Celebrity Brands: The Effects of Star Power on a Startup
How far can star power take a new brand? Kylie Cosmetics by Kylie Jenner made a shocking $420 million in revenue in its first 18 months. But Kylie isn’t the only celebrity to make waves with a startup. We’ll take a look at popular celebrity-owned brands and see how they leverage AI-enabled marketing solutions and their star power to succeed.
Leveraging Large Followings
Brands with a large email list or a following on social media see a lot of “owned traffic,” which is quite valuable. The obvious benefit is massive reach, but this high volume of traffic also offers an effective way to reach customers that doesn’t involve dipping into the ad budget.
As a celebrity or influencer, imagine you post a few lifestyle shots with different products. Due to your large reach and engaged audience you can quickly gauge which products are winners and which aren’t. Your website and pixel immediately go to work in collecting conversion data and valuable information on who will buy what, when.
Companies without this massive organic following spend a lot of money running ads and calibrating the brand’s audience to find a 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. Once the website records 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 subscribing. 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 to purchase.
The Value of Connections
Celebrities are very well connected professionally. They often rub shoulders with media and other industry giants. Star power goes a long way. As a celebrity, it’s relatively easy to get a plug or appearance on a national television show focusing on your new product. The same goes for having a major magazine showcase your brand in an article.
Let’s not forget hiring: there’s a certain allure to working with a celebrity entrepreneur. This brings quality talent which can be vital in building a strong foundation for a growing brand.
Using Technology and Data to Power Personalization
In a fragmented retail environment, celebrity founders are finding success by connecting with their customers. Celebrity-backed companies are increasingly using technology to focus on personalization.
Reese Witherspoon (Draper James), Sarah Michelle Gellar (Foodstirs), and many other celebrity founders 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.
Brands using Retention Science send email and SMS messages 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 and Instagram to acquire more customers.
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) were 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 in a different stage it might send a different email 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 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. Use of item triggers based on product affinities is just another way celebrities are using AI to stay hyper-relevant to customers and boost KPIs 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.
Getting Down to Business
Don’t be fooled- there comes a time in every celebrity brand’s life when some of these factors begin to matter less and less, and the product, business model, and customer service start to matter 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 to solve it.
ReSci is a team of marketers and data scientists on a mission to democratize AI. We make powerful recommendations and predictions accessible to brands.
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