How ULTA Beauty is Developing Loyal Customers

Loyal customers are what every brand is after. Considering the cost to acquire new customers — as well as the challenge of identifying which of the multiple touchpoints drove them to purchase — many retailers are recognizing the value in spending to retain the customers they already have. From technology upgrades to improve the shopping experience to better loyalty program perks to hiring top-notch employees, retailers are testing a number of tactics generate lifelong fans.

In a panel discussion at last week’s SAP Retail Forum in Miami Beach, Lockie Antonopoulos, principal architect at ULTA, talked about how the fast-growing beauty brand is winning customers’ loyalty.

Ears to the Ground
ULTA’s customers are enthusiastic about beauty, and are looking to the brand to serve all of their needs. The retailer’s loyalty program — Ultimate Rewards — boasts more than 16 million active members, who account for 80 percent of the company’s sales.

“We’re thinking about the loyalty experience every day,” said Antonopoulos, noting that ULTA listens to what its members want, don’t want and are dissatisfied with. Social media has proven to be a valuable resource for ULTA as it mines for customer feedback. It then takes that feedback and tries to personalize the shopping experience — both in-store and online — to each member.

In addition to personalizing the shopping experience, ULTA works to reward its customers for their loyalty. For example, the retailer frequently invites its Ultimate Rewards members to special in-store events that are closed to the public. Furthermore, ULTA offers all shoppers “clientelling” services such as free beauty consultations with their makeup, hair care, nail care, etc., experts.

“We then attach the info we get from the consultation to our loyalty program, which enables further personalization,” Antonopoulos said.

Challenges to Overcome
Despite the overwhelming success of ULTA’s loyalty program — and its customer retention efforts in general — there are still things the brand needs to do better, Antonopoulos acknowledged. He cited finding unique rewards for loyal customers, developing consistent messaging across all customer touchpoints, and giving store associates access to a customer’s online profile (e.g., items/categories browsed, past purchases) as examples.

Then there’s the whole issue of privacy and not wanting to be “creepy.” ULTA is using push/SMS messaging to communicate with customers, but cautiously balances how closely it wants to be monitoring its customers. Antonopoulos noted that the retailer's millennial customers are typically more willing to share and use technology to enhance the shopping experience.

What’s Next?
When asked by the session’s moderator — Tim Denman, senior editor of RIS News — what he sees coming next in the area of customer loyalty, Antonopoulos focused on two areas: order fulfillment and personalization.

“Digital purchases delivered within 12 hours is going to be the table stakes in the next two [years] to three years,” Antonopoulos said. “And giving customers access to the data you have on them, such as their purchase history. A lot of customers have likely forgotten the type of mascara they bought last year.”