COVID Was a Test. Ulta Beauty Passed. Here’s Why:
The impact of combining data, marketing, and customer loyalty.
Last year, when COVID suddenly sent everyone home, shuttered stores, and introduced masks, Ulta Beauty, which has long offered makeup, haircare, skincare, and related services, faced a challenge. "We had to shift our communications strategy to focus on what was most relevant to our guests in the moment," said Prama Bhatt, chief digital officer, Ulta Beauty. "We had to focus on being responsive and hyper-relevant while our stores were closed. We worked to be a source of light that celebrated self-care, self-expression, and togetherness and as a resource by providing insights and education."
The situation, as Bhatt describes it, was dynamic and evolving quickly. "We saw behaviors change. As we navigated mask mandates, for example, we saw eyes get played up more than lips and conversely, on video, lips were making a bold comeback." Throughout the year, she adds, "we built relevant storylines to underscore our real relationships with our guests rather than simply promoting product. That's how we build enduring connections."
"For less digitally sophisticated companies, the changes in customer expectations wrought by the pandemic have been not just a challenge but devastating," notes Larry Fisher, CEO, Rise Interactive, a Chicago-based digital marketing agency that has partnered with Ulta Beauty for more than a decade. "But that wasn't the case for Ulta Beauty, which, thanks to a deep reservoir of data and a well-established partnership between the members of its digital, technology, marketing, and merchandising teams, was more than ready."
As we've explored in earlier installments in this series, the kind of partnership, flexibility, and skills Ulta Beauty demonstrated were key to its success in this difficult time.
Loyalty: Bigger Than a Program
At the heart of Ulta Beauty's readiness was its best-in-class loyalty program, which also serves as a robust data set for the retailer. The company's ability to mine data from one of the most successful industry loyalty programs allows it to remain consistently relevant with its more than 36 million members. "The program is easy to use and to understand," Bhatt says. "There's high engagement in earning and using points with flexibility across everything in our assortment."
"A loyalty program doesn't guarantee loyalty. Loyalty is much bigger than a program." What's important, is how the company uses the program as a foundation.
However, Bhatt notes, "a loyalty program doesn't guarantee loyalty. Loyalty is much bigger than a program." What's important, she stresses, is how the company uses the program as a foundation. "Having the grounding and then creating experiences to drive and reinforce loyalty is critical. That's how we get deep insights and, in turn, create personalized experiences. It's what allows us to better build relationships so guests feel empowered to bring their possibilities to life." It's also what helped the company move so quickly when COVID changed its guests' beauty regimens. Teams tapped into the company's well-honed ability to tie data into marketing and merchandising strategies.
"With all of the changes in data privacy, advertising platforms want brands to push their own, consented first party data into systems for audience targeting," explains Fisher. "For brands like Ulta Beauty that have made smart investments in customer databases, the ability to connect with customers 1:1 with the right message across different channels is powerful."
The Building Blocks of Basic Data
To understand how Ulta Beauty created such a successful, multichannel, future-proofed, loyalty-based business, it's useful to see how the company has evolved in terms of technology and its approach to marketing—and to marketers.
"Our technology roadmap has been a multiyear journey," says Bhatt. "It started with the desire for a single source of truth with fundamental data: Who are our guests? How are they transacting? You start with these building blocks because it's too overwhelming to tackle all the sets of data. We picked specific use cases and high-value guest experiences to drive the technology and data roadmap. Over time, we got more sophisticated with unstructured data, interaction data, and began to better understand intent through engagement with emails, ulta.com, or with our mobile app."
To accelerate its digital experience roadmap, the company bought two startups: an artificial intelligence firm called QM Scientific and an augmented reality company called GlamST. The idea, Bhatt says, was to "move toward more interesting, personalized experiences by connecting new capabilities with our core dataset and loyalty program. We then could expand our foundation and create experiences like Skin Analysis, a tool to help guests on their skin journeys with an analysis and personalized routine recommendations based on images from your phone's camera."
Working with an Ecosystem of Skills
But technology alone isn't enough to drive Ulta Beauty's leadership. "There's an ecosystem that houses the marketing, merchandising, and digital teams and our technology partners," Bhatt explains, noting the unlikeliness that all the necessary skills would be found in any one function. "For us, winning means multidisciplinary hubs working together across the company to better understand how to think about technology and data to enable the experiences we want to create."
People with specific skills are the most critical piece. Ulta Beauty builds "business teams with acumen around diagnosing and understanding digital experiences and what drives conversion and engagement." In addition, Bhatt says, "there's a very specific need around data science, data engineers, and data analysts, as well as top-notch product and development capabilities that help us be more modular and flexible to put tools in the hands of marketers and merchandisers to bring experiences to life faster."
Notably marketers remain a key part of the equation. "Marketers need to have an even deeper blend of qualitative and quantitative expertise," she explains. "There's so much data now—marketers are the connectors. They find the balance of look and feel, inspiration and analytics, and in doing so, they connect and inspire with storytelling. That storytelling is grounded in a deep understanding of our guests, and it's coming to light even more now."
Data Moving at the Speed of Beauty
Insights into guest behavior, Bhatt says, "drive everything we do and ensure we're relevant. Whether surveying our loyalty members, connecting with our Beauty Board, or mining data, we seek to learn about preferences, behaviors, and values. Our consumer insights go beyond transactional data to get underneath key trends."
"It's the marketers who embrace the data engineers and other tech functions who will get there the fastest."
The data, Bhatt says, is coming in faster than ever. And this, she adds, "is where building at scale helps. Ultimately, you want to get to a segment of one. That is aspirational. We build the foundation to create a balance between great insights and data to respond in a more near real-time way." Simultaneously, she adds, "you have to balance responses with experiences that can be automated, leveraging data to fuel personalization at scale. And that means using data at the speed of beauty, retail, and your ecosystem."
"This is really where the next chapter of marketing is going," says Fisher. "Once brands have a foundation of rich customer insights, structured in a way that can be easily activated, and combine that with an ecosystem of real-time data, we will get closer to delivering on the ultimate goal of providing customers with messages that add value at the right time, and in turn, deepen their relationships with brands. And it's the marketers who embrace the data engineers and other tech functions who will get there the fastest."
In the next three installments in this series, with the CMO's role more fully defined, brand engines fueled up, and audience strategies future-proofed, we'll look closely at how companies can prove their impact and continue to act on real-time opportunities.
Originally posted at MediaPost.