The Community Effect: Rare Beauty’s Path to Uncommon Success
Why every company should learn from this emerging beauty brand
Hi there, welcome back to Unbound! We're about to take a deep dive into the secret sauce behind Rare Beauty's meteoric rise. The brand has reportedly reached a staggering US$2 billion valuation in just four short years, with reports that it is fast becoming an attractive acquisition target for more prominent players.
After a bit of a hiatus, I'm thrilled to share my continuation piece on this incredible brand. But as I started putting pen to paper, I realized the real story wasn't just about Rare Beauty's products or campaigns. No, the heart of this brand lies in its ability to tap into something much more profound—which we will deep-dive into later!
You see when I was facing some personal challenges recently, it was the unwavering love and understanding of those closest to me that helped me transform despair into hope. And that got me thinking about just how crucial a sense of belonging is, especially in today's continuously evolving digital-first world.
Living with Never Ending Change
On average, people spend a staggering 6 hours per day on screens. A more virtual existence has profound implications, from our social connections and mental well-being to the way we work, learn, and, of course, shop.
While we are aware of these trends, I dug a little deeper to quantify their impact:
Online dating has officially become the most common way for people to meet romantically, and the speed of adoption is mind-blowing!
There is a growing loneliness epidemic affecting society that we all feel, according to Gallup:
Nearly one in four people worldwide (+1bn people feel very or fairly lonely) according to a recent in more than 140 countries.
1. Mental health issues are increasing, especially in younger generations. The WHO estimates:
+1 bn people are living with mental, neurological, and substance use disorders.
Suicide is the fourth leading cause of death among 15–29-year-olds.
You're probably wondering what this has to do with Rare Beauty.
Rare Beauty: A Community Powerhouse
Even though social media has changed our behavior and how we interact with others, the intrinsic human need to belong and stay connected has and will remain UNCHANGED. And that got me thinking:
What if a brand could bottle that same sense of belonging and connection? Will brands become a new epicenter for young generations to build and nurture relationships?
And that, my friends, is where Rare Beauty savvily comes in.
In a few years, the company has harnessed a global community of ~11 million across IG and TikTok by connecting with people looking for outlets that advocate for inclusivity and mental health and promoting messages of empowerment and self-acceptance. This resonates strongly with so many, especially with Gen Z's values, allowing them to express themselves authentically and find belonging in a community of like-minded individuals!
I was astonished to find hundreds of free posts from customers thanking the brand for creating a safe space. To say the least, I was impressed and baffled.
With this realization, I went deeper into the rabbit hole of their community strategy, breaking it down into five pillars of how the brand is achieving this incredible authentic relationship with their customers:
1. Leverage Selena Gomez's unique social media platform and perception:
One thing that has truly captivated me about Rare Beauty is its strategic use of data, from the get-go. I might be mistaken, but my instinct tells me that data from Selena Gomez's social media platform was the cornerstone of building the brand.
Rare Beauty's brand persona is seamless and resonates deeply with its young audience. It's a warm invitation and place to celebrate yourself and your standards of beauty.
Selena Gomez's brand identity is strongly interwoven with Rare Beauty's unique value proposition.
If you can validate what your customers want and need, crafting an emotional and distinct narrative increases your chances of success MASSIVELY.
You're not blowing millions on empty marketing. You're creating products that have an immediate market fit while building a loyal fanbase and advocacy. So many good lessons…
The lingering questions I ask myself are: What happens to the brand if Selena ever hits a rough patch personally (like Chiara Ferragni)? And ultimately, can Rare Beauty become a standalone brand without her?
Clear and value-aligned messaging:
Nothing is more powerful, refreshing, and empowering than an active invitation to be your true self. I genuinely admire that younger generations no longer aspire to meet unrealistic and narrow beauty standards.
I think we're all tired of this absurdity!
People who buy Rare Beauty want to feel good in their OWN skin and not look like SOMEONE ELSE.
"Being rare is about being comfortable with yourself. I've stopped trying to be perfect. I just want to be me." Selena Gomez
As GenZ demands more inclusive representation, authentic self-expression, and purpose-driven brands that align with their values, brands with a purpose and cohesive storytelling can build cultural capital and robustly build brand equity.
I recommend reading Katie Welch's explanation of social media users today, dropping wisdom like this:
"What is interesting with social media is that it is not so much a demographic as it is a psychographic. If someone on TikTok is interested in beauty content or content that is more about their self-worth and mental wellbeing, then that might show up in their feed."
User-generated content:
In an algorithm-driven world, nontraditional marketing is everything. It's more about lifestyle, interests, relationships, and emotional relevance.
Brands that have built tight-knit communities where followers actively engage with the content tend to perform better in social media, and algorithms recognize this as a signal of relevance and interest. Rare Beauty's success here underscores the impacts of visibility and relevance in a crowded digital landscape.
Rare Beauty leverages its User-Generated Content (UGC) by encouraging beauty creators, influencers, and consumers to share their #RareRoutine online. This dynamic is complemented by having a standout product or Hero Product (the blush in this case) - crucial for influencers who depend on credibility and audience trust.
This creates a virtuous cycle of quality, inclusivity, authenticity, community, and strong support from content creators.
UGC fosters a STRONGLY CONNECTED community of brand advocates, which drives engagement and unprecedented growth. That's why its global community stands behind it, ride-or-die style.
Data -> Community-Driven Product Development:
Before Rare Beauty's launch in September 2020, Gomez and her team spent hundreds of hours on Zoom having "Rare Chats" with beauty content creators and potential customers. These conversations were a goldmine of customer data from a spectrum of sources, covering everything from co-creation, product feedback, distribution strategies, community engagement, purchasing power, and content creation.
This firsthand data was a treasure trove that enabled Rare Beauty to tactically tailor its marketing strategies and contribute significantly to the triumph of products like the 'Pinch Me' blush. By 2022, the brand sold 3.1 million units of its bestselling Rare Beauty Liquid Blush (which retails for $23 per unit).
This approach helps Rare Beauty stay at the forefront of innovation and allocate the right resources to product development. That's why they have initiatives like the Rare Collective - " a community of creators passionate about beauty, self-love, and content creation."
Giving back to its community
Rare Beauty has skilfully crafted a unique space where its community thrives, both pre and post-product launch. It gathered its most engaged followers for heartfelt discussions on platforms like Geneva and then moved to TYB, a pioneering "play-to-earn" platform.
On TYB, the brand introduced a dynamic way for its community to earn rewards, from coins to discounts. This digital engagement is complemented by real-world interactions and exclusive incentives, blending online and offline experiences to strengthen bonds and enhance brand loyalty.
Rare Beauty is setting a new standard for creating brand affinity in the digital age.
Mental Health
To navigate this challenging but essential subject, the company delivers co-created mental health content by the Rare Beauty Mental Health Council, which is comprised of advisors from the mental health, nonprofit, academic, and medical fields. I find this extremely valuable, as one of the primary challenges in addressing mental health issues among younger audiences is the significant shortage of adequate support and resources.
Mental health problems remain highly stigmatized, making it difficult for young individuals to feel comfortable seeking help and support. Compounding this issue is the lack of awareness about mental health conditions and the available resources to address them. Without proper education and information, young people may not know where to turn for assistance, further exacerbating the challenges they face in addressing their mental health needs.
Impact:
Looking at GenZ and Millennial behavior, around 80% of them are more likely to base their purchases on a brand's mission or purpose. Rare Beauty generates impact in three ways, and its community constantly lauds it:
1% of all sales go to the Rare Impact Fund, which provides grants to organizations that deliver mental health services, education, and support to youth. To date, the fund has raised US$6M in contributions and distributed +US$3M worldwide.
Although Rare Beauty does not proclaim itself a truly sustainable brand, as it lacks transparency about sourcing practices and sustainable materials, it has made some commendable efforts in packaging and ethical practices. I thought it was pretty cool that its packaging is made of 100% recyclable boxes from responsibly sourced, FSC-certified materials, and it uses water-based ink for printing.
PETA certifies the brand as cruelty-free and 100% vegan, avoiding animal-derived ingredients and animal testing.
Community Translates into Brand Equity & Valuation
Rare Beauty shines in the crowded beauty market by skillfully harnessing its vibrant community to build a strong brand, setting itself apart as a symbol of trust, credibility, and relevance.
In all honesty, my market research reveals a thoughtfully and intentionally created brand that transcends a category of products to become a brand that connects with its customers.
According to Piper Sandler, the company has become a relevant player in the cosmetic space globally. Talk about making a splash!
Echoing Warren Buffett's wisdom, a strong and defensible brand is the cornerstone of a company's long-term success. What makes a brand strong or has a 'wide moat' in Buffet speak continuously evolves with time. Brands like Rare Beauty are at the cutting edge, redefining the creation of brand equity in a digital age.
All of these accomplishments have made the company highly desirable, not only by its community but also by investors. In mid-March 2024, the company boasted a valuation of US$2bn. 2023 was another incredible sales year, estimated at US$300M—US$350M. Very few emerging players in this space manage to accomplish sales above US$100M a year. As I covered in my previous piece, in just the past few years, +50 celebrities launched brands, and most of these did not pop.
Is Rare Beauty aiming to boost its valuation? Are they leveraging their rapid sales growth and attractiveness to sell before the brand loses relevance? Are they looking to test the waters and measure its fanbase response to the potential sale?
By no means am I implying that this company is PERFECT. However, I strongly believe in studying success (as well as failure) to learn great lessons, and Rare Beauty is teaching us how to create great communities as a pathway for success in the ever-evolving world we live in.
Thank you for taking the time to read Unbound! I can't wait to hear your thoughts and learn from your experience. Feel free to reach out to me anytime!
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