Ulta Beauty's Path to Abundance
Phil Horvath, Ulta Beauty's general manager and vice president of salon operations.
With a goal aimed at helping its 4,500 stylists and 800 estheticians achieve personal and professional success while strengthening loyalty to the company, Ulta Beauty launched its Path to Abundance career path program in the summer of 2008. According to Phil Horvath, Ulta Beauty’s general manager and vice president of salon operations, it was a time in the company’s history when they were looking to grow, and he wanted a career system that would help Ulta stand out among other independent salons and even other chains
Borrowing a foundation from Summit Salon Business Center’s Peter Mahoney, Ulta customized its own level systems. “At the heart of the program are coaching modules that really train our managers how to hold formalized coaching sessions—or salon professional development meetings—with each team member, every month,” Horvath says. “The coaching starts with understanding an associate’s professional and personal goals, then outlining a program to help them achieve those goals.”
In each session, the coach and the associate review specific metrics, including rebooking rates, chemical service percentage rates, average ticket, referral rates and conversions, which is the number of Ulta shoppers the stylist has converted into clients. Associates are given their own tracking books to use in-between meetings and are expected to be prepared to talk about what’s working and what isn’t.
“So much of the industry focuses on the technical and creative aspects—and we do, too—but we felt it also was important to focus on the business side behind the chair and develop a system that would help team members reach their goals,” Horvath says.
The Path to Abundance program includes five levels, and each time an associate jumps a level, his or her compensation grows in two ways. First, Ulta issues a price increase for the promoted associate. In addition, Ulta raises the commission percentage for that associate. For example, Designer 1 stylists receive 43% commission, while Master Designer 2 stylists are bringing in 58% commission.
In addition, associates make product commissions that are calculated separately. When 35 percent of a stylist’s customers leave with a product that was recommended, the stylist receives an additional 2 percent in service commission. “We opt to do that versus a straight product commission, because we find it’s a bigger motivator and it makes recommending products part of an associate’s overall job standard,” Horvath says. “Also, we want them to recommend what’s really best for each client, not simply the most expensive product.”
Ulta implemented Path to Abundance right before the Recession struck, and Horvath admits it took a little longer than predicted to change corporate culture and reap the program’s benefits. But, now those benefits are more than apparent. Before the program, Ulta’s turnover rate on all stylists ran as high as 80 percent. Now, that turnover rate is down to 35 percent, and the turnover rate on team members at the master designer level is down to 10 percent. “Organically that loyalty translates into sales growth, because as stylists stay so do their clients, and those clients refer their friends,” says Horvath. “We’ve been fortunate to experience double digit sales growth in an environment where salon companies are doing well to post 5-6 percent growth.”
When a team member earns a level jump, Ulta celebrates it, including sending the stylist a hand-written note of congratulations from the corporate office. When stylists reach more than $100,000 in service sales, they join the Elite Club, are honored at the company’s annual conference and receive special educational training with top artists.
Perhaps much of the success of the program though comes from the stories associates share with one another. For example, stylist Amanda was an Ulta client as a teenager before she went off to a four-year college. Along the way, she decided to attend cosmetology school, and ended up getting a job at the same Ulta location, where her former stylist was then a manager. Amanda worked her way up through the Path to Abundance program, reaching Master Level 2 and being named to the Elite program within three years. She also fulfilled her personal goals of buying her first home at age 21, paying off her credit cards, car loan and student loans, then buying her dream home a few years later. “I know without a doubt that I would not be where I am in my career and my financial success without Ulta,” wrote Amanda in a letter to Horvath.
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