Personalization and Data Privacy Balance in the Beauty Industry

Data-driven personalization continues to accelerate as customers increasingly value the advantages of a convenient and fast shopping experience. They're likely to spend more and add extra items to their baskets when the purchasing experience is specifically tailored to their problems and needs.

According to a study conducted by Epsilon, 80% of customers are more likely to buy from a brand that provides them personalized experiences.

Data is at the center of personalization Initiatives

To understand customers' behavior and provide them personalized services to their needs, having rich sources of user data in-house and a streamlined process of analyzing and using those data has never been more critical. Data-driven customer personalization is developed based on a combination of first-party user data - collected from consumers and third-party customer data - collected from external organizations.
In the beauty industry, customer data such as typical skin types of shoppers, common skin problems, and the allergic ingredients to most customers are precious for beauty brands and retailers.

Utilizing different kinds of data to yield better personalization

Personalized beauty product recommendations

There are three types of data typically used for personalized beauty product recommendations. Those are contextual data, including shopper's location, weather, demographic data such as age, gender, skin concerns, skin goals, allergies, and behavioral data like browse history, abandoned cart, transactional data, search keywords, and content consumed.

At Revieve, we also gather real-time data from skin analysis of the user's selfie image to instantly provide detailed diagnostics and individualized product-matching offers.

Hyper personalized beauty products

In recent years, one of the rising trends is hyper customized beauty products based on information collected from skincare quizzes around customer lifestyle, habits, location, and artificial intelligence to develop the most effective formula for every customer.

From hair care to makeup and skincare products, brands like Function of Beauty, BITE Beauty, and Curology witness rapid growth and positive customer adoption. "Even if you had the same skin type as someone else, your skin needs can be very different from theirs. A personalized product can specifically address each concern specific to the individual that a mass-produced product cannot." – said Dr. David Lortscher, CEO and founder of Curology.

Consumers now expect more one-to-one initiatives in the interaction and experience with brands across different touchpoints and from the products themselves.

‍Re-engage marketing campaigns

Thanks to associated cookies, recognizing regular customers or new visitors and tracking their browsing behaviors on the website are the primary steps toward a highly personalized remarketing campaign. From behavioral data of visitors on the website, brands/retailers can set up retargeting ads campaigns reaching specific audiences based on specified criteria.

By doing this, a website's conversion rate increases more effectively since resources are allocated to audiences who are likely to convert into customers.

Challenges of data collection

Given the importance of customer data in offering a personalized beauty customer journey, not every beauty brand or retailer can collect the correct data or process big data to generate meaningful insights and values for business development.

As for beauty brands, one of their challenges is the ownership of consumers' personal and transactional data due to the indirect relationship and communications with customers. They depend on distribution networks in selling products. Therefore, they're at a distinct data disadvantage. 

Providing a personalized customer journey, including product recommendations and individualized beauty products, is impossible without information. As a result, more beauty brands nowadays are trying to diversify their distribution channels and less reliance on partner retailers by selling through their e-commerce shops.

Despite having a massive amount of data in-house, beauty retailers face specific issues of insufficient data centralization and lack of advanced technology in processing data to automate personalization solutions effectively.

Data privacy and security

The recent cases of high-profile corporations in abusing consumer data continue to raise concerns over how beauty brands and retailers can reach the right balance between personalization and customer privacy protection.

Data associated with payment methods or basic personal information such as gender and age can be considered the number one issue. However, it's even more complicated in the context of AI-powered beauty technologies. AI/AR-enabled applications require detailed information about consumers' skin concerns and even their selfie images.

Therefore, a robust and advanced customer data protective infrastructure is a must for any beauty brands and retailers operating in an era of tighter control of personal data, especially when the General Data Protection Regulation (GDPR) comes into force.

According to Salesforce, 65% of customers have stopped purchasing from brands that acted suspiciously with their data. Data breaches can significantly damage brand reputation and erode customers' trust and confidence from sharing information about themselves.

To cope with these matters, beauty industry players are increasing their focus on protecting customer data and carefully choosing the trusted partners for collaboration. However, it can be an intensive effort, requiring companies to divert resources from other critical personalization innovations.
Ensuring the security and privacy of data-driven personalization can help build a sustainable long-term relationship with customers while boosting customer satisfaction and retention on business.

Revieve collaborates with leading beauty brands and retailers to deliver personalized and engaging beauty experiences for customers while staying compliant with global privacy regulations. We adhere to the strictest privacy and data security standards. We operate a secure, enterprise-grade CCPA and GDP-compliant infrastructure for data transmission, processing, and storage with relevant encryptions, safeguards and practices in place to ensure the protection and privacy of any data passed through Revieve's systems.