Too many customers? Thin the herd with your loyalty program!

I’m not a hugely brand-loyal consumer, unless I really, really love something. I can get pretty passionate about brands I love.
Image of Sprayway Glass Cleaner
If the topic of glass cleaner comes up in conversation, I’ll start rambling about Sprayway, and how I affectionately refer to theirs as “the glass cleaner of the gods.” (I love the stuff so much that I happily paid $5 a can for it when Restoration Hardware was the only place I could get it. It’s now one of the few things I’ll set foot in WalMart for, as they sell it for $1.97. I always pick up several cans to make it worth the agony.)

I am equally passionate about brands I hate. If you mention you’re planning a trip to Mexico, I’ll steer you far away from the El Dorado Royale in Playa Paraiso.

Are people still boycotting Chick-Fil-A these days? It doesn’t matter. I am. Me, fly Spirit Airlines? I’d rather die in a crash on another airline. 

Turning customers into brand advocates is supposed to be the raison d’être for marketers. So I find it perplexing when a company seems hell-bent on making people despise them. It’s happened to me, and I always take the message to heart. Once I’ve been wronged by a brand, I neither forgive nor forget.


Brand Meets Girl

It was 1990 when my mom introduced me to a store called Ulta3. The name was off-putting (what exactly is an “ulta,” and why must it be cubed?), but I loved the store. Born long before Sephora, Ulta3 was, at the time, the only store wholly devoted to beauty products. It was positioned as a discounter to compete with stores like Drug Emporium (it carried drug-store brands only, not department-store brands).

Photo of a retail store interior.

The original Ulta3 store interior looked a lot like the store in this photo. Apropos of a discount retailer.


Brand Gets Girl

Ulta3 introduced a rewards program. It didn’t cost anything to join, and I liked shopping there, so I figured, why not? I could buy my makeup, facial cleanser, and hair and nail products at one store, and at a great price; have fun looking at all the pretty colors; plus earn rewards. Total win-win proposition. The program was novel for its time too (this was the first retail-store loyalty program I’d come across).

Brand Tries to Lose Girl

The rewards program was crap.

It was structured poorly, for one thing. Instead of earning points, you earned “certificates,” and your spending only accumulated toward certificates for three months at a time. So, every quarter, your account was wiped clean, and you started over at zero.

If you made one big makeup splurge during a quarter, you could reach the one-certificate level. Beyond that, you had to have serious disposable income and a makeup addiction to match. I only made it to the next level once in roughly 15 years (I think the next reward level was three certificates; if you earned two, you had to choose two one-certificate rewards).

The rewards themselves were reminiscent of the weight-guessing scene from “The Jerk.” You got to select from glorious prizes like a bottle of clear nail polish, generic mascara, and an emery board. There were about six rewards available at the first level. If you went nuts and spent something like $150, you could hit three certificates, and get a generic lipstick. Woo-hoo!

Image of Steve Martin in the 1979 movie

“Take a chance and win some crap.”

When you went to the store to redeem your certificate, the only way to find out what rewards were available was to ask a cashier (no Internet yet). He/she would hand you an oversized collateral piece roughly the dimensions of one of those Scholastic Book Club foldout mini-posters. The size made it inconvenient to store anywhere. I’d always end up folding it into quarters to fit it in my purse or bag. It would clutter up my kitchen countertop until I got tired of moving it around, at which point I’d throw it out.

Needless to say, the program didn’t motivate me. But I liked the store and felt like the prices were good, so I continued to shop there in spite of it.

Key Takeaway:
When customers shop at your store in spite of your
loyalty program, your loyalty program isn’t working.

After I’d spent about a decade working in marketing — on loyalty programs, no less — I went from being unmotivated by Ulta’s program to wholly disgusted with it (by that time, they had dropped the mysterious “3” from their name). It needed simplifying, and it needed rewards that were both desirable and attainable. A points system that would reward you with coupons for dollars off purchases would have been easy to understand and far more compelling.

So I wrote to Ulta. I told them I’d been a loyal customer and member of their program since it started, and that I was dissatisfied with the program. I explained that it was nearly impossible to spend enough in their store during a three-month period to earn a reward worth having, which meant the program didn’t do what a loyalty program is supposed to do: Encourage repeat business.

At that point, I was simply a mildly frustrated loyal customer, hoping to get a response along the lines of, “We understand, and we’re working on it.” I wanted confirmation that the company was aware of the program’s shortcomings, and that improvements were in the works.

The poorly worded response I received from Ulta turned my mild frustration into anger. This was the gist of it:

“I’m sorry you’re unhappy with our program. Most of our customers love it.
Thank you for participating in Ulta Rewards.”

Huh?

There is absolutely no way most of their customers loved that program. The only customers benefitting from it were those who spent at least a couple hundred dollars a month at Ulta, and that couldn’t have been a significant portion of their customer base. (Remember, at the time, Ulta was positioned as a discounter, competing with drugstore chains. People dropping hundreds on cosmetics and hair products on a regular basis weren’t buying CoverGirl and Revlon, and they weren’t doing it at Ulta.)

And what the $#%& kind of response was that anyway?

A proper response to a customer email like mine would have:

  1. Stated that my feedback was appreciated, and would be taken into consideration in their ongoing evaluations of the program’s effectiveness;
  2. Recapped the benefits of the program as it stood; and
  3. Offered a helpful tip about how to maximize program benefits.

Despite my anger, I continued to patronize Ulta, though I shopped there less frequently. Unfortunately for me, they had become the only store that still carried my favorite facial cleanser, so I felt backed into a corner.

That is, I did, until around 2007 or so, when Ulta stepped in it again.

Brand Tells Girl What She Can Do With Her Business

Image of an Ulta store interior by Chipman Design Architecture.

With apologies to Chipman Design Architecture: Lovely interior, but no one asked me if I wanted it before telling me I had to foot the bill for it. (http://www.chipmandesignarch.com/retail-planning-design-ulta.php)

The next blunder was innocent compared to the email exchange, but it was the final straw for me. This time, what got to me was a store remodel — the second since around 2000 — combined with a gradual onboarding of luxury brands.

The first remodel was nice, and I thought, “It’s about time.” With the remodel, of course, prices went up on everything. No more discount prices, but they hadn’t gone crazy.

The second remodel, however, was purely a waste of money from my perspective. It was too soon after the first, so it was cosmetically unnecessary. Prices went up again so Ulta could move their checkout area and put in more upscale fixtures.

It was obvious that the aim of this remodel was to go highbrow to compete with Sephora. It was bad marketing, which is stupid, and I don’t tolerate stupid.*

So again, I wrote to Ulta. I restated my longstanding loyalty and dissatisfaction with their program, recounted my past unsatisfactory interaction with their customer service team, and explained my concern with the remodel and resulting hike in prices. This time, NO response. Crickets.

Girl Takes the Hint

I quit shopping at Ulta. I’d rather go to Sephora or a department store and pay more than set foot in that store. And I can now get my facial cleanser for less at Amazon.

Ulta finally revamped their rewards program a couple of years ago. I don’t know anything about how it works now, and I don’t care.

Too little, too late.

Deconstructing the Crime

Why does this kind of thing happen? Ineptitude. Or laziness.

When you roll out a loyalty program, there’s a chance it will take off, and a chance it will fail. What most likely happened with Ulta was that people joined for the same reason I did: the “Why not?” factor. So membership numbers probably looked good.

Then, by having the cashiers ask customers if they were members at checkout, Ulta was able to spur participation and continued enrollment.

Where the company made its first mistake was in equating these numbers with success; in concluding that participation meant “our customers love it.” In all the time I was an active member (roughly 20 years), I never received a survey of any kind about the program, nor did I receive any type of member communication beyond the Ulta sales circular that came with my glorious reward certificate attached. So they had no clue what I or any other customer thought of the program.

And the lack of communication was mistake #2, and it’s a huge one. Because right behind the goal of encouraging repeat business is the goal of gathering customer contact information.

“Respond to customer emails” isn’t a communications plan. Communications of this sort — reactive communications — should compose but a fraction of your library. The reason you create a mechanism for capturing customer contact information is so that you can market to your customers. (“Aha! It’s a profit deal!”)

Mistake #3 was the very poorly written response to my email. Having written communications of this type myself, I know that they aren’t written on the fly. A company has an approval process for all communications. So this very rude communication to a very loyal customer was approved by multiple stakeholders. Either it was intended to be rude, or everyone in the approval chain was inept.

Mistake #4, therefore, is not having taken the customer communications discipline seriously enough to hire competent people to handle the job.

Mistake #5 was not responding at all to my second communication.

Finally, what the company doesn’t understand is that while I may have been one of a tiny handful of people to ever complain about the program — or perhaps even the only person to have complained — I wasn’t exactly typical of their membership. As I explained to them, I worked in marketing, on loyalty programs. I had, and have, a level of knowledge about how they work that the typical consumer does not have. Ulta would have been wise to have considered the source of the feedback, rather than dismissing it as an anomaly.

But let’s pretend I worked in some other field, unrelated to marketing or loyalty programs or customer communications. Does that make my feedback any less important? Any less worth listening to, and responding to in a polite manner?

It should be frighteningly obvious, but if you’re in a customer-service profession, you’ve got to be nice to people. If you’re not, they will go away. And they’ll talk about your rudeness to anyone who will listen.

Forever. And ever.


*In my opinion, it was a mistake for Ulta to try to compete with Sephora because 1) Ulta was not a luxury retailer, and 2) they owned the discount cosmetics/beauty market. Sephora wasn’t their competition. McDonald’s didn’t close all their drive-through windows and redesign their restaurants to compete with The Cheesecake Factory. Without the cosmetic upgrades (pun not intended), I believe Ulta could have remained a big fish in a very lucrative pond, and positioned themselves nicely for eventual online competition with sites like Amazon, Drugstore.com/Beauty.com, and Jet.
Sure, Ulta as a company is probably doing fine. (I don’t know, because I won’t buy stock in the company either.) But when did “fine” become an acceptable business goal?

 

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