L’Oréal believes that companies that just sell products will not be successful in the future, with its chief marketing officer in Western Europe, Stéphane Bérubé, saying services are becoming key to reaching and engaging with consumers.
“L’Oréal’s has been selling products for 110 years but we need to start selling services. I believe that the company that just sells products will not be successful,” he told the Festival of Marketing last week (11 October).
He cited augmented reality beauty service Modiface, which L’Oréal bought in March, as an example of how product business can diversity into services. It uses AR to develop custom beauty apps, offering, for example, a tool that allows consumers to try out different make-up and hair products online to see how they will look.
He said the service has been great at driving engagement, although he admitted it’s impact on sales is less clear.
“We don’t know how much more we’re going to sell but it is getting huge traffic right now,” Bérubé added.
L’Oréal’s digital transformation
L’Oréal has shifted it strategy in recent years, moving away from its previous aim to be the number one beauty brand to instead become “the number one beauty tech company”. Purchases like Modiface are part of this “new era”, explained Bérubé.
The brand’s digital transformation is being spearheaded by CEO Jean Paul Agon, but Bérubé said that shift is “almost counter-intuitive” because it came off the back of one of L’Oréal’s most successful years in 2014.
Bérubé explained: “I was in Paris and we had had a good year of growth and the share was very high. We were expecting a big thank you and congratulations from our CEO, which he did, but he also said ‘everything you do is wrong and we need to change everything’.
“I went away and realised he was right. We needed to change before it was already too late. That included how we went to market, the media mix, everything.”
There is no way you can transform a company with consultants and agencies, you need to have the expertise close to you. – Stephane Bérubé, L’Oréal
Bringing experts in-house was crucial to overhauling L’Oréal, which now has nearly 3,000 digital specialist worldwide compared to 300 in 2014.
“We could not have done this without bringing expertise in-house. There is no way you can transform a company with consultants and agencies, you need to have the expertise close to you,” said Bérubé.
He admitted that despite now embracing technology and social he wasn’t always at the forefront: “I was personally very late to digital transformation. I didn’t join Facebook in 2005, I wasn’t necessarily pushing for ecommerce. Fifteen years ago people were saying consumers will never buy beauty online because you need to touch and smell the product. Today that is a completely stupid thing to think.”
Now the majority of growth comes from ecommerce. And Bérubé urged marketers to integrate tech into every aspect of their thinking, arguing: “There is now a tech aspect to being a marketer and if you’re a marketer who has no opinion on AI and think that digital people should take care of digital things that is a big mistake.”
Bérubé, who has been CMO in Western Europe for almost a year, admitted targeted ads can feel “a bit creepy” but ultimately make for a better experience for the consumer and more effective marketing.
He said: “If I told you I was going to buy a Lancôme ad for football, people will call me crazy and say it should be a beer ad. But the power of data is my wife could be watching the match on one TV and I could be watching on another. I should get the Heineken ad and she should watch the same game at the same time and get a make-up ad.”
Despite the importance of technology, he concluded that one thing that will never change is the “love of brands”, which he defines as “loyalty beyond reason”. He explained: “I’ve worked in Europe and America for 22 years and one thing I believe will never change is the strength of brands.”