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The retail industry worldwide has been one of the most disrupted business sectors during the COVID crisis, one that was already at the forefront of extensive transformation to meet the omni-channel demands of customers in a digital economy.  The recent National Retail Federation (NRF) Big Show surfaced a large number of excellent best practice exemplars of retailers strategies for surviving the pandemic as well as paving the way for recovery. 

One of the most interesting use cases was that of Sally Beauty Holdings, the largest distributor of professional beauty products in the US (based on store count). This is a story of digital transformation with two angles of particular interest – the customer experience aspect and the fulfilment perspective. In this two part article, we take a look at both, beginning with the customer experience. 

First off, some context for those who are not Sally’s natural clientele – myself included! Now half-a-century old, Sally operates via two business operations – Sally Beauty Supply, which boasts more than 3,700 consumer retail stores across 12 countries, and Beauty Systems Group (BSG), a network of stores – with brand such as CosmoProf or Armstrong McCall – and direct sales consultants selling professional salon brands to licensed beauty stylists. For 2020, the firm, which has 27,000 full-time and part-time employees worldwide, reported full-year revenues of $3.51 billion. 

Both parts of the business have a store portfolio, which in 2020 was obviously negatively impacted by the pandemic and called for action. In her role as Group VP of Digital Strategy and Innovation at Sally Beauty, JC Johnson is responsible for customer marketing, which includes email, the loyalty program and customer analytics, as well leading strategy and innovation for the enterprise.  This puts her in a strong position to pick-up on trends in the market, as she explains:

No surprise – we had store closures. That led to some pretty immediate changes to [customer] shopping behavior. We did temporarily have to close the vast majority of our stores. We offered curbside where we could, but what we saw the customer do was shift to online shopping. We saw a very large spike in e-commerce demand. Our Sally [online] business for US and Canada was up 555% year-over-year, so definitely there was a shift in how she was shopping.

But the biggest behavioral shift was a rise in consumer DIY haircare and beauty self-care to the highest level the firm has ever seen, be it home hair coloring, home nail maintenance and so on, says Johnson This may be a permanent shift: 

For better or worse, a lot of experimentation was happening. Even more interesting, there are some signs that this behavior will be sticky. [Point of sale research firm] Omnibus did a bit of research that shows 16% of women said, ‘You know, even after the pandemic subsides, I’m going to continue doing my hair color at home, to at least a certain extent. I’m not sure when I’ll go back to the salon’.  The shift to DIY, we had already been going down that path. We recently re-launched a brand under ‘Unleash Your Pro-tential’, and we just accelerated that. We launched DIY University, we launched SallyCrew [a brand ambassadors scheme], we’re working with social media influencers, and we just changed our email marketing strategy to be really focused on DIY content.

This ties in with a wider need to be more communicative with customers during the crisis to ensure that they were kept in the loop about changing circumstances and availability of services, with outreach managed via Salesforce’s Marketing Cloud, explains Johnson: 

Lots of social media and email messages using Marketing Cloud, updates on store status – is Barbicide in stock?. We saw very high engagement in these very informational messages, but we still also saw a large spike in customers calling the call center. We leveraged [Salesforce] Service Cloud, which we already had implemented,. We quickly launched service bots. We started talking about those at the beginning of June; this was live by the end of June. We were able to serve many of our customers using these online chat bots, tens of thousands of inquiries a month using service bots.

Sales support, brand consistency

There was also a need to support salons as with Sally’s Field Sales consultants had themselves to switch to the virtual world rather than visting clients. This was challenging for some, recalls Johnson: 

You had some people who had never had a social media accounts. Field Sales consultants were  now launching social media accounts, running Instagram polls on what products do [customers] need while salons were asking them about what was in stock. This kind of happened organically, but we did need to fully provide them with all the tools to support this. Right now we’re working on a Salesforce implementation to re-launch the ordering platform and give them better tools, things like on-the-spot recommendations of what’s the next best product for the salons to buy etc. They used to do a lot of that very high touch in the salon, but we’re having to shift to the virtual world.

Another challenge as part of Sally’s wider digital transformation program has been the need to create a consistent brand experience, one that in Johnson’s words, “definitely extends beyond the buy button”. She cites an example to make her point, stemming from the launch of Buy Online, Pick-up In Store (BOPIS) : 

Post-purchase, as [the customer is] walking out the store, we have to figure out how we still create  online that educational, DIY experience in the store that she saw. Now, we’re very fortunate that we hire an associate base that has a high level of expertise. A lot of our store associates are hairstylists themselves and so because of that, we have this perfect opportunity for in-store education when they come to pick up their order. 

In fact, as it’s turned out, add-on items has been a revenue driver, says Johnson: 

They’re having that conversation of, ‘Hey I saw you purchase bleach. Did you know you need to do a bonding treatment?’. And so, [the customer] buys that and then because the transaction happened online via Commerce Cloud, that data goes to Marketing Cloud. She starts to receive emails from us, that are automated around, ‘Here’s how you do your color at home’. So it’s a nice post-purchase experience where we can also integrate our stores. 

Cross-servicing

For Sally, being an omni-channel enterprise across the two operating arms of the business brings cross-servicing benefits, says Johnson:

We leverage the fact that both of our customer databases are in Service Cloud and we identify cross-shoppers. We’ve created a single customer ID. A great example of how this worked out was  when we recently launched our rewards credit card. This is the very first cross-segment shopping tool we’ve ever launched. You can use it in both [businesses] stores, you can earn rewards in both stores. 

If you’re a Pro, you automatically become a member of both stores. [A Pro customer] typically shops at CosmoProf [which distributes salon brands to licensed salon professionals]. She signs up for the rewards credit card in a CosmoProf store. She automatically becomes a member of Sally Beauty Rewards. So we have to figure out, how do we take her on that post-purchase journey of introducing her to Sally Beauty?

The fact that we have the common customer ID in Sales and Service Cloud and then the automated email [from] Marketing Cloud, just makes it very seamless to take her on a journey and share the messages around Sally Beauty – what are Sally B rewards? –  and then we really start to think about tying that back to Commerce Cloud. The first time that shopper checks out on Sally Beauty, we automatically recognise her as a loyalty member and it’s just a very seamless experience for her. So, this is a type of journey that really opens up a world of possibilities for us to create a very intense, connected customer experience across all of our stores.

But…

But while all of those are clearly positive developments, the rise in COVID-driven e-commerce business did bring its own problems, admits Johnson: 

We could not fulfil all of those orders on a timely basis out of our warehouse. So we launched ship-from-store. We very quickly set up the ability for our US store fleet to fulfil e-commerce orders. We went from zero stores able to do this to 300 to over 1000 in a matter of days. 

How that happened is the subject of part 2 of this article here.