Just about every company has a loyalty scheme these days with perks for subscribers or members, from airmiles, supermarkets, and coffee shops. We’re used to it, and expect it! Birchbox, one of the leading beauty subscription boxes has been renowned for of the best schemes in the business that offered £5 or $5 in points for every review of a monthly box and its contents. Boxes cost £10 or $10 so most people were sold on the premise they would get half the value of the price paid back in points to spend in the online shop, and that was a huge selling point. People search for and love their extra perks, so it makes little sense of a company to get rid of them, because the savvy consumer generally wants some extra for free.
In July 2016, Birchbox USA decided to scale back on the points offered, and adjusted the benefits available to subscribers. Instead, they encouraged loyalty with the Aces program, which offered VIP benefits for long-term subscribers, or those who spent a certain amount each year. Subscribers now only get points for the first five reviews (10 points for each review), but they have removed the 100 points ($10) threshold to use the points and reduced it to 10 points ($1), which makes it easier for people to spend. As with most things, people don’t like change and while some subscribers stayed, others left and looked for other boxes in what is now a fiercely competitive market. In its place are more discounts when you purchase items.
Birchbox had to look at what was sustainable, and it’s not the first company to cut back on customer benefits when profits are down, but it’s how it is done that matters too. The Aces program didn’t seem to offer much (free shipping on orders, and first choice of items for a box) to compensate, and to become an Ace wasn’t that easy. Initially it required a $500 spend in a calendar year, and then was lowered a few months later to $400, and now it’s $300. The total can be an accumulation of subscription costs, purchases, or gift subscriptions, and has to be renewed each year. The program has evolved with Aces earning slightly more (1.3) than a point for each dollar spent, and flash benefits such as bonus points to spend, but is focused more on how much is spent rather then the length of the subscription. Therefore, a long-term subscriber who rarely buys from the online shop would not get to be an Ace. Subscribers were given a month before the changes took effect, but the changes weren’t a surprise as Birchbox had already suspended its Canadian operations due to costs.
It was a matter of time before the Birchbox UK points would undergo a similar change, and that has finally happened. On 19 April, Birchbox UK announced it was replacing the much loved points system with a new range of benefits for subscribers. Unlike the American branch, subscribers were only given two weeks notice, as points will cease to be earned after 2 May on purchases, referrals, or reviews. Many subscribers who had been saving their points for a purchase were caught unawares, and many appear disappointed with the changes. I do feel that the company will have to adapt accordingly, and already after what must be an increase of cancellations over the past few days, current subscribers are now offered a discount in the shop if they click on the cancel subscription button in a bid to persuade them to reconsider.
The points system wasn’t complicated, but there are a segment of subscribers who rarely buy from the shop, and who would save up their points from reviews and use them instead, and thus Birchbox made very little money from them. It seems Birchbox are now targeting and focusing on the subscriber who wishes to purchase instead, and perhaps they didn’t realize for many the points were an incentive to buy. I’m surprised that they didn’t follow the current US model, because simply offering discounts isn’t enough these days. There are so many discount codes on various websites, Birchbox need to have something a little more unique.
Birchbox say the changes are in response to feedback, and in order to make the business sustainable. Most people would believe the latter, but I doubt the majority would have wanted the points system to be culled in lieu of discounts. Even when you had a bad box, people could always fall back on the fact you would still get £5 back in points. Now that no longer exists, what if you get a few bad boxes or products that you don’t like? Return the box or cancel? There is no other immediate incentive. With the point system it worked out to be 50% back, although there are some subscribers on social media that probably aren’t that good at maths and think that a 15% discount is better than a 50% return! You would need to spend at least £30 a month in the shop to get the equivalent return under the new scheme.
Here is a current list of the new benefits from 3 May, and I say current because I expect they will be tweaked in the next few weeks and months. VIP status is gained after six months (continuous) of being a subscriber, although the extra perks are somewhat limited.
- 10% off the products sampled that month ~ What if none of the products are anything you like or want, or other outlets offer it cheaper? It’s not a huge incentive as competitors usually offer the same discount, if not more.
- Choose a product or design of a box each month ~ This benefit already exists!
- Free delivery when you review a box ~This is slightly misleading as it doesn’t mean you get the £2.95 shipping deducted from your subscription box costs, but offers free shipping on your next order from the shop. It’s not much of a benefit if you aren’t buying anything.
- £5 voucher for a referral ~ This is the same as the current perk where 50 points were given for a referral. It used to be 100 points until it was changed a few months ago. When that change occurred, it was evident other changes were going to take place.
- Early access to limited edition boxes ~ This perk already existed as subscribers are emailed advance notices with an option to be put on a wait list.
- Birthday offer ~ The birthday gift was 20% off purchases over £35, so maybe they will provide a better gift? I never used mine as often the items I wanted were out of stock.
- VIPs get 15% off everything in the shop (though I’m not sure about sale items) and first choice to choose a product or design of a box ~ This is only of use to people who buy from the shop. While there are some exclusives, ranges tend to be limited, and competitors offer similar discounts with a loyalty scheme, and free gifts. If you look at FeelUnique, currently they have a loyalty scheme, plus discount codes, and free gifts that can all be used in the same transaction.
The bottom line is that Birchbox is focusing on the retail aspect, and while the shop in the US has more choice and brands, the UK branch has far fewer and is often out of stock of items. This has already caused some frustration among consumers who wished to spend their points and use the discount codes only to find they have expired once the product they want is back in stock. Younger beauty buyers are often impulsive and impatient and the market must respond to the demographic targeted.
I used to work for a beauty company that offered a loyalty card with tokens that once saved up earned them a free product. It helped, but I had the discretion to top up with tokens or to give bonus ones to encourage a sale. Customers like free gifts and perks, and a discount code is something that is expected to be honest rather than a perk. The problem with the new Birchbox benefits is that they giving the subscribers the hard sell, and when any company has to do that (and I used to do this when I worked in marketing) you know that they are clutching at straws.
This looks like the end of Birchbox points in the UK at least, but I imagine there will have to be additional perks added over the next few weeks to make up for it. I do believe that UK subscribers got a good run, and as I have said in other articles, it wasn’t going to last much longer. Birchbox does run some good promotions, such as 2 for 1 box offers, or free gifts with a first box, but they are time sensitive and often are available for a matter of hours while stocks last. The points system is what has kept many subscribers, and I believe they are offering refunds for those who have recently signed up to six month and yearly subscriptions, because what they had signed up for (points for each box), no longer will exist just as they did in the USA. It’s only right and fair, because Birchbox did use the points system as a selling point for their subscriptions, and once removed, they no longer offered what was originally sold.
All loyalty schemes are discretionary, and companies are entitled to terminate them at will, or to change the terms and conditions whenever they wish. However, to keep the consumer happy, sensible companies give sufficient notice when changes are made, so while the customer maybe disappointed, at least they won’t get angry. It’s one thing to gain a customer, but keeping them loyal is just as hard. Good products, customer service, perks, and honesty are all essential for a successful business, and if you fail on any of those, then social media is your worst enemy. Look at the recent United Airlines debacle where customer service was practically nil, and then there were some less than accurate statements made publicly—a prime example of how not to treat customers, or how to address issues as people are opting to use other airlines and even pay more to avoid using the company.
I can see that Birchbox overall needed to adjust the loyalty scheme because they couldn’t afford to keep it running, but what has replaced it isn’t exactly ground breaking. Will it keep loyal customers, and more importantly will it attract new ones? Maybe Birchbox should have kept points for purchases only? At least then people would have an additional incentive to buy as well as the proposed discounts (there was always the odd discount code floating around, so this isn’t a new step). Sometimes it takes more than a discount to tempt a customer —just saying Birchbox, other companies can offer discounts and loyalty points at the same time, and make a profit…
Currently the April box is still available (and it’s a handy drawer box), and will be the last box subscribers can review to earn points. Birchbox still offers good value at £10 plus £2.95 shipping for five beauty products, but without the incentive of review points, time will tell as to how important the points were to the customer.