See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/351936435

Sephora Smart Customer’s Experience Enhancement

Technical Report · May 2021

DOI: 10.13140/RG.2.2.21586.94407

CITATION READS

1 12,761

1 author:

Muhammad Usman Tariq

Abu Dhabi University
229 PUBLICATIONS 1,965 CITATIONS

SEE PROFILE

All content following this page was uploaded by Muhammad Usman Tariq on 11 May 2023.

The user has requested enhancement of the downloaded file.

Sephora Smart Customer’s Experience Enhancement

Dr. Muhammad Usman, Associate Professor, prepared this case from published sources and
it’s intended to be used as basis for classroom discussion rather than to illustrate either
effective or ineffective handling of a management situation.
Introduction

In 1969, Sephora emerged as a perfume store in France. The brand name is extracted from
Sephos- A Greek word that is a term for pretty and Moses's wife name- Zipporah. A luxury
group known as Louis Vuitton and Moet Hennesey purchased this brand in 1977. Sephora
opened its first shop in 1998 in New York, USA. The business model of Sephora is like a
superstore of makeup products. It allows women to buy all the cosmetic products under one
roof to complete their entire look. When Sephora began its business, many people considered
it a niche brand and avoided their purchase. Soon Sephora started to progress in the market and
attained a competitive position in the market. Sephora has become an international beauty and
cosmetic retailer and is considered a consumer-centric organization. They welcome and
embrace their customers gracefully1.
Makeup and cosmetic products shopping are an intensely personal experience. Sephora
allows customers to buy their personalized products. It furnishes the chance of personalization
to customers as their objective is "beauty is yours to define and ours to celebrate." Every
consumer has his own opinions and ideas about their beauty. Sephora tends to provide
maximum personalized tools that can be used across all the channels. Their objective is to offer
perfect products for women's needs and enhance their customers' experience. It begins with the
wants of the consumers. Almost 55 % of customers anticipate makeup brands to present
personalized tools and experiences. Smartphones are playing an essential role in the diversity
of customers' demands. Consumers continuously switch between real-life and virtual life,
anticipating an integrated and casual experience. Makeup brands have an extraordinary chance
to make the shopping experience more memorable with their brand. Experiences are influential
2
.

____________________________________
1
https://savvycomsoftware.com/dcx-101-case-study-what-does-sephora-teach-us-about-digital-customer-
experience/3.
2
https://www.mcorpcx.com/articles/a-digital-customer-experience-case-study-sephoras-supremacy
Customer Service at Sephora:

Sephora maximized profits with their store interior and colour themes and their websites. When
a customer enters the store, she gets a chance to try the makeup products to check what suits
her. There is a hurry to ask any staff member for help, but they provide customer service when
required. The target customers of Sephora are women of the age group 24-36. In the beauty
sector, women mostly try to purchase a product which their friends suggest to them, or if they
observed it is looking good on someone else, or if they used, they utilized the product. Sephora
has a competitive advantage as they permit their consumers to try the samples of their products.
Customers have the privilege to shop with freedom. They can investigate the best-selling
products online as well. In 2020, users spent 76% on social media. Sephora took an excellent
step to furnish their products' details on social media applications such as Facebook, Instagram,
and many more. It is an opportunity to keep customers engaged with the products. Social media
is a community-based platform. Consumers can quickly get answers to their queries,
complaints, and suggestions. This technique of engagement is marvellous. In 2014, the News
Feed algorithm was adopted by Facebook, which displayed advertisements that encouraged
users to buy certain products. Sephora gained the trust of its customers and did not need these
constant promotions to attract them. They understand the needs of their customers. The
Facebook advertisements' models display a natural look, and consumers predict that they can
get the same look by using makeup products, and it becomes more approachable for consumers
3
.
Competitive Benefits:

There are many competitors in the market for Sephora, making it highly competitive. Their
strength is that they can compete with other cosmetic brands and the running web-based
businesses. Some of their competitors are MAC, Ulta, and many more. Sephora focuses on
providing the best customer service, unlike other cosmetic stores. The representatives engage
with the customers as soon as they enter their store. The CEO of Sephora feels that the brand
image improves with customers' experience, both in stores and online 4.

____________________________________
3
https://smallbusiness.yahoo.com/advisor/resource-center/digital-customer-experience-case-study-sephora-
supremacy-010513900/
4
https://www.dynamicyield.com/case-studies/sephora/
Advanced Technology Helps to Make the Lives of Customers Easier

Customers' recognition and understanding about a technology upgrade customers’ mobile and
digital experience strategy, making consumers' lives easier. Their customers are the women
who implement technological advancements in their daily routine to benefit Sephora. With
almost 2700 stores in 32 countries, Sephora has adopted technology to maximize its profits and
maintain its competitive position. Customers expect the store to offer them impartial services
from experienced employees and provide them with an extraordinary shopping experience. If
Sephora applies creative, innovative, and technologically adequate strategies, it will nourish
customers' relationship with the brand. Sephora is trying to fulfil customer expectations to
make their experience with the brand best than competitors 5.

Accepting and Taking Benefits from Smart Consumers:

Sephora has millions of followers on Instagram, Facebook, YouTube, and Twitter in today's
date. Enhancing the digital experiences of customers help them to shop from Sephora smoothly.
Sephora is generating benefits from the web-based experiences of customers 6.

Analyzing Sephora's Strategy of Enhancing Customer Experience:

The strategy depends on the customers' brand and experience, and it becomes challenging to
duplicate this strategy. The strategy is planned following the advanced technologies, which
tends to be a positive point. The brand's success is the reflection of its consistent delivery of
personalized services for customers. Sephora has recognized that the brands should not adopt
the technology just for its sake. The fundamental reason to adopt advanced technology is to
fulfil customers' needs and provide them with a platform to understand their desires and wants
clearly and then determine the requirement of technology adoption to make the customers' lives
easier. It is a crucial factor that brands need to recognize. When the market competitors are
busy selling the product only, Sephora emphasizes serving and selling. It helps to attain
customers' loyalty towards the brand 7.

____________________________________
5
https://www.medallia.com/customers/sephora/
6
https://nrf.com/blog/5-ways-sephora-creates-seamless-customer-experience
7
https://en.calameo.com/books/004278973b52d02f9f2cf
Review, Possibilities, and Threats:

The user growth of Facebook from August 2019-August 2020 went from 510,000 users to over
920,000 in one year as shown in Exhibit I. The website of Sephora also had increased visits
from 2016-2020. At the same time, Sephora also enjoyed increased growth in sales. In 2020
web-based sales were thrice the sales than in 2016 8

It can be concluded that the enhanced engagement of Facebook increased the visits on the
websites, which means the two are positively associated based on sales. Sephora's popularity
was progressing fast. It was essential for the managing team of Sephora to discover their
brand's value on social media. So, they reviewed the ROI to find the worth of their web-based
investment. Return on Investment of Facebook was -8.8%. Even though Sephora is trying
hard to keep customers engaged with the targeted users, they cannot attain their sales goals. It
is essential to engage customers with adequate information so, users visit Youtube to watch
videos related to Sephora, so they purchase the products they like.

Instagram's total Revenue was 50,625 in 2020 as shown in Exhibit II. Although ROI also turned
out to be negative at -0.70. The number of the targeted audience of Sephora spends spare time
on Instagram, but it is still not enough to convert the viewers into purchasers. Sephora,
customer engagement, and positive relationship management, and self-service help grow their
business.

The preferred option is YouTube for generating online videos. After evaluating Return on
Investment and revenues for Instagram, Facebook, and YouTube, the most favorable values
are of YouTube. The value of users is more than Facebook and Instagram users. Users
interested in Sephora are watching videos and tutorials related to the products of Sephora and
purchasing the products; the Return on Investment for short and long videos is positive. It
predicts that short videos are more effective than long videos.

____________________________________
8
https://digital.hbs.edu/platform-rctom/submission/digital-beauty-how-sephora-leveraged-digital-technology-to-
overhaul-the-in-store-experience/
Following Exhibit 3, Sephora requires customer engagement through the platform of YouTube
to maximize traffic towards the site, make users check products on the website, buy products
from the website of Sephora. Dependent on the number of YouTube users Sephora had in 2020,
about 15,000 users were anticipated to purchase products from the website.
Present Status:

In today's date, Sephora has 25,927,741 followers who like their page. Sephora can attract
many followers because of its relationship and involvement with online customers. People tend
to watch the latest makeup and fashion trends via videos on YouTube 9.

Ways to Create a Flawless Shopping Experience:

Makeup and cosmetic shopping are an intensely personal experience. Sephora works on the
fact that "beauty is yours to define and ours to celebrate." Sephora provides an opportunity for
customers to make their shopping experience personalized. Sephora considers the requirements
of every client and provides them with services accordingly. Every consumer has a different
opinion and outlook on their beauty. The brand should give women various personalized
channels to assess all the products 10. The objective is to make women's experiences better and
discover suitable products to fulfill their desires. It begins with the requirements of customers.

Sixty-five percent of customers anticipate that brands will provide them with personalized
products and comfortable experiences. Smartphones are playing a vital role in the changed
buying behavior of customers. Customers keep switching between online shopping and
shopping from the stores, and they look forward to the same integrated and trouble-free
experience. Brands have an incredible chance and responsibility to make the shopping
experience memorable. Experiences are influential and can upgrade the brand image in the
market 11. Following are the ways to make the experience better:

____________________________________
9
https://www.retailcustomerexperience.com/blogs/boosting-customer-engagement-by-fostering-community-
connectivity/
10
https://www.slideshare.net/pap692/sephora-case-study-64838603
11
https://www.warc.com/newsandopinion/news/sephora-uses-experiences-to-build-loyalty/42580
Virtual Experiments:

Customers can try products with Virtual assistants from various categories, all from
smartphones' comfort. Tools available on the website detect a person's facial features and
12
explain how they can apply these products according to their desires . Sephora has added
more than 250 million shades for the makeup products like lashes, lipsticks, face powders,
foundation, and many more tried and purchased by consumers (Figure 1).

(Figure 1)

Getting in Touch with Customers

The live chat feature on the website allows the customers to ask queries related to their browse.
The live chat assistants provide unbiased recommendations and responses in real-time.

Integrating Digital Profile to the Sephora Store:

Mobile applications and websites of Sephora modify into the "store companion tool," which
helps when consumers visit a store physically; the store has a data profile about the products
they have browsed online and provide them with recommendations about the items according
to their needs 13.

___________________________________
12
https://www.bluecore.com/resources/sephora-case-study/
13
https://www.vertexvr.nl/case-study-sephora-leveraging-ar-ai-transform-retail-help-customers-buy-cosmetics/
Integrating the Digital and Store Experience:

Online guidance about makeover and skincare allows the store employees to explore products
recommended or applied during the digital service and deliver those products to the customers
for future purchases with a difference between the before and after pictures 14.

Voice-Assisted Guidance:

The latest tool, known as "Sephora Skincare Advisor, " is the brand's first voice experience.
Customers can determine some skincare tips and type of their skin daily using Sephora
Experience. Sephora is the brand of continuous innovations, but brands have to face some risks
15
and determine how it works to become innovative . Sephora continues to expand its
technologies through its innovation lab. Focused on the current beauty and fashion trends, we
can witness Sephora discover the following opportunities:

"Beauty Devices":

Advancements on the Internet of Things, Artificial Intelligence, and some more technologies
enable a diversified list of beauty devices. An augmentation in the market like Foreo is
furnishing high technology devices for the cosmetic sector, such as smart mirrors and smart
diagnostic systems. Sephora has been getting profits from the trends of different beauty devices
such as facial steaming, cleansing, hair removal, anti-aging therapies, and many more. It could
be expected that smart beauty devices can become more famous, enabling, and attracting
customers towards the brand 16. The employees and assistants at Sephora are wholly trained to
work with intelligent technologies to work with cosmetic tools while switching to digital
technology. They feel comfortable while using advanced technologies and efficiently guide
consumers.

___________________________________
14
https://www.mckinsey.com/industries/retail/our-insights/personalizing-the-customer-experience-driving-
differentiation-in-retail
15
https://www.cram.com/essay/Sephora-Direct-Case-Analysis/PKGECCA53UZKQ
16
https://www.bartleby.com/essay/Sephora-Case-Study-FKAPJMZA4FP
Sephora can use the technologies like Augmented Reality and Artificial Intelligence to train
the beauty assistants in the stores and those working for the online stores and the advanced
beauty routines, application of makeup products, and skincare guidance. Sephora has engaged
with the ModiFace technology to augment the virtual assistant program of the brand. The
company is trying to increase awareness about Artificial Intelligence and Augmented Reality
to acquire ModiFace easier. L'Oréal has already acquired the ModiFace technology, and to
maintain the competitive position, Sephora is also striving to keep track of the latest
technologies. With ongoing concerns of competitors' access to customers' data, Sephora can
discover some partners to implement AR/AI technologies for enhancing the virtual try-on
experiences of customers 17(Figure 2).

(Figure 2)

The Difficulty

Sephora required a swift way out that supported discovering the latest product and marketing
opportunities and supported keeping a check on the prosperity of the innovations. Sephora
adopted Medallia technology17.

___________________________________
17
https://www.zendesk.com/blog/sephora-created-futuristic-omnichannel-customer-experience/
The Execution

Sephora adopted a closed-loop feedback system for all the retail stores from the first phase.
Furthermore, Sephora assumes Medallia as a chunk of its innovation experimenting procedure
19
. The team at Sephora continuously tries to provide innovative customer services to serve
them better and then evaluate their efficiency through consumer feedback. The latest launched
and experiment technologies involve "Skincare IQ, Skintype IQ, Color IQ, and services at
stores to support the customers to discover the perfect products for the. Medallia is integrated
into Sephoras' mission to provide comfortable and memorable consumer experiences 18.

The Outcomes

The investment of Sephora in Customer service improvement has proved its worth. Medallia
technology integration has covered every aspect of customer experience, customer loyalty,
brand image, in-store and online customer satisfaction. The response rates have increased
discussions between customers and improved the fundamentals of dialogues between
customers and employees, which benefits the brand 20.

Conclusion

Sephora can take benefits form the smart customers and using different social media as
discussed in the case. They can develop proper strategy to enhance customer experience
based on the advanced technologies. Additionally, integration of the digital technologies and
store experience will provide improved customer satisfaction and response rates that will
benefit the overall brand.

___________________________________
18
https://blog.smile.io/top-10-best-customer-experiences/
19
https://wwd.com/business-news/business-features/sephora-sailthru-report-1203332771
20
https://etailwest.wbresearch.com/blog/how-sephora-integrates-retail-online-marketing
 Exhibit I:

Facebook ROI (Derived Value-Investments)/Investment

Number of 920,000
Users
Value of a $8.00 Revenue 8280.00
user
Increase of 92.00 Short-term 75000
10% average
cost
Conversion 1.125%
Rate
Revenue $8280.00 ROI using -0.8896
short-term
cost
Source: Sephora.com

Exhibit II:

Instagram ROI
Number of 5,000,000 Cost 76000
followers
Followers' value $0.90 Revenue 50625
Conversion Rate 1.125%

Revenue $50,625.00 ROI for 1 Year -0.70486

Source: Instagram.com
 Exhibit III:

YouTube Traffic to YouTube

Viewers Sephora ROI
5,000,000 40% 2,000,000 Est. 15000
purchases
Value of $35
user
$525,000
800,000 30% 240,000 Cost of short $5,750
video
Cost of a $19,500
long video
190,000 6% 11,400
ROI(Short 90.3
videos)
ROI(long 25.92
videos)
Source: Youtube.com
 Suggested Readings and References:

1. Evelina, L. W., & Safitri, Y. (2019, August). Customer Experience Bali Natural
Beauty Care Through Social Media. In 2019 International Conference on Information
Management and Technology (ICIMTech) (Vol. 1, pp. 82-86). IEEE.

2. Koetz, C. (2019). Managing the customer experience: a beauty retailer deploys all
tactics. Journal of Business Strategy.

3. Leavy, B. (2019). Decoupling: customer-centric perspectives on disruption and

competitive advantage. Strategy & Leadership.

4. Nastasoiu, A., & Vandenbosch, M. (2019). Competing with loyalty: How to design
successful customer loyalty reward programs. Business Horizons, 62(2), 207-214.

5. Ponomareva, E., & Nozdrenko, E. (2021). Digital Transformation of Marketing

Strategy of Western Firms in Chinese Cosmetic Market. In Digital Strategies in a
Global Market (pp. 229-241). Palgrave Macmillan, Cham.

6. Ramesh, N., & Siranjeevi, M. S. (2017). The Determinants of Customer Satisfaction

towards Cosmetic Products. Indo-Iranian Journal of Scientific Research (IIJSR), 1(1),
189-203.

7. Rayome, A. D. (2018). How Sephora is leveraging AR and AI to transform retail and

help customers buy cosmetics. TechRepublic, Feb, 15.

8. Rincon, M., & Attas, K. (2017). Phygitalization and its effect on customer satisfaction
and loyalty-The case of Sephora.

9. Santulli, M. (2019). The influence of augmented reality on consumers' online

purchase intention: the Sephora Virtual Artist case (Doctoral dissertation).

View publication stats