Digitizing Beauty Experiences
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WILSON RAJ: From virtual try-on features to AI-enabled skincare analysis, the pandemic and ensuing disruption have accelerated innovative and immersive technologies. And with a further emphasis on health and wellness, beauty brands have had to evolve from a one-dimensional category to something more holistic and inclusive. Hi, I'm your host, Wilson Raj. And welcome to this episode of Reimagine Marketing, Digitizing Beauty Experiences. Welcome, everyone. And I'm really excited to introduce our guest today, Kelly Mahoney, vice president, customer marketing at Ulta Beauty. Welcome, Kelly.
KELLY MAHONEY: Thank you, Wilson. I'm happy to be here.
WILSON RAJ: As we are, too. So this is such an exciting and, I think, very interesting topic given the state of affairs, past the pandemic and now as we move to 2021 and to the future. And I know that, in your role, you've got a huge responsibility. You lead the global loyalty and CRM team. You're responsible for that journey from start to finish and the personalization across touch points. So tell me a little bit more about that role and some of the pressures that you're facing there.
KELLY MAHONEY: Yeah, absolutely. Yeah, customer marketing at Ulta Beauty is all about really engaging and connecting in as authentic way as possible with all of our members. And we're so fortunate that we have well over 32 million active members. So you're right, it's a lot to be responsible for. We manage our Ultimate Rewards program. We manage all of the customer contacts that we deliver across all of our channels with our guests.
And to your point, a big focus of our team right now is, how do you personalize every single connection?
WILSON RAJ: Right.
KELLY MAHONEY: And from, you mentioned, the pandemic, a big focus this year is just how do we re-engage? How do we welcome our customers back into our stores, online, and do it in a way that keeps them coming back to Ulta Beauty?
WILSON RAJ: Absolutely. And that will be a huge focus of our conversation today. Now also, from your experience perspective, you had a wealth of experience, but one really caught my eye here, you've had a significant number of years in the oil and gas industry, I think at least something like around 10 years or so?
KELLY MAHONEY: Yeah.
WILSON RAJ: This is really interesting. So how has that industry shaped your perspective on what you're doing now with Ulta Beauty?
KELLY MAHONEY: Yeah. I always like to say BP was my home, so to speak. It's really where I grew up, from a leadership perspective. And I look back with such fond memories of my experience in BP. I ran their loyalty, their point of sale for North America. And it was a fascinating industry. To have that challenge of trying to find ways to differentiate your brand in such a low involvement category is definitely not an easy task. But the brand itself is just so highly differentiated, a lot of it can be applied to beauty, believe it or not.
WILSON RAJ: Right.
KELLY MAHONEY: And that's what I've been doing. I mean, I agree, it's fascinating. And there's a lot I can take from my experience at BP over to Ulta Beauty.
WILSON RAJ: We'll see some of that transference in-- because, I think, the industries, while they're different, there's definitely the same challenges, in terms of reaching your brand affiliation and connecting with suppliers and consumers, so definitely interested to hear a little bit more about that.
KELLY MAHONEY: Absolutely.
WILSON RAJ: So now, getting on to this topic around this tech-infused beauty consumer, I saw a recent report by McKinsey that says-- this is pre-COVID research-- nearly 85% of all beauty product shopping took place in the brick and mortar store. And today it's closer to 60% online. And another stat from that research also showed that basically beauty sales declined as much as 30% in the first half of 2022, according to McKinsey.
So I think the health of beauty brands and the industry that you're in, Kelly, is tightly, tightly connected with the ability to try out new products or have on-site consultations with advisors. So how do you view recovery when these sorts of in-person experiences have basically fallen by the wayside?
KELLY MAHONEY: Right. Yeah. I mean, in March of 2020, we had to close our entire fleet of stores because of response to the rise of the pandemic and, obviously, the health and safety of our guests and our associates, absolutely our top priority. But that meant we became an online only retailer overnight. We had to accelerate, I would say, about two to four years of Omnichannel innovation in a matter of months.
WILSON RAJ: Wow, that's incredible.
KELLY MAHONEY: Right. And to your point, and you hit on it, in our category in particular, it's all about the art of discovery and exploration, and it's a moment of fun, and it's a moment of joy. And so what was on our minds is, how do we bridge that? How do we bridge that gap without our brick and mortar stores open? And we leaned-- we leaned into our shopping experiences on digital to deliver that.
So things like our GLAMlab-- which we were so fortunate to have invested in GLAMlab. That's our augmented reality technology that's embedded into our app-- this ended up being a key tool that we used to really amplify ways to explore. So this is things like foundation, that are typically difficult to find the right shade, we were able to bridge that in a digitized way to help support finding the right shade of foundation, as an example.
WILSON RAJ: Right.
KELLY MAHONEY: It also allows you to try and makeup. You can try on new hairstyles. And it's fun.
WILSON RAJ: That's a key point, I think, to make this-- still keep that fun, that discovery sort of DNA experience as part of it. Now, not just beauty brands, I think retailers at large because of the disruptions and so on, they had to-- they were forced to actually rethink their marketing efforts, moving from some more transaction oriented interactions, so maybe cheap deals or discounts, to something that's more value oriented. And you hit on some of those. And we're going to delve into those a bit later. We talked about experiential. Now, what's your take, as far as Ulta is concerned, from your brand perspective?
KELLY MAHONEY: Oh, absolutely. It's all about this idea of moving from transactional, functional to experiential, emotional. And we start, really, with our brand and our purpose. So about two years ago, we were on this mission already, to move our functional branding purpose. And so you might know, all things beauty all in one place is very purposeful. We will always keep that purposeful message, because there's a lot of value in having all things beauty all under one roof. That's inherent to our brand value proposition.
But about two years ago, we started to move, because we started to recognize that beauty is meaningful, and it's very, very highly emotional. And we wanted to play more in that space. So our bold new purpose is, bring the possibilities to life through the power of beauty. So we've been on this journey, and only accelerated it really, over the last 18 months or so to amplify the meaningful role that beauty plays in all of our lives.
And we believe we have the power to really influence that through our branding, kind of our North Star, and then everything we do to personalize all the different touch points across all the different channels that we're interacting with our customer.
WILSON RAJ: Kelly, what you said there is-- I think it's got huge ramifications for all brands, or in terms of their branding. And the beauty all in one place, it's not a bad thing. It's certainly valuable and functional. But I think this notion of bringing to life the beautiful possibilities, that's that aspirational, that emotional connection. I believe all the things that you do from a CX perspective definitely falls out from that. So I think that that's such a cool thing.
KELLY MAHONEY: Thank you. We're very proud of it. And we continue to invest in it. We launched our ad about two years ago. And even in the midst of the pandemic, we felt it was important to continue to lean into that, and especially as we started to note that people needed this from us. Our customers actually needed us to amplify sources of joy and light during what was dark times. So it was just kind of coincidental in some ways, that we had already been on this journey. And it allowed us to really amplify content that resonated during the pandemic and resonates now, ongoing.
WILSON RAJ: Absolutely. And I think, Kelly, here's another thing for our audiences, I think the brands, the leading brands that actually invested in marketing during this difficult time were the ones or are the ones that are continuing to be resilient. So there's no pulling back. The ability to launch such a big brand campaign in the midst of that is such a brave, and bold, and certainly, I think, a gutsy move that I think serves you well.
KELLY MAHONEY: Thank you. Thank you, very much. I mean, we had to be nimble in that moment. We had to act swiftly. We definitely had to reroute things, to ensure that we were hyper relevant in our communications during that time but without moving away from our bold purpose, which is to bring the possibilities to life through the power of beauty.
WILSON RAJ: Excellent. So this is an excellent segue here, to kind of now get into that, now, how do we merge all those things, that personalization, that brand purpose to build that loyalty. We acknowledge that consumer behaviors have changed as in-person engagement has been forced more into a digital, or maybe you could call it physically distant model. Now in your opinion, do you think this is temporary, or is it going to last? Is it-- how is this going to net out for you guys in the next couple of years?
KELLY MAHONEY: Yeah, as I mentioned earlier, we were an online only business overnight, fortunate to have the 32 million active members in our loyalty program, many of which pivoted along with us to our online shopping properties. No, the answer is, this idea of showing up where your customers want you to be, that's never going to change. Now, we are now leveling out, and we're seeing a return to brick and mortar, because it's a lot of fun to go into our stores and explore and discover. But we will always pivot where our customers need us to show up.
So our focus is still very much on delivering Omnichannel experiences, whether that be buy online, pickup in store, or whether that be even more personalization within our online. And how do we enhance that, even within our brick and mortar?
WILSON RAJ: Gotcha. And that is a key thing in terms of what's the mix, in terms of really giving the best experience and therefore, also value to the customer. Now, you said something that's really important, so that personalization now. Clearly, the type, and the intensity, and the depth of personalization that you do at Ulta requires tons of data. Now, that data has to be protected in order to not just gain trust but continue to maintain and build trust.
So you're caring for the personal well-being of your consumers of the brand, but you're also taking care of their data. So what's your philosophy in terms of building that trust to reinforce these engagements and continue building relationships with your clients?
KELLY MAHONEY: Oh yeah, definitely. Trust is paramount with our members. And I think, at Ulta we build that in a variety of ways. You hit on this idea of privacy and ensuring that the way in which we are tending to the data that we have about our guests is done with the utmost security and credibility that we could possibly deliver to our customers. So we take that very, very, very seriously.
From a marketing standpoint, at the heart of it, we talk about trust, more about authenticity. So showing up to our customers everywhere we show up with our customers, we want to show up in an authentic way. We think authenticity is really what builds trust. So how our associates are showing up to our guests in our stores by providing credible guidance, by the way in which we're communicating, understanding who we're talking to when we're personalizing, it's highly relevant. And it's delivered in channels that our customers want to see those messages. That's really what we mean when we get to trust, is showing up in an authentic way.
WILSON RAJ: Mm-hmm. And that seems, from a data perspective, there is certainly a lot of collaboration with-- as you're responsible for customer marketing, that involves such a wide swath of things right there-- CRM. There's loyalty. Now, who are the stakeholders that you connect with in the management team, broadly, to really build that trust that you just talked about?
KELLY MAHONEY: Yeah. So data is at the heart of everything that we do, from a building trust and building authenticity with our customers. And you don't do data by yourselves, for sure. So it's very much a cross-functional effort to deliver anything in a personalized way. So we partner very closely with our data and analytics team. We are almost symbiotic. As one team, they attend all of our team meetings. So they're ingrained and embedded in the customer marketing team, high focus with the partners in IT. So I have regular connects with our IT partners and our IT leadership.
But also our digital and our e-com teams are included as well. We have an agile pod that we work in. So we actually apply agile methodology to the way in which we go to market with our customers, from a marketing communications standpoint, which consists of all of those stakeholders that we just talked about, including creative, because creative is such a core component to really getting personalization.
WILSON RAJ: Oh, absolutely. Yeah.
KELLY MAHONEY: Yeah.
WILSON RAJ: I love your concept of the agile pod. I've heard different kinds of structural teams and stuff like that, but this notion of a pod, it's self-reinforcing, and, I think, Kelly, you used the word symbiotic. That is such a great word to describe collaboration. It's not just one way or one dimensional, even few dimensional. It's-- everybody gets benefit from that. And so I think it's how you've orchestrated that or externalized that from a team perspective, it is really commendable.
So just related to that, as you shift your brand, you have shifted from that transactional function to something that's more meaningful and personalized, the changes in your clients, the younger generation, that Gen Z, the millennials, how do you see them in terms of this digitizing beauty, all this orchestrated digital beauty journeys?
KELLY MAHONEY: Yeah, I see it as a must have. And I think that's probably true for every retailer out there, a must have, to be operating in a personalized way across all of your digital platforms, it's an expectation. That's how we see it. And so for us, it's license to operate. It's part of our table stakes right now.
And we are so fortunate, because we started this journey three years ago, four years ago, maybe, just getting the data right and getting the data housed in a place that allows us to scale and allows us to access the data so that we can actually activate. I think that's a mistake that many retailers have made, is that the data is there, but how do you activate it? And we're so fortunate to have the 32 million active members that we've talked about. You know, having access to first-party data is such a luxury. It's a differentiator, even, especially in the landscape that we're living in right now.
WILSON RAJ: Yes.
KELLY MAHONEY: So it's really, it's all of that that's allowing us to be able to action against highly personalized experiences in the digital landscape, to create that sort of human connection when there isn't a human.
WILSON RAJ: You know, Ulta has always been sort of in the forefront, in the category for digital innovation. We talked earlier about the virtual GLAMlab, and I know that there's a host of other very innovative immersive interfaces that you have created for your clients. Could you talk about some of them?
KELLY MAHONEY: Oh, absolutely. About 18 months ago, we created a digital innovations team. And their focus is all about in a plane, really figuring out new technologies that we think our customers will love. And one important one, outside of GLAMlab, that we talked about, but another important one is the skin analyzer. So the skin analyzer is an important one because skin is a difficult product to sell.
Makeup, you can try makeup on. And you can see whether or not that looks good, whether or not you like that. Skin's different. Skin's about problem resolution. And you don't necessarily see those results immediately. And so we figured out this tool that you can use on your mobile app, and it allows you to analyze your skin and provide you with recommendations in the moment, based on what the tool has noticed.
Maybe it notices that you have wrinkles, and we can help you with some anti wrinkling. Maybe it notices that you have some dark spots from sun damage, and it can offer you recommendations on products. So this has been a really great tool for us, where we're kind of combining a bit of play with the idea of solving a problem, and then adding personalized recommendations that are even split out based on price point, too, so going a layer deeper and trying to really get to a place that the customer, then, will convert and purchase those products.
WILSON RAJ: Right. I think, to me, what you've described, Kelly, is beyond hyper personalization, because you're right, makeup on the skin, you can certainly personalize that, but getting into individuals' skin tones, skin conditions, and then from there going from the inside out, that is a true audience of one person in the entire world. So to me, I think using things such as AI and data for that is such a cool thing.
Now, speaking of data, in your opinion, from a beauty brand perspective, are there other sources of data that has been maybe underutilized or maybe left uncaptured that could actually drive even more valuable insights?
KELLY MAHONEY: Yeah, definitely. I mean, I think we have a tremendous amount of data. So we have over 95% sales penetration, member sales penetration. So we know everything about what's going on with our members, what they're buying from us. The area that we've been focused on, and these tools like GLAMlab and skin analyzer really help us get underneath more about preferences, and browse data, and how customers are engaging with us.
Because in our business, we're not a every week purchase. We're a about three times a year, on average, type of frequency business. So the more access that we can get to that non-transactional data or that preferential data is really important to us. And that's why we've done some things like rate and reviews. And we are looking for feedback loop all the time in our personalized recommendation, to understand, are we getting it right?
I love-- and this is not an example of Ulta Beauty-- but I really love how Stitch Fix has their, it's almost gamified, way of learning about their customers' preferences. And I've found myself just waiting for a doctor appointment and running through the Stitch Fix app. We want to continue to create access to that type of data.
WILSON RAJ: Yeah, I love that example. And I think that's, I think really illustrative of not just the beauty brands but, I think, all retailers, in terms of creating those moments that stick. And it's not an opportunistic thing. It's something like, as you say, Kelly, of value. Can I make my skin more healthy and then how that linked to overall well-being.
So and I think even your brand, the new brand, beautiful possibilities, takes it from, should I say, the word skin deep to even something that's even broader, health, a lifestyle kind of thing. Are you finding that kind of reaction from your consumers?
KELLY MAHONEY: Yes, well, I would-- absolutely. I mean, beauty and wellness intersect. And we've really taken note of that. And so where we can step in and provide that guidance becomes very meaningful, very, very powerful. And that leads to what we like to call brand love. We're moving beyond the idea of just even loyalty to this concept of brand love. That's our ultimate goal, is we believe all the things that we're doing, all of the digital innovations that we've just talked about. The application of our data to create personalized experience is not to create loyalty, of course it is, but really the ultimate goal is love, an emotional connection.
WILSON RAJ: That's great. So I think this is a good point here to kind of do a little bit of crystal balling. I mean, you're already doing so many innovative things. I can't for the life of me, at least from where I'm sitting, think of like, wow, what's the next thing for beauty brands at large?
So from where you're sitting, and being right in the midst of this thing, what are some of the trends that you think are interesting or that might be more mainstream in a year, or two years, three years from now, or a business model that's changing, what's your take on that, Kelly?
KELLY MAHONEY: Yeah, I've thought a lot about this, obviously, in my role. And I know that industry-wise we've been talking about personalization for so many years, but honestly, I'm going to say it again. I think it's really about getting personalization at scale. That's what the trend is, and that's what's on the horizon. It's no longer these point-based solutions or these channel approaches to personalizing, but how do you integrate so that you're creating, in our case, a beauty journey that's personalized for the customer, wherever they are? And that's what's on the horizon. And I'm not sure we can point to any retailer that's really got that down pat, but that's certainly-- that is our focus.
WILSON RAJ: I love that, personalization at scale, certainly in the moment. And you're certainly employing all kinds of great technology, certainly AI, real time data, immersive tech, such as augmented reality, to help you do that but do so not just throwing some technology there, but I think you've got a much broader strategy in view. That was very clear from our conversation here.
KELLY MAHONEY: Well, thank you so much. It's definitely a-- takes a village. And we have an amazing team at Ulta Beauty. I couldn't be more proud to lead the customer marketing team and be a part of this amazing fast-growing brand.
WILSON RAJ: Thank you so much, Kelly. I think this is a great spot to wrap up this discussion. That's it for this week's episode of the Reimagine Marketing podcast. If you enjoyed today's show and content, be sure to head over to sas.com/experience2030 to join the conversation. You can certainly subscribe to more of the content on your favorite podcast platforms for show notes, and bonus content, and also hear previous episodes and guests. So thanks for listening. And I will see you on the next episode of the Reimagine Marketing podcast. Take care.
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