Consumer Spending Shows Signs of the ‘Lipstick Effect’ Amid Continued Economic Uncertainty
The Q1 2023 edition of Klaviyo’s Business Trend Recap, an intelligent marketing automation platform that uses customer data to provide the most recent insights into online shopping trends, was just released.
According to Andrew Bialecki, CEO and co-founder of Klaviyo, “consumers are prioritising spending their money on small, discretionary items that bring them joy and improve their quality of life.” Businesses now have a better chance to meet the emotional needs of their clients and offer them services and products that connect with them on a deeper level. Even in the most difficult economic times, businesses can foster brand loyalty and long-term growth by capitalising on consumers’ desires to feel good.
During Q1 2023, which runs from January 1 to March 31, Klaviyo combined insights from more than 250 million global shoppers across more than 82 countries and territories using the company’s platform. The top highlights for this quarter include*:
- Despite continued economic uncertainty, consumers are still spending and even increasing their average order value by 13%. This is supported by the well-known “lipstick effect,” where consumers tend to spend more on small, luxury indulgences during uncertain times, such as mascara, serums, and other Health and Beauty products.
- In fact, the Health and Beauty category saw an increase in order count by 36%, while Jewelry saw a decrease of 15%.
- In addition, within Health and Beauty, order count for mascara increased by 86%, and by 65% for serums.
- As pandemic trends continue to soften, the experience economy is growing. Consumers are spending more on services and experiences, as evidenced by the decrease in the House and Home Improvement category, where both order count and average order value (or AOV) decreased by 19% and 17%, respectively.
- With summer just around the corner, consumers are getting ready to spend more time outdoors, and we’re already seeing an increase in AOV for Sporting Goods by 8%.
- We’re seeing a significant rise in the number of texts sent to consumers as businesses continue to realize the efficacy of the medium. In Q1, businesses drove nearly 28% more revenue from SMS campaigns than they did in Q1 of 2022.
According to Ben Tulagan, Director of Ecommerce at Sneaker Politics, “Since implementing Klaviyo’s SMS capabilities, our ecommerce numbers have seen stunning growth and we’ve built stronger relationships with our customers.” When the chance to purchase the newest styles of trendy footwear or clothing arises, our demographic is always prepared to make a purchase because they are concerned with the present moment rather than idly checking their inboxes. The quick-moving, can’t-miss nature of SMS is beneficial because it enables us to move product at top speed and gives our closest subscribers access to items that are genuinely special to them.
The platform from Klaviyo is made to make it even simpler for businesses to build trusting connections with their clients and deliver the top-notch customer service. With Klaviyo, businesses can automate personalised email and SMS communications that make customers feel seen by fusing customer data with more than 300 native integrations. In order to help sellers quickly sync real-time and historical data from Square Online into Klaviyo, including event-level data, profile properties, and catalogue information, Klaviyo recently announced a new integration with Square Online. This will enable sellers to quickly deliver truly personalised experiences across their marketing channels, including email, SMS, forms, and more.