Ulta Doubles Down on Loyalty Program, Personalization
Ulta Beauty’s growth strategy for 2025 and beyond is centered around its UB Rewards loyalty program and creating the best, most relevant experience for members/shoppers. A core part of this strategy is personalization as well as leveraging its retailer media network and marrying in-store and online engagement using members’ sales data.
CEO Dave Kimbell said during a fireside chat at the Raymond James TMT & Consumer Conference on Dec. 11 that “retention is high” among the loyalty program member base, which comprises about 44 million shoppers who make up, “in a broad sense,” 95% of sales. The retailer wants to continue to grow membership over the next few years.
A recent data partnership between Ulta and Adobe, in addition to a broader body of work around personalization at the retailer, is designed to help the retailer “more deeply understand” each guest’s motivations, find opportunities to personalize communication and advertising and drive deeper connections and engagement with guests, Kimbell said.
This partnership will establish “a fully automated, real-time personalization engine” with UB Rewards, leveraging data, AI and machine learning, “without the need for manual intervention,” Ulta Beauty chief marketing officer Michelle Crossan-Matos told Retail Brew in October.
More on UB Rewards
UB Rewards loyalty program was up around 5% in Q3, due to attracting new members and strong performance and engagement from its Platinum and Diamond loyalty members. Ulta’s loyalty program is separated in three levels: its basic membership level, then Platinum shoppers (those who spend $450 or more in a calendar year) and Diamond members (those who spend $1,200 or more in a year).
“A simple model of Ulta Beauty's growth is our ability to continue to grow members and increase spend per member,” and many of the retailer’s initiatives (such as product recommendations and replenishment reminders) are designed to do both, particularly when it comes to personalization, Kimbell added during the chat.
“If it's relevant to you, obviously, that will be something you're more likely to respond to,” Kimbell said. “Whether it's downloading our app, using our services [or] shopping online for the first time. … There are so many ways that we can introduce our guests to different parts of our business [through personalization once they’re in the door or make a purchase as a member]. Our personalization efforts really are key to doing that, and our partnership with Adobe is one new step in driving that.”
Advertising, including investments in Ulta’s retailer media network UB Media and social commerce capabilities, is also an important part of the retailer’s current focus and growth strategy. Ulta continues to enhance its product capabilities to grow UB Media, including through a recent partnership with e-commerce company Rokt to introduce AI non-endemic ads for products and services outside the beauty category.
Additionally, Ulta also partners with Roblox, the virtual universe and online game platform, to create innovative advertising opportunities for brand partners. Over the years, the retailer’s “Ultaverse” has attracted more than 11 million visits on Roblox.
“With growing interest from beauty brands to participate in our Ultaverse, we're unlocking new possibilities at the intersection of gaming, innovation and media to bring those brands to life in exciting new ways through our UB Media capabilities,” Kimbell said in Ulta’s Q3 earnings call on Dec. 5.
Ulta’s store experience also ties in to its larger personalization and loyalty goals to drive differentiation and “creating authentic, personalized experiences across all our channels,” Kimbell added on the earnings call. In Q3, Ulta hosted more than 13,000 in-store events, including unique celebrity and brand founder events, multi-branded events and skincare-focused events. It also expanded its salon event, The Workshop, to more stores and invited guests to learn how to create “salon-worthy blowouts” while receiving customized coaching and personalized recommendations from in-store stylists.
At the same time, Ulta is focused on enhancing its digital experiences to drive discovery, trial, traffic and sales.
“During the quarter, key online activations drove guest engagement, and our expanded sampling program delivered double-digit sales growth,” Kimbell said. “Our digital merchandising strategies, including enhanced search, guided navigation and enriched product pages drove conversion, and our site optimization efforts are improving the guest experience and delivering stronger conversion trends. Importantly, we also continued to drive increased [mobile] app adoption.”
Ulta last quarter also added to its suite of virtual try-on and AI-enabled skin and hair analysis experiences with the launch of GLAMlab 2.0, which includes a new 3D engine to enhance precision and stability, shoppable makeup looks and a new user interface that includes sharing capabilities. It also rolled out new digital buying guides to amplify search engine optimization while providing guests with educational content, beauty tips and product recommendations.
“We have a very differentiated unique proposition from our assortment to our experience, in-store, online, of course, our loyalty program and services,” Kimbell said on Dec. 11. “So the collection of experiences that we offer have allowed us over time to gain share, and we think position us well with continued innovation to be a share leader for many years to come.”