How Sephora Wins At Omnichannel

Beauty retailer Sephora was recently faced with a challenge: how to best market digital gifting to its consumers. With that challenge came the retailer’s decision to better align its omnichannel strategy, and in turn differentiate itself from other top omnichannel players. The solution? Leveraging the cloud-based CashStar Commerce platform to offer personalized, mobile gift cards that seamlessly cross all retail channels. A newly released CashStar case study breaks down how the omnichannel prepaid platform helped Sephora reach a digital gift card revenue growth rate of 8x over the prior year, with a 71 percent boost in average in-store basket size over the initial digital gift card value. But as Sephora and others look to drive omnichannel growth in the future, how will this platform continue to deliver an enhanced shopping experience, and fuel customer loyalty and acquisition?

TAKING OMNICHANNEL ONE STEP FURTHER

Since its start in 1970, Sephora prides itself on its “unique” open-sell environment, and currently spans 1,780 stores in 29 countries across the globe. It also offers an “award-winning” website, Sephora.com, along with the Sephora to Go mobile app. According to the recent CashStar case study report, Sephora has established itself as “the world’s premier digital beauty destination and an international force in prestige cosmetics.”

But while the retailer has long executed on its omnichannel strategy, says CashStar, its digital gift card program had remained misaligned from those digital, in-store and mail-based tactics. One crucial negative to that was that Sephora gift card recipients were limited to online purchases only.

So the company chose to take its strategy one step further – and focus primarily on mobile.

“We recognized that mobile was key to unifying our gifting program across across all retail channels and supporting the omnichannel experience our customers were already seeking,” said Bridget Dolan, Vice President, Sephora Innovation Lab at Sephora, in the report.

That mobile-first approach proved to be a winning strategy for the company. In 2012, it decided to participate in the launch of Apple’s Passbook, then quickly leveraged CashStar’s cloud-based platform and integration with Passbook to launch a “mobile-first, digital gifting offering in just two months,” says CashStar. And the results of that program far surpassed anything Sephora could have ever experienced with plastic gift cards, Dolan later said.

ENABLING CASHSTAR’S DIGITAL GIFTING PLATFORM

While Sephora knew that its customers were shopping across all channels, said Dolan, mobile was quickly becoming “an important way in which customers were researching products, creating wish lists and making purchases.” The company therefore sought to find a gifting technology that allowed shoppers to send, redeem and store digital and plastic gift cards – for both the Sephora to Go mobile app and consumers’ preferred mobile wallet app.

Enter: the CashStar Commerce solution. Once enabled, Sephora customers could send digital gifts from any computer, tablet or smartphone – all while Sephora could focus on its primary business objective, says CashStar. That is, driving revenue growth through innovative customer experiences. Through the platform, gift givers can also personalize their digital gift cards by uploading photos and videos, and can add a Beauty Studio Services eGift Card, which gets the gift recipient an in-store, 45-minute makeover. That feature has shown to drive more in-store foot traffic at Sephora, according to the report.

THE BENEFITS OF OMNICHANNEL GIFTING

Since implementing CashStar Commerce, Sephora digital gift cards have “gained a higher initial value, faster redemption velocity and a higher basket value at redemption,” says the report. But the most significant result was a Sephora digital gift card revenue growth that was eight times faster than the growth rate the prior year. Digital gift transactions also went up by 90 percent just one year after the program was launched.

“Fifty-one percent of our digital gift cards are redeemed within just one month, compared to 33 percent of our plastic gift cards,” said Dolan. She then added that the initial purchase value from Sephora’s eGift cards is 30 percent higher than their plastic cards.

Thanks to the level of success that Sephora has enjoyed from the digital gifting platform, Dolan said omnichannel prepaid commerce will remain a top priority for Sephora, especially in the coming year.

“We expect digital gifting to become a key differentiator for retailers working to drive omnichannel growth, and we look forward to staying at the forefront of this movement.

For more on how the CashStar Commerce digital gifting platform drives revenue and enhances the customer experience, as well as key results from the Sephora case study, download the full report below.