August 2, 2022
How a CDXP can help beauty brands drive replenishment purchases and grow customer lifetime value
In this playbook, we’ll show you how beauty brands use Lexer’s Customer Data and Experience Platform (CDXP) to predict customers' next purchase and push the right messaging at exactly the right time.
The future is hard to predict, particularly when it comes to customer behavior.
Replenishment can generate substantial revenue growth for retailers whose products are consumable and often become a staple of a customers’ routine.
Beauty and skincare brands typically benefit the most from replenishment purchases, however, this strategy of driving returning purchases can be applied to nearly any retailer. By determining when your customers will return to your brand for additional transactions you can connect the right message to your customers at exactly the right time.
Predicting your customers' next purchase is possible with Lexer’s Customer Data and Experience Platform (CDXP). Lexer provides retailers with the tools to use customer purchasing behaviors to create an effective replenishment strategy. In this step-by-step guide we’ll show you how to use the Lexer platform to predict your customers’ replenishment needs and create personalized messaging that speaks directly to those needs, ensuring they make that next purchase.
Are your products consumable?
When promoting replenishment and making next purchase predictions, it is important that you pick the right product. Not all products will be a good fit for a replenishment campaign—there are a select group of products and behaviors that will generate the best results, and that’s where you need to start.
For example, it doesn’t make a ton of sense for a denim retailer to launch a replenishment campaign for a best selling pair of pants if the repurchase frequency is low. On top of that, even if customers were buying the same pair of pants more than once, it’s likely there’s a long period of time between purchases, making predictions hard to nail down. On the other hand, the repeat purchases of consumable products such as make-up, skincare, wellness, and pet products can be far easier to predict, promote, and convert.
For retailers, being able to predict precisely when customers are ready for an additional purchase can improve marketing strategies and generate revenue. If you can figure out when your customers are ready to buy again, you can trigger relevant messaging exactly when your customers are in need.
Additionally, knowing when an influx of purchases is going to occur can work to strengthen your supply strategy. If you preemptively know when a majority of your customers’ will replenish, you can ensure your product is readily available so that your customers don’t have to wait to receive their next order or deal with an ‘out of stock’ message.
How to predict the next purchase
Step 1: Identify your top products
Your first step in predicting and driving replenishment is to identify the products that outperform all others in volume and frequency.
Using Lexer’s CDXP, you can analyze historical purchase data to identify which products are the most popular. You can also use Lexer to pinpoint specific product lines, sizes, colors, and other attributes to take a granular approach to identifying your high-performing products and launching your marketing campaigns.
Step 2: Determine patterns of behavior
There is no guarantee that your top-performing product will fit with an effective campaign. To identify the products that need replenishment you have to first determine if there are any patterns of replenishment behavior amongst your customers.
Replenishment behavior is defined as repeat purchases of the same product or the same category of products. For example, if you identify 16 oz. bottles of SPF 40 sunscreen as your top performing product, you must also identify how often the same customers purchase that product again, and how long it took them to make the second purchase. As mentioned above, not all products will fit into a worthwhile replenishment campaign, so identifying the right product and behavioral pattern is essential.
Step 3: Analyze time to return to purchase
Once you’ve found the products that qualify for replenishment you need to analyze precisely when previous buyers returned to make that second purchase.
Focus on the customers who have already replenished, and organize them based on the time it took them to purchase again. With these customers divided into separate time windows, analyze which day-range has the greatest volume of customers. The time-period with the greatest number of customers is likely to be your ideal time-window for replenishment.
For example, if you find that a majority of your customers make a replenishment purchase of 8 oz. bottles of moisturizing face cream within a range of 60-90 days, you can predict that your customers will likely replenish within that 60-90 day range, and the right time to send the replenishment reminder is on day 60.
Sometimes seasonality can affect customer behavior, so it is important to take time of year into account. For instance, if your customers made replenishment purchases for 8 oz. sunscreen in 30 days over the summer season, it’s unlikely that they’ll replenish again with that same frequency during the winter months.
Take into account how frequently a product will be used as well. Some products, like face cleansers are going to be used every day signaling a shorter replenishment time window. Alternatively, the amount of use of a blush or lipstick might be far lower by comparison. Picking the right time range will make or break your replenishment campaign, as you’ll want your messaging to be relevant and engage at precisely the right time.
Step 4: Connect with your customers at the right time with the right message
Once you’ve identified the time it takes for customers to replenish, create sequenced messaging based off the customers’ first purchase. This messaging should be both personalized and relevant, directly targeting your customers’ need to replenish their supply of the product.
Use your repeat purchase time window as an indicator for your marketing campaigns. With attributes created in Lexer’s CDXP, you can trigger your audiences automatically, pushing relevant messaging the moment a customer has moved into your designated time window. Lexer’s Smart Search allows for even greater segmentation granularity, driving increased personalization and better targeting at each customer touchpoint, resulting in delivering the right message at precisely the right time.
Maximizing the ROI of your replenishment campaigns
So, you’ve established a replenishment campaign strategy and now it’s time to create an engaging experience for your customers. There are many strategies you can deploy to make the most of your campaign and maximize your ROI.
When developing your messaging sequence, capitalize on the opportunity to either retarget for additional purchases or upsell to a larger-sized product. This strategy helps you account for shifting customer needs, and can improve your experiences by providing a different product that may have a different replenishment window.
For example, if you’re in the early stages of a replenishment campaign for 8 oz. bottles of exfoliating face wash provide an option for your customers to either re-purchase their previous product or upgrade to a larger 16 oz. bottle instead.
If your customers have yet to convert beyond the replenishment window, don’t worry, there are always going to be outliers. While you shouldn’t allocate all your attention to these atypical customers, you can still spend the time to reach out to them and ask them how they liked their first product. This feedback may not win their business back, but it can inform how you interact with other customers in the future. With this feedback form, suggest alternative products within your collection that align with their initial purchase. And if all else fails, retarket these atypical customers with your winback triggers. Your dedicated customers are always going to provide you with far greater value than those who feel lukewarm about your product and your brand.
Know your customer. Grow your business.
With Lexer’s CDXP, you can get a deep understanding of who your customers are so that you can create engaging experiences that grow your business. Lexer is the CDXP of choice for over 150 leading brands including Zimmerman, Kathmandu, Supergoop!, Sur La Table, Hairhouse and The Iconic. We transform disconnected data into actionable insights, and provide the workflow tools to automate and optimize the customer experiences that drive sales.