PYMNTS Summer Loyalty Series: 95% of Ulta Beauty Sales Driven by Loyalty Members

Loyalty is a beautiful thing for consumers and retailers, and loyalty in the beauty space is doubly so, in that choice of retailers and products are deeply personal, literally modifying how we present ourselves visually to the world. That gives beauty brand loyalty unique qualities.

Sitting near the pinnacle of the beauty loyalty space is Ulta Beauty, whose Ultamate Rewards loyalty program has over 40 million members and growing. The interactions with the brand in-store and online paint a portrait of a highly engaged loyalty member with powerful brand affinity.

Speaking with PYMNTS for the “Summer Loyalty Series” sponsored by Banyan, Nicole Bernhardt, head of Ultamate Rewards at Ulta Beauty, talked about the power of data in crafting the offers and rewards that make Ultamate a case study on how to do loyalty well.

Bernhardt told PYMNTS that the Ultamate program not only monitors “the pulse of what consumer shifts are happening, but it allows us to engage our consumer in meaningful ways. It allows us to consistently offer value, which is always going to be important to consumers. And it allows us to deliver things that are personalized to them, in terms of their discovery, in terms of their checkout, in terms of their promotions.”

It’s working, as she noted that 95% of Ulta Beauty’s sales are attached to its loyalty program — an astounding statistic — and, as she said, a testament to the ability of data to drive success.

“I think about data being twofold as to how we use it to effectively craft a loyalty program,” she said. For example, “receipt level data is transactional data. You get data about what a consumer is purchasing, how frequently they’re purchasing, what’s in their basket, and how large their basket is. You can understand the tenures of members, and all that information is valuable as we are a loyalty-centric culture in continuing to drive membership” and Ulta’s key performance indicators (KPIs).

That fits well within Ulta Beauty’s three-year effort, Project SOAR, phase 1 of which began in 2022 around upgrading its enterprise resource planning (ERP) platform. It’s part of larger series of guest experience enhancements that are heavily reliant on data capabilities.

Leveraging Loyalty as a Product

Ulta’s use of receipt-level data is a crucial pillar of its standout loyalty offering, but other data types contribute to the success the retailer sees across its roughly 1,300 U.S. stores.

For example, Bernhardt pointed to the value of program engagement data.

“If you think of the loyalty program as a product that we want people to sign up for, use, derive value from and get celebrated for using, program engagement data, meaning what features of the loyalty program are they using and how they’re deriving value, is another very important way that we get information to be able to, again, continue to innovate and evolve our program and make sure that we’re offering something to individuals that they find valuable,” she said.

The ability to innovate and evolve is only as strong as the systems doing the analysis. This is borne out by PYMNTS research. In “Meeting the Need for Item-Level Receipt Data: Why Data Infrastructure is Key to a Better Customer Experience,” a PYMNTS and Banyan collaboration, we find that companies recognize receipt-level data as critical to the success of loyalty efforts.

Just over 80% of those surveyed said granular data reflecting what consumers bought, browsed or returned is invaluable. However, technological capabilities and tech readiness are often lacking, making more merchants turn to touchups via third-party platform capabilities.

Bernhardt agreed, saying, “The vastness of personalization is at times, I think, overwhelming, to think about all the ways in which you can speak to someone as an individual.”

“We’re looking at all those things,” she said. “I continue to think about the fact that loyalty is this important key as to how we can deliver things to you at the right moment, the right time, whether it be a promotion … or a recommendation because we know you as a member.”

Data Drives Decisioning

Whether loyalty program members are drawn to prestige beauty products, mass-market brands, or a mix, the Ultamate program constantly watches those numbers and makes inventory and merchandising decisions that align with a demand that can shift unexpectedly.

“We’re a very data-driven organization,” Bernhardt told PYMNTS. “We’re leveraging the information that we’re getting, not only about sales in the macro, but tied to our consumers because of our loyalty program and our membership, to be able to make those decisions.”

“We’re always staying close to the analytics so that we can remain nimble, and we can continue delighting our guests and innovating for the beauty experience.”

The better an organization, be it a merchant or a bank, understands what motivates its most loyal customers, the closer it gets to the kind of outcomes Ulta Beauty is realizing.

Bernhardt noted that having the technical ability to construe data hits every touchpoint in loyalty creation and care, from “simplistic acknowledgments of who you are as an individual” to more complex capabilities like making highly specific product recommendations based on the data relating to categories and SKUs that members leverage or might want to but haven’t yet.

“Loyalty programs are the keys to being able to not only deliver the right recommendation, the right promotion, the right personalization,” she said, “but it also allows us to make sure that those offerings we’re giving them are readily accessible as the consumer is actively shopping, both in discovery as well as in their checkout moments.”