Customization in the Beauty Industry: A Shift towards a Customer-Centric Experience

Susanna
Susanna
Aug 28, 2017 · 8 min read

Ever since I’ve worked as a consultant in Europe, traveling has been one of the most exhilarating yet annoying experiences in my career. The latter is mostly because I used to be a horrible packer (though I have improved of late!). Figuring out what toiletries and make up I could fit into my bag without bringing my entire arsenal with me was my biggest annoyance.

Specifically, I found myself debating every time whether or not to bring my beloved Urban Decay Naked Eyeshadow Palette (see below).

Courtesy of Urban Decay

This palette would never fit into my travel bag because it contained 12 whole eyeshadows, and attracted dust on the outside during travel. I also only needed 4 out of the 12 shadows, so carrying the whole concoction with me always seemed silly. At the same time however, I liked the formula of the eyeshadows, so I didn’t want to buy new eyeshadows. Why wasn’t there any way to create a custom-made palette that fit all my specifications?

Lo and behold, I came across the Colourpop Magnetic Palette. It’s an empty palette and is intended as a case for loose eyeshadows. I could basically create my own eyeshadow palette!

Courtesy of Colourpop

I first went back to my Urban Decay Palette and took out my eyeshadows. (Eyeshadows are powder pressed into small metal pans, so you can pop the metal pans out of the bigger case and you’re left with the individual loose eyeshadow pans)

Taking out the individual eyeshadows out of the Urban Decay Palette

I then put these eyeshadow pans into the empty Colourpop Magnetic palette, and voila.

Successfully creating my own palette!

This new palette was small enough to travel with, had non-dust attracting packaging and contained my 4 favorite shadows. I had successfully created a palette that met my exact needs.

Even if you aren’t as particular about your toiletry choices as I am, you have probably had a similar bad product experience that made you wish that the company had better understood your specific needs. In other words, you probably wished you had a product that was customized to you.

Many companies are indeed shifting towards creating customizable products and services. This is true across all industries (see here for food, tech, and retail). The beauty industry is no different, and it’s been exciting to see innovations in this space. In this article, I want to explore why customization matters in today’s beauty industry. I will also discuss different methods that companies have used to create customized products or experiences, and how each method can be used to achieve different business objectives.

Courtesy of Sephora

Why does customization matter?

In nowadays age of empowered consumerism, purchasing products is as much about the experience of buying it as it is about the product itself (in my previous blog post, you can find some examples on important the experience aspect has been for consumers). Customers want to feel personal and authentic. By offering tailored solutions, companies show that they genuinely care about customers’ individual needs. Companies with personalized products also allow for customers to engage for a longer time period, which provides more opportunity to build a strong brand-customer relationship. NikeiD for example allows you to build your own shoe. While this isn’t Nike’s primary business model, offering this option helps position Nike as a customer-focused company.

Customization, in a sense, is the new luxury. Luxury companies have traditionally been known for personalizing their products (think custom-tailored suits and clothing), and making customers feel like they are part of the elite and privileged. By offering the same at a lower price, non-luxury companies have made exclusivity more accessible and less intimidating.

All the above apply to the make up industry. Let’s explore some examples of customization in the beauty industry.

Courtesy of thebeautylookbook.com

What are some examples of beauty brands incorporating customization?

Customization comes in different business models in the beauty industry. Below are three types of companies, from more structured to more “flexible” customization, each one with its benefits and considerations.

CATEGORY 1 — Sample-based companies (oftentimes subscription-based)

  • Examples: Birchbox, Ipsy, Sephora Play!, FabFitFun Boxes
  • How it works: Customers fill out an online profile with their preferences. The company will send out boxes containing samples based on these preferences and send them out on monthly basis (varies by service).
  • Pros: From the customers’ standpoint, this business model allows them to explore different brands at a much lower cost than if they were to purchase full-sized brands (most monthly subscriptions only cost $10 / month). From a business standpoint, distributing companies can negotiate better deals with the sample-providing companies since the latter are oftentimes small brands eager to reach larger customer bases. This model is also efficient: Once there is an algorithm for matching products to individual customers, the company can just run that algorithm rather than having to think about each customer individually.
  • Things to consider: If you are not a customer who likes experimenting (aka you already know what you want / like), this business model will not work for you. Instead of spending money on sampling, you could probably save up the money and buy a full-sized product instead of samples you may not use.
  • Potential customer segments: This model works well for customers who are just starting to and are still experimenting with make up (teenagers and young adults). This could also work well for those who want to switch up their beauty routine and are looking to find new brands.

CATEGORY 2 — Companies with multi-functional products that customers can tailor to their needs

  • Examples: The Z-palette, Mink Make Up Hacker, CoverFX Custom Cover Drops
  • How it works: Customers can “play” with the product and can themselves customize it themselves to fit their needs. For example, the Mink Make Up Hacker allows customers to add pigment to any existing product to change its color to your desired one (read: you can turn your one blue eyeshadow into a bunch of different colors).
  • Pros: Customers get play time! Instead of worrying about whether or not they bought the right shade / formulation of a product, they can change them up as needed. From a business perspective, once companies have perfected whatever product they’re selling, they can focus on efficiently producing / selling one product (instead of having to worry about matching individual products to individual customers like the brands in Category 1).
  • Things to consider: These products can run a bit pricier. This is also not suited for customers who want straight-up, easy make up routines without having to mix and match things themselves.
  • Potential customer segments: Make up artists are ideal customers because they can minimize the number of products they need to carry and also quickly customize based on their clients. This is also good for customers who like playing and experimenting with make up.

CATEGORY 3 — Companies creating custom-made products for each individual customer

  • Examples: Giella, Lancome Custom Foundation Le Tient Particulier, MatchCo
  • How it works: The company custom-creates a product that will be unique to you. This can be done either in person as is the case for Giella and Lancome, or through an app like with MatchCo. Oftentimes these companies focus on finding the exact foundation shade, though Giella also offers custom-mixing lipsticks and blush.
  • Pros: The creme de la creme of customizations! Customers truly get to create the product that they want. Because it takes longer to go from initial conception to finalization of the product, brands have the biggest opportunity for building a strong relationship with the customer.
  • Things to consider: Given the individualized attention needed (at least for in-person consultations), companies need to find a way to still make the customized products profitable. Companies will need to clearly define with parameters of the product will be customizable.
  • Potential customer segments: This is ideal for customers who want a foundation that is an exact match to their skin, or have a specific lipstick shade in mind that they want to create.
Courtesy of marieclaire.com

What should cosmetics companies consider if they want to offer customized products / services?

If beauty companies are aiming to become more customer-centric and compete in today’s consumer-driven environment, customization is one way (though not the only way) to address this.

Below are some questions that I recommend companies keep in mind when considering introducing a customizable product line:

  1. What is the primary objective of offering customized products? Do you want to use customization to strengthen your brand name? Do you want to build better relationships with a certain type of customer? Do you want to be more “well-rounded” by complementing your current product lines with customizable ones?
  2. Which customer segments do you want to target with your customized products? Do you want to target pro-make up artists? Teenagers who are still experimenting with make up? Busy moms who don’t have time to go and try out different products? Prestige brand buyers who are looking to take their make up to a new level? Customers who are on the extreme ends of the skin color spectrum and have a hard time finding products that match them?
  3. What business model will best support the objective? Will you only offer products that are fully unique to each customer? Will you provide each customer with a set of products that they can use to customize things themselves? Will you do a mix of both? Will you offer some standard products and introduce a new line of customized products for the experimentally-inclined?

At the end of the day, we need to remember that customization is just one way to create better customer experiences. Customization in itself is tricky and varies greatly among industries. Companies will have to carefully evaluate trade-offs among profit margins, simplicity / user friendliness, brand image and the customer relationship.

What do you think?

Susanna

Written by

Susanna

Northwestern Kellogg MBA | brand enthusiast | consumer products & beauty aficionado | medium.com/@susannaly