August 06 - 09, 2019
The Sheraton, Boston
Here's How Sally Beauty Leverages Analytics to Better Target Customers
With annual revenues of more than $4 billion, it’s safe to say that the US’s largest beauty supply distributor and retailer Sally Beauty knows a thing or two when it comes to converting customers and making sales.
But in the highly competitive and increasingly digitized beauty industry, remaining relevant is more than simply maintaining a presence and an extensive product inventory. It’s about building customer strategies based on big data and analytics to provide unforgettable experiences that grow both loyalty and revenues in one fell swoop.
Founded in 1964 with a single store in New Orleans that offered salon-inspired products to customers at value prices, Sally Beauty has spread to 3,781 locations worldwide, has built up a strong ecommerce arm, and has even formed a distribution partnership with Amazon.
But as both the beauty industry and the world of online commerce continue to evolve, today, finding increasingly sophisticated ways to nurture prospects along the online buyer’s journey is key to remaining competitive, and Sally Beauty is now designing new approaches to excel on this front.
A Loyalty Program Driven by Data
As Ryan Linders, Vice President of CRM, Loyalty and Marketing Analytics at Sally Beauty, puts it, "We're now competing with the rest of the retail environment, and everyone is heavily promotional." To cut through the online cacophony, Sally Beauty has developed a strategy that relies on gathering data to gain a better understanding of its customers and their preferences, and then use that data to deliver more personalized shopping experiences.
"We're at a place where everything is driven by the customer and driven by data," Linders says. Specifically, Sally Beauty wants to be able to put the right product in front of the right customer at the right time – and that means enticing customers to surrender their contact information.
To do so, the retailer has devised an offer to coax customers onto its paid loyalty program. It costs just $5 to join, but Sally Beauty offers a matching $5 coupon in return, which will be sent directly to the customer’s email address. With the email captured, the retailer then slowly drip-feeds a series of messages that unveil various product offerings, point recipients towards Sally Beauty’s additional online channels, before eventually asking the member for a phone number – again, using a 20%-off coupon to incentivize the customer to release the contact information.
From there, says Linders, Sally Beauty is able to craft a customer journey that is specifically tailored to each individual’s unique needs.
Using a customer who’s dyeing their hair as an example, Linders explains: “If we think about that as a journey, the customer comes in and buys hair color from us. At some point in their transaction history, we know that they're going to be up for retouching their hair, and they'll have to buy conditioner for color-treated hair, and at some point in time, they're going to recolor their hair completely.”
Having the most up-to-date contact information is crucial for delivering the well-timed messages that will drive customers to make such additional purchases. And Linders says that targeted programmatic ads are even configured to chime with these email messages “to the point where the banner ad models' hair color matches the shade of dye that a customer purchased.”
Site Optimization: From A/B Testing to Eye-Tracking Studies
And it’s not just improving direct email messages that Sally Beauty has been working on – the retailer has been conducting research to gain a better understanding of how its customers want to navigate its website as well. Led by Richard Surridge, Head of Ecommerce and Customer Services at Sally Beauty, a team has been running A/B tests, conducting telephone interviews, and carrying out eye-tracking studies to help optimize the site for increased conversions.
“From the eye tracking that we did, we found that no one was clicking on the promotional banners but heading for the sub-category navigation,” says Surridge. “We redesigned the page with that in mind.”
Other redesigns were also made in response to data gathered by analytics tools, such as Treejack, Optimizely and Google Analytics. For example, Surridge was concerned about what was displayed on the website’s failed search page (i.e. the page that’s displayed when there are no matching product results to return in response to a user’s search query).
“Originally,” explains Surridge, “you’d search for something and it didn’t appear with alternatives, but it used to show you the top 20 products or the top offers. I found that a bit odd when I joined. If someone did that in a shop and said, ‘I’m after this particular product,’ and the sales assistant said, ‘We don’t stock that but how about this completely random product,’ it wouldn’t work.”
Now, the page has been redesigned to suggest how shoppers might refine their search – by brand, product category, etc. “I think sometimes in ecommerce we don’t necessarily think about how customers would behave in a store,” Surridge says. “We designed a different page, and I think it was a 45% increase in revenue that came out of that page.”
You’re Only as Good as the Data You Have
As Sally Beauty continues to operate with a greater focus on data and analytics, better-targeted promotions and improved online experiences are constantly being innovated. And that, in part, is what’s helping to drive loyalty, and indeed the 3.1% sales growth over the previous year that the retailer enjoyed in 2016.
The last word goes to Ryan Linders. "We're on the cusp of some advanced analytics right now. We're following those transactions and making better decisions with the data that we know we're collecting. […] The biggest thing I've learned is that you're only as good as the data you have. That has helped us unlock everything."
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