Following recent declines in net earnings and skin care sales reported by the Estée Lauder Companies, risk management firm Chargebacks911 examines the potential impact of eroding brand loyalty and offers tips to boost sales and market share.
(Tampa Bay, FL) September 15, 2015 – The Estée Lauder Companies recently issued financial results for the fourth quarter and fiscal year ending June 30, 2015, revealing significant drops in quarterly net income and skin care sales (1). While the declines were primarily attributed to currency impacts and accelerated retailer orders, Chargebacks911—a leading dispute mitigation and risk management firm—posits that decreasing brand loyalty may be contributing to the downward trend and proposes strategies for companies to reclaim lost sales and market share.
According to Estée Lauder’s latest financial report (1), net earnings for the fourth quarter of 2015 fell 41% compared to 2014: from $257.7 million to $153 million. A breakdown by product division shows skin care brands suffered the greatest decline during the fourth quarter, with a 16% drop in net sales—from $1.2 billion to $1 billion—that still translates to a 9% decrease in constant currency. The report stated that the comparative declines reflect “the negative impact of foreign currency translation” and “accelerated orders,” as well as “the prior year’s significant launch activity by the Estée Lauder and Clinique brands” (1).
Monica Eaton-Cardone, co-founder and Chief Operating Officer of Chargebacks911, acknowledges that currency fluctuations, accelerated orders and a lack of new product launches had a major impact on Estée Lauder’s earnings. However, she believes today’s shifting consumer loyalties may also be partly to blame.
“Estée Lauder and its brands are well known and widely respected. But with the growth of eCommerce and online advertising campaigns, brand loyalty faces increasing challenges,” Eaton-Cardone explained. “While consumers once prized quality and brand reputation, online comparison shopping has led them to become more focused on price and value. And with online merchants and lesser-known brands promoting similar products at a lower cost, many consumers have supplanted brand loyalty with economic logic.”
Eaton-Cardone points to a Nielsen report that found only 16% of North American consumers were “completely loyal” to personal beauty product brands (2). Across all product and service categories, 61% of North Americans said they would be willing to switch brands or retailers for a better price, while only 20% would switch for better quality (2)—which may explain why premium brands have been losing ground in recent years.
For manufacturers and retailers seeking to reclaim lost sales and market share, Eaton-Cardone shares her top three tips for boosting brand loyalty:
Position your company as an expert and innovator. Find out what challenges your target audience is facing, then provide useful advice and solutions—and publish that content through multiple channels. Value-added information can quickly spread to new audiences through social sharing.
- Be a Thought Leader: Position your company as an expert and innovator. Find out what challenges your target audience is facing, then provide useful advice and solutions—and publish that content through multiple channels. Value-added information can quickly spread to new audiences through social sharing.
- Maintain Your Value: Avoid lowering your brand’s standards to compete with others. If you cut quality or features to achieve a lower price point, or if you reduce product size or quantity to increase profitability, you may lose existing customers if their perceived value of your brand diminishes. If you implement changes, make sure they add
- Listen to Consumers: Monitor your brand, competitors and industry through social media and other channels. If consumers have a complaint or question, be quick to address and resolve it. If you discover an unmet need, be the first to develop a solution.
In the case of eCommerce merchants and manufacturers with online storefronts, Eaton-Cardone also advises companies to employ an effective risk management solution. “If your sales are declining due to eroding brand loyalty, chargeback fraud can further compound those losses,” she cautions.
Eaton-Cardone urges Internet retailers to learn how to recognize potential cases of cybershoplifting and effectively dispute fraudulent claims, and she encourages business owners to download Chargebacks911’s free chargeback prevention eBook, which outlines actionable steps to fight chargebacks and preserve profits.
For more information on Chargebacks911 and its dispute mitigation and chargeback management solutions, visit http://chargebacks911.com.
About Global Risk Technologies and Chargebacks911:
Global Risk Technologies is most known for its role in payment processing solutions that cater to each side of the value chain: Chargebacks911.com and eConsumerservices.com. The firm is headquartered in Tampa Bay, Florida, with offices in Ireland and Atlanta. They have approximately 350 employees worldwide and currently manage over 200MM transactions worldwide each month.
Chargebacks911 is a division of Global Risk Technologies, and was developed specifically for merchants to offer immediate aid through proprietary technology and provide the necessary function that gives merchants the freedom to focus on their core competency and optimize their in-house skill set. Chargebacks911 focuses on chargeback mitigation and risk management. They specialize in servicing Internet merchants and acquiring banks, offering dispute response solutions and deep analytics. Chargebacks911 works with their client base to help them keep dispute rates down and retain their ability to accept credit cards. For more information, visit www.chargebacks911.com.
- The Estée Lauder Companies Inc. “The Estée Lauder Companies Reports Strong Adjusted Constant Currency Sales and Earnings Growth in Fiscal 2015 Fourth Quarter and Full Year”; press release issued August 17, 2015. businesswire.com/news/home/20150817005232/en/Estée-Lauder-Companies-Reports-Strong-Adjusted-Constant
- How Loyal Are Your Customers?; report issued November 2013. nielsen.com/content/dam/corporate/us/en/reports-downloads/2013%20Reports/Nielsen-Global-Report-of-Loyalty-Sentiment-November-2013.pdf
Karla Jo Helms
Phone: 888-202-4614 ext. 802