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If you ask someone from Generation Y — more known as millennials — what they’re aspired to be growing up, you are more likely to hear answers involving occupations like doctors, engineers, or lawyers. However, ask people from Generation Z, and you will be surprised by how many of them mention social media influencer.

Why are more people pursuing this career path? Simple. They get paid to do something that they already love to do on a daily basis: posting on social media.

An influencer, someone with a substantial number of followers on social media, can generate a paycheck in the range of from US$124 to US$1,405 for one sponsored post, depending on the follower count.

How come a social media post worth that much? Moreover, why are so many brands willing to invest time and money in influencer marketing? 

The Influence of Social Media

One reason why influencer marketing becomes a powerful marketing tool is that influencers understand what today’s consumers want. Many of these influencers are regular people that gained their followers by curating contents that resonate with many people — earning them the power to influence their audience’s opinion and are more likely to be trusted by consumers.

Tofugear found that 55% of Gen Z consumers bought products due to the content shared by influencers. TBWA\Hakuhodo’s chief creative officer and executive creative director, Kazoo Sato, explained the phenomenon.

Influencers brings an entirely different perspective from ad agency creators. He understands what creates buzz for the smart-phone obsessed generation, and we intend to leverage this sensibility and perspective to involve brands in culture.

As a result, they’re able to devise contents that appeal to the brand’s target customers.

It’s also worth noting that influencers usually have their own niche and have followers that are interested in the same group, allowing brands to target the right audience effectively. Markerly found that those with fewer followers have higher engagement rates, most likely because the audience is interested in the product or the topic the influencer is advocating rather than just being fans of the influencer.

Figure 1: Instagram accounts with fewer followers have higher engagement rates; Markerly

In a region where social media is highly popular like Southeast Asia, where 55% of the population (around 360 million people) are avid social media users, it’s become more critical for brands to gain relevancy among their consumers in this platform.

Figure 2: Social media users in Southeast Asia account for only 55% of the entire region’s population; Hootsuite, We Are Social

Thanks to social media exposure, younger consumers also have an easier time connecting with the other consumers online and trust their opinion more than the ‘official’ brand channels or traditional media, because these people have experienced using it or are experts in the specific field.

The rise of social media usage has also raised the popularity of social commerce in this region. According to PayPal, 80% of Asian merchants use social media to sell online. The number is even higher for the three largest Southeast Asian countries. Thailand recorded the highest percentage of merchants using social commerce at 95%, followed by 87% of Philippines merchants, and 80% of Indonesian merchants.

Figure 3: Social commerce is popular among Asian merchants; PayPal

Case Study: Building a $1 Billion Business through Instagram

One of the most successful examples of influencer marketing is Daniel Wellington (DW), a Swedish watch company established in 2011. During its initial conception, DW is famous for leveraging several smaller influencers on Instagram to promote their product instead of choosing a celebrity to gain the same ‘viral’ effect with lower cost. 

By contacting many of these smaller influencers to post images of them wearing the DW watch in exchange for a free watch, the brand manages to invoke public curiosity and place their products in the eyes of potential customers and have the images speak for itself.

Figure 4: A Daniel Wellington Instagram post by Thai influence bikwansr; Bikwans’ Instagram

The result? Almost 4,700% revenue growth in the three years leading to 2015.

An effect to this extent won’t be as easy to achieve now as it did before as more brands are utilizing Instagram as their marketing channel and the platform has since set up posting guidelines to make it more transparent for users to see whether or not an advertiser sponsors a post. Still, it’s evident how powerful influencer marketing is when done right.

The Key to Influencing

There isn’t one right answer on how to choose the right influencer(s) for brands. However, there are some key rules brands should keep in mind when doing influencer marketing.

1. Alignment with Brand’s Audience

Know your audience. Enlist the influencer that has the same audience as your brand or product is targeting to, to ensure your message falls into the right ears and maximize the promotional effectiveness. One of the brands that did a good job with this was Lenovo.

Brief: To promote its new product line of YOGA 3 Pro and YOGA Tablet 2 Pro computers, Lenovo hired influencers, bloggers, and YouTubers to advertise their product on their platform using images, videos, and blogs that detailed their day using the product and promoted a giveaway. One of the influencers that were chosen was Kileen, a Dallas software developer and fashion blogger that works full time and has two kids.

The rationale behind this influencer: As a mom and fashion and beauty blogger, Kileen’s audiences are active, fashion-conscious women who are interested in fashion or lifestyle products. This match with Lenovo’s target, which wanted to position their YOGA 3 Pro and YOGA Tablet 2 Pro computers as a product that can be used daily for all kind of consumers, including active women.

Result: Although the blog post was only able to attract 62 comments, with other posts from other influencers, the campaign was able to garner 51 million social impressions and rank number eight as trending national topic in the US on Twitter. The giveaway also attracted over 61,000 entries.

Figure 5: A blog post by fashion and beauty blogger Kileen regarding Lenovo YOGA Pro 3; Kileen’s blog

2. The Influencer’s Engagement Rate

Brands should also take into account an influencer’s capability on engaging the audience and whether or not they’re someone your target audience can relate to and trust on, just like what Clinique did.

Brief: To promote better skin care routine among Men audience in general and introduce their new product line for men, Clinique for Men, the cosmetics and skincare brand partnered with 37 influencers from numerous fields, including stylists, filmmakers, lifestyle bloggers, and outdoorsmen. One of the influencers it worked with was Mikey de Temple, a surfer, photographer, and filmmaker from New York.  

The rationale behind this influencer: By partnering with someone unrelated to the fashion industry and more known for his professional works, Clinique was able to display how its new product line is used by regular people as a part of their daily activities.

Result: Despite his post only acquiring 748 likes (around 2.68% engagement rate), the campaign from the 37 influencers was able to garner an engagement rate of 3%, or 3.8 times higher than the post from Clinique’s official Instagram account. The campaign was also able to achieve 2.4 million impressions and over 67,000 interactions.

Figure 6: An Instagram post by surfer, filmmaker, and photographer Mikey de Temple to promote Clinique for Men; mikeydetemple’s Instagram

3. Do Homework on the Influencers

When choosing the influencers, it’s also important to see the history of their professional works to be able to judge their integrity and make sure all parties involved can able to meet all contractual obligations to prevent any future problems. Sadly, many brands failed to do this when they hired Instagram influencer and local photographer Daryl Aiden Yow.

Brief: Numerous big brands like Reebok, Dyson, Uniqlo, and Sony had hired Singaporean photographer and Instagram influencer Daryl Aiden Yow to promote their products on his Instagram platform. However, Mothership.SG exposed how he had been using stock photos from websites like Shutterstock and Pinterest and photoshopping himself in the images to promote their brands. Critically, Mustsharenews claimed that Yow had done this with the brands’ full awareness and approval.

The rationale behind this influencer: With Daryl Aiden Yow’s reputation as a photographer and his production of high-quality images, having him promote products on social media would show how picturesque and good the products are to his 115,000 Instagram followers.

Result: Post the expose, many individuals like APD’s Tim Sharp and Singaporean influencer Wendy Cheng and brands like Scoot and F&N Seasons have slammed both Yow and the brands. This not only damaged his reputation as an influencer but also brought down numerous brands’ name, resulting in contract termination from brands such as Sony and Issey Miyake.  

Figure 7: The number of Instagram posts on Yow’s channel drastically decreased from 1165 posts to 42 posts; darylaiden’s Instagram

Influencer marketing is an effective way to directly reach and attract your target audience without needing to spend millions of dollars on advertisements. However, like any other best marketing practices, personalization is needed when choosing these influencers to make sure you reach the highest level of engagement and in turn, your conversion rate.

The Background

Back in 1851, a small apothecary was established in the neighborhood of East Village, New York by John Kiehl. Breaking away from typical drug stores that offered common compounds and nostrums prepared onsite, John chose to open a store that focused on essentials oils, homeopathic and herbal remedies to achieve his objective — keeping the local community happy, healthy, and feeling their best.

The apothecary remained in the family for 70 years until it was purchased by Kiehl’s apprentice, Irving Morse, in 1921 before his son, Aaron Morse, took over in 1950 and added grooming products for men and women to the brand’s product line.

Aaron was also the one who introduced free samples to customers and is still practiced at today’s global cosmetics powerhouse Kiehl’s.

More than 12 million Kiehl’s sample packets and tubes are given away each year.

Fast-forward to 2000, Aaron’s daughter Jami Morse Heidegger decided to sell the business she inherited to L’Oreal for approximately $100 million. The brand had become immensely popular among fashion enthusiasts and skin-care connoisseurs worldwide and impossible for her to continue managing.

“It was like a snowball rolling downhill and just getting bigger and bigger. I created something I couldn’t control” – Jami Morse Heidegger

Jami Morse Heidegger, third-generation Kiehl’s heiress and her husband, Klaus Heidegger
Source: Retrouve

After being acquired by one of the largest cosmetics companies in the world, Kiehl’s expanded to 2,000 locations in 61 countries and was well on its way to the top of the beauty industry. What could go wrong?

The Challenge

Jami always feared her business would become a brand fighting for money, attention and space.

The thought of selling her business to L’Oreal didn’t appeal to her at first because L’Oreal had a reputation in building mass brands like Maybelline and had never managed a niche, boutique brand before.

But after it grew to a size she could no longer handle, she had no choice but to hand the brand over to a corporate looking to compete in the burgeoning specialty market.

Kiehl’s was afraid that under the management of L’Oreal, consumers would no longer view the store as independent and cutting-edge but rather as a revenue-generating corporate machine.

“[The challenge is] to grow and export the Kiehl’s way without changing it. We soon realized that we needed to stick as closely as possible to our business model on a global basis, to create a consistent Kiehl’s experience around the world,” said Kiehl’s General Manager Worldwide, Cheryl Vitali.

How were they going to keep a tight leash on L’Oreal?

Inside Kiehl’s apothecary during its early days. Source: Yahoo

The Strategy

The company didn’t want a flashy marketing budget or fancy model to be representing its brand.

“We want to keep the line [Kiehl’s] very exclusive,” said L’Oreal USA’s former chief executive, Guy Peyrelongue.

In order to appease the wishes of the Kiehl’s family, L’Oreal maintained the brand’s identity and its distribution model while ensuring its stores around the world matched the look and feel of the original apothecary in East Village.

Kiehl’s was on a mission to set strict brand boundaries for consistency and product control. And it worked.

Any one that has ever stepped into a Kiehl’s apothecary will recognize the iconic skeleton, Mr Bones, next to the famous Harley Davidson motorcycle.

“The motorcycles entertained the guys while the ladies shopped — and it was also a very clever way to introduce Kiehl’s men’s products to them,” – Chris Salgardo, president of Kiehl’s USA

Kiehl’s shops around the world look almost identical thanks to the brand’s strict guidelines. Source: Marie Claire

The brand also spends heavily on the development of products and ingredients, almost 3 to 5 times more than competitors. Its contribution to multiple charitable efforts also proved to be a successful way to hook customers to not only buy for themselves, but also feel proud to gift Kiehl’s products.

In Thailand, Kiehl’s introduced the country’s first ambassador and offered free samples together with a 5-minute consultation. Source: mThai

The company’s success in the US made global expansion a next natural step. In line with L’Oreal’s focus on digital marketing and ecommerce to capitalise growing consumption, Kiehl’s went online.

“It [online] enables us to get to know our customers better and interact more effectively with them, while remaining true to the brand’s rebellious and offbeat style” – Cheryl Vitali

By 2013, Asia had topped global sales of natural personal care products. The popularity of natural products was driven by major economic changes and rise in disposable incomes, especially among the Chinese, who had become more health-conscious.

The chart shows the sales of natural personal care products by region in 2013; Asia is the leader in sales. Source: Kiline Group

Southeast Asia also displayed the highest-growing demand for beauty and personal care causing Kiehl’s to invest heavily in performance marketing and its website with the help of ecommerce enabler and e-distributor aCommerce.

Beauty and personal care is expected to grow the most in Asia Pacific from 2016-2021. Source: Euromonitor

A fear many brand managers face is consistency across channels. How do I ensure the brand is rightfully represented at all customer touchpoints?

In the case of Kiehl’s, the company successfully projected its edgy and young vibes through bright colors and flashy images on its website in Thailand and Indonesia.

Kiehl’s website was localised for Indonesian customers.

The brand preserves its mission to make each and everyone of its customers feel good by utilizing technology. Kiehl’s recently implemented artificial intelligence and a text messaging model in its stores and online to keep customers engaged and taken care of.

“We’ve learned the first purchase happens in store, and online we’ve created tools to extend services to make a cycle,” Julia Mavrodin, Kiehl’s associate vice president of e-commerce and digital marketing said.

Through historical data collected from online orders, Kiehl’s can accurately estimate when a customer will run out of an eye cream or facial cleanser and send a text message to prompt the customer to order a new one.

A sample text message that Kiehl’s sets to keep their customers replenished with its goods. Source: Digiday

By introducing a direct channel to converse with customers, the brand is able to track where and when customers buy its products, even at partner retailers like Sephora or Nordstrom.

This allows the brand to stay top of mind and shield customers from buying unauthorized products off of e-marketplace like Amazon at the same time.

To this day, Kiehl’s has remained one of L’Oreal’s fastest growing brands and broke the symbolic $1 billion sales mark in 2016.

The Future

Kiehl’s is looking to capitalise on its brand power in new markets like the Middle East and Latin America to ultimately spread the brand’s legacy and become the number one skincare brand in the world.

“To get there we will need to pay even closer attention to our customers. After all, that has been the secret of our success for the last 160 years.”

Loyalty programs are one of the oldest tricks in retail to get customers to continue shopping.

Members of these rewards, points or cash-back programs tend to generate 12%-18% more revenue for retailers than customers without membership.

The existence of a loyalty program is also a deciding factor for 72% of customers when choosing where to shop.

However, running one can be a considerable investment. In the US, companies spend $50 billion a year on these programs alone.

And just because a company has one doesn’t mean they always add value – some companies with loyalty programs reported a 2.28 percent comp sales increase, while companies without reported a higher 4.26 percent.

To ensure the effectiveness of a loyalty program, brands need to consider a number of factors and understand that there needs to exist a value proposition that addresses the needs of both the consumer and the brand.

loyalty program retail

Retailers need to consider different value factors that fits their objective for the loyalty program. Source L2

Important value factors for an effective loyalty program

Although monetary incentive is still the main drive for 67% customers to join a loyalty program, non-monetary benefits can distinguish the brand from others.

Offering a tiered loyalty program that provides differentiated rewards based on spend allows for more customer segmentation and targeted marketing as well as add interest and incentives for customers.

Giving exclusive access to the brand’s special promotions and offering an overall higher priority service for the members are the kind of personal experiences that customers look for when they joining a loyalty program.

 

Discounts tend to be the most popular loyalty features but only lift a considerably low points of consumer satisfaction factor. Source: L2.

Having a loyalty program, if done right, could actually lead to the biggest revenue generator for a company and lower the user acquisition costs. Amazon Prime by Amazon is one of the best examples.

In addition to offering Prime members the usual perk of free shipping, Amazon also holds an annual sale exclusively for Prime members called Prime Day. This year, the company broke its sales record by 60%

compared to the same period last year, selling most of its private label brands and highest number of new members sign up.

No wonder the ‘Amazon of Southeast Asia’ launched its own version of Amazon Prime called LiveUp.

Southeast Asia’s companies better ensure they have strong tactics in place to keep their customers loyal because the US retail giant is about to launch in Singapore in the very near future.