Lap of Luxury: Using Customer Insights To Deepen Customer Relationships
Luxury brands seem immune to the caution that has characterized the retail sector in recent months – some finding it difficult to keep up with demand. For example, Louis Vuitton witnessed sales growth of 20% in 2011 and Gucci breached the €3 billion mark in sales for the first time last year.
So how can luxury brands capitalize on this upward trend, and ensure customer loyalty for the long term?
Leveraging Critical Data to Significantly Enhance Customer Loyalty
Affluent Americans account for roughly 60% of all household income earned in the U.S. Top-tier customers make up a third of total annual sales for some luxury brands; therefore, elite consumers are often looked at by marketers through a different lens compared to the rest of their customer base.
What every luxury marketer knows (or should know) by now are the unwritten rules they must abide by when targeting these exclusive customers and prospects. Traditional batch and blast emails are a big no-no, mass-produced communications are widely frowned upon, and those who develop campaigns using repetitive, irrelevant communications might as well consider the campaign a failure before it’s even executed. The relationship between luxury brands and their customers must be based on higher standards for personalization and consistent offers that precisely align with past shopping behavior and expressed preferences, while supporting the brand image.
In order to appeal to this demographic and meet their needs and expectations for excellence at every touch point, luxury marketers must consider each customer interaction as unique and exclusive.
New digital marketing channels have opened up incredible new opportunities to help luxury retailers market to and target customers and prospects – at the right time, and in the right place. However, marketers are now challenged with figuring out how to drive consistent communications and experiences across both emerging and traditional channels (including face to face in-store interactions).
It is for this reason that luxury marketers need instant access to information and insight to strategically plan, segment, and better target customers and prospects. The goal is to create a holistic customer experience that transcends email, direct and point–of-sale to enable marketers to capitalize on cross-sell and up-sell opportunities, while creating lasting customer relationships.
Marketing technology exists today to help marketers develop a centralized database to provide a 360-degree marketing view of the customer. With this technology, luxury marketers can be more scientific about unifying inbound and outbound communication strategies by tracking and managing all marketing activity data to generate targeted messaging and make the best, most relevant offers.
In support of this paradigm, consider one world-renowned fashion and luxury retailer. In an effort to build a single marketing view of its customers, increase brand awareness in the U.S. market and increase the number of repeat customers, the retailer leveraged conversational marketing technology to store all its U.S. customer data generated from every touch-point. It then deployed advanced analytics to segment customers into several categories, enabling it to score and calculate the lifetime value of each customer.
Benefitting from having a single data mart integrated with a list hygiene provider, analytics and marketing automation capabilities, the luxury retailer effectively tailors its marketing programs to each customer segment. This more targeted approach enables each boutique’s sales team to further engage with customers through a personalized follow-up phone call or email, and improve overall response rates.
For luxury marketers, being able to track several customer statistics, such as the 12-month average shopping cart value, number of products per transaction, items purchased, price paid and highest priced item purchased, takes on additional value. In the case of this retailer, it was able to create sophisticated reports on marketing effectiveness across all of its channels and track POS data back to each campaign. It can now make more intelligent decisions about its level of marketing investments in specific channels.
While there are a multitude of challenges in the luxury retail sector, the one thing marketers can rely on to help differentiate themselves and be successful is having instant access to critical customer data and the right tools to help track, analyze and act on it in a timely manner. Ultimately, luxury brands rely on deep, personal relationships with customers. To increase customer lifetime value, deep customer insight is one of the most critical success factors for maintaining loyal customer relationships, and one luxury marketers can’t afford to be without.