the Mini-Program landing page in the Public Account articles, bottom and WeChat Moments, and users can directly access the Mini-Program with one click. Shortly after the function was internally tested and launched, Lancôme officially launched its Mini-Program Mall.
The rapid implementation and landing of Lancôme Mini-Program Mall benefits from the group's attention to WeChat private domain ecology and long-term prospects. Lancôme has set up a Chief Digital & Marketing Officer (CDMO) team directly led by the Group, which is specifically responsible for tracking the dynamics of various aspects of China tech giant Tencent's ecology. The team also ensures timely follow-up on Tencent's latest products, tools, services, and other capabilities, and combines with the group's development strategy, output executable solutions or guidance suggestions to its brands and business departments. To promote the establishment of cooperative and co-creative relationships between Tencent Smart Retail and various brands, the team vigorously promotes the layout and investment of each brand in the private domain. At the same time, to better coordinate the group's resource allocation and cross-brand collaboration, the group will also organize Top to Top talks among senior management to promote the construction of private domains from top to bottom.
With the attention of the group, Lancôme was urged to start preparing for the layout in 2017, becoming the earliest entrant in the beauty industry. Concurrently, under the overall planning of the group, Lancôme has innate advantages in private domain cognition, marketing strategy and other aspects. In less than a year, Lancôme’s transaction value in WeChat Ecosystem in 2018 broke the ￥100 million RMB mark (nearly $16 million US).
Consistent WeChat Moment ads campaign drives traffic to private domain
During the early phase of private domain launching, WeChat Moment Advertisement is Lancôme's main tool of customer acquisition. At the beginning, Lancôme mainly drove customers to its official account to retain customer traffic, but now the brand uses ad campaigns more intensively to attract traffic to the mini-program mall.
By integrating massive data from multi-channel promotion, "Tencent Youshu" helps Lancôme gain comprehensive insights into a customer’s age, city, relationship status, marital status, interests and preferences. It also analyzed the behavior of customers along the whole chain of decision making from browsing, purchasing to ordering. The resulting portrait of customer segments: they are mainly women aged 29-44, wealthy, insensitive to promotional mechanisms, and more loyal to brands, more willing to try new products and share experiences spontaneously with their social networks.
Lancôme also leverages the big data capability of "Tencent Youshu" to create "high conversion, high potential and high value" audience segments, and conducts retargeting campaigns to reach these “3H” segments. In addition, Lancôme further evaluates the marketing return by reviewing the data funnel of "advertising – native landing page - mini-program purchase", and uses the data to coordinate and optimize private domain & mini-program operations, and continuously improve purchase conversion rate.
Based on the understanding of customer portraits and their behavioral preferences in WeChat, Lancôme made adjustments to the advertising assets for WeChat Moment. For example, Lancôme has reduced discount-driven advertisements because consumers are insensitive to discount campaigns. During last year’s Double 11 (Single’s Day, the biggest retail event in the world), Lancôme promoted 9 products, with 4 top sellers and 5 gift sets, which were a comprehensive portfolio to cover diverse customer demands.
Lancôme has been taking the lead in using innovative interactive style of WeChat Moment ads. For example, gamified ads with user interaction design, such as drawing and twist card ads are very simple and creative forms of interactive ads. These campaigns greatly enhances the customer experience and interest, and shortens the distance between Lancôme and customers. It also stimulated social communication, leading to higher brand exposure and more private domain user accumulation.
Private domain strategy upgrade, mini-program mall differentiated operation
Under the influence of the epidemic in 2020, the private domain economy was booming, attracting more and more merchants to adopt this trend. 2020 is also called the era of the private domain. New merchants often face questions about how to use WeChat Ecosystem products to build their own private domain. But the challenges for Lancôme are much more complex. Lancôme already established a sizeable private domain customer base and how to effectively drive sales growth became the key goal at this stage. For this reason, Lancôme has strategically upgraded the position of its mini program by turning it into a comprehensive digital marketing hub with e-commerce functionalities, and deepening the operation of its WeChat community and livestreaming campaigns.
Unlike traditional e-commerce platforms, Lancôme mini-program features include:
1) Dedicated assortment: With the insight that consumers are not sensitive to discount mechanisms and are more willing to try new products, Lancôme decided to prioritize new products and co-branded product releases in the mini-program, or launching mini-program exclusive products in WeChat. This is a smart and accurate move for Lancôme to retain the brand’s most loyal customers on WeChat, and reinforce their sense of belonging and recognition.
2) Differentiated service offers: Thanks to the effectiveness of reaching and managing tens of thousands of customers in its private domain, Lancôme has developed a product sample center that’s only available via the official Lancôme WeChat mini program – and the brand’s loyal customers can only acquire Lancôme samples via the mini-program. According to the annual data of 2020, Lancôme sent out 400,000 samples, among which the repurchase rate of trial users reached 10% and the repurchase revenue reached more than 10 million yuan (more than $1.5 million US), which is a remarkable result.
WeChat Work Group refined operations
For high-end beauty brands, community building is beneficial for long-term consumer education, loyalty building, and conversion optimization. Lancôme migrated the CRM system and management methods to the management of WeChat community. There are five different types of WeChat communities being established: Black Card, Gold Card, Rose Gold Card, Silver Card, Ordinary Card and Potential Customer. Apart from providing new product recommendations, beauty advice, skincare science, product consultation, Q&A, and other content for daily interactions, Lancôme also provides differentiated treatment, marketing campaigns and points-burning privileges based on the membership level.
Brand-owned Livestreaming has a significant effect on sales
Livestreaming has become a routine marketing effort for Lancôme in WeChat. Under the advice of the Tencent Smart Retail team, Lancôme established a livestreaming operation program which consist of 3-4 livestreaming campaigns per week, with each livestream lasting no less than 3 hours (no less than 6 hours in the case of major shopping festivals). Between March and May 2021, the revenue from the Lancôme mini-program livestreaming campaign rose rapidly, accounting for 60-70% of the total monthly gross merchandise value (GMV).
It is worth mentioning that during this year's 618 promotion period Lancôme also adopted mini-program + WeChat Channel dual-platform livestreaming. At the same time, leveraging the WeChat Work group to warm up the community and limited-edition Hello Kitty co-branded powder water to attract attention, Lancôme mini-program official store GMV increased 97% year-over-year. WeChat Channel livestreaming transaction exceeded 10 million RMB (more than $1.5 million US), selling over 15,000 bottles of Hello Kitty co-branded hydrating and soothing toner.
With the increasing cost of online traffic acquisition in China, brands are acting fast to make changes. Lancôme, as a successful showcase, has established its own version of a private domain where the brand can reach a large number of customers repeatedly for free. The brand is driving the growth of WeChat Ecosystem sales by combining a refined community operation and high-quality brand-owned livestreaming campaigns. Lancôme’s success also provides a very inspiring reference and business model for all brands who want to do business in the WeChat Ecosystem.