Creating & Sustaining a Customer-Centric Enterprise Culture

Michael Smith, Senior Director, Customer Experience Innovation, Ulta Beauty

The Ulta Beauty Story

Evolving our Brand Purpose

Designing a CX to LIVE our Brand Purpose

Net Promoter System – Medallia Partnership

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Today’s Discussion

OUR STORY…SO FAR

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Our Experience Starts With A Differentiated Offering

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We’ve Delivered Industry-Leading Financial Performance

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We Develop Experiences Within Several Categories

Guest Experience

We Are Building on our Sustainable Differentiation Strategy

Digital Experience

Loyalty Program

Merchandise Assortment

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In Beauty, Newness Drives FUN and FUN Drives the CX

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Ulta Beauty Strategic Imperatives

BRAND PURPOSE EVOLUTION

The Beginning of Our Brand Journey

FUNCTIONAL EMOTIONAL PURPOSEFULwe were here.

EVOLVING THE BRAND

we are going here.

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We bring POSSIBILITIES

TO LIFE THROUGH

THE POWER OF BEAUTY.

Tell the story.Visualize and celebrate the vastness of possibilities that Ulta Beauty a inside each and every one of us.

Live the story.Celebrate the meaning & power of beauty, inspire & support the possibilities in people, and remove limits placed on beauty. #beautywithoutlimits

How Do You Develop CX for a Successful Brand?

CX Strategy

What got us HERE…

Wont get us THERE…

Our Experience DNA Principles will help us LIVE our Brand Purpose

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Bring possibilities

to life through

the power of

beauty

Brand Purpose

Our Experience DNA principles

We make shopping fast, easy, intuitive and effortless.We promise that you will never leave without getting what you came for. This is beauty whenever and wherever you want.Spend all your time experiencing beauty – not waiting, not searching.

Beauty. Simplified.

Everything we do feels human across every single touch point.We want you to feel beautiful inside & out and loved like we’re friends.We promise to listen to your needs, your questions and your goals.We’re friendly, approachable, always there for you, educating & guiding you.

Human Connection

All Things BeautyWe have passion for ‘all things beauty’ and we know it like nobody else. We scour the world to bring you the very best products. We bring you amazing brands & products you can’t find anywhere else.

We make beauty shopping & services SO MUCH FUN! Immersive. Unexpected. Interactive.We bring beauty to life. Products & services are brought together to create a unique beauty playground.We keep things fresh and new. So much to discover and to experiment with.

Beauty-tainment

We know you. We get you. We personalize beauty for you.We know what you’ll love even before you do.We love solving your beauty problems. We have a relationship with you, and we talk beauty with you all the time.

Just for You

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Creating the vision, strategy, and roadmap that will focus, organize and orchestrate

the longer term, transformational, end-to-end customer experience

Customer Experience Innovation – Intent

Orchestrate the org with one, aligned channel-agnostic strategyCenter on the guest

Develop innovation pipelinesSize, prioritize, and sequence the work

Innovate faster against big bets that will matter mostMake investment tradeoffs

To Drive Brand Love & Guest Advocacy, We’ve Evolved to a Deeper Guest-Centric Culture Across the Enterprise

Enterprise Engagement Activation• Strategic enterprise focus on guest centricity• Leadership alignment to vision, strategy & CX design

Dedicated CX Team• CX leadership to develop vision, strategy,

insights & innovation

• Cross-functional collaboration to design, development & deploy future CX

• Performance tied to CX

Change Management• Support culture shift • Corporate, field & stores focus

• All functional & levels

KPI Reporting • Net Promoter Score added to KPI• Tracked & reported across enterprise

• Included in business performance updates

• Included in Test & Learn inputs/outputs

Objectives & Compensation• Corporate, field & store focus • Objectives created to improve NPS

• Infuse into annual performance measurement

Associate/Guest/Consumer Insights • Deep insights around consumers/guests• Test & prioritize CX drivers

• Leverage data to support future CX & innovation investments

Robust NPS Platform• Net Promoter System• Real-time custom dashboard

• Closed loop culture

• Listen | Insights | ActionsProgress Made

Current Scope

Future Scope

CX Design• Vision, Strategy, Innovation• Journey Mapping

• Innovation Stage Gate Process

• Test & Learn COE• Centralized/prioritized decisions

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We Identify and Solve our Consumer/Guest Pain Points as we Innovate for the Future

CX INSIGHTS

Pain Point #1

1. Satisfaction w/assistance received2. Associates unavailable3. Lack of greeting/welcoming4. Associate knowledge

Pain Point #2

1. Long lines2. Associates unavailable - perception3. Registers open - perception

1. Quick checkout (HP#4)

2. Easy to get in/out (TOME#34)

3. Hassle-free returns/exchanges (HP#11)

4. Positive last impression5. 40% of OON trip missions guests

expect to finish shopping quickly

Pain Point #3

1. Product I needed was OOS2. Guest awareness opportunity for

current OOS solutions

1. Find what I was looking(HP#8)

2. Same info online/in-store(UN#13)

3. Fully-stocked shelves(HP#19)

4. Buy same products online/in-store(TOME#41)

1. Get my questions answered (HP#2)

2. Easy to find what I need (HP#8)

3. Calm & patient employees (HP#9)

4. Go out of way to help me (UN#6)

5. Focused on my goals (UN#14)

6. Empathetic employees (UN#15)

7. Clear communication (UN#18)

CX DRIVERS

PAIN POINTS

Pain Point #4

1. Point system unclear2. Unaware points expiring3. Reward was OOS4. Coupon exclusions5. Associate UR knowledge

1. Offers good promotions & sales(TOME#25)

2. Able to redeem rewards points in my transaction(TOME#53)

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Understanding the Why Behind Your Customers’ Shopping Mission Can Inform Your CX Strategy

FUNCTIONAL EMOTIONALTrip Mission #2

X% of $

Trip Mission #3

X% of $

Trip Mission #4

X% of $

Trip Mission #1

X% of $

Primary Shopping Trip Mission– Total Beauty Enthusiast Shopping Respondents –

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Stat

ed Im

port

ance

Motivational Power (Derived Importance)

High Priority Drivers

High stated, High derived

Unarticulated Needs

Low stated, High derived

Top of Mind Expectations

High stated, Low derived

Low Priority Drivers

Low stated, Low derived

Understanding what people say is important to CX. Understanding loyalty & brand advocacy drivers – uncovers priority areas

NET PROMOTER

SYSTEM

AD·VO·CA·CYTHE ACT OR PROCESS OF SUPPORTING

A CAUSE OR PROPOSAL

Evolution of CX & Brand Love Measurement

Launching

NPS

• Basic Needs

• Satisfaction

• Love

• Advocacy

Exploring

Brand Love

NPS as Companion KPI to Sales

• Enterprise Reporting• Quarterly Insights

Topic for Today

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To deliver on guest experience vision, part of our strategy is to minimize detractors and convert them to promoters

StrategyEvolve/sustain guest-centric, enterprise-wide culture at Ulta Beauty that will enable us to exceed our guests’ expectations across all channels/phases of her journey all measured by NPS

NPS Calculation | % Promoters - % Detractors

DETRACTOR0-6

PASSIVE7-8

PROMOTER9-10

• Spend + $xx per year• X more trips/year• X more items in basket• More engaged (likely to visit UB salon (+X%pts) likely to use UB.com (+X%pts)• % category inspiration from advocacy ( CAC)• Retention +X%pts higher than detractors

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NPS Platform | Enterprise Design, Focused on Guest

4 New scope will provide better survey for guests

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1 More survey responses/consistency across all UB channels

Services NPS aligned w/ Store

NPS for reporting,

analyzing & acting on CX

feedback

Store NPS aligned w/ Services NPS

for reporting, analyzing & acting on CX

feedback

Guest Services NPS linked to

services, stores/web +

product CX w/ robust speech

analytics engine

e-com CX measurement w/customer journey

lens

Collect product feedback post-purchase for

services/retail/ product link + vendor data

monetization

Overall Ulta Beauty Brand CX Score

Active Social Media Listening to Thread Through All Channels & Feed NPS Dashboard

Website Feedback button for consumers to

share website feedback, get

help & provide store feedback

3 More visibility & actionable data for stores

2 Medallia dashboard drives deeper insights/actions

CX Assessment

Mar-Apr

Salon CSAT is collected @ POS ON 5 star scale + disjointed from

store NPS. Results could be inflated based on capture

Store NPS is collected, reported

on dashboard without link to

behaviors, performance + compensation

Guest Services CSAT is measured on 5-point scale + lacks

robust speech analytics to

determine data trends

Website + e-commerce

experience lacks customer feedback

measurement –dark spot in CX measurement

No product experience measure feedback post-store visit to

which is a gap in CX + vendor innovation +

potential monetization opportunity

No Current Ability to Measure Overall Brand CX

Lack of Social Media listening capabilities & Connection

Associate Satisfaction

captured on non-NPS basis + no link

to the overall brand experience.

#associatesmatter

• Inventory Ulta CX culture, tools & NPS deep dive

• Cross-functional conversations about CX

• Reviewed agency strategy, assessment & plan

• Created & aligned CX Feedback Platform vision w/ cross-functional teams

Mar-May

Design + Develop

Salon NPS aligned with

Retail vendor for continuity in

reporting, analyzing & acting on CX

feedback

Store NPS aligned with Salon vendor for

continuity in reporting,

analyzing & acting on CX

feedback

Vendor-agnostic Guest Services NPS linked to Salon, Retail + Product CX w/ robust speech

analytics engine

Vendor-agnostic Website + e-commerce

feedback with aligned NPS

customer measurement

Collect product x weeks post-purchase for salon/retail/

product link + vendor data

monetization

Overall Brand CX Score

Active Social Media Listening to Thread Through All Channels

Associate NPS is captured, feedback

summarized to support

#associatesmatter& innovation

• Notify agencies of decision & direction

• Meet with selected agency to layout final scope, contract process & timing

• Cross functional design team work to design, develop & deploy scope

• Develop detailed project plan to achieve scope & timing

Enterprise Teams Engaged in Each Stage of the NPS Platform Selection Process – Early, Frequent and Open Dialogue About Decisions

May-Jul

RFI Process

• Determined prospective vendors for CX platform

• Cross-functional alignment to RFI agencies & scope

• Attended CX conferences to gain best practices

• Aligned RFI prospects cross-functionally to invite to RFP process

Aug-Oct

RFP Evaluation

• Narrowed to 3 top vendors based on scope, capabilities & RFI responses

• August meetings with prospective agencies

• Cross-functional decision-input for selection of agency and platform

• Need final alignment to move Accelerated Initiatives funding from earmark to budget

We are here.

Q2

Stakeholder Launch

Cross-functional launch design & deployment

Phased-approach to phase-out current solution & test

• Determine GMC activation touchpoints

• Determine post-GMC activation touchpoints

Strategic Imperative• Enterprise focus on guest centricity• Leadership alignment to vision,

strategy & CX design • Centralized design + development

innovation stage gate process

Dedicated CX Team• CX leadership to develop vision,

strategy, insights & innovation• Cross-functional collaboration to design,

development & deploy future CX• Performance tied to CX

Change Management• Support culture shift • All functional & levels• Corporate, field & stores track

KPI Reporting • Net Promoter Score added to KPI• Tracked & reported across enterprise• Included in business performance updates

Objectives & Compensation• Corporate, Field & Store • Infuse into annual performance

measurement

Associate/Guest/Consumer Insights • Deep insights around consumers/guests• Test & prioritize CX drivers• Leverage data to support future CX &

innovation investments Robust AX/CX Feedback Platform• Net Promoter System• Real-time custom dashboard• Closed loop culture• Listen | Insights | Actions

CX Design• Vision, Strategy, Innovation• Journey Mapping• Design solutions for guest• Centralized/prioritized decisions

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Current State of Ulta Beauty NPS

3 Survey ResponsesSignificant reduction in responses

Short-term impact to individual stores

Increased email send rates – back in business + driving more

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1 Survey IncentiveUB removed incentive on 2.4.19

Illuminated NPS reality

No incentive: CX industry best practice

Incentive drives inflated NPS results

2 NPS KPI & Trend

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60

70

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Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 TD '19

Store NPS

XXStore Survey

XXCmptv Gap

XXCX Rx

Incentive Removal

Enterprise CX Culture Assessment

Executive Conversation on CX

Financial Review – Biz Case

3 things you can do further YOUR customer-centric culture?

Recommended Actions

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