Reinventing the Sephora Loyalty Program: Creating the Future of Beauty CRM
Introduction
Brands are dead. As consumers continue to move into the age of “now” companies are realizing that having a good reputation as a brand isn’t enough to keep consumers happy. At the origin of loyalty cards companies would entice their customers to purchase a loyalty card in exchange for receiving limited offers, exclusive promotions and specialty products. As soon as one company started offering their loyalty card for free, the evolution of customer loyalty programs began. Moreover, in previous years loyalty programs were mainly used by clothing stores and coffee shops (stamp cards); however, nowadays one can receive a loyalty card, online card, or cell-phone application at almost any type of retail company including gas stations, cinemas, super markets, and even local boutiques and coffee shops with the help of app-development software.
Currently, the majority of loyalty programs are run under similar schemes. Most loyalty programs include some combination of the following customer benefits:
· Spend “x” euros and receive “y” points
· Sign up for special e-mail offers
· Receive a special gift or discount on your birthday
· Free shipping if purchasing a product online
· Extra discounts from non-member customers (either online or in store)
Furthermore, because of the rise in online/cell-phone based promotions, different loyalty programs are constantly trying to attract the attention of their previous consumers. Therefore, this rise in loyalty programs, cards, and applications has not only caused competition against normal retail competitors (e.g. clothing store vs. clothing store) but has also caused companies to compete for their customer’s attention across product specification (e.g. coffee shop’s new product vs. sale at clothing store).
When Sephora launched its loyalty program in 2003 it was the “Best-In-Class Retail Loyalty Programm”. Although Sephora’s loyalty program was one of the greatest in previous years, it is currently competing against a number of other beauty brands on the basis of point-schemes and customer attention. Moving forward, it is time for Sephora to reinvent the loyalty program and re-capture its piece of the market. Our mission is to understand what customers need from their beauty provider and how to make Sephora their #1 choice when purchasing beauty products.
“The goal of BETC is to have its customer brands become intimately personified in people’s daily lives.”
We understand that BETC values creativity, innovation, and brand connectedness. The goal of BETC is to have its customer brands become intimately personified in people’s daily lives. BETC hopes to add an emotional-connection to brands and our goal is to do exactly that with Sephora and its customers. Where Sephora was originally a reputable brand, it now has to become more than a brand: a creative advisor, an understanding friend, and a trustworthy beauty guru.
Purpose
The purpose of our project is to reinvent Sephora’s loyalty program. Sephora’s current loyalty program has been copied and imitated by various other companies (beauty and other), losing its novelty and differentiating factors. Moreover, Sephora’s diverse brand offerings and better attempts of personalization have helped them continue to compete with current beauty brands. However, with their current loyalty program, customers lack an emotional and personal attachment to Sephora.
As shown in the competitive map below, other beauty brands have better percentage of savings offerings than Sephora.
Table 1.0 Competitive map of loyalty programs at different beauty companies
Although Sephora has its own Sephora make up brand, beauty companies like The Body Shop and Kiko are known for only carrying their own branded products. This means they are more likely to have higher profit margins and a greater ability to deploy exclusive offers and sales. With all of these tactics stacked against Sephora there is even greater need to find other forms of value proposition for Sephora’s loyalty program — specifically personalization. Sephora has to become more than a brand and be considered as partner in beauty thanks to personalization (targeted offers), more advice (advice can be about finding the product that personally fits you or being inspired), more qualified rewards and a sense of community.
Project Description
Our project focus is to create a value proposition for Sephora’s loyalty program that will increase customer loyalty, create brand ambassadors, and help women feel confident in their beauty habits. Our goal is to re-create loyalty programs through innovative engagement techniques with customers to feel excited to interact with Sephora as a brand. Through the surveys we have gathered from European women of different financial backgrounds, family structures, and beauty habits; we have understood that women have three primary needs from their brands:
1. Personalization in offers and contacts with the brand
2. Advices and coaching
3. Reachable rewards and valorization of loyalty
4. Genuine community engagement (with friends and make-up professionals)
Goals & Objectives
Goal: To re-invent the Sephora loyalty program with creative and innovative customer engagement techniques to help consumers feel appreciated by and faithful to the Sephora brand.
Objective: To create a four-fold CRM program that has ten different value-added advantages for Sephora customers.
Methodology & Timelines
Ongoing: calls with BETC every 2 weeks
October 30th: meeting with BETC in their Paris office to focus on first concept ideas and the promise of the new loyalty program
November: testing the first versions of our ideas
End November: analysis of our tests and improvement of our ideas + selection of the final idea
December: Final idea improvement + establishment of overall implementation and communication strategy
Beginning January: Precise definition of the implementation and communication strategy
Benefits & Anticipated Outcomes
Sephora will benefit from a better brand image, which in the long term can help recruit new clients and maintain the existing ones. This strategy could also help Sephora gain brand ambassadors. The strategies we plan on implementing require the clients to give some information about themselves (for personalization reasons): this will give Sephora key data about its clients and help Sephora target its customers better. In counterpart, the customers will benefit from this loyalty system as well: they will feel special and have a stronger emotional relationship with Sephora.
Contact Information
Perrine Coursières perrine.coursieres@edhec.com 07 87 94 84 06
Maïlys Curutchet mailys.curutchet@edhec.com 06 01 75 01 83
Akila Chetitah akila.chetitah@edhec.com 06 59 53 36 86
Berenice Gonzalez Moraga berenice.gonzalez-moraga@edhec.com 06 40 77 06 98
