Different marketers have different priorities when it comes to customer engagement, customer experience, and customer loyalty.
For ULTA Beauty CEO Mary Dillon, the company developed a long-term strategic framework last fall to guide its path to deliver market share gains and long-term sales and earnings growth.
“The first imperative is to acquire new guests and deepen loyalty with existing guests,” Dillon said during the company’s first-quarter earnings conference call on May 28, according to Seeking Alpha.
At the end of May, the ULTAmate Rewards loyalty program reached 15.5 million active members.
“We believe improved retention signals that both the program is strong and the benefits of converting to one program last year,” Dillon explained. “New membership was driven by great in-store execution by our associates, converting non-members into members, and guest recognition of the benefits of the program.”
Member comp sales were very strong, driven both by more loyalty member shopping and higher sales per member.
“Our loyalty program and increasing capabilities to deliver more targeted and personalized offers through our CRM platform continue to drive strong traffic and sales growth,” Dillon added. “While we will always focus on offering our guests a strong value proposition at ULTA Beauty, in the first quarter we were able to maintain very healthy traffic while trimming the depth and breadth of some of our promotions.”
ULTA Beauty continues to focus on new customer acquisition by reallocating some marketing dollars into awareness and acquisition vehicles.
“After a successful test of advertising in the third quarter of last year, we invested in a national radio campaign during the holiday season,” Dillon said. “And based on the success there, we ran a national radio campaign for 21 days of beauty this quarter, which drove very strong traffic growth during the event. Our increased use of tools like advertising and social media gives us another opportunity to create an emotional connection between our guests and ULTA Beauty. We plan to continue to use a full array of marketing strategies and tactics, including traditional and digital advertising, PR, CRM and magazines to acquire new guests and deepen loyalty with existing guests.”
The second strategic imperative is to differentiate by delivering distinctive and personalized guest experiences across all channels.
“We continue to see good results with the client telling app we initially tested in 30 stores,” Dillon explained. “We are now rolling out an upgraded version of the app to an additional 30 stores this quarter. The new version will give our prestige associates the ability to track and review the preferences, purchases and loyalty points of our guests, enabling more efficient follow up and feedback collection and more personalized interactions on every visit to our store. The store operations team is planning to extend the pilot to additional districts and continue to measure how the application improves the guest experience and increases engagement and loyalty. Another way we are making the guest experience more engaging and personalized is through exciting in-store and online events.”
The third strategic imperative is offering relevant, innovative and, often, exclusive products that excite customers.
“Our guests are responding very well to the product assortment that our talented merchant team continues to curate and evolve,” Dillon said. “Many of the new brands and products launched last year in our prestige cosmetics category continue to show strong momentum IT Cosmetics, IT Brushes for Ulta, and new products from Urban Decay and bareMinerals. We are increasing our focus on offering exclusive products with more and more items marked new and only at Ulta in our marketing communications.”
First-quarter sales rose a whopping 21.6% for ULTA Beauty.
Dave Kimbell, Chief Merchandising and Marketing Officer for ULTA Beauty, said the company has done a better job of “getting non-members into the store, but importantly, we converted them in store into members at a higher rate than in the past. But also contributing to that was an increase in retention. I don’t think we have shared specifics around retention rates in the past, but we are very pleased with what we are seeing around retention overall.”