Case Study: Sephora’s cheeky way to build ‘loyalty’ with the Beauty Pass program

As part of our Loyalty Landscape Review, we compared the top beauty retail loyalty programs with the top F&B loyalty programs in Singapore. A good indicator of the value of a loyalty program is to look at the financial rerun benefit for the member, and these can vary based on the sector. Our research has found that, for example, the return benefit for F&B establishments are around 15-20% of the final receipt value, while return benefit for beauty retail is only between 2-5%. That’s a huge difference. 

But this doesn’t mean that loyalty programs in the beauty space are not effective. While financial incentives are a key driver for programs, the best-designed programs also offer lifestyle or brand related benefits that compliment the overall brand offering. This holds particularly true for the beauty space.

And one of the most effective – and iconic – beauty loyalty programs out there is the Beauty Pass program from the Sephora Group. It might help that this particular rewards program has a return benefit many times higher than the retail average – but that’s not the only reason.

In this case study, we’ll take a closer look at Sephora’s Beauty Pass program (called the Beauty Insider program in the USA), and what makes it one of the more renowned names in the beauty loyalty space.

First off, it’s worth noting that Sephora’s beauty loyalty program gets a lot of attention through their US counterpart – the Beauty Insider program. The American program has generated a lot of buzz in the beauty community, with almost every single US beauty personality being a member of the exclusive Sephora VIB Rouge program – a status achieved with a cool USD $1000 spend within a year of membership.

The success of the Beauty Insider program, along with a high word-of-mouth and influencer marketing rate, has no doubt rubbed off on all of the other programs around the world. It’s worth noting, however, that the US version of their loyalty program holds very different offerings to the Singaporean one.

What A Beauty Pass Member Can Expect:

Why Singaporean Customers Keep Coming Back to Beauty Pass:

Sephora has one of the best offerings of both affordable and premium beauty and skincare on the market. The Sephora brand is synonymous with quality and beauty expertise, and customers flock to their stores to stock up on harder-to-find products. There are lines out the door at every sale or product launch. With their Beauty Pass program being free-to-join with any purchase, there really isn’t any reason for a customer to not become a member.

At each point of sale, customers are asked for the e-mail address or phone number associated with their beauty pass account so that points can be credited or used to offset a purchase. Usually, updated points are reflected within 48 hours from the time of transaction. Points are easy to earn – each purchase (even discounted purchases) or review gives a member points.

They also offer three very clear loyalty tiers, which makes is easier for a member to monitor their status and move to the next one.

Rewards increase with each spend. Tier levels expire 365 days after a member reaches a new tier, which keeps customers coming back to earn and burn their points before they expire. This adds a sense of urgency to the purchase, and this way, Sephora ensures that their best fans keep coming back to spend in-store or online.

(Note: While we love the tiers, we do think the amount needed to reach the top tier seems a tad unrealistic – $1500 spend for a Gold membership is hard to reach for the average consumer.)

What also works for the brand are their strong EDM campaigns. Members receive EDMs almost daily that detail new products and promotions. Their mailing list isn’t something that is limited to only their loyalty members – non-members can also opt to be a part of their mailing list. Sephora’s EDMs are eye-catching, with quirky fonts, bold colours and witty headlines. This helps keep their brand top of inbox and top of mind – customers are less likely to regard their EDMs as spam if they’re interested in the content.

What We Think:

At first glance, the program looks like a great way to keep beauty fans coming back to Sephora over other beauty providers. While the program is famous, we think the ultimate return is slightly on the low side.

We’ve also noticed some tricky parts. For example, at 300 points (a total of $300 spent), members can redeem a 10% discount at the Sephora Rewards Boutique. This discount is only valid for one purchase. It seems like a really low-effort deal – spend $300, and redeem $10 off an $100 item. That’s not a 10% discount – considering the amount of full-priced items needed to spend $300, it’s a lot closer to a 3% discount. This is actually a smart move from the brands standpoint, because customers are less likely to think of how long it took for them to receive their rewards points once they’ve been accumulated.

Sephora has done incredibly well at building their brand and staying top-of-mind to their customers – their EDMs are a great way of reminding customers of their latest promotions and new products, thereby encouraging returning customers to keep coming back for products.

There is lots of room for other brands to take a page out of Sephora’s book and build on the strengths and add a flair of their own and we’d love to see more beauty providers in the region and build and implement winning loyalty programs of their own.

Because in the end, with more competition battling it out for loyalty and patronage, the consumer is the one who ultimately wins. And in today’s tough market space, brands need gain an edge from any space possible.

 

At Riverview, we’re all about mobile-first customer retention solutions. Our SaaS solution has helped our clients increase their customer’s lifetime value and revenue contribution by giving them the ability to track what types of communications and offers are most effective at shifting behavior. We put your customer’s experience at the center. Reach out to us for a free demo, or click here to download our Product Edition Sheet.

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