The financial impact of loyalty in the beauty and cosmetics industry is undeniable—especially with the global cosmetics market projected to grow from $108.4 billion in 2024 to over $132 billion by 2029 (CAGR of 3.8%)1. With nine out of ten consumers2 enrolled in at least one loyalty program and 90% of companies offering loyalty initiatives3, brands must go beyond transactional benefits to create meaningful, long-term customer relationships.
The Financial Impact of Loyalty Programs
Loyalty programs are powerful revenue generators. Members of loyalty programs contribute 12-18% more annual revenue growth4 than non-members, and loyal customers spend 43% more on average. Furthermore, 83% of businesses with loyalty programs5 report positive ROI, with loyalty initiatives delivering 5.2 times more revenue than their costs.
In beauty, where brand identity, routine, and personal values play an important role in consumer behavior, loyalty is a strategic growth lever. With online channels now contributing 40% of global cosmetics sales and mobile driving 64% of that digital revenue1, there's a golden opportunity to reinvent loyalty for a digital-native, brand-conscious audience.
The Evolving Mechanics of Loyalty
To thrive in today’s market, beauty brands must move beyond traditional points-based programs and embrace innovation. Here are some of the biggest trends transforming loyalty programs:
1. Hyper-Personalization Using AI
AI-driven personalization is revolutionizing loyalty programs by delivering customized experiences based on real-time data. By analyzing customer behaviors, preferences, and past interactions, AI enables brands to craft offers that resonate with individuals. For example, a skincare brand might offer targeted product bundles based on skin concerns and routine frequency.
The evolution of AI has seen three significant waves: the first wave focused on predictive capabilities, the second introduced co-pilots to assist human decision-making, and now, the third wave brings autonomous agents. These agents enhance personalization by independently managing customer interactions and delivering tailored experiences across various platforms.
In the beauty market, where ingredients and product quality are top purchasing drivers, AI can tailor experiences down to preferred product formats, tones, or even routines—deepening engagement and increasing conversion.
2. Gamification in Loyalty Programs
Gamification is an increasingly popular way to boost customer engagement. By integrating game-like mechanics such as challenges, leaderboards, and rewards, beauty brands can make loyalty programs more interactive and fun. Retailers are launching AR experiences where customers earn rewards by engaging with virtual try-ons, product quizzes, or completing social challenges. For example, Sephora’s Beauty Insider consistently ranks among the top beauty loyalty programs due to its mix of gamified features and exclusivity.
3. Omnichannel Loyalty Programs
Beauty shoppers move fluidly across channels. A customer might discover a serum on TikTok, try it via a virtual mirror on the brand’s site, then buy it in-store or through a subscription box. Omnichannel loyalty ensures that points, preferences, and offers follow them seamlessly.
Online sales in the beauty and personal care market are projected to reach 44.8% by 2029, up from 32.3% in 2023—while offline remains relevant at 55.2%1, showcasing the ongoing importance of blending digital and physical channels. In cosmetics specifically, mobile accounted for 64% of online revenue in 20231, emphasizing the need for mobile-optimized, omnichannel loyalty journeys.
4. Subscription-Based Loyalty Programs
Subscription-based loyalty models are gaining traction as customers seek exclusivity and premium benefits. These programs go beyond simple perks—they offer ongoing engagement that keeps customers coming back. The numbers tell the story: The global beauty subscription box market was valued at USD 2.85 billion in 2024 and is projected to soar to USD 21.9 billion by 2032, growing at a CAGR of 24.7%6. In the U.S. alone, the market stood at USD 1.22 billion in 2024, with an expected CAGR of 21.6% through 20307. This explosive growth underscores consumer appetite for curated, recurring beauty experiences.
Brands like Ipsy, Birchbox, and Allure Beauty Box have successfully embraced this model—delivering personalized product discovery, exclusive samples, and early access to new launches.
As more consumers turn to subscriptions as a trusted way to explore skincare, makeup, and wellness products, integrating subscription-based loyalty becomes a strategic advantage. For beauty brands, it’s a chance to build deeper relationships, ensure recurring revenue, and differentiate in a saturated market.
5. Tiered Loyalty Programs
Tiered loyalty programs create aspirational value by incentivizing higher spending and engagement. Customers move up through different tiers—each offering more exclusive benefits than the last—encouraging them to increase their spending to unlock better rewards.
For example, Ulta’s Ultimate Rewards and Estée Lauder’s tiered programs drive strong retention by offering perks like VIP previews, deluxe samples, and complimentary makeovers.
Looking Ahead: The Future of Loyalty in 2025 and Beyond
Loyalty programs are no longer just about discounts and rewards—they have become strategic assets that drive customer lifetime value. As beauty brands refine their loyalty strategies, integrating AI-driven personalization, gamification, omnichannel engagement, and premium loyalty experiences will be crucial for staying ahead.
The key to success lies in delivering value-driven, emotionally engaging, and digitally optimized loyalty experiences that resonate with today’s beauty consumers—many of whom are mobile-first, ingredient-aware, and community-driven.
At OSF Digital, we specialize in helping beauty and cosmetics brands transform their loyalty programs into revenue-generating powerhouses. By leveraging AI, automation, and data-driven insights, we enable businesses to create personalized, seamless loyalty experiences that drive customer engagement and long-term growth.
Check out our work with schuh, Harvey Nichols, and Marks & Spencer to see how we’re redefining loyalty for the next generation of customers.
Are you ready to redefine your loyalty strategy for 2025?
Contact us to learn how OSF Digital can help you build next-generation loyalty programs that drive results in beauty and personal care.
Sources:
- https://www.statista.com/outlook/cmo/beauty-personal-care/worldwide#analyst-opinion
- https://www.snipp.com/blog/loyalty-program-providers-how-to-choose
- https://queue-it.com/blog/loyalty-program-statistics/
- https://www.businessdasher.com/customer-loyalty-statistics/
- https://antavo.com/blog/global-customer-loyalty-report-2025/
- https://www.businessresearchinsights.com/market-reports/beauty-subscription-boxes-market-118203
- https://www.grandviewresearch.com/industry-analysis/us-beauty-subscription-box-market
- https://www.youtube.com/watch?v=G-V2y9lHK4c&t=71s
