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Beauty & Personal Care

Beauty's on the Inside at Sephora

1 Apr, 2009 By: Jacqueline Renfrow Response

Vice President of CRM Shannon Smith has proven that customers in the beauty giant's loyalty program actively engage with the brand, boosting sales.


It is no surprise that one of America's top selling beauty and personal care retailers was originally a gift from Paris, a city known for setting trends in fashion and beauty. Sephora — a brick-and-mortar and online retailer of cosmetics, skincare, makeup, fragrance, perfume, hair and other beauty products — was founded in France in 1969, and acquired by luxury product group LVMH Moët Hennessey Louis Vuitton in 1997. The first American store opened in New York in 1998 and just more than 10 years later, Sephora now operates more than 220 stores in the U.S. and Canada.

One of the most defining characteristics of the brand is the open-flow environment of the stores, which feature every product out on display for customers to try. And it is the enormous variety that sets Sephora apart from other retailers and brands normally sold in department stores. Sephora is host to about 200 brands — including a private label in many beauty categories.


 

 

The store launched its E-commerce site Sephora.com in the U.S. in 1999 and has leveraged it to take customer loyalty to new heights. As vice president, CRM, Shannon Smith oversees Beauty Insider, Sephora's client rewards program, which touches on every aspect of marketing, especially its direct response tenets: merchandising and brand marketing, E-mail and Web marketing, in-store marketing and training and client analytics. Working closely with these teams to truly understand the client base, Smith is able to measure campaign results, evaluate ROI and assess them for new opportunities.

Smith, a self-proclaimed passionate Sephora client, has almost 12 years of retail direct marketing and CRM experience, but this is her first experience working in prestige beauty and cosmetics. Before joining the newly launched Beauty Insider team in 2007, she had stints at Morgan Stanley, in the retail and apparel industry group; J. Crew; and Williams Sonoma, for the Pottery Barn Kids brand.

Sephora.com launched in the United States in 1999. Today it is not only an online store, its a place where customers can interact with the brand.
Sephora.com launched in the United States in 1999. Today it is not only an online store, its a place where customers can interact with the brand.

 

 

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What made Smith an ardent Sephora fan is what draws so many others into the store. "Sephora completely changed the beauty products landscape by offering consumers a new shopping environment," extols Smith. "Prior to Sephora, women looking for prestige beauty products could purchase them at department stores and a handful of boutiques, where each brand had a dedicated counter and sales associate. Sephora's mission was to offer women a beauty playground — a place they could easily learn about and compare all brands and products, in a fun and entirely pressure-free environment."

And the hype has not slowed down. The store is still rapidly expanding its offerings and remains a stepping-stone for many up-and-coming brands and products — including a number of products and lines that have made names for themselves in direct response television and home shopping, including the now huge Philosophy brand.

Beauty Insider, the brands customer loyalty program, offers coupons for redeemable gifts throughout the year, including this 2009 birthday gift for club members.
Beauty Insider, the brands customer loyalty program, offers coupons for redeemable gifts throughout the year, including this 2009 birthday gift for club members.

 

Besides selling beauty products that women cannot seem to resist, the mantra surrounding the store is personal attention. Sephora's marketing team uses personalization to get consumers, both offline and online, into the virtual and brick-and-mortar stores and then continues its relationship through continuity. "We invest heavily in educating our store associates on all of the brands we carry," says Smith. "A sales associate can offer each client individually tailored advice on the best products for her."

There are even skincare PhDs and color experts in every store. Basically, it is about putting the client first — listening to what she wants — and the drive to reach customers who are inundated with new beauty product brands. With all of the beauty and personal care product options out there, Sephora has to be creative to reach potential customers — and then retain them.


 

 

"The desire to reward and retain our loyal clients was the reason we launched the Beauty Insider program," says Smith. Creating a rewards program meant keeping customers excited about perks including innovative products, events and services, and value — gifts, gift cards and discounts. Smith categorizes today's Beauty Insider as offering two distinct benefits: rewards and relevance.

Rewards for shopping with Sephora come from clients earning points and redeeming them for free samples or featured full-size products. Also, the customer receives a birthday gift, invitations to store events and gift offers throughout the year. The second benefit, relevance, includes personalized online advice on what products Sephora thinks a customer might like, based on purchase history and profile questions.

When Sephora launched in New York in 1998, the brick-and-mortar retailer wanted to offer an open-flow environment, with every product out on display for customers to try. Different than the traditional department store beauty counter, Sephora offers more than 200 brands.
When Sephora launched in New York in 1998, the brick-and-mortar retailer wanted to offer an open-flow environment, with every product out on display for customers to try. Different than the traditional department store beauty counter, Sephora offers more than 200 brands.

 

"We sell thousands of products at Sephora, and for many clients, navigating that selection can be incredibly daunting," says Smith. "When a client enters a store, she can ask a store associate to help her find the right products. By analyzing a client's purchase history and preferences, we can do something similar on our Web site or in E-mail communications, offering increasingly targeted product recommendations to help our client quickly find the things that are right for his or her needs."

For example, if a client's skin concern is dryness (information gathered in her online profile), and she prefers natural and organic products (taken from her purchase history), Sephora will inform the consumer when it launches a new moisturizer or offers a gift with a purchase from an organic skincare brand.

Sephoras direct response marketing targets cross-channel client behavior. E-mails with promotions and product information drive a percentage of sales both online and offline. But some customers are still best reached in-store. In fact, a majority of Beauty Insider members only shop in-store, so Sephora creates printed newsletters and its POS system targets clients at checkout.
Sephoras direct response marketing targets cross-channel client behavior. E-mails with promotions and product information drive a percentage of sales both online and offline. But some customers are still best reached in-store. In fact, a majority of Beauty Insider members only shop in-store, so Sephora creates printed newsletters and its POS system targets clients at checkout.

 

So by giving the shoppers a compelling reason to provide the retailer with basic personal information, Sephora "opened the superhighway of client information flow in both directions," notes Smith. "Our loyal client base hasn't changed — it's our ability to understand them and speak to them in a personalized way that has changed."

But testing what works in DR and customer loyalty campaigns can have its obstacles. For example, although delivering increasingly relevant communications becomes easier the longer a customer is in the loyalty program and the more personal the information Sephora collects, some customers prefer not to receive E-mails.

"We aren't getting 100 percent of program member E-mails" says Smith. "Without E-mail addresses, it is more difficult to deliver messages about personalized product recommendations and new program benefits, which we frequently launch."

But Smith and her team are trying to rise to the challenge by, first, testing new ways to reach clients through more direct mail and in-store campaigns. Second, Sephora launched an edit capability on its point-of-sale (POS) system so associates can capture the correct E-mail address when a customer walks back into a physical store. Finally, the company is testing new ways to increase client E-mail capture at registration.

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