We recently had the great honor to talk with Kellen Fitzgerald, Director of Marketing, Digital & Client Experience at Tarte Cosmetics (who are a wonderful Custora customer, by the way). We wanted to get the inside scoop on their incredibly successful loyalty program, Tarte Rewards.
Following our article Don’t Launch that Loyalty Program Until You Have the Right Customer Intelligence, we reached out to some of our customers who do have a loyalty program. Because we work with some of the great minds of retail marketing, we knew we'd learn some interesting strategies underlying their loyalty programs, and Kellen Fitzgerald of Tarte Cosmetics did not disappoint.
Read the interview in full below!
CHESTER: Loyalty programs are often launched to capture otherwise anonymous in-store customer data. As an e-com-only brand, what factors went into deciding to create a loyalty program?
KELLEN: We saw the Tarte ♥ Rewards Program as an outlet that our clients (our “tartelettes”) needed and deserved, given that we have such an engaged and socially active audience. We wanted the loyalty program to be a vehicle for rewarding the love we feel from our clients every day, and ultimately drive retention among our loyalty tartelettes. There are so many options when she’s choosing where to buy her beauty products and we wanted a dynamic and all-encompassing loyalty program to be our expression of gratitude that she’s choosing us.
CHESTER: What objectives and key results are you driving with this program?
KELLEN: Our primary goal of the loyalty program was to improve retention with the brand and to foster incremental value among the loyalty segment. The thought behind incentivizing both spend and non-spend activity was aimed at rewarding the client for building a truly well-rounded relationship with us.
We want to reward more than just her shopping behavior; we want her to feel rewarded for engaging with and learning about the brand too—whether that’s via on-site content, opening our emails, writing a product review and so much more.
The program launched in September 2017. After its first year, we were really excited to see that purchase frequency and lifetime value of loyalty clients was significantly stronger than our average client. Despite our loyalty members only making up a small percentage of our total base, they contribute a significant percentage of our revenue and their lifetime value remains 18–20% higher than our average client.
CHESTER: How did you decide on the structure of your loyalty program, Tarte Rewards?
KELLEN: One of our main goals when thinking about the structure of the program was aimed at being able to reward and recognize the full audience spectrum. Our client base spans so many generations—older women who have been shopping with tarte for 19 years and may have more spending power; but also a younger audience who, although she spends less frequently, she acts as an ambassador for our brand by being so highly engaged in the digital space.
We didn’t want our loyalty program to fit the typical “spend and get” model. We wanted to be able to make all of our clients feel appreciated regardless of spend, so we paid a lot of attention to rewarding both spend and non-spend activities. We award points for brand engagement (opening and clicking emails, following us on social, taking quizzes) in addition to purchases, so we aren’t just singling out and rewarding our high spenders, but our brand fans as well.
CHESTER: What kinds of customers analytics contributed to the ideation and design process?
KELLEN: In the initial brainstorming phase, using client demographics and survey feedback was critical to understanding the customer landscape and what our client expected out of a loyalty program today. Once we began building the framework of the program, we went through an in-depth points economy process to build out our earning and rewards structure—this required us to look at our client’s AOV, frequency, our average unit price, and our estimate around how quickly we thought the program would grow.
CHESTER: How do you measure the success of the program?
KELLEN: We are constantly looking at loyalty members’ lifetime value, AOV, and frequency and measuring that against our total client base in order to ensure that we’re continually seeing incrementality and improved value in that segment. We also look at revenue penetration from the loyalty segment to ensure that it continues to grow proportionately to membership growth.
CHESTER: Do you use Custora to complement, supplement, or inform Tarte Rewards, and if so, how?
KELLEN: Custora is a critical tool for us in proving out loyalty client value.
The Custora tool allows us to quickly see loyalty clients’ value metrics at a glance and easily compare those to our average non-loyalty client, and for any given period of time. This allows us to see if and how we’re driving incremental loyalty value during particular activations and campaigns.
Outside of using Custora to compare loyalty to non-loyalty, we also use the tool to gain insights on how each of our three loyalty tiers differs in shopping behavior, frequency, and affinity. This gives us an even deeper understanding of how the clients within our three loyalty tiers behave and what makes each tier unique.