Affluent consumers place enormous value on the purchase experience , expecting not only extraordinary service and the highest quality but also personalisation and understanding. Luxury shoppers want to be recognised, be recommended products that would truly be of interest to them and made to feel a valued customer every time they interact with the brand. They are incredibly emotive, and have genuine passion for luxury brands - the ultimate brand advocates. But how do luxury brand marketers leverage this bond, emotion and passion and convert it into tangible transactions, increased revenue and more profitable customers?
We look at 5 key steps that luxury brands (and general retailers) can follow to improve their data and customer relationship strategy to enable them to convert luxury brand advocacy into tangible commercial results:
Harness the power of all customer information
All companies maintain many disparate sources of information on its customers across various IT, transactional, marketing or partner systems, but there is demonstrable commercial value in being able to combine them to get a more consolidated, holistic view of the customer as part of a complete data strategy.
Ritz-Carlton Hotel group are one example of a luxury brand that shares a single view of their customers across their global hotel network. This enables them to tailor the customer experience to meet individual customer preferences regardless of what hotel they visit so a customer will have their preferred pillow type, favourite wine, films or music in the room before they arrive.
As consumer touch-points with a brand continue to proliferate across offline and digital channels, sources of data will multiply. The creation and maintenance of a Single Customer View (SCV) remains a working objective for most organisations. In a recent study 57%1 of companies stated that they have not yet built a SCV which integrates pieces of data they hold on a customer into a single centralised repository.
Achieving a more complete view of the customer need not be overwhelming and complex; it must be practical, realistic and aligned to the commercial value it will generate. The skills of a data planning specialist will be able to identify how this can be achieved and used to create more profitable customer relationships based on clear business and marketing objectives.
It's no longer enough just to know who they are
The type of relationship a consumer has with a luxury brand is no longer as personal as it once was. The world is now a smaller place and with the explosion of new digital distribution channels and eCommerce, a direct relationship worldwide, let alone one which is primarily face to face, is much more difficult to achieve.
One recommended approach is to map the customer journey at all stages of the lifecycle to identify all of the potential touch-points for interaction across all channels. This touch-point mapping exercise can be used to highlight where the interaction could be improved to both capture more information and deliver a more integrated, multi-channel customer experience. Luxury consumers must be convinced of the value which they will derive in providing data about themselves as they are highly protective of this personal information.
Tag Heuer offers individuals an opportunity to create their own personalised profile space (My Tag Heuer) based on the data provided at registration such as date of birth, leisure interests and previous purchases. This information creates access to a list of preferred brand ambassadors, a personal watch portfolio and gallery.
Not all customers are equal - creating actionable insights
A sound data strategy creates the opportunity to transform data into insight which can be actioned to drive more informed business decisions and results. Data analysis and segmentation is a vital part in this process and can be used not only to categorise the value of customer types, but also to help to drive a highly targeted communications strategy.
Many companies, including luxury brands still do not understand who their best or most valuable customers are, or those who have the potential to become so. The definition of best or most valuable customers varies, but typically this could be related to profitability, total spend and standard segmentation analysis would consider the value, recency and frequency of purchases.
The Carlson Hotel Group (formerly Rezidor) operates five brands worldwide including the luxury hotel brands of Regent and Hotel Missoni. They have been able to better understand who their customers are and assess whether there were ways to use the data they had in a more intelligent way to increase retention rates and incremental revenue.
Customers demand relevant and personalised interaction
Adopting a more sophisticated, data-driven and behavioural targeting approach helps brands move away from blanket discounts and special promotions to more targeted communications. For example this could be connecting them to the content they are interested in, invitations to exclusive events or product launches based on their previous purchase behaviour, or even to engage and solicit their opinions to inform future product development.
Consumers want to see that the data that they have entrusted to a brand is being used positively to provide information tailored to their preferences. This not only makes the customer feel more important and valued, it supports a more regular and open dialogue, encouraging them to spend more and become more loyal.
With the move to digital, brands are also having to consider how they measure interactions as well as transactions - using it as a metric that not only reflects current levels of engagement, but also as a predictor of potential future behaviour and revenue. Burberry is one of the few brands that have apparently managed to correlate interactions to tangible results - to date they have secured an incredible 11 million Facebook fans and profess the result to be a 10% increase in same-store sales. However for the majority of brands, a direct correlation of social media activity to revenue is difficult to prove.
However whilst digital channels continue to be a focus for the development of customer relationships, the importance of direct and personal contact within store should remain a top priority. The insight and customer understanding needs to be shared with experienced sales associates in-store to ensure that customers are recognised and receive a personalised experience, beyond what they would online. This requires a clear and focused customer relationship strategy, supported by robust process, IT infrastructure & technology plus of course engagement with sales associates.
Demonstrating commercial value - converting transactions
The opportunities are there for all luxury brands to create more profitable customer relationships through leveraging greater customer insight. By using behaviourally-targeted campaigns to deliver more relevant and personalised communications, brands can drive greater spend and build deeper customer relationships, thereby demonstrating a direct return on investment and creating more loyal customers.
With increasing pressure on Marketing Directors and their departments, it is now more important than ever that they continue to maintain and prove a direct correlation between marketing spend and incremental revenue generation. The more that they can harness the passion and brand loyalty that affluent consumers naturally possess, and utilise deep customer insights to deliver value in the right ways through across all channels, the greater their long term success will be. Only through engaging customers in a relevant, personalised and highly targeted way across both digital and offline channels will luxury brands start to make the shift to driving real transactions.
1 Data Strategy of the National Survey 2011