Ulta Beauty Rewards
Is Ulta's rewards program a total knockout or a beauty faux pas? The Loyalty Program Slam is putting the program under the microscope! We're diving deep into points, perks, and prestige to see if it's a mascara miracle or a lipstick letdown. Get ready for a beauty breakdown!
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>> Welcome back to loyalty programs,
Slam. I'm your host, Amber Collins,
Product Marketing Manager here at
Annex Cloud, your comprehensive and agile
SaaS solution for enterprise loyalty management.
The loyalty programs Slam is jam-packed with
real-world commentary on some of
the world's most beloved loyalty programs.
Here's how it's going to work.
Each Slammer has roughly two minutes to state
their case on these four areas,
program design, value proposition,
engagement, and performance.
Our Slammers are going to get points for
Slams which could be excellent one-liners,
debunking each other or just generally be an awesome.
Today's Slammers are Alex, Head of Strategy,
Scott, Director of Product Solutions,
and Elise, Senior Graphic Designer.
Today's program Slam is drum roll,
please Ulta Beauty Rewards by Ulta.
Ulta is a well-established program.
I'm talking about it's 24 years old,
it was launched in 2000,
and it has evolved over time.
It now offers a comprehensive set of benefits and
a strong focus on customer engagement.
This is beauty retail.
Estaggering 90 percent of Ulta's sales come from
its loyalty program members,
of which they have 42 million members.
The competitors include Sephora,
Macy's, Department Source of Beauty sections,
and even drug stores.
They've got a tiered structure,
a free membership program that increases
the benefits for this higher tiers,
multiple earning opportunities,
they've got birthday gifts which I personally have
taken advantage of, reviews,
and social media engagement,
considering that they hear all these brands,
aggregating those experiences,
I can imagine could be really important for this program,
especially when we're talking about beauty.
The variety of awards include those discounts for products,
exclusive offers.
They even offer salon services in stores,
so their program is hooked up to their salon services.
They've got a mobile app,
so personalized recommendations.
Again, I think that these are all things that are
really, really important in the beauty space,
and they also have a credit card offering.
Let's jump right into it, at least.
Give me your case for Ulta Beauty Rewards.
>> I think Ulta Beauty Rewards is doing a lot of things right.
They have a large differentiation between the tiers.
One thing that really stands out is that points don't
expire at the higher tiers.
I thought that was a huge advantage over other programs,
and it just incentivizes people to keep using the program
and get to those higher tiers.
Another thing that they have is you can use
your points for discounts on products of your own choosing,
in addition to services.
Sephora, for example, you get opportunities for
redeem points for discounts, but they have bucket of items to choose from.
You can't necessarily just use your discount on anything that you want.
You might have a bunch of points,
but you might not have anything that you really want to redeem them for.
I think that is a huge advantage for this program too.
I think that they also have fun interactive experiences in the app.
They have a glam lab where you can virtually tie on products before you buy.
Maybe it is more accurate in helping you
picking out shades of different makeup that you want,
that you weren't necessarily knowing what to choose based on descriptions or sw
atches.
There's a couple of things that I think that they could change.
For example, on their website,
they're using rewardiest and rewardier.
It's these made up terms,
and I'm probably not the target for it, to be honest,
but it just didn't really appeal to me.
Overall, their look and feel is just more youthful.
I think it's just targeted towards the younger demographic.
They have anything from drugstore to high-end luxury brands.
If you look at Sephora, they have more sophisticated up and feel,
but aside from their house brand,
they lean towards all high-end and luxury.
Over the last few years,
Altus brought in more of these high-end and luxury brands
trying to appeal to more consumers.
I think that that's an opportunity for them to reevaluate their branding
overall,
and update the looking feel of things if they're going to bring on such a huge
variety.
Overall, I just think it's a really great program design.
It's easy to use, it's easy to navigate.
There's a huge opportunity to earn points.
Another thing that I think could be changed or improved
is that you do have to activate bonus rewards manually.
I was just in the app this weekend,
and they had an overall 20% discount for the holiday,
but then there are a ton of different other things that you'd have to manually
activate.
I just think, as we've discussed with other programs,
just give people the discounts.
That's my true sense.
- Appreciate it.
Scott, how are you feeling about Altus Beauty Rewards?
- My wife shops there quite a bit between herself and my daughter,
who's a competitive dancer, needs a lot of makeup.
Between the two, our household is an Altus rewards family.
I base a lot of what I'm about to say based on her interaction.
My quick interview over the dinner table.
Loves the member pricing, loves the brand, loves the stores,
loves the convenience, loves that it's in target,
is excited about the target circle and rewards partnership.
So we can earn a cross shop, especially because they have
those little mini shops within targets and the advocates walking around,
helping people pick out stuff within that area.
But it is really centered around the transaction.
They are doing a couple things here and there.
We're just to kind of get to know you as a beauty brand should.
But what it's missing are more interactive things.
Things like shows that your overall prom makeup show us your overall dance fro
ck.
Do all of the things where people are more advocate rather than just shopper.
So if you are just looking for a discount shopping experience, then it's fine.
But I think people want to generally show off or,
we've seen that with other beauty brands where they want to be advocates,
they want to be their own influencers in this space.
So I feel like this brand is missing that next step, that community aspect.
They have the shops, they have your dollars coming in.
But do they take it to the next level?
Are they guaranteeing that you're not going to second shop at some of these
other places to get some of the other things?
Yeah, to Lisa's point about the branding and its doing younger.
We know that younger folks want that community.
We know that younger folks want to be seen.
We know that they want to be recognized for their creativity.
They want to be recognized for their ability.
And makeup is one of those places that is, you know, pretty accessible when it
comes
to shelving off that creativity and pretty accepting as well.
That's a spectrum of gender and presenting and age and just really people
just coming into their own, you know, art, beauty and makeup.
It's an artistry and people really take pride in it.
I think it's one of those industries where like you said,
it's super easy to build a community.
People want to advocate, people want to show off,
people want to be seen, people want to be rewarded for it.
And then to slap that Ulta brand on it and say, this is where you get it from.
And maybe even make that experience where you put this community now shoppable.
And with all this tech that we've got going on,
Ulta's already got a lot of tech built into this user experience,
as Lisa mentioned, there's certainly a lot of opportunities there.
So Alex, love to hear what you think.
Yeah, well, I was in the beauty space for about two years.
It's interesting having assessed Ulta a number of different times.
I do think from a positive standpoint, I'm aligned with a lot of what the team
said here.
I do like that you can select your birthday gift.
You know, I do think they give you a lot of different increments in which you
can redeem.
So you can redeem three bucks off with 100 points, which is nice.
So, you know, they're kind of doing like a 3% back in a way.
I would say that most of beauty or high-end beauty and brands,
specifically with their programs like Clarins or Estee Lauder,
a lot of brands are doing more like 5% back.
So I do think they're a little under there.
I will say that having looked at Sephora,
they're more like a 2% give back.
And then Mercury and Macy's are kind of hovering around that 2% to 3% as well.
So I can see where they're going for their competitors, which is fine.
I do wish that there was more in their catalog.
So Sephora lets you get samples or full-size products.
Ulta just has discounts.
And so to me, it's just kind of lackluster and very transactional.
I do like some of the tiering where you can unlock $10 coupons as you move up
in tiers,
you get special gifts.
So those are kind of nice.
And then the one really cool thing that I saw recently that came out
was their new sample dispensers, where you can basically check in at the
dispenser.
And it's kind of like a gumball machine.
It drops a sample to you because you're a member.
I thought that was a really, really clever thing that I think they need to do
more things like that.
Because I think their overall structure of their design is a little lackluster
and doing more of these more interesting engagement opportunities
and getting more ways of people to come into the store and engage with the
product.
Like you said too, rewarding people for their social behaviors,
being influencers or ambassadors of the program.
I think they're just missing a lot of interesting ways to elevate it.
That being said, they do mention that you're joining a community of 42 million
people.
I've seen Ulta present a number of times at conferences
and their credit card numbers are insane.
Their active rates are really high.
So they're clearly working very well.
But I think they really need to take it to the next level.
I think it's a little boring.
It's a 24 year old program.
I mean, I'm sure there's been so much evolution of it.
I'm glad to hear that they are keeping up with a lot of things.
Like we said, there's a lot of tech here in this user journey,
which I think is important in the beauty space as well.
So definitely lots of opportunities here for Ulta.
So let's get into the scoring.
Elise, how are you going to rate the program design?
I gave it a four.
I do think I know that everyone's saying it's really transactional,
but actually for beauty, I don't know if I necessarily
mind that as much.
Just I like having control of what I want to put my points towards
versus just being able to choose from a bucket of like a couple sample sizes of
things.
I think that's more enticing to me on a personal level.
So you like the flexibility of that?
Okay.
Yes.
Scott, how do you feel about the program design?
Give it a two.
Yep.
For a program design, again, it's member pricing is huge.
So I believe in the brand.
And I believe that the brand has a genuine interest in the customers.
From a program design, they're doing very little to know with the engagement of
members on that social,
like we just said.
And they're missing a huge opportunity with a parent, child and household,
because you can create a profile right now.
My wife can create a profile and list all of her skin tone, her preferences,
etc,
which are 180 degrees different than my daughter.
But when she goes to shop, it is my wife doing all of the primary shopping.
So there's no way to really tie some of those together without having maybe two
accounts.
Then I've got a 17 year old account.
So it feels weird then.
And so I think that they can do more with the acknowledgement of the family,
acknowledging more of the artistry, doing more with education,
doing more to my comment earlier.
I believe that they got your dollar anyway.
But how can they turn you into an advocate and keep you from the Sephora?
How can they keep you from the Amazon or any of the other brands out there?
So that's your point of having the two accounts.
I have plenty of friends that have daughters and whether they are fathers or
mothers.
Everybody knows that daughters like to shop and you've got either one account.
And then all of a sudden, their friends at the mall spent all of your points.
And if I'm the mother, I'm like, I was saving those points.
Or you've got these two accounts, you've got to manage them.
And it's like, maybe you did want to pull your points.
Let's go on a shopping spree together.
Like, let's put all the kids, let's put all the daughters, multiple daughters,
situation or sons, let's be honest.
So the household is a huge opportunity as well,
but definitely Alex, how do you think about design?
I gave it a two, it's just a MeToo table stakes program structure,
while it is very successful as a program.
It just doesn't have anything that's that exciting.
Now, five years ago, 10 years ago, maybe would have given it more like a three
and a half or a four.
It looks like it's just kind of meeting its competitors where it needs to be.
And that's it. I think that's a big mess.
Understandable, fair enough.
At least how do you feel about the Vyfop here?
I also give it a four.
I also give it a four. I just think they do have incentive to reach higher
tiers.
You know, platinum increases to one and a quarter points,
diamond increases to one and a half points per spend.
And I just think you can also spend the points on salon services.
I mean, there are some other things that you can spend points on besides just
discounts.
I do think they do a good job to spend it, but also to earn it, right?
Imagine you're going to Ulta and you're going to the salon service
and you're not earning points against those interactions.
I mean, that's one way to say, okay, then I'll go to a different salon because,
you know,
if I want my makeup, I'm going to go here for makeup.
It's that meshing of those two sides of business units, if you will, right?
The services with the products and making sure that there's no gap in between
the earning or redeeming there, for sure.
Right.
Scott, how are you going to value?
Give it a four.
Okay.
So here's why member pricing and what Elise mentioned, I can use my points
however, whenever I want.
When you compare to one of their biggest competitors with Sephora,
one of the first sentences that comes out of why do you like Sephora?
First three sentences are about those free samples, you know, birthday rewards,
free samples, you know, those kinds of things.
So I feel like to get that five, they have to kind of acknowledge some of those
other things.
But as far as your ability to earn, it's well understood, your ability to
progress,
it's well understood, it gets you coming back because I can use those points.
So I gave it a four for overall program value.
Okay.
Alice.
I gave it a three, I think it's just right in the average, it's give back is
three percent versus a number of brands that are at five,
but then they're core competitors.
Sephora, Blue Mercury, Macy's, those are harder hurdles to get the actual
dollars off and they have lower give back.
So that's where I just kind of averaged them out at a three.
Okay.
Elise, engagement and experience.
I mean, there's not a ton of engagement. I did give it a three just because
they do have like the interactive experiences available in their Glam Lab app.
There are some ways to engage and I do think people that are like beauty
enthusiasts and really like the member program are going to be engaging with
the app on a regular basis.
There's always new makeup drops coming out.
There's always new things to be excited about and I think that that members
really involved in the beauty community are going to be engaging with
with the program.
Okay. So, Alex, how do you feel about the engagement and experience?
I gave it a two just think it's a very transactional program, but a lot of room
for improvement and taking advantage of opportunities to engage through other
interactions.
So a lot of white space for them. I just hope they take advantage of it.
Good point there.
Scott, talk to me about the engagement and experience of Ulta.
Gave it a two because all the things that Elise was describing were for
available for all customers.
Yes, maybe you had to give it a little bit of information just to kind of gate
keep it, but I didn't feel like it was a members only experience to be able to
access those things.
So again, as a company, I think that they're doing really well.
I think that they're really engaging as a company for differentiation for their
member base.
I don't feel like we get any other benefit that my household gets any other
benefit because we are loyalty members.
I do believe that there is a general we're getting your dollars anyway and we
're getting a few more things for you to stop and shop us.
But there's no there isn't an opportunity to just be different for members and
provide a unique experience for people who are going above and beyond.
So could you say that when they when they get back to the 90% of transactions,
I mean, I keep going back to this analogy of the shopper card, right?
Like I'm there. I'm buying. I'm going to give you the information a because
everybody's trained to ask for it.
I don't think you know, I think you're like, hey, well, what am I missing out
if you keep asking about it?
Let me join it. But it's like you're just kind of going by and identifying
yourself.
So it is is 90% of their guess what I'm trying to say is 90% of their
transactions with multi members simply because
almost to their customer base is loyalty members and they're not necessarily
growing it.
I believe so.
And they're not necessarily. Yeah, right?
The very low cost, you know, like people time costs to enter into the program.
It's very easy to join. It's very easy to redeem at point of sale and they're
everywhere.
They're in the targets. There are lots of convenient locations for stores.
They're doing a great job as a company.
But as far as a loyalty member base, there's really no differentiation.
There's just people who have come back again. Yeah. Yeah.
And that's not what to mean.
I think that also differentiator for them is that is that they don't have all
the brands that support us.
They're not apples to apples on the brands. And that's what that absolutely
gives people a reason to definitely go to Ulta or Sephora.
But that's an opportunity for education of your loyalty members, right?
People who are advocate for you as a brand teaching them that this other brand
that you do carry can do these things.
And maybe that's what you want to go. So again, this member education, there's,
you know, how to, there's communities where people use their product and show
how that one eye shadow or that, you know, one, you know, technique can be done
using this other thing instead of the one that they're potentially used to
because they happen to get it at a different store.
Even as again, I think that the whole, the fact that this is a common number of
brands that are in one place that you could get this from somewhere else.
So what about it is the Ulta program that makes you want to get it specifically
from Ulta?
Well, I think it's a lot of it's kind of the grocery store mentality too, right
? I can go to a butcher shop. I can go to a farmer's market.
I have to make multiple stops. Having multiple brands under one roof is a one-
stop shop for everything that you're trying to do there.
But people specifically in the beauty brand, they have preferences based on
application, based on color, scent and just skin reactiveness to certain things
So they're acknowledging that, but I don't know that you walk in and it's
overwhelming. You know, I'm going to go to the three things that I know and I'm
going to get that.
And if I happen to see something on the way or I happen to have heard about
this other thing and I see it in my path, I know that, but you're trying to fit
an entire grocery store into that footprint.
And so it can be overwhelming. So how are they helping members to help me to
educate members?
I agree because most of that research happens before you get to the store.
Yeah, I was going to say that's probably more of their like online opportunity
than, although I mean, they do have store associates to help people too.
But if you are doing that research beforehand, it's helpful to have that.
But to that point though, those associates are going to help everybody in the
exact same way.
Not that members with experience.
It's not like you walk in, you identify yourself as a member and you get a tri
ad session, right?
Or a technique session that other non-members can see and strive to get to
achieve.
No differentiation. They do a great job with their customer. Nobody is saying
that they don't.
They are beloved and they're everywhere. They've got great partnerships as a
company, but as a member base,
I don't know that you truly feel different than anybody else.
Yeah, I think that rules right into the next metric, right? So at least what's
your commentary on their performance?
I did get them before. I think that they do have a lot of members and they have
a lot of people are using the program.
A lot of people like the program. I think it is effective. Do they have our
vision,
use to grow and do other things and increase their engagement? Yeah, they do.
But I think overall it is functioning very well as a program.
And Alex, how do you feel about the performance?
Performance I'd give a four just based on the knowledge that I have from the
conferences that I've seen them present at.
They're doing very, very well in terms of monetizing the program, driving
credit card
and a large amount of members when you consider the adult population in the US,
like 42 million members is quite large.
And they have a high active rate according to what they've shared in those
presentations.
So I've been impressed by that. Considering the program as it is, if they
elevated and sophisticated even more,
I think they could really knock it out of the park.
I agree. I think the statistic of the 90% of their transactions come from
loyalty.
She tells us that this program is definitely providing a value. It's definitely
engaging in people.
And people are aware of it. I think most importantly as well in the store and
online to use their program,
to use their points. I think that that's a hallmark trait of a company culture
of loyalty
that is showing the results that we would expect when you treat loyalty the way
that
Altan has treated it. Well, to that point, if it is a central focus of the
company,
then it's a great opportunity for them to put together those strategies to
elevate it and get approval for that and invest in it.
So, so Elise can love it even more and give it a five.
But the same reasons I gave it a three. Again, I believe that they've created a
low cost of entry,
low people time cost of entry into the program. So I think that a lot of their
performance numbers
are people who are customers anyway and are simply giving the email address,
giving the phone number when they when they're doing the shop because it's
convenient, right?
It's very there's not a lot of headache as a part of that process.
Would you have completed that shop anyway at that point if they hadn't asked
you more than likely
in my own opinion? So I think that there's a lot more of this community that
they can be
building and do more with, you know, education with family with, you know,
household and stuff like that
to really be different than a lot of others in their space. So I feel like I
got a stick with a three.
So overall the score for all the beauty of rewards is a 3.1. And of course we
've got actually today
Scott and Alex, you guys were tied at 2.75 and then Elise you were at 3.75. And
I will say this,
when you say 90% of your transactions are coming from multi members, I think
that obviously we're
in the loyalty space and that is a great number to say out there. But we go
back to that mix of
how much more did they spend because of the loyalty program? How much more did
they,
how many more times did they purchase if they were going to make this purchase
anyways and it's
90% of it then cool. But if they make 90% of the transactions came from multi
members and 30% of
that they weren't necessarily going to buy or 30% of it was products that they
had never bought before
and not just re-elping also they were already done. That to me is the
performance that makes
that number more impressive. It's an impressive number in and of itself but it
makes it more
impressive to me when you start to think about, okay, if this is like you
started to get their
dollars anyways, they're going to re-up on their makeup anyways, all to where
they go get it.
Where's the lift? Where's the incremental value that's put on top of that? And
that's a number
that I would love to understand when they talk about their 90% of their
transactions come from
loyalty. So with that being said, thanks everybody for the commentary today.
The overall points will be
posted. Awesome, thank you. Thank you.