How Can Home Goods Stores Improve their Loyalty Strategy?
In this article, we’ll discuss Sephora’s loyalty program, its latest update, how it works and why it works.
The Beauty Insider
Initiated in 2007, The Beauty Insider was designed to offer a sense of exclusivity to its loyal customers. The program is updated from time to time in order to stay relevant and offer better benefits to its customers.
In 2009, the program added the infamous Very Important Beauty tier (VIB) and then again in 2013, a third tier called the Rouge tier.
Sephora added The Reward Bazaar in 2016 and a year later created a community that focused more on brand-consumer relationships, The Beauty Insider Community. Sephora also has a Rewards Bazaar where you can spend your Beauty Insider points.
The 2020 update offered better deals to its customers both in-store and online, with Beauty Insider Cash, which allowed members to exchange loyalty points for money off their purchases.
How does it work?
It’s a free loyalty program for customers in the U.S. and Canada that allows customers to earn points on every purchase. As of 2021, Sephora’s loyalty program had three tiers—Insiders, VIB and Rouge.
Every tier has a distinct set of perks and incentives, along with a generic rule that on every dollar a customer spends, they earn one beauty insider point. Anyone can sign up to be an Insider member. To become a VIB member, one must spend more than $350 a year in Sephora.
For a Rouge membership, one must spend over $1,000 a year. Members enjoy special perks, exclusive benefits and rewards, gifts on birthdays, free makeovers, free beauty and makeup classes, and early shipping on their online orders. VIB Rouge card also gives access to exclusive events. The program offers exclusivity to its customers at each tier, giving them a sense of inclusion in the elite Sephora community.
Mobile Application Features
Sephora recognized that 80% of all shoppers use their phones while inside a physical store to supplement their shopping experience. Hence, enhancing the online and in-store experience through a sophisticated app was the next step.
The Sephora mobile app replaced the physical loyalty card. It enables you to track and redeem points and also gives you a preview of rewards and benefits for members.
The app has also simplified the buying process by showing customer reviews and a ‘Love’ feature that enables customers to save products they like for future reference. Sephora also offers free Wi-Fi at all its brick-and-mortar stores to enhance its customers’ browsing and shopping experience.
The updated program
The 2020 update of Sephora’s loyalty program launched on May 29, 2020, across stores in North America. The Beauty Insider Cash allowed members to exchange loyalty points for money, where 500 points equaled $10.
The update introduced multiplier events, experiential rewards like free sessions, facials and meet-and-greets, sessions with famous brand founders, and more rewards on the feature Reward Bazaar. It also granted free shipping to Insider members on orders above $50, and to VIB members on orders above $35.
The new update also has a charity feature wherein donations can be made with points to charities like National Black Justice, which works with Black LGBTQ community, and Coalition and Project Glimmer which helps at-risk, teenage girls.
Strengths of the loyalty program
- The Tier System – By breaking membership into distinct groups, Sephora’s loyalty program creates challenges for customers and benchmarks to reach. The tier system creates a competitive atmosphere wherein members of the lower tier end up spending more than anticipated.
- Unique Privileges – Sephora is a major player in the retail cosmetic business. It has access to exclusive and high-end brands and their founders. Sephora uses this to its advantage and offers customers exclusive one-on-one sessions with the top players in the industry. Access to exclusive products and free entry to master-classes conducted by well-known makeup artists from around the world are some of the unique privileges loyal Sephora members can enjoy.
- Offers Exclusivity – Being a Sephora membership cardholder is a prestigious thing among make-up enthusiasts. Sephora offers top-of-the-line products and is a one-stop-shop for superior makeup brands which is an aspirational goal for budding make-up enthusiasts.
Why does it work?
Sephora’s loyalty program is focused more on building an exclusive community. According to studies, emotional perks drive three-quarters of customer engagement.
Sephora understands this and works on emotional drivers. Incentive-driven loyalty works on need and greed, whereas emotionally driven loyalty has a deeper and stronger impact, which offers long-term benefits.
Sephora offers a sense of inclusivity to an elite community. It also personalizes its perks and rewards, building a strong one-on-one relationship with its members.
Free samples or birthday gifts are specially curated and shortlisted after careful analysis of consumers’ purchase behavior and product preference.
The success of Sephora’s loyalty program can be determined by the vast size of the community itself. It has more than 17 million members in North America alone, and the numbers are growing rapidly. The loyalty program members drive 80% of sales while also providing strong, organic publicity to the brand.
There’s no better example of promoting brand loyalty through emotional drivers than Sephora’s loyalty program. As Allegra Stanley Krishnan, Vice President and General Manager of Loyalty at Sephora, puts it, “Loyalty is at the core of everything we do. We know rewards that provide greater emotional and memorable experiences are the most meaningful for our clients. We want to continue to deliver personalized experiences where our clients can choose what works best for their needs.”
Ready to take your customer relationships beyond transactions? Contact us to explore how you can leverage loyalty to stand out and deliver unique value, then see our modern loyalty solution in action.