Main Points
Based on its Mini Program store, L'Oréal Paris introduced the online-to-offline (O2O) business model in stages, starting with just a few exemplary stores and their beauty advisors (BAs) and gradually replicating the same success across the country. This allowed it to better reach and serve customers. Meanwhile, by improving its service skills and management capabilities, promoting digital tools, and applying successful training experience across all channels, L'Oréal Paris has been able to create long-term value for itself.
Company Introduction
L'Oréal Paris is a beauty product brand founded by Eugène Schueller in 1907 and one of L'Oréal Group's most recognizable and longest-established large cosmetics brands, with a focus on hair coloring, makeup, and skin care. The high product quality has made the brand a favorite among beauty lovers worldwide. L'Oréal Paris has first-class pharmacological laboratories and dermatological centers, as well as research and testing centers around the world. These R&D facilities ensure that it can continuously develop quality products that cater to the different needs of consumers around the world.
In 2020, L'Oréal Paris had the foresight to promote digital transformation among its offline stores, adding online service scenarios such as Mini Program store, WeCom, Weixin communities, and live streaming.
Challenges
Amid trends of increasing consumption, young consumers' buying power has grown, and demand has arisen for new product categories. Meanwhile, as shopping becomes increasingly digitalized, dramatic changes have taken place regarding where and how people shop. Consumers are no longer satisfied with just one possibility. They look for more diverse and personalized options.
Against this background, through in-depth cooperation with Tencent, L'Oréal Paris hoped to create a new model using private sales channels, connecting its physical stores with owned channels online to respond quickly to changing consumer demand and better serve consumers.
Best Practices
- Creating Long-Term Value in Stages
For L'Oréal Paris, which has a rich portfolio of products, expansive sales channels, and a large offline sales team, digitalization is no easy task. L'Oréal Paris started small and undertook its transformation in stages. It first explored the new model in its global flagship store and tested it in 10 self-owned stores. Then, by holding nationwide BA competitions in collaboration with Tencent Smart Retail, it selected a number of exemplary stores and BAs whose experience can be replicated elsewhere.
L'Oréal Paris placed the Mini Program store at the center of its strategy and, with the help of its offline sales team, created long-term value for itself in terms of customer base, products, and channels.
- New and Differentiated Products, Better Inventory Control
Despite having a rich mix of products, L'Oréal Paris was unable to showcase all of them in its stores due to limited space, and shortages of particular SKUs were common for makeup and hair color products. With the Mini Program store, L'Oréal Paris is able to go beyond the limitations of time and space and offer its full product line to consumers anytime and anywhere, ensuring that its BAs don't let go of any chance to engage with potential customers.
Moreover, because online shopping habits are different from those of offline shopping, after extending its business presence online, L'Oréal Paris was able to discover and create new demand for its products. For example, the sales of facial masks had been low in its offline stores. However, by providing recommendations and launching promotional events in its Mini Program store, L'Oréal Paris was able to educate customers about this product category and greatly grow the demand for facial masks online, which in turn increased demand offline as well.
The Mini Program store also played an important role in promoting new products. Before launching a new product, L'Oréal Paris would invite the target customers to try it and give feedback, and encouraged them to write reviews online. This allowed L'Oréal Paris to develop products that better cater to customers' preferences and, at the same time, increase the number of new customers and the sales of its new products.
- More Channels to Improve Engagement and Deepen Connection
Besides limited physical space, another problem L'Oréal Paris faced with its offline stores was the low frequency of visits and short duration of stay. BAs didn't have enough time to introduce products in detail. This changed after L'Oréal Paris joined the Weixin ecosystem. Now, BAs can reach out to and engage with customers anytime, anywhere via online channels including Weixin Moments, one-on-one chat, Weixin communities, and even live streaming.
These scenarios are not isolated from each other. With their respective advantages, they complement each other and can create great synergy together. Specifically, one-on-one chat allows L'Oréal Paris to offer in-depth services to customers; communities enable high-frequency engagement; Weixin Moments offers a way to promote products without disturbing customers; and live streaming provides a venue for customer education.
L'Oréal Paris designs the content to push via these channels according to their respective characteristics and consumer demographics. For example, it offers weekly discounts via Weixin communities, and live streaming has corners like New Product Day, Family Day, and Cloud Class. Through these interconnected channels, BAs have been able to build strong and long-lasting relationships with customers.
- More New Customers and More Loyal Existing Customers
Through online-offline integration, the Mini Program store brought in new traffic for L'Oréal Paris. Meanwhile, by connecting public channels with private ones, L'Oréal Paris was able to retain customers through in-depth customer relationship management.
Currently, the Mini Program store acquires traffic mainly from offline stores. In turn, it also drives online traffic back to the physical stores. The Mini Program is designed so that customers are referred to BAs and offline stores wherever possible. With respect to existing customers, L'Oréal Paris is also encouraging two-way referrals to increase repeat sales, boost retention, and improve customer lifetime value.
- Omnichannel Skills, Digital Tools, Better Management
L'Oréal Paris replicated its successful digitalization and training experience across all channels. Specifically, there are three aspects to its digital transformation.
- Omnichannel Service Skills for Higher Conversion Rate
In the past, BAs communicated with customers face to face, letting them try products and offering facials to realize conversions. After shopping moved online, it became necessary for today's BAs to learn how to use tools like WeCom to better connect with customers, promote products online without annoying customers, and ultimately drive online customers to offline stores to boost conversions.
Given this, L'Oréal Paris designed a full suite of training programs on omnichannel sales skills to teach BAs how to serve customers both offline and online while delivering distinct shopping experiences. Depending on the channel, BAs were equipped with different skills to better serve customers and boost conversions.
Considering the wide coverage of offline stores, regional diversity, and the fact that operating models change rapidly, L'Oréal Paris adopted a decentralized management strategy, hoping to maintain the flexibility of its offline stores. The headquarters sets goals and establishes standards. Regional sales managers and new retail trainers develop practical guides based on regional conditions and front-line experience and report them back to the headquarters. This makes for a management model that can quickly update itself to stay effective.
- Innovation for More Efficient Management
L'Oréal Paris, known for using the power of technology to deliver beauty solutions, is intent on ramping up digital transformation and innovating its O2O model. Its headquarters and regional branches worked together and established an effective collaborative model to promote digitalization among offline stores and extend the company's service and sales scenarios.
By adding Weixin to its portfolio of sales channels, L'Oréal Paris' new retail team explored new business models. It complemented its O2O service chain, established new service standards, and rolled out new training programs for salespeople. The successful experience was then shared among other teams. This allowed the company to upgrade its business model, accelerate the digitalization of its offline business, and deliver better customer experiences.
In the age of new retail, since communication with customers is no longer limited by time or space, BAs can do more to increase customer stickiness and build customer loyalty. What's more, through one-to-many live streaming, BAs can easily inform consumers about offline events, increasing their efficiency.
- Digital Tools for Improved Efficiency
WeCom played an important role in helping L'Oréal Paris digitalize its offline business. WeCom is connected with L'Oréal Paris' Mini Program store, SCRM system, and BA task management system. Together, they help L'Oréal Paris deliver a more convenient, omnichannel shopping experience and increase BAs' efficiency.
Based on its Mini Program, L'Oréal Paris developed a shopping cart component that allows BAs to generate personalized orders for each customer. Customers can make payments easily by scanning a QR code. This greatly reduced the time spent on selecting products. A series of other digital tools, such as product showcasing, promotion, and data analysis, are also offered to BAs to help them provide more flexible and targeted services to customers.
WeSocial is a WeCom-based operating platform developed by L'Oréal Paris. It offers one-stop solutions for BAs, helping them engage with customers more efficiently and offer personalized services to customers to increase conversions. In the BA task center, BAs can also use out-of-the-box tools to determine what marketing content to use based on the consumer demographics of different communities.
In addition to intelligent and digital tools for BAs, L'Oréal Paris also improved its underlying digital capabilities with the help of Tencent Smart Retail. It monitors the customer journey in its Mini Program store, tests and reviews the process in terms of UI, interaction, and usability, and makes improvements based on the results. This ensures that customers get the best shopping experience in the Mini Program store.
Results
By 2022, L'Oréal Paris had replicated its digitalization experience in more than 1,000 offline stores and offered training on digitalization and private channels to over 2,000 BAs, establishing a successful O2O business model.
In the BA competitions L'Oréal Paris held, with the help of online channels, exemplary BAs were able to increase their passive sales by 40% and online sales by 300%.