Ulta Beauty has been flying high and among the many factors at play is its loyalty program and subsequent database, which chief executive officer Dave Kimbell often highlights during earnings presentations.
But it wasn’t always this way, as he told Carol Hamilton, the group president of acquisitions for L’Oréal USA, during a wide-ranging conversation between the two executives.
“We had some work to do on it. You may remember, we had two different programs. They were complicated and we didn’t have the data organized. Our team in our stores in particular didn’t really understand the importance so we worked hard to invest in that and drive that part of our business going forward before because we like loyalty. That’s important, right?” he said of the beginnings of the loyalty program soon after the company was founded.
“We wanted people to be loyal to Ulta Beauty, but we also wanted to understand their behaviors to dive in deeper,” he continued. “We had the opportunity to really understand consumer beauty enthusiast purchase behavior better than anybody. So we moved down that path and one of the biggest things we did was get our teams excited about it in our stores to understand the importance to see the value that it added.”
That work has paid off with 40 million members of the loyalty program called Ultamate Rewards and 95 percent of sales going through it, while the data trends have led to the development of programs such as it retail media network, UB Media, to offer brands addressable advertising leveraging its Ultamate Rewards members.
“It’s been a great journey, but like I said, we’re not done and we’re going continue to invest,” added Kimbell.
Away from analytics, Hamilton went on to ask Kimbell what his secret weapon was
for really understanding the consumer as a person, not as data only, to which his answer was his army of store associates.
“We have over 50,000 store associates,” he said. “They are a massive source of insight beyond the data to understand what they see every single day as they’re engaging in all different guests across the country.”
There’s also a Beauty Board made up of 10,000 beauty enthusiasts that Ulta reaches out to almost every week asking questions, to understand not just what’s going on with beauty, but what’s going on in their lives.
The latter has been particularly helpful during the global coronavirus pandemic and also the current period of economic uncertainty, according to Kimbell.
“We ask them questions all the time and we really increased that during the pandemic when we wanted to understand not just what was going on in makeup but what was going on in their lives and about what’s ahead of them, what’s the economic outlook, how are they connecting with others in a time of uncertainty and so we continue to do that,” he said. “Most recently with the economic certainty what’s the role of inflation, how are they thinking about it.…It certainly helps us understand our strategy.”