Closer Look Over Sephora’s New Loyalty Program and iPhone App
You’re probably used to conducting research on other companies. You should have done this in the past as part of your market analysis.
Before your business launched and even years after the launch, you should constantly be researching and analyzing your competitors.
Understanding how your competitors run and operate their businesses can help you make your own business even better.
But today we’re going to try something a little bit different. I’m going to show you how you can analyze businesses outside of your normal competitors.
In fact, you can research and analyze companies that aren’t even in your industry.
Whenever you see a business that is successfully growing and retaining their customers, you need to take a step back and see how you can apply those same strategies to your company.
For this example, I’m going to spend time discussing Sephora. They recently launched a new loyalty program and iPhone app that’s a huge hit for both new and existing customers.
It’s worth reviewing, even if you’re not in the beauty industry.
Use their ideas and this guide as a reference for applying these strategies to your own company and mobile app.
Quick history of the loyalty program
In 2007, Sephora launched a customer loyalty program called Beauty Insider. The goal of this loyalty program was to offer their most frequent shoppers access to products and events.
Don’t get me wrong, this isn’t groundbreaking news. They weren’t the first company to come up with a customer loyalty program and they certainly won’t be the last.
But take a look at how these types of programs increase the chances of a consumer shopping from that brand.
So if your business doesn’t have a loyalty program, you’re missing out on a huge opportunity to retain customers and increase their shopping frequency.
But let’s get back to Sephora.
This original loyalty program had two tiers. In addition to the Beauty Insider level, they also had a program called VIB.
Recently they decided that they wanted to make this program even better. They added a third tier to the loyalty program called VIB Rouge.
The launch of this new program paired with the release of their newest iPhone application has helped Sephora dominate this space and keep their customers happy.
Creating a sense of exclusivity
Let’s back up for a moment here. Most customer loyalty programs are pretty straightforward. If your company has one, I’m assuming customers just need to provide some basic information to sign up.
Even if your company doesn’t have a loyalty program (which is a big mistake), I’m sure you’ve signed up for these at other stores in the past.
But you can’t just sign up to be a VIB Rouge member. The only way to become a member is by increasing your annual spending at Sephora. It’s a brilliant idea that creates a sense of exclusivity.
VIB Rouge members know that not everyone is on the same level as they are. Customers who aren’t members are striving to be members.
Here’s a closer look at how the program works.
Anyone can sign up to be an Insider member.
Once you join the loyalty program, you’ll still get some exclusive benefits compared to shoppers who aren’t members.
Insider members get a gift on their birthday, rewards, and free beauty classes. If they want to pay $10 per year, they’ll get two-day shipping on all online orders.
This is a pretty standard loyalty program that you’re probably familiar with.
Once an Insider program member spends $350 in a calendar year, they get their membership upgraded to a VIB account.
VIB members get all the same benefits as Insider members, with a couple of extra perks. With the VIB card, customers get a gift every month and a free custom makeover once during the year.
So let’s say that you’re a Sephora customer. You normally spend about $250 to $300 on their products every year. This reward program encourages you to spend that extra $50 or $100 on the year in order to reach VIB status.
Think about your own business. Imagine if you could get 1,000 customers to spend an extra $50 each per year. That’s an extra $50,000 in revenue, just by implementing a simple program.
For Sephora, becoming a VIB Rouge customer is the ultimate sense of exclusivity. Customers need to spend $1,000 each year to reach VIB Rouge status.
VIB Rouge members get the same benefits as VIB members, but they get even more perks for spending the extra $750+ annually.
These customers receive unlimited free makeovers. They also get free two-day shipping on all of their orders.
Furthermore, the VIB Rouge card gets members access to a private Sephora hotline and invitations to exclusive events. There are even certain products that can only be purchased by VIB Rouge members.
This is the ultimate pinnacle in terms of exclusivity.
Sephora won’t even let customers who spend $350 a year in their store buy certain products. When you think of it like that, it’s kind of a mind-blowing concept.
But the idea of this loyalty program and marketing campaign is to reward their best customers.
Even though your brand may not be selling makeup or lipstick, you can still try and apply this same type of program to your company.
Sephora to Go
Sephora to Go is the name of their new iPhone app.
When customers download the mobile application, it acts as a replacement for their physical membership card. This helps their customers save space in their wallets and purse.
People may not want to take their membership cards with them everywhere, but their phone is most likely glued to their hands at all times.
The app also keeps track of all of their past purchases. Then it uses their purchase history to recommend products. These recommendations help create a personalized experience for the customers.
Research shows that consumers are more likely to purchase from brands who suggest products based on their buying behavior and browsing behavior.
Plus, 70% of consumers say that they want to get a more personalized shopping experience.
When customers browse on the Sephora mobile app, they have the option to “love” a product. This means that they may want to try a product before they buy it.
Then the next time they visit a Sephora retail location, it’s easy for them to pull up this list of products from their app. Once they have the chance to sample the items, they can decide to buy it or try something else.
This is much easier than trying to remember all of the items that you want to test out.
Personally, I know that I wish some of my favorite brands had a feature like this. It seems like I always forget about products that I want because I don’t have a system for keeping track of everything.
Sure, there’s always a pen and paper, notes in your phone, or screenshots. But this app feature is much more effective, organized, and leads to more conversions.
When using the app, customers will also be able to conduct research on products before they buy something.
In addition to seeing the product description and photos from Sephora, they’ll also have access to ratings and reviews from other customers.
This really enhances the buying process. Obviously, Sephora is only going to have good things to say about their products. But customer reviews will tell the whole story.
84% of shoppers say that they trust online reviews just as much as their friends and family. 91% of consumers read online reviews.
Having access to all of these features in the app is perfect. Otherwise, the user would have to navigate to a mobile browser and try and find reviews online somewhere else.
That’s a tedious, annoying, and time consuming process that Sephora eliminates to keep their customers happy.
Happy customers spend more money.
The mobile app also lets customers scan products in the store using a barcode. Then the mobile app will bring up all of the product information, such as the reviews, which we just discussed.
Now they can add these products to their “loved” list, so everything is organized if they want to make the purchase at a later date.
Sephora recognized that 80% of all shoppers have used a phone while inside a physical store to enhance their shopping experience. So that’s why this app accommodates those needs.
In fact, Sephora even offers free wifi in all of their stores to encourage customers to use the app.
Combining customer loyalty with a mobile app
The loyalty program and the mobile app go hand-in-hand.
Based on everything that we just discussed, it’s clear that each of these works well on their own. The loyalty program is successful and so is the mobile app. However, combining these two together have made Sephora a major success.
The whole idea of the loyalty program is to reward customers who spend more money. While the mobile app helps the customers spend more money by optimizing their shopping experience.
As a result, Sephora is able to increase their customer retention rates.
These numbers suggest that profits significantly increase when you’re able to keep loyal customers.
You can do this too. You don’t have to be in the beauty industry to focus on customer loyalty and create a great app that improves the consumer shopping experience.
Sephora is doing great.
They recognized shopping trends and paired them with their mobile app.
By creating a customer loyalty program that drives sales, they were able to focus on customer retention and increase their profits.
Customer loyalty programs get your best customers to spend even more money. The mobile app helps too.
As I said earlier, you don’t need to be in this industry to have success implementing these strategies.
Just follow the lead from Sephora, and apply the same concepts to your business.
How do your customer loyalty program and mobile app help improve your retention rates?