10 Jan 23 Celebrity Brands: Effects of Starpower on a Startup
Kylie Cosmetics by Kylie Jenner has made a shocking $420 million in revenue just one and a half years from launch. But Kylie isn’t the only celebrity to make waves with their startup. Today we’re going to examine popular celebrity brands and the advantages celebrity entrepreneurs are using to succeed.
In a fragmented retail environment, celebrity founders are discovering success focusing on being relevant to customers, as well as leveraging their following and network for early wins. One notable trend in celebrity-backed companies is that they are increasingly using technology to focus on personalization.
What do Jessica Alba, Rachel Zoe, Sarah Michelle Gellar, Reese Witherspoon and Sofia Vergara have in common?
Each of these celebrities’ brands use artificial intelligence to automate their customer lifecycle marketing and multi-channel campaigns – and we’re not talking about your basic segmentation or workflow tool.
Each customer gets a different communication with personalized recommendations and discounts based on thousands of signals and hidden patterns. These communications are predictive and happen without a marketer setting up a single workflow. They are based on each customer’s unique demographics, behaviors and preferences. On top of this, the same AI can be used to find customers with the highest lifetime value, then create lookalike audiences in Facebook to acquire more VIP’s.
Here are five important AI-driven email attributes:
- Best Performing Email Templates and Subject Lines Prioritized
- Personalized Product Recommendations Based On Sophisticated Algorithms
- Incentive Distribution That Accounts For Price Sensitivity
- Timing Optimizations To Reach Users At Their Best Time Of Day
- Item Triggers Based on Product Affinities
For the first two, we’ll use an example from Reese Witherspoon’s company, Draper James below…
A great example of personalization, powered by AI, from Draper James
1. Best Performing Email Templates and Subject Lines Prioritized
This email stage and particular cart abandon template (including subject line) was chosen by the AI to maximize the chance of a conversion for a specific person based on their individual user data, while for another user it might send a different email stage and template entirely. This immediately makes Draper James’ messaging more personalized and relevant to the customer.
2. Personalized Product Recommendations Based On Sophisticated Algorithms
While many brands simply use popular items, manually selected items or retargeting in their recommendations, Draper James uses predictive product recommendations using AI. These predictions are based on thousands of variables. These variables include a user’s onsite behavior, demographics, similarity to other users and purchase history. They are all taken into account to display the products most likely to achieve a customer conversion.
In addition to the two AI-driven email attributes in the above example, you also have the following:
3. Incentive Distribution That Accounts For Price Sensitivity
Discounting and incentivizing customers is a great balancing act. For these celebrities, artificial intelligence makes discounting easier with dynamic incentives based on each customer’s predicted price sensitivity. Knowing which customers need no discount, a 10% discount or a 20% discount (and acting on that information at a 1:1 level) can make a huge difference in protecting a retailer’s margins.
4. Timing Optimizations to Reach Users at Their Best Time of Day
On top of all of this, artificial intelligence can predict when each customer tends to open emails, click and purchase. With each customer interaction it calibrates and self-optimizes, adjusting to each user’s preferred window to provide a large overall bump in open rates across the board.
5. Item Triggers Based On Product Affinities
If a brand has an item that drops in price, is it a good idea for them to send a notification to the their entire user list, even to users who haven’t shown interest in that product? What if that brand could send an email notification only to the customers who had an affinity for the product that dropped in price? With AI, that’s exactly what celebrity brands are doing for item triggers like Price Drop, Back in Stock and New Arrivals. This capability helps even more so in situations when retailers order excess inventory and need to target the customers most likely to purchase a particular product. Item triggers based on product affinities is just another way celebrities are using AI to stay hyper relevant to customers and boost KPI’s for their marketing campaigns.
AI for marketing is the perfect tool to address what celebrities already know: the more personal and relevant you are, the bigger your following gets.
Celebrities are simply transferring that knowledge to the customer lifecycle using new technology that older retailers might not be ready to commit to… and that gives them a valuable jump-start on the competition.
But let’s not forget about another area that gives a celebrity startup an entrepreneurial advantage…
MILLIONS OF FOLLOWERS
In marketing, if you have an email list or a following on social media, we call this “owned traffic.”
The obvious, surface-level benefit of such a following is massive reach, and a completely free way to distribute products and ideas.
As a celebrity or influencer, imagine you post a few lifestyle shots with different products. Within minutes, you already begin to know which products are winners and which aren’t. Your website and pixel already start gaining conversion data and valuable information on who will buy what.
Companies without this massive organic following spend a lot of money running ads and calibrating the brand’s audience to find product/market fit. For celebrities it’s free and can be instantaneous with the help of a large following. In the above example, Kylie can build anticipation for a launch, and send a free initial bout of traffic to her new product. Once the website records that purchase data on a pixel, social ads get much easier and keep the conversions coming long after.
To make this initial influx of traffic even more valuable, celebrities are leveraging AI for lead scoring to determine who their best customers are. It’s important to note that 62% of users churn after signing up. This means that after they register they never make a purchase. Celebrity brands use lead scoring to address this issue so their marketing teams can send campaigns with targeted incentives and rewards to the best customers, and spend less time on users who have a low likelihood of purchase.
One final reason celebrity startups have an edge?
Celebrities are very well connected professionally. They often rub shoulders with the giants in the tech industry. They naturally have relationships with reporters and contacts in the media. Starpower goes far. It’s relatively easy to have an interview with a pundit on national television focusing on your new product. The same goes for having a major magazine write an article about your brand.
Let’s not forget hiring: there’s a certain allure to working with a celebrity entrepreneur. This brings quality talent much more readily than your average startup. This can be vital in building the foundation for a burgeoning name in retail.
THE LIMITS OF FAME
Don’t be fooled- there comes a time in every retail company’s life where some of these factors begin to matter less and less, and the product, business model and employees start to matter more and more. The celebrities who tend to win out in the long term don’t simply provide an endorsement for their company. They are intimately involved in the story, the strategy, the operations and the marketing of their business. They focus on a real problem, and help solve it.
There are only so many times you can post to your followers; only so many talk show interviews you can have; only so many favors you can pull. When these advantages finally play out, then it’s down to business and the work begins.
Click Here To Download The CSV Table Containing 23 Celebrity Retail Brands…
- Name of Celebrity Startup Founder
- # of Instagram Followers
- Estimated Monthly Website Traffic
- Alexa Rank
- Date Founded
- Retail Category
To Learn More About How ReSci’s Marketing Artificial Intelligence Can Help Your Brand: Click Here For A Demo