There are a number of places that I can go to shop for makeup, but whenever possible, I go to the beauty store, Sephora.
Mostly because I’m hooked on their loyalty program.
Here’s how it works: After I spend a certain amount of money (or accumulate a certain number of points), I’m eligible for a free high-end beauty product of my choosing. Alternatively, I can choose to keep accumulating my points and snag an even better freebie down the road. And if I shop there during my birthday month, I also get a free gift!
All of this…and I’m just a basic member (meaning my membership is free).
As you can probably tell, there’s a reason why Sephora’s loyalty program, called the Beauty Insider program, boasts 17 million members in North America alone (including myself). Those members are also responsible for 80% of the company’s sales.
So what makes the Beauty Insider program so outrageously successful?
That’s what I’m going to reveal in this blog post. But first, let’s take a closer look at how exactly the program works.
How Sephora’s Beauty Insider Program Works
Sephora’s Beauty Insider Program relies on a points-based tiered model with the following tiers:
- Insider (the lowest tier and free to join)
- VIB (second tier; requires a spend of $350 per calendar year)
- Rouge (highest tier; requires a spend of $1,000 per calendar year)
The higher the tier, the more points the user is able to acquire for each dollar spent and the more benefits they get in return.
Here’s an overview of the benefits for each tier:
You can see that even the lowest-tier members are not excluded from many of the program’s benefits. But there is clearly an incentive to purchase more, as members in the highest tier are rewarded with exclusive benefits that others don’t have, like a $100 Rouge Reward, early access to products, access to exclusive events and free standard shipping.
So how exactly does this program succeed in building a base of repeat, loyal customers? Let’s find out.
What Makes Sephora’s Loyalty Program So Great
Sephora is known for selling high-quality, expensive products. As with any luxury brand, people who shop there want to feel like they are a part of something exclusive. And with the name “Beauty Insider,” Sephora makes their shoppers feel like they are a part of something exclusive…when they join the loyalty program.
Even the names of the tiers (Insider, VIB and Rouge) are catchy and on-brand. VIB stands for Very Important Beauty Insider and the name Rouge is surely homage to the company’s French ancestry (Sephora was founded in France).
On top of that, the points-based tier model system creates an addicting gamification aspect that makes users want to spend more. The more members spend, the more they are rewarded.
So for example, once shoppers earn 750 points, they can redeem those points for products without having to purchase any merchandise from the store…plus they get free shipping on those items.
One Beauty Insider member even admitted that, “I love collecting points, so Sephora’s point system does make me shop there more.”
Would you rather go to a restaurant and find that you only have the option to order your favorite dish…or that you have the option to pick from a variety of dishes (including your favorite one)?
Even if you know you’re going to order your favorite dish, it would probably be nice to have the option to choose from a variety of dishes, right?
That’s because having choices makes us feel powerful and in control.
From high-quality products to high-end experiences, Sephora lets their members choose from a variety of rewards, rather than just one or two. The brand therefore helps to meet the demands of all of their members, while allowing them to feel more in control of the shopping experience.
Rewards Aligned with Brand
Have you ever noticed that many luxury brands don’t discount their products? Some, like Burberry, even go so far as to burn excess inventory to avoid giving discounts.
The reason for this is that discounting can cheapen brands. It’s therefore fitting that a luxury brand like Sephora doesn’t reward their loyalty members with discounts; instead, they reward them with freebies and experiences—things that are more aligned with the brand and don’t cheapen its image.
Valuable Products and Experiences
If you want your members to actually use your loyalty program, you’ve got to provide them with products or experiences that they will truly value. Sephora provides their members with both.
Even the most basic, free members are rewarded with high-quality products once they accumulate enough points. And members of all three tiers are spoiled with gifts during their birthday months:
But those who spend more are rewarded more. Members in the highest tier have exclusive access to beauty classes, makeovers and a private hotline with a beauty advisor.
And once members accumulate 10,000 points, they are eligible for experience-based rewards. But in order to snag these deals, they have to check the website at certain times (Tuesday and Thursday) and scoop them up while they last.
Some of the previous rewards included: three-day VIP passes to the Austin City Limits festival for two; a meeting with the founding team of Verb, the haircare brand; and a five-night trip to Hawaii (surfing lessons included).
One member redeemed her 17,500 points for a trip to Los Angeles, which included accomodation at the Standard Downtown hotel, a helicopter ride, a two-hour makeover and dinner with the founder of Beautyblender at the luxurious Shutters on the Beach hotel.
She raved that, “This trip was definitely worth the points and had I known how fabulous it would be, I would have been willing to spend more points,” she said. “It was just amazing. I can’t get over how great they made it.”
Sephora may have a stronger brick-and-mortar presence than online, but they found a way to fortify their online presence with the creation of an online Beauty Insider community:
There are different groups that cater to users’ beauty interests, like Everything Eyes and Lip Lovers:
And in the forum, users can pose and respond to questions:
There’s even a live chat where users can chat with one another.
Through the online membership community, Sephora has found a way to bring their customers to the website even when they aren’t shopping. They’ve found a way to engage their customers.
And the benefits of this are multifold: Research has shown that improved engagement leads to a 22% increase in cross-sell, a 13% to 51% increase in upsell revenue, and a 5% to 85% increase in order sizes. Not only does brand engagement encourage people to spend more, but it also helps to increase customer loyalty.
Sephora takes an omnichannel approach to their marketing, which is “…a multi-channel sales approach that provides the customer with an integrated customer experience.”
For example, Sephora lets their customers try on makeup virtually with AR and match their skin tone to a foundation using AI. When customers walk into the store, they are greeted with different tools and technologies that help to improve their in-person experience.
Sephora’s omnichannel approach is also effective in building customer loyalty. Harvard Business Review found that “customers who engage in an omnichannel experience are much more emotionally connected and therefore consistently more profitable.”
Nothing more frustrating than spending time and money accumulating points…and then having to jump through a bunch of hoops to spend those points.
Sephora makes it super easy for their members to redeem their rewards. They can either redeem them in store or go online and redeem them through the “Rewards Bazaar”:
A good loyalty program doesn’t stay stagnant. It’s always evolving with industry trends and customer expectations. And that’s exactly what Sephora’s Beauty Insider program does. It’s continually changing and finding new ways to surprise and delight its members.
And how could you not want to stay on board with a loyalty program like that?
What Could Be Improved
With all that being said, no loyalty program is perfect. Even Sephora’s (although it does come pretty close). Here are two things that could be improved upon:
Expire Dollars After 12 Months
As mentioned above, in order to become a VIB member, customers have to spend $350 in one calendar year. And in order to become a Rouge member, they have to spend $1,000 in one year.
But unfortunately, those dollars expire at the end of each calendar year. So if a shopper spends $950 in November and December and then $50 in January, she would not be eligible for Rouge status, because those $950 dollars would expire on December 31.
It would be much more fair if the dollars expired 12 months from the date of the initial purchase.
Advertise the Loyalty Program
One of the best things about shopping at Sephora is its loyalty program. So it should be advertised! Unfortunately, the user has to go hunting on the website to even find the loyalty program–or have pretty good eyesight:
It would be more effective if they had a separate tab for the Loyalty program at the top of the homepage or an attention-grabbing section and call-to-action that highlighted the program and encouraged users to enroll.
Even on the checkout page, there isn’t much indication that the loyalty program exists:
They provide the option for current users to sign in and redeem their rewards…but nowhere do they encourage new customers or non-members to sign up.
Customers who are emotionally connected to a brand are “more than twice as valuable as highly satisfied customers.”
And HBR found that “…among customers’ key emotional motivators were their desire to feel a sense of belonging, be thrilled by the shopping experience, and have a sense of freedom and independence.”
Sephora capitalizes on all of that. Through their online membership community, they create a sense of belonging. By rewarding their customers with high-quality products and even exciting adventures, they create a thrilling shopping experience for their shoppers. Finally, they afford their customers flexibility and options, which makes them feel valued and in control of the shopping experience.
And in turn, they get loyal customers and a high customer lifetime value (CLV).
So what can you learn from Sephora’s Beauty Insider program?
First, get to know your audience. Find out what makes them tick. What would they truly value in a loyalty program? If you’re not sure, then ask them!
Once you’ve done that, start creating a loyalty program that your shoppers would be excited to be a part of. Learn from Sephora’s Beauty Insider program and:
- Come up with a catchy, on-brand name (for both your program and tiers, if you have them).
- Make it fun for your users! Gamify things. Reward them for spending more, and make your members (especially your higher spenders) feel like they are a part of something exclusive.
- Afford them flexibility. Provide them with options in terms of how they can redeem their rewards.
- Choose rewards that are aligned with your brand and don’t diminish your brand image in any way.
- Provide your customers with valuable, coveted products and experiences.
- Encourage member engagement by creating a membership community.
- Engage with your shoppers on multiple platforms, using a personalized, consistent and integrative approach.
- Make it painless and easy for your members to participate and redeem their rewards.
- Continually improve your program.
On top of all that, make it as fair as possible for your customers. Don’t trick them with gimmicks or super fine print. If there are certain regulations to your program that your members have to abide by, then make sure you are clear about that with them from the get-go. If your customers have to redeem their rewards within a certain time period, then tell them that.
Whether you do it alone or join forces with an experienced eCommerce web design agency, use a platform like Swell to create the best loyalty program out there. Then make sure your website promotes that loyalty program loud and clear. Shout it from the rooftops! Or at least…from your website.
If you succeed in doing all of that, then you’re bound to have loyal customers for life…maybe even more loyal than Sephora’s customers.