Sephora became the dominate player in the makeup space in the past decade due to their thoughtful retail strategy. Upon digging into their history, we are starting to venture that their rewards program might have had something to do with it. And if you’ve ever shopped at Sephora, you know why. Almost every other time you go to their stores and make a purchase, it feels like you are getting a free gift. That’s because their point system is set up to give you a free product worthy of 100 points every time you spend $100. Coincidentally, that is around the average AOV given the product values. As a result, the program is super enticing! The every other time gift structure creates almost a Pavlovian-esque response.
But this is just for first tier rewards engagement. The real question is: how has Sephora harbored true community and grown their rewards programs in such a meaningful way that has resulted in them becoming leaders in beauty and makeup? There must be more to it than this gift. Let’s dive in - and at the end you'll see how our Toki platform can set you up with all of this, and more.
The Sephora program is fairly simple. You earn one point for every dollar spent. Easy enough. With that said, you cannot redeem points for discount rewards until you hit the 500 point mark. At this point, you get $10 off for every 500 points earned. If you aren’t interested in discounts like this, the alternative is to trade in points for gifts at the Rewards Bazaar (more on this later).
The rewards program has three tiers - Insider, VIB and Rouge. Free shipping is included to all tiers. Upgrade to VIB states if you spend over $350/year and you get a 2x multiplier on your points. Upgrade to Rouge states if you spend $1000/year and you get a 3x multiplier on your points, plus the ability to exchange 2500 points for $100 off.
While entering into the rewards program is great, Sephora really wants you to enter their community, app and credit card. This is where the real juice of the program lives. While unfortunately the online experience is a little lackluster due to dated UI/UX, the concept is strong. Let’s unpack this amongst other features that make Sephora’s rewards so rewarding.
One of the things that makes the Sephora program feel fun for lower tier loyalty entrants is the optionality. When you are at the store, you actually have around 3 different sample options to choose from when you are redeeming your points. So not only are you walking away with a fun gift, but you’ve gotten to choose what that gift is!
The second really fun part is the Rewards Bazaar. If you are shopping online rather than in-store and you want to utilize your points, you are able to see a lot more than just three options, and you can redeem even when not connected to a purchase. Being able to trade in your points for free stuff at your leisure is engaging, rewarding and again - fun!
With Toki, you can create your own “rewards bazaar” and allow your consumers to cash in their tokens for free products of your choice.
For some brands, this might not feel possible if you do not have enough SKU’s. But don’t fear! You can actually add products from other brands in our network to your “bazaar”.
The most interesting thing that Sephora has done with their loyalty program is turned it into a full scale community platform. They have basically copy-pasta’ed Facebook groups onto their website and given it a lot more media functionality. This is not easy for your typical mom and pop shop. When you log in to your account, you can…
As you can see from some of these numbers, the network and community is highly responsive and active! This is a testament to the Sephora brand, given it is no small feat to log in to this portal. We have little information on how they activate their community members to utilize the platform, but we certainly have some ideas on how you build out incentives to do such.
With Toki, our aim is to democratize the availability of a community platform, such as this one, so that any size brand can create a community like Sephora has. Right now, the Toki app is a place where your consumer will go for the rewards/loyalty tokens they have collected with you. Our aim is to build out a platform where your community can live and engage together, just like Sephora. We will do this with an announcements feed, as well similar groups and media that you’ve seen in the Sephora example here. We think the most crucial step is announcements, so we started there. Within Toki, you have have a 1-1 communication channel with your consumers that isn’t email, SMS or social. Here you can activate your community by telling them about new product launches or upcoming events, in a way that doesn’t require a ton of community management, but will lead to a huge ROI! The extra cherry on top is if your consumer has set up push notifications, it’s even easier to access and communicate with them.
Interested in learning more? Sign up for a demo here to get the full Toki picture!
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