Part loyalty program, part fan club, “community commerce” platforms are the latest tech trend gaining traction among beauty’s biggest players.
On August 28, Ulta Beauty was announced as the first retail partner of Kiki World, a beauty start-up funded by the Estée Lauder Companies that incentivizes member engagement. In July, Glossier joined an impressive list of more than 80 brands on TYB, a community rewards platform and the brainchild of Outdoor Voices founder Ty Haney, with more than 30,000 members joining the G Collective group its in the app. Both have received investment from crypto-focused VC firms, getting brands to embrace concepts related to “Web3″ technology after the end of the NFT craze in 2021. The new partnerships mark the latest effort of beauty companies to build stronger online “communities,” which many do through formats like group chats on Instagram or social apps like Geneva.
The benefits, the brands say, are worth it. The concept of creating a brand “community” has become paramount in beauty marketing, and both TYB and Kiki World allow brands to award loyalty points for purchases and brand-related social interactions . TYB also offers group chat functionality, where brands can send updates and communicate back and forth with members.
The rise of these platforms comes as beauty brands, faced with sky-high ad and customer acquisition costs, shift their focus to customer retention. Although still in the early stages — TYB is two years old and Kiki World for one — they offer brands a way to experiment with new formats of loyalty and communication to stay relevant in a Gen-Z audience, as well as ways to increase user-generated social content as it grows in importance compared to influencer marketing.
And for consumers, it allows them to be closer to their favorite brands than ever before.
“We’re seeing this shift in the beauty space in terms of brands and consumer engagement and community building, and really this shift in consumer behavior and expectations,” said Shana Randhava, the SVP of Estée Lauder Companies’ investment and incubation arm New Incubation Ventures, announced in April 2024 as an early investor in Kiki World, along with Andreesen Horowitz’s crypto fund a16z crypto and others invested a total of $7 million in initial funding.
Loyalty to the Next Generation
The community commerce platform’s loyalty offerings are perhaps their biggest draw.
TYB allows brands including Glossier, Rare Beauty, Ouai and Dieux to offer loyalty points for activities called “challenges.” In challenges, customers are rewarded for simple actions — Glossier, for example, gives customers 50 points for answering a quiz question or 100 points for submitting a selfie that can be featured on social channels of the brand. Those points can be used for discounts on products through an embedded tool or discount code at Shopify checkout, with 100 points equaling $1 off. Glossier’s TYB account marks its first DTC loyalty program, which the brand has avoided for years.
Haney said that as an “OG of community building,” Glossier’s adoption shows how even DTC brands are looking for new ways to cultivate online loyalty.
“In many ways, the direct-to-consumer business model is flawed because the most important relationships a brand has, those with its customers, are mediated by discovery-optimized ad platforms,” he said, adding that the idea for a platform dedicated to customer retention was born during his own time in the DTC sector. “We spent all this money on Instagram and Facebook to get customers, customers that we didn’t need to have first-party data or a relationship with. And ultimately, it leads to a lot of one-and-done customers, which is a very expensive model.”
Even brands that have previously experimented with loyalty programs have embraced TYB’s approach. Topicals, the first brand to join TYB in 2022, moved its entire DTC loyalty program to the platform in the fall of 2023, transferring customers’ points.
“TYB gives us another level of connection,” said Grace Sofia Caro, community impact manager at Topicals. “It’s just a deeper level of connection beyond the points and purchases of a normal loyalty program.” Beyond points for purchases, Topicals offers rewards to members for a variety of challenges, including creating social content about the brand such as videos that offer them a chance to win spots on its influencer trips.
Kiki World’s model, meanwhile, centers on collecting user feedback to shape the production of its own products. The platform partners with influencers to create a set of product prototypes, and then awards loyalty points to users who vote on which products the brand should produce. The Ulta Beauty team-up is its first partnership with an outside brand; this will allow users to access Kiki campaigns through the Ulta Beauty website and get exclusive collectibles.
“All your feedback is rewarded,” said Kiki World founder and CEO Jana Bobosikova, who created the platform with the concept that “the next generation of brands will not be created and maintained top-down.”
Cultivating a Customer Community
Beyond apparent loyalty, brands have been laser-focused on the concept of “community” in recent years — a vague term that refers to the ways they try to create a friendly connection in the minds of customers.
Finding community takes many forms, starting with private Facebook groups, moving to invite-only Instagram groups, chat-specific apps like Geneva and most recently, Instagram’s broadcast channels . Community commerce apps are positioning themselves as the Gen-Z-friendly version.
Glossier previously used a private Facebook group as a community hub, but has switched to TYB, which Kristin Kim, Glossier’s VP of brand and product marketing, says functions as “an intimate space where it feels like we chat in a circle of good friends.” Glossier’s group chat currently features brand announcements on new challenges or a heads-up about promotions such as free samples at the US Open.User comments include product feedback and links to their social posts about the brand.
Brands also use the platforms to engage with their influencer ambassadors. Topicals moved its group chat for its ambassador program to TYB in August 2024 after operating on the Slack-like group platform Geneva. Customers can also access perks usually reserved for influencers on these platforms: Topicals also use the app to send invitations to in-person events across the US, while skincare brand Mario Badescu chose 40 members of its TYB group to sample and analyze recently. launching a spray on the face.
Community and loyalty incentives appear to be the biggest draw for these platforms, rather than their connection to emerging tech — both crypto funds count on their investors, operate on the blockchain and offer NFT-esque digital “collectibles.” But the NFT’s fascination with fashion and beauty has faded, and now carries some taint.
So far, that hasn’t been a deterrent: Next quarter, Kiki World will launch what Bobosikova calls a “permissionless version of Kiki,” which will allow partners to use its platform with their own brands; around 50 brand and influencer partners are lined up to participate. TYB has more beauty brands slated in the coming months and is also venturing into fashion: Cult Gaia and Urban Outfitters are members.
“Higher engagement leads to greater loyalty. That’s not a novel concept; I’m not saying anything groundbreaking there. What’s different with Gen-Z is how and where and how often that engagement happens. that,” said Randhava.
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