Loyalty Case Study: Sephora's Beauty Insider (VIB)

September 7, 2016
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Sephora’s Beauty Insider Program is famous in both the retail and ecommerce loyalty communities. Time after time this program is included in top loyalty program lists, but what makes the VIB program so great?

This Sephora Case study is designed to show you specifics of what makes Sephora’s loyalty program so good, as well as to show you where they can improve. After all, even the best programs have room for improvement!

 

What Beauty Insider Does Right

With over 10 million Beauty Insider members, Sephora is definitely doing a couple of things right. Here are three of the top reasons Sephora’s loyalty program is so successful.

1. Effective Use of Tiers

Tiers are one of the most effective ways a loyalty program can motivate a desired behavior. Each tier is challenging your customers to see if they can reach that next milestone. Tiers can be set based on number of orders, loyalty points earned, or total dollars spent.  Sephora has chosen to use the points method within their loyalty program.

beauty insider tiers

One of the reasons Sephora’s tiers are so effective is because of the exclusivity the upper tiers create. Tiered programs are effective when the upper tiers have a minimal amount of members, usually around 10%. You want your most loyal customer to feel like they achieved something that others could not, and get other customers striving to get there.

The tiers that Sephora has set ($350 for VIB and $1,000 for Rouge) have effectively segmented shoppers. The Rouge status is tough to reach, but obtainable, which leads to the most effective form of motivation. Just look at how many people are bragging about their VIB Rouge status on social media outlets like Twitter.

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On their own, tiers add an element of gamification to Sephora’s loyalty program that influences customer behavior. However, you also need to motivate customers to pursue each new tier with effective rewards. Sephora rewards their VIB and VIB Rouge members with awards that match their brand and customer type.

2. Rewards Match the Brand and Customer Base

Sephora has done an excellent job aligning rewards with what the brand stands for. The Sephora brand has become synonymous with prestige, quality, and luxury which is reflected in what they offer as customer rewards.

beauty insider vib rouge exclusive

The tier rewards like exclusive products and events, access to the beauty studio, and early access to products and sales align perfectly with what Sephora stands for. These rewards create a sense of luxury and assign an exclusive status to members in the upper tiers.

Sephora shoppers want the latest in beauty and want things that others cannot get. VIB Rouge rewards are the perfect motivators for Sephora’s typical shopper.

beauty insider rewards bazaar

The rewards that can be redeemed with points follow a similar principle. Sephora’s Beauty Insider Program is seen as a high end or luxurious program, and they have created a redemption that reflects that. Instead of using points for a discount, Beauty Insider members can use their points to claim more beauty products at the Rewards Bazaar.

beauty insider rewards offered

Once again, this a very effective way for Sephora to allow points to be redeemed. Discounts and coupons are not aligned with most premium or luxury brands like Sephora, so redeeming points for products is a better fit.

Sephora’s rewards do an amazing job motivating customers to perform profitable actions while at the same time staying true to the brand’s identity. It is one of the key factors driving the success of the Beauty Insider Program.

3. Personalized Product Recommendations

Sephora knows that their shoppers are highly motivated by experiences, as evident in how they have set tiers and rewards. That is why they have created personalized product recommendations for Beauty Insider members.

beauty insider recommendations

These personalized product recommendations are usually based on your prior shopping history. This poses one potential problem: what about new shoppers or those that are new to using cosmetics? Sephora also has a solution for that, and it’s called the Beauty Profile.

beauty insider vib profile

A shopper simply inputs hair type, hair concerns, skin type, and other information about themselves into the “Beauty Profile” and Sephora generates recommendations specific to your information.

Personalized products establish a relationship with your customer that creates a positive association with your brand. Not only does this motivate customers to purchase more products (that you know they will like) it also gives them the type of experience they need to become a brand advocate.

 

What Beauty Insider Does Wrong

1. Poor Explanation of Benefits

A loyalty program is effective when people are enrolled, and people only enroll if they know how it works. You need to be sure you explain to customers exactly how they can signup, how they will earn points, and most importantly how they can redeem points. This information is usually shown as an explainer page.

beauty insider rewards 1

Sephora does a good job of explaining some aspects of the program, such as the tiers and rewards, but fails to explain how customers will earn and redeem points. The only mention of how many points you will earn I could find is shown below, buried at the bottom of the account page.

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Sephora’s employees do a good job of explaining the program to shoppers in store, but as their online sales continue to grow Sephora should consider updating the site to make it more clear. Customers see value when they spend their points, so they need to know how to do so.

2. Inadequate Earning Window for VIB Status

Sephora has chosen to use dollars spent as the milestones in their tiers.  In order to move up each tier, a customer has to first spend $350, and then an $1,000 to unlock VIB status. This is a highly effective strategy for motivating customers to spend more, but only if they are given adequate time to spend.

beauty insider VIB expiry

Sephora’s program resets each customer’s dollars spent at the beginning of every calendar year on January 1st. From a company perspective this is a simple way to establish a cut off and award VIB or Rouge status for the following year. From a customer perspective, however, it can be very demotivating.

Say a customer joins Beauty Insider in November and spends $200 on gifts for the holidays.  In January, they spend an additional $150 on products for themselves. Based on the amount they spent, they would expect to become a VIB member. Unfortunately, the refresh ensures that they don’t get the new status, meaning that the customer has spent $350 in 3 months but is still not considered a VIB.

An easy way to improve this customer experience issue is by determining tiers based on a rolling expiration. By rewarding tier status based on spending over the last 12 months, no customer can feel cheated out of their reward.

3. Hidden Program

This goes hand in hand with the program’s lack of clear explanation.  Many brands use either a visible tab or a clearly highlighted link on their homepage to point customers to their loyalty program.  After all, they want them to participate, and in order to participate they have to be able to find it.

beauty insider homepage

Sephora has done a rather poor job of making their program obvious and accessible to their customers.  While their homepage is sleek and beautiful, they’ve hidden their program at the very top in small font, with no clear indication that customers should be clicking on it to access their account.  They’ve even neglected to include it in the Quick Links panel on the left, which seems like a glaring oversight.

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The only other place I could find mention of the program is at the bottom of the page, which some customers might not even see if they don’t intentionally scroll through the entire page.  Even though their program’s prestige is well-established, they can always stand to gain new program participants.  Making Beauty Insider difficult to find is not the best course of action.

 

The Beauty Insider Program

Sephora’s Beauty Insider Program is one of the best examples of a loyalty program in existence. It is successful both in store and online and has many components that help make it great. The successful use of tiers, rewards that match the brand, and personalized product recommendations make Beauty Insider a hit with Sephora shoppers.

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I do however think there is room for improvement. The program should fix the hard cut off of Jan 1st, improve their explainer page, and make the program more easily accessible. That being said, I think the program benefits outweigh the negatives, and over 10 million program members seem to agree.

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