Welcome to Let’s Talk Loyalty, an industry podcast for loyalty marketing professionals. I’m your host, Paula Thomas, and if you work in loyalty marketing, join me every week to learn the latest ideas from loyalty specialists around the world.
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Hello and welcome to episode 282 of Let’s Talk Loyalty. Featuring Ulta Beauty, the largest beauty retailer in the United States, famous for cosmetics, fragrance, skin, and hair care products, and also salon services. As an industry leading retailer, Ulta Beauty operates over 1300 stores across 50 states, and it’s continuing to grow both its footprint and its market share.
One of the key drivers of their success is its Ultamate Rewards Program, which is seen as a key differentiator for its customers. With over 38 million members, Ultamate Rewards is an extremely successful program that is enjoyed and appreciated by customers and company executives alike. So we were delighted to connect recently with Nicole Bernhardt, the head of Ultamate Rewards.
Nicole shares the importance of understanding the consumer to deliver a meaningful loyalty program. As well as the value of Engaged Field Associates to drive loyalty program adoption. I hope you enjoy listening to these wonderful insights from Nicole Bernhardt and Ultamate Rewards.
Paula: So Nicole, welcome to Let’s Talk Loyalty.
Nicole: Hi Paula. Thanks for having me today.
Paula: Oh,, I’m super excited to meet you. I was just saying I haven’t realized what an incredible business you guys have.
Nicole: Well, thank you so much. We are very proud of our loyalty program. We ver we’re very proud of the expansion that we’ve had in the United States. Mm-hmm. , we’re over 1300 doors now, retail locations for Ulta Beauty. Um, and we have 38 million loyalty members.
Paula: Oh my goodness. That’s absolutely extraordinary. And actually you came to our attention, uh, myself and Pooja, as you know here on the team when we were talking with the guys in the Bond Brand Loyalty research study, and I know you are one of the top three health and beauty retailers, so congratulations on that.
Nicole: Thank you very, very much.
Paula: Yes, very high praise. So, listen, let’s get straight into it, Nicole. Um, as you know, our favorite question always to start is to understand what you as a loyalty professional are either noticing or enjoying in terms of other loyalty programs other than ultimate rewards. So tell us what is your favorite loyalty program?
Nicole: So since I am based in the United States, my favorite loyalty program other than Ultamate Rewards is Chipotle’s loyalty program. Uh, I think they’ve done a really, really nice job launching that program. Um, it is a newer, more recent program for the United States. Um, I mean, the first thing is that. I really love Chipotle and I eat there a lot, so I always feel like loyalty programs are going to work best when you are a frequently engaged consumer that can derive value out of the loyalty program. Yeah. Um, but the, the loyalty program from, from a Chipotle standpoint is really simple, and I think that that’s a really important tenant of loyalty programs. You earn points, you redeem those points for, you know, the menu of food. And so it’s, it’s something that’s very, very easy for consumers to understand. Mm-hmm. , very easy for them to engage with, Very easy for them to actually, again, derive that value. Yeah. Uh, I also really love that the program was launched around the app, I think that, you know, having a, a strong base in a, in an application, an a, a mobile app Yeah. Nowadays is so important to put the power in the hands of the consumer. Yeah. Uh, and allow them to have really strong awareness, you know, an understanding of how many points they’ve earned, what their points actually translate to. Um, it just puts it all in front of them and puts them in control. And I think that it, heavily, um, supports and helps your brand with that whole education piece. That’s really critical. Yeah. After you’ve acquired a new consumer into your loyalty program.
Paula: Well, well said Nicole. There’s, uh, there’s like five or six kind of key points there that I’m always kind of going, you know, can we talk about things like simplicity, for example? Um, so yeah, all of the, the pillars that you’ve picked up on as a consumer. They’re the ones that will drive my behavior change. So I, I said to you, Chipotle is something I had to learn to pronounce actually, because I’m outside the US and so anyone else like me, it’s apparently an absolutely delicious. I think it’s Mexican style food, if I’m not mistaken. Is it?
Nicole: It is. I actually am someone that has celiac disease. Okay. And so that’s why I eat there so frequently. Okay. It’s one delicious. Yeah. Um, but there’s very little gluten in the food. There’s only the flour tortilla. So it’s, it’s healthy, it’s fresh, and yes, it’s like fast, fast, casual, Mexican food.
Paula: Wonderful. Yeah. But what I do like, as well as the simplicity, Nicole, as you said, they’ve put the, um, the education piece and the visibility piece into the mobile. And in this day and age, I think that probably is, um, the, the norm and the standard. But when I think back to the start of my loyalty career, there was actually a lot of thinking and we did actually.
Deliver our loyalty program in a separate app to the core business. Now it was in telecommunications, but there was concern at the time that there was too much content and it was confusing. And I think there was a concern technically as well that one might be too much, um, to, to hold all of that content. But to me, as a loyalty practitioner, I want to be able to engage with my customer. You know, in the whatever, 23 hours and, and, and 30 minutes that are not in my store. So the mobile app, the, the rewards fully integrated. It sounds like you have a wonderful experience with it.
Nicole: Yeah, and you just hit on something that is, is a trend that has happened with the loyalty space and something that I think is the, you know, a great direction for loyalty, which is the importance of that integration into the company. Yeah. So you just spoke about how in your. In your past background, there was a separation. Yeah. And the, the loyalty program was something that they wanted to sit separately and it wanted to have its own app and they didn’t want it to be overwhelming. And yeah, you’re seeing such power now with, um, you know, and, and great integration between, you know, having one app and having, having that integration of the loyalty program into the experience. Um, which I think. Helps with, again, consumer understanding, awareness, them actually deriving value and it being well integrated into either the retailer or food industry or travel industry experience.
Paula: You know what I’m hearing coming through Nicole, it sounds like, uh, you’ve totally fallen in love with the loyalty industry, Dare I say? Because I can see your background is much more on the kind of analytical side actually, before this.
Nicole: Yeah. So I actually have a background in consumer insights mm-hmm. , which I do think comes through with how analytical, I do think about who, uh, what consumers needs are and how to deliver on those needs and, and, and what’s important to consumers. Yeah. Um, consumer insights I actually think is a really great foundational background for a lot of different corporate careers. Sure. Um, it, it teaches you how to understand consumer needs and, and then build a strategy around what the consumer expectations are and how to deliver on those values. Within meeting business objectives. Cause that’s where the two, when the two things come together, that’s where magic is ha you know, happens. Yeah. Um, and so that, that is my background. My background is in consumer insights mm-hmm. . And, um, I got to a place in consumer insights where I then really, really wanted to be able to apply that understanding that, that what you said, analytical power. Yeah. Um, and consumer understanding to actually own a business line. Um, and think about things end to end from, not only understanding what the competitive landscape, what the consumers were saying, what, you know, what even the business in and of itself, running a loyalty program is something that requires analytics. You have to understand your metrics and you know, you need to press in. Um, and then actually transforming that into a strategy and operations.
Paula: Yeah. Yeah. Super fun. So what is the story then, in terms of Ultamate Rewards, You know, as a, I suppose, a strategic lever within Ulta Beauty? What’s the kind of history behind it?
Nicole: So Ultamate Rewards has been around for a while. We are a, we’re very proud, We’re a very established loyalty program. Mm-hmm. . Um, we have 38 million active Ultamate Rewards members in our program, which we have a, I would say a aggress, uh, a, a very good definition of what it takes to be an active member. It’s that you’ve purchased with us within the last 12 months. So these are people that have, Yeah. Have come and they’ve purchased with us within the last year. Um, and they’re engaged in, in loyalty. So our, our program has evolved over the years, um, since, since it’s, you know, been initiated, you know, some, some major milestones for the program was that we, we added a tier, Okay. A few years ago. We, we were realizing that there was a, a consumer need as well as, you know, you know, a great, a great objective of being able to add a, an upper tier, which we call Diamond, our Diamond Members. Okay. Um, and so those are our, the, you know, our, our best of our best guests. Um, and we have differentiated benefits that we’re excited to be able to offer those guests. We also, from a major milestone perspective launched a, a, a card for our credit card for our portfolio. Nice. And our credit card and our loyalty program are really closely integrated. Okay. So the credit card is an accelerator of the loyalty program. And you earn double points. Um, and an additional point, um, for every purchase inside Ulta Beauty. And so again, guests were very, very excited, about being able to have that ability to accelerate their points and their earning. Yeah. Um, and I work very, very closely with, um, our head of the credit card program so that we can think about how the loyalty program and the credit card are very holistically integrated.
Paula: For sure, and that sounds like a very recent development. Then Nicole, Is it the, The card itself, the credit card?
Nicole: The credit card has been around for. I wanna say four or five years. Oh, okay. Okay. So pretty mature actually. Probably even more than that. Yes, it is a mature card.
Paula: Okay. Okay. Yes, and I think it is a genius strategy.
I did see it on your website, and again, I think the US loyalty market leads the way in understanding. The power of, if I have a loyalty card and I have a credit card and then a points currency as well, which clearly not every program has, but the opportunity for multipliers and promotions and, you know, I suppose the flexibility it gives you is absolutely incredible.
Nicole: Yes. And that is, that is also a, a trend that we have seen in the United States. Um. You know, credit card accelerator of the loyalty program and things being tied to the loyalty program. Mm-hmm. , I think it’s beneficial from a credit card business line perspective. Um, and again, it’s that it’s that nice dynamic of, you know, consumers are looking for this and are excited about this. Yeah. Um, and it can allow them to derive more value out of the loyalty program. So it’s a, it’s a nice win-win and we have seen more of that dynamic in the, in the US market.
Paula: Super, super well, and, and I did even, I, I had a, obviously a look at your investor presentation as well, just to kind of see, because I know Ulta Beauty, again, publicly quoted company and some wonderful just numbers in there, now I don’t remember them off the top of my head, but people can go and look it up, but, In terms of, I suppose that, you know, complimentary, um, opportunity as you said for, you know, somebody to come into the store, perhaps to buy a product, maybe a makeup product and avail of a service, um, and driving footfall and dare I say, at loyalty. Purely by having the breadth of product and then layering that on with the Ultamate Rewards Program, it’s just a very holistic, it feels like, to use your word earlier, a very integrated concept, like very well thought through everything people might want is available within the brand.
Nicole: Yes. And we do see that from the dynamics of our consumers that, that shop our space. Um, the, the reality is, is how consumers buy beauty is they are in multiple different categories. The beauty space, when you think about what defines beauty, it’s huge. It’s not just a mascara, it’s also your hair products, it’s also your skin products. It’s, yeah. The, the, the dynamic of the, the needs of, um, an individual for beauty is, is really expansive. Yeah. Um, And so we’re, we’re very excited to be able to, to offer that. And then it’s obviously our privilege that we have very, you know, a very active, strong loyalty membership. Where individuals can be engaged with the program. And we’re excited that, they feel that they get value out of the loyalty program, which is why they’re members. Yeah. Um, so, so that they, they can actually get value and get benefits out of being engaged and loyal to Ulta Beauty.
Paula: Absolutely. And I know one of the things that comes through a lot, and perhaps the reason you guys scored so highly with the Bond Brand Research is that increasingly, it seems, Nicole, to me and, and certainly to the industry, that, the more we demonstrate loyalty to our consumers, the more they feel that love and are happy to engage back. So, So I can feel that you guys have that lovely intention of, again, breadth of product, breadth of proposition, and doing what you can to look after them, and then they’re only too happy to come back in and use all their rewards.
Nicole: Yes, Yes. That is the intent.
Paula: And you know what I loved most, actually, Nicole, again, just looking through all the slides in the, in the presentation, the actual percentage of customers who are members of Ultamate Reward. So I’m sure you’re very proud of that number because it’s been, uh, quoted in terms of the percentage. I think it’s the highest I’ve heard quoted. So do you want to share what you’re managing to achieve on that?
Nicole: And I’m assuming that you’re referring to our member sales penetration number. Exactly. Exactly. Yes, we are very, very proud that our member sales penetration is over 95%. Wow. And that comes from a place of the importance of loyalty for our organization, uh, and also speaks to the consumer excitement and engagement with the program. So we’re that, I, I, it’s interesting to hear from you that that’s the highest. That you’ve ever seen in terms of member sales penetration. But we’re very proud of that. And again, it speaks to our loyalty culture. Yeah. Um, and the engagement of our consumers.
Paula: Absolutely. Yeah. And you know, I, you know, I’ve asked a, a few people about that when they’ve been able to discuss it. And of course the intention is always 100%, you know, we have to be ambitious and, and hope for, for full penetration. But, uh, as they said, I’ve not heard anybody get to that as yet. But who knows, maybe you guys will get there in the future. The other piece, Nicole, that I thought was really, uh, coming through from everything you’ve said and everything I’ve read in terms of Ulta Beauty, it does seem to be something that is respected and supported at the highest levels of the business. So do you think that’s part of the reason for your success? Like how is it viewed internally in terms of, because marketing isn’t always given the, the level of respect that, that, uh, that of course we as loyalty marketers wanted to achieve. So how is it within Ulta Beauty?
Nicole: Oh, you, you are. You are definitely speaking to something that is so, so important, which is that we are something that is very important to the organization. Our loyalty program is viewed as a differentiator. For our company, it is if you spent some time looking at our earnings call releases. Yeah. You saw that loyalty is talked about. Yeah. On every single call. Yeah. And it’s very exciting to be able to. Um, you know, have it be so important to the organization. And important to our strategy that it’s something that is talked about on those calls, but it also comes through at really every level of the organization. So, you know, our, our executive leadership wants to know, What what’s happening with our loyalty program wants to know, you know, our strategies. But it’s also something that’s kind of integrated through every level, cross-functionally. Mm. Our distribution centers, our stores, um, we could not. We could not have the success that we have with loyalty without our extremely important field teams. So the fact that, you know, our stores understand the importance of loyalty, again, not just for the guests. Um, it’s, it’s, you know, obviously it’s, it’s very, very important to the consumer, but the stores also understand the dynamic of, of why that member life cycle is important for their store and the success of their store. Um, because, because it is something that we really heavily believe in. Again, like you said, you give consumer something that they value. And you’re meeting their needs and you’re giving them benefits. Um, we really believe in that reciprocal relationship of them. Then, you know, coming back and, and spending more with Ulta Beauty. And, and being a, a very loyal, valued guest for us.
Paula: So Nicole, you are obviously getting a wonderful experience for your customers and your members in store, and I always do think from my own career that’s possibly the hardest to, to execute on. I, I really think, you know, as loyalty professionals, we, we have such a wonderful opportunity with the design and the development and building what we think people are gonna love. But I think that moment of truth in terms of what happens when somebody’s standing, probably in a rush actually to leave the store, cuz we’re always super busy. What actually happens at that moment of truth in terms of whether or not they join the loyalty program, understand the loyalty program, or whether the store associate represents it to them. So I just wanted to ask for Ultamate Rewards. How do you manage that? Because it’s obviously working extremely well.
Nicole: Yeah, we could not do it without our field team and we could not do it without our, our field, um, you know, associates, representatives, um, they are so extremely important to making the loyalty program successful. So I actually have a partner inside my organization that is responsible for, uh, engaging all of our stores and she has a team of individuals where there’s, there’s, there’s, you know, a, a playbook that, that we, we operate with our field to get them engaged. Mm-hmm. to bring them visibility on. How loyalty is performing in their stores to provide training on the importance of, of how you engage that consumer and, and discuss the value proposition of the program, get them signed up for the program. Um, it’s, it’s really well integrated into our stores and, and integrated into our, you know, it’s that our associates really, understand the value. Yeah. Um, of, of not just what they’re then going to provide to the consumer. Mm. Um, but also then the value of, of what, what that generates from getting loyal members for their actual store. So again, it’s, it’s marrying those two things together of business objectives. Mm. And then those consumer needs. And like I said there, the getting the field, you know, getting that field dynamic, right? Is so important to the success of a loyalty program. Yeah. If you have retail locations, I would say, I guess it’s not that important If you are a, a direct to consumer brand, you don’t have a retail presence. But if you do have a retail presence like Ulta Beauty, which, we have over 1300 doors. Um, that is something that should, should not be forgotten and is a huge dynamic. Yeah. To, to making your loyalty program successful cuz you set its thought on those associates are the front lines. Um, they are the individuals that are communicating that message to the consumer as to why they should join loyalty. Yeah. And what they’re gonna get out of it. Um, and getting them signed up for the program. And so there’s a whole dynamic to think about, with the training and the education and their involvement, um, and their excitement, um, for the program.
Paula: Yeah. You know, and I, and I really feel, you know, that perhaps this part of the world could learn a lot from the US on that particular point, Nicole, because, you know, I, I nearly, you know, almost find, um, it’s important to me to, to almost test the person if they’re asking me, you know, the scripted part of, do you wanna join the loyalty program? Like, I just won’t sign up for that, you know? And, and it’s probably just me being the, the industry professional. I want to see if they’ve been trained. And in so many cases, and it may be an issue around, you know, in this market, for example, we’ve got a lot of franchise own stores. So perhaps the training doesn’t filter down the way a beautiful brand with 1300 stores, um, can manage a coherent training program. So I’ll definitely be, uh, you know, as I said, when I’m in the US and, you know, going to check out all the, the beautiful stores and products you’ve got. Just to see that live experience because I think the mistake, again, I’ve seen, and maybe I’ve even done it myself in the past, is, you know, I do the education program and I put the training in place, but it’s the ongoing training. It’s, it’s what I’m hearing, like it sounds like you’ve got a consistent year round sales force that’s dedicated to loyalty. The education and the inspiration piece, which I don’t think very many brands tend to invest at that level.
Nicole: That’s interesting that you’re bringing up that, um, there might be a unique piece. We have always talked about how our field in general, not just for loyalty. Yeah. Is, is such an important engine for us, um, in, in understanding and delivering both the, you know, the Ulta Beauty and the Ultamate Rewards value proposition, so, yeah, it’s an interesting observation, and yes, I’d be very, uh, I’m, I’m excited for you when you visit the States to be able to visit an Ulta Beauty location, and you’ll have to let me know how that experience went.
Paula: Wonderful. Wonderful. So, listen, that’s all the questions I had for now. As I said, it’s my, my first time getting to know Ultamate Rewards and Ulta Beauty, so I’m super excited and inspired. Is there anything coming up that, uh, that you can share or, or not? I know, um, sometimes things have to wait their turn to be unveiled, but even industry trends that you’re paying attention to, you know, we’re talking about things like content, for example, as a strategy, subscription programs, there’s a lot of things that are floating, web 3.0, dare I say it, , all of the cool crypto, crypto kids are, are out talking, but. Just even in terms of general trends and loyalty, are any of those capturing your attention for, for consideration?
Nicole: You have definitely brought up some of the, the larger industry trends within the loyalty space, which, you know, we are obviously keeping a pulse on, which is a very important dynamic that any team for loyalty should be considering and thinking about. Um, I know that we talked about when I, I brought up Chipotle being my favorite program, that there was an app dynamic and we talked about the importance of, of. Of having a presence on the app and having that home from a consumer education. We talked about the card and, and the trends of credit cards and the acceleration that credit cards can provide for loyalty programs. Um, you just brought up subscription based programs, paid programs, subscription based programs are also something as a dynamic that has, has, we’re starting to see more turn for those. That’s definitely an area where, again, with my consumer insights background, Yeah. It’s so important to think about whether or not, you know, sometimes, sometimes these trends take off. Um, and it’s really, really important to understand your industry, your consumer, what, you know, value you can provide to a consumer with that dynamic mm-hmm. to understand if it’s right for your business, your consumer. So yeah, obviously those are all things that we watch for, evaluate, consider, um, something I think though is, is equally as important. And we talked about some of the like really important tenants of loyalty programs is sometimes actually coming back and regrounding in the basics of loyalty programs. Um, especially in the United States. I don’t know how it how, you know, there’s, there’s some dynamic that I’m aware of in, in certain countries, um, but in the United States, consumers have so many loyalty programs in their wallets. Yeah. They, they join, you know, every establishment that they walk into, every food place that they order food from, there’s usually a loyalty program available. And it, and it does become, I would say, from a consumer standpoint, pretty noisy. Totally. They all work a little differently, . Um, and they all have slightly different rules and you engage with that retailer at different frequencies. Yeah. And so that’s always something that I think about. As a loyalty professional, which is sometimes cutting through the noise is, is trying to be very, very simple and kind of going back to those basics of, yeah, you know, what is, what’s the value proposition and how, how can I very simply acquire someone to my program? How do I actually think about the layers and the build of their education and awareness of that program in a smart, thoughtful way? Yeah. How do I get them engaged? What are those member milestones? To get them slowly engaged to the program. It is an evolution and a build. So that is something that I, I sometimes find is, is very, very important. Sure. We can always lean in Yeah. And do something super innovative. It’s also really important to sometimes go back to the basics. Yeah. Um, and just think about the fact that a loyalty program in and of itself is a consumer product. Sure. We want people to, join the program. You know, it’s, most programs are free to join. We just talked about the dynamics of paid. So sometimes they’re paid. Yeah. But we want people to, to, to buy in quote unquote, um, I just use air quotes but you couldn’t see them. So I’ll say them cause we’re on a podcast . Um, you want people to buy in, you want people to join, you want them to actually then, understand how to use it. You want them to engage with the different dynamics of the program. Mm. And make sure that what you’re offering in your value prop is something that people are actually using and getting value from. Yeah. Um, and then you wanna celebrate them. Um, and you wanna have dynamics in your program where they are feeling valued and are feeling appreciated. Um, And, and sometimes that, you know, bringing through that simplicity and coming back to some of the basics is really, really important. Again, because yeah, the industry is, it’s, it’s hard to cut through the noise of the industry because there are now so many programs. Yeah. The reason there’s so many programs is because companies have found a lot of value in having these programs and giving them to consumers. So it’s a, you know, It makes sense why I think most companies in the United States have some dynamic of a loyalty program. Yeah. Um, but that’s, that’s, that’s my kind of take of what we consistently look at is, you know, we’re obviously future, future thinking, but yeah, there’s, there’s always a fresh lens that can be had with re-looking at communications relooking at member life cycle, relooking at where we’re personalizing, re-looking at, um, ways to better engage in the offering that we already have. Yeah. Um, because, because sometimes we, we forget that there is improvement in those things.
Paula: Totally, totally. Well, it’s a, it’s a classic, um, piece of wisdom. Dare I say it, Nicole, because they’re a member of former guests saying sometimes the best strategy is just to say, no, we’re not , we’re not doing any more promotions. We’re not complicating things anymore. Um, and I remember somebody else saying actually, and I think it was in, uh, consumer goods, in fact, that it’s just at the point where we’re getting bored with our logo and bored with our copywriting. That’s the point you’re probably cutting through for the consumer, like it’s directly related. So again, I think, I certainly love the innovation, love the future thinking, but I also love the fact that you’re grounded in your insights and they may be super simple and people maybe don’t want anything else to think about other than just, uh, you know, just enjoying Ultamate Rewards as it currently stands.
So I do hope, Nicole, that you will come back and, uh, keep us up to date, uh, in the months and years to come. So, with all of that said, um, it’s a very inspiring story, as I said, uh, one, we hope to stay very close to you guys now and, uh, and, and watch with the, with excitement in terms of what you’re doing. So, Nicole Bernhardt, Head of Ultamate Rewards, at Ulta Beauty. Thank you so much from Let’s Talk Loyalty.
Nicole: Paula, thank you so much for having me on this show. I can’t wait to, to get your memo that you have visited the states and got to experience Ulta Beauty and, and Ultamate Rewards in person. Um, I, I can’t wait to hear your feedback and excited to stay connected.
Thank you again for having me on the show.
Paula: This show is sponsored by The Wise Marketer, the world’s most popular source of loyalty marketing, news, insights, and research. The Wise Marketer also offers loyalty marketing training through its loyalty academy, which is already certified over 245 executives in 27 countries as certified loyalty marketing preofessionals.
For more information, check out thewisemarketer.com and loyaltyacademy.org.
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