Ulta captures the frequent buyer with its loyalty program

Cosmetics are becoming a "super consumable" with enthusiastic shoppers buying more often and trading up to more expensive products as they enjoy the extensive customer service available at brick-and-mortar stores like Ulta. Ulta is also making sure the online channel is available in-store, enjoying major growth on mobile device orders. Finally, they have figured out how to leverage the gift-card connection, distributing gift cards to those retail racks we see in the grocery store. 

RIS News: Ulta Solves the Loyalty Puzzle, 2018-Jun-4 by Tim Denman

With over 28 million active users, Ulta has a massive opportunity to track, analyze, and gain actionable insight from its loyalty program. The retailer is investing in its AI capabilities in this key area to further personalize the experience for its shoppers.

Ulta is doing a great job converting casual shoppers into loyal brand fans, fueled in part by its exploding gift card business ― gift card sales increased 45% in Q1. In 2018, the retailer plans to add another 15,000 partner locations to sell its gift cards, a key initiative since the sale of the cards is “driving significant incremental sales and margin dollars,” Dillon says.

Quartz: The one retailer that Amazon can't seem to destroy is in cosmetics, 2018-May-28 by Helen Edwards & Dave Edwards

Ulta Beauty is described as “one of the best growth stories in retail” by UBS, which sets the market for beauty products and services at $139 billion in 2017 and growing. It is growing even as Amazon aggressively expands, powered by a combination of new store openings, exclusive product selection, and a successful loyalty program that supports e-commerce and prestige purchasing. The company also just cracked the Fortune 500 list, securing its place amongst the country’s most successful companies.

Refinery29: Ulta's Revamped Membership Program is a Beauty Lover's Dream, 2018-Jan-4 by Samantha Sasso

As far as loyalty programs go, Ulta Beauty's is among the best. If you're willing to cash in those catalog coupons every month, you might as well earn some moolah while spending half of your paycheck on mascara and luxe shampoo bottles.

Coresight Research: Beauty Loyalty Programs: Sephora Vs. Ulta, 2017-May-5

ULTAmate Rewards: Ulta’s Ultamate Rewards program features value-related rewards, such as points for discounts and extra points accrual for higher-tier members. Indeed, most of Ulta’s customers cite price and promotions as reasons they shop there, according to Prosper Insights Monthly Consumer Survey. 

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Kohl's explains new loyalty program to customers

Actually, the new program is still in pilot, but we're very impressed with the clarity and timing of this announcement. Kohl's is committed to sharing their reasons and plans with their customers. 

Kohl's press release: Kohl’s CMO Greg Revelle Reveals the Future of Loyalty: Kohl’s Rewards, 2018-5-22 

Why change a good thing? We listened to our customers, who gave us a challenge: they asked for more savings, made easier. With this input, we set out to evolve our loyalty platform to make it simpler, more convenient, and bring greater value. We developed our next evolution loyalty program – enter Kohl’s Rewards.

Kohl’s Rewards unifies our three best-in-class loyalty programs – Kohl’s Charge, Kohl’s Cash and Yes2You Rewards – into one platform based on the power of Kohl’s Cash.... 

We also heard customers hate when they don’t redeem their Kohl’s Cash. We want to provide every opportunity to use it. We will automatically keep track of customers’ Kohl’s Cash in the Kohl’s app and will remind them at the register of their Kohl’s Cash balance to ensure they never miss an opportunity to redeem what they’ve earned.... 

Kohl’s Rewards is coming to eight markets – approximately Kohl’s 100 stores – the week of May 21st. During the pilot, we will test, learn, and identify what resonates most with our customers and our Kohl’s associates. We will continue to fine tune the experience to deliver the most compelling program to all of our customers when we roll out the program nationwide in 2019. 

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How zulily harnesses both people and data to drive customer loyalty

With Kevin Saliba of zulily we see amazing, aggressive execution of the 'new basics' of marketing: 

  1. Know why customers stay
  2. Employ and support people who love your customers
  3. Use hard evidence to decide what's working
  4. Innovate constantly.

Retail Touch Points: Exclusive Q&A: How zulily Grew Its Customer Base 22% In 18 Months, 2018-May-23 by Glenn Taylor

Data and hard facts are important in marketing, but there are also elements of “art” involved, according to Kevin Saliba, SVP of Marketing at zulily. The retailer seems to have found the right mix of science and art: zulily has made significant strides to widen its base and foster more recurring buyers over the last 18 months. Since Saliba took over the position in January 2017, zulily has increased its customer base 22% to 6.1 million active customers, while growing its private label credit card membership to 160,000 accounts.... 

[Salida:] "When I took over the marketing role here, I really wanted to make sure that we were customer-obsessed. Delivering the right message at the right time to the customer was important. We’ve done a lot of work on the back end making sure that we have the right analytics in place and data available, so that we can optimize and tweak. The goal is for the customer to get the best message at the right time.... 

It’s really a cross-collaboration effort. We have one team that’s focused on acquiring the customers, another team focused on retention and the lifecycle of those customers, and another team focused on the brand and creative. It takes the entire team working together in harmony to see success.

We’re launching over 100 events a day, and we have more than 9,000 different SKUs. The average Costco has around 4,500 SKUs, so we like to say we’re launching two Costcos a day. It’s probably similar to the newspaper industry in that we start from scratch every day. With that much activity going on, it’s even more important that everyone’s collaborating and working together. "

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Comcast looks to boost customer experience by mimicking the Apple retail strategy

Stores are less and less a place to buy something, and more and more a place you go to do something else. Businesses which realize this will have greater customer engagement and loyalty. 

USA Today: Coffee, iPhones, Wi-Fi? If you thought this was Starbucks or Apple, surprise! It’s Comcast, 2018-May-21 by Charisse Jones

Comcast is betting its new retail stores with giant video screens and comfy couches will help strengthen its connection to customers. There will be zones where they can try out products ranging from Comcast's X1 video player to smart locks controlled with the tap of an iPad.

Comcast plans to set up shop in malls and shopping centers, sometimes moving into spaces that more traditional chains have left empty after struggling with slipping sales.

The stores will be more akin to the sleek, interactive spaces pioneered by tech titan Apple, designed as much around experiencing gadgets as they are to selling them.... 

Comcast customers will be able to continue taking care of routine tasks such as paying bills or swapping out equipment at the new stores. But they will also be able to try out Xfinity apps with various devices in different sections of the store. 

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How loyalty has become a hobby for customers at Marriott

The absolute best result we can get from a loyalty program is that it gets customers more involved with the brand. 

NY Times: Meet the People Who Can’t Get Enough Hotel Points (You’ll Learn Something), 2018-May-15 by Alan Blinder

“I’ve had a chance to read some of your posts,” Mr. Flueck [David Flueck, SVP Global Loyalty] told the group in a tone that set off a roar of laughter.

“We were just kidding,” a woman called out.

Except they almost certainly weren’t.

A gathering of self-educated points experts — and the notion that Marriott would send an executive to spend Saturday night at it — is a reflection of simultaneous eras: one in which travel loyalty currencies have come to stand as both a hobby and cottage industry, and one in which the internet has seemingly transformed everyone into an airline, hotel or restaurant critic.

In the early 1980s, when the most consequential frequent flier programs made their debuts, industry executives thought they were giving rise only to a clever marketing effort that would discourage travelers from toggling among brands. They did not foresee that, decades later, people would be weaving together weekends built around pub crawls and points strategies.

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Loyalty from the inside out at Hilton Hotels

Making sure the employees appreciate and have access to our company's products is key to building loyalty.

Quartz at Work: Hilton Hotels' newest upgrades are strictly for staff, 2018-Apr-2 by Oliver Staley

“Our mission is to be the most hospitable company in the world, and you can’t do that without great people, and you can’t get great people without being a great workplace,” says Matt Schuyler, Hilton’s chief human resources officer. “We can’t have a dungeonous back of house and expect people to have a great workplace.”... 

Hilton and Hyatt are part of growing wave of companies recognizing that money spent on blue-collar workers should be viewed less as an expense to be eliminated, but rather an investment that can reduce costs and improve revenues. Costco, the warehouse retailer, was a prominent early adopter of what MIT lecturer and author Zeynep Ton has dubbed “the Good Jobs Strategy” and other companies have followed, including Starbucks, JetBlue, and Trader Joe’s. Even Walmart, long notorious for its low wages, has realized it needs to improve pay and working conditions if it wants to compete with Amazon....

At Hilton, the investments in service workers are paying for themselves in the higher quality of applicants for vacancies and lower turnover, says Gareth Fox, a vice president for human resources in the Americas, who heads the initiative that Hilton calls Heart of House. Turnover at all US properties fell 6% in 2017, saving about $30 million annually. Among millennials, a famously restless demographic, turnover in the US fell 13% last year, Fox says.... 

The company also overhauled its program for employee discounts at its 5,000-plus hotels....

Employees can book up to 30 nights a year for a fee equal to the cost for cleaning a room. At the budget Hampton Inn, it’s $35 a night. Friends and family of employees are eligible for a discount of 50% off the hotel’s best rate, also up to 30 nights a year. There are additional lifetime benefits for long-tenured employees, who can take advantage of the rates even after they leave the company or retire.

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How Warby Parker recognizes the opportunity in unhappy customers

A frustrated or disappointed customer = an opportunity.

MyCustomer.com: How to be more human, 2018-May-8 by Jeanne Bliss

The first ground rule at Warby Parker is “treat customers the way you’d want to be treated”. When you call them, with those crumpled up glasses in your hand, or for any other reason, a human being answers your call within six seconds. They are a company of people with common values and a series of rituals that fuse them together (such as receiving a copy of Kerouac’s “Dharma Bums,” whose early characters were names Warby Pepper and Zagg Parker). So you are always greeted with someone happy to be on that phone with you – because they work for a company whose values let them take selfless actions that put others before themselves: actions which help them to grow their business.

Through a culture and operation built on value, trust and personality, the number one driver of sales for Warby Parker is word-of-mouth. Their Net Promoter Score is near 84 – eclipsing other optical retailers performing in single digits. They have grown to an estimated valuation exceeding 1.2 billion. US sales are projected to increase 20% in 2017, on top of a 28% growth in 2016, according to market research firm 1010data. When other retailers are closing stores, they are opening 25. 

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How Foot Locker is evolving their stores to support local partners

Like West Elm, Foot Locker is strengthening the appeal of their stores by supporting local businesses. As more of us avoid national (non-local) retailers as much as possible, this strategy will become more common.

Quartz: Foot Locker’s CEO says “retail apocalypse” headlines are missing the point, 2018-May-4 by Marc Bain

One thing they’re doing is tailoring stores to specific markets by working with local artists and influencers. They’re also considering services you can’t get online, whether that means putting a barber shop in the back, or having a sneaker cleaner come in once a week so folks can get their shoes freshened up.

“The real headline wasn’t that we’re closing 100 doors,” Johnson insisted. “It’s that we’re opening 40 and they’re going to be really special places for our consumer to come and engage with our brand.”

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24 Hour Fitness understands why their customers lapse

When we look at our value exchange with a gym, the most challenging part is maintaining our participation. For years, shortsighted gyms have enjoyed excess profits from people who pay but don't use the facilities. Now 24 Hour Fitness is confronting the issue and testing many different ways to keep their customers involved.

AdExchanger: 24 Hour Fitness Markets Mindset, Not Just Amenities, 2018-Apr-30, Interview of CMO Tom Lapcevic by Kelly Liyakasa

How are you balancing new member acquisition vs. retention?

We used to try to bring people in with offers, but our goal now is to reach out and get people engaged with fitness.

We look at information we have where we can help people, deliver them workouts, improve their ability to work out at home with video and help them overcome the intimidation of fitness. So, our first goal is to help people get started with fitness, whether they come to us or a competitor. We send millions of communications per month with the primary goal of helping people get engaged with fitness, and we hope, from a business perspective, we help them progress.

What’s your top challenge?

We don’t lose members to competitive facilities. We lose them to inactivity. It’s why we’re so focused on each phase of the consumer journey. When people do join us, we need to onboard them in an appropriate way, and when they walk into our clubs, we push a personalized workout to them because we’ll know what amenities and services they’ll have access to within a specific facility. We also wanted to create a delivery vehicle of programming and content to keep them engaged.

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How Zara is setting new marketing standards with retail customers

With all the changes flying around the brick-and-mortar channel of retail commerce, it can be very difficult to organize what we're learning and figure out how to apply it. A professor at the Fashion Institute of Technology, Shelley Kohan, offers an excellent way to organize a strategy, based on her study of Zara. And consultant Pamela Danziger paints a great picture of how it plays out on the store floor. 

The 4 E's describe how Zara has put the customer in charge... For a company to do that, it has to be organized to learn from the customer and keep up with them in its operations. Are you interested in more loyal retail customers? Then consider:

Forbes contributor: Why Zara Succeeds, 2018-Apr-23 by Pamela N. Danziger

Creating customer curiosity is a most powerful pull marketing strategy. Every human being is innately programmed to satisfy it. With this new AR application and in so many other ways, Zara excels by pulling customers into the brand, unlike its closest competitor H&M, which remains fixed on pushing its brand and product out to the customer.

In studying these two oft-compared brands, the essential differences revolve around their overall approach to marketing. H&M still is fixed on the old 4Ps of marketing model—Product, Price, Promotion and Place—where the company and the brand is the focus.

By contrast Zara has evolved to the new 4Es of marketing strategy—Experience replaces Product; Exchange is new Price; Evangelism is now Promotion; and Every Place is new Place—that puts the customer at the center around which the company and brand revolve.... 

Shelley E. Kohan, assistant professor Fashion Institute of Technology, recently shared an analysis of the Zara difference based upon the 4Es marketing concept.... 

Zara has a deep understanding of the entire value proposition it exchanges with the customers. Its fast-fashion deliverable is available in the quantity, format and time in which the customer needs the product. That translates into great value.

In planning a loyalty program, we need to keep our eye on the "exchange" of value. Most customers join a loyalty program because they do plan to spend with a retailer, and the program will help them maximize the value they realize in that exchange. 

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