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Ulta Shows Its Customers the “Fun Side of Beauty” That Drives Brand Loyalty

In an age when many retailers are shrinking their respective real estate portfolios, Ulta Beauty is headed in the other direction. The nation’s No. 1 specialty beauty retailer is about to open its 1,000th store, with plans to open 100 new stores each year.

Ulta Beauty’s customers are very engaged and brand loyalty is rampant.

During his keynote session, “How Ulta Beauty is Leveraging Customer Data with Brand Partners,” on Tuesday at the 10th annual Loyalty Expo, Eric Messerschmidt, senior vice president marketing for Ulta Beauty, talked about his company’s great relationship with its more than 500 brand partners and its highly successful Ultamate Rewards loyalty program.

Ulta Beauty was founded 26 years ago by Richard E. George, the former president of Osco Drug.

“Prestige brands thought Ulta was a drug store,” Messerschmidt explained. “That changed about seven years ago.”

Messerchmidt said Ulta makes the company fun for its devout customers with a key tagline being: “Welcome to the Fun Side of Beauty,” stressing fun, fresh, and real.

“The guest is the center of everything we do,” Messerschmidt explained.

Each Ulta Beauty store also includes a full-service salon. Fortune named Ulta Beauty CEO Mary Dillon the third-ranked “Business Person of the Year” in 2016, behind Mark Zuckerberg of Facebook and Jeff Bezos of Amazon.
Since 2009, Ulta Beauty has been the top performing stock and, in the past years, has recorded a 22 percent compounded growth.

In 2014, the company introduced its Ultamate Rewards loyalty program to all of its stores across the country. In that short amount of time, the program has attracted more than 23 million members.

The Ultamate Rewards program is basic in its premise−1 point for each dollar spent−but, as Messerschmidt noted, members can earn bonus points at various points throughout the year, including their birthday and membership anniversary, and can redeem for any of Ulta’s 20,000-plus products. The program also offers members extensive and informative content, and a credit card where bonus points can be earned also.

“Many look at our program as an aspirational model,” Messerschmidt said.

Ulta Beauty refers to its most loyalty customers as Beauty Enthusiasts. A staggering 90 percent of Ulta’s sales come from its loyalty program members.

“We leverage loyalty data in so many different ways,” Messerschmidt said. “We use data to survey in multiple ways. We have a great merchandising team that is a great partner for our brands. Brands leverage us through our customer insights. It’s like turning on a light in a dark room. We have unparalleled insights and we offer our brand partners customer data (the what) and market research (the why). We also offer them actionable insights and strategies to drive their respective programs. Brands leverage access to deliver targeted offers.”

Messerschmidt offered attendees some key takeaways:

Align on a trusted measurement methodology

Develop a cycle of continuous learning

Test lots of approaches and offers

Build and leverage a knowledge base

Staff consultative “account managers”

Presented by Loyalty360 – Association for Customer Loyalty, Loyalty Expo has earned the reputation of being one of the industry’s premier events.

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