• by Layton Han , October 24, 2012

In the era of Groupon Reserve, how can luxury brands hope to hold their customers? If everyone is looking for a bargain, can stores like Barneys and Neiman Marcus even stay in business, much less maintain the loyalty of their pre-recession customers?

They can, and they do. With smart loyalty programs, these businesses have an ongoing love affair with their best customers.  By offering members-only events, exclusive sales, rewards and aspirational Platinum Card-like status levels within their program, these luxury retailers keep the aisles filled with return visitors. But even the best loyalty programs suffer from apathy and attrition. Here are three ways luxury brands keep their customers in the program:  

Figure out why they left -- and look for systemic issues

Hopefully, you’ve been getting data from your loyalty club members. Not just what they bought and when, but survey data, and data about where they may have fallen out of the funnel during their last online interaction with your brand. Look for patterns in the data. Do members seem unhappy with your social media presence, or your response times in social media? Are there multiple comments about snotty customer service reps, or your 14-day return policy? Have members had problems redeeming points? These are issues that need to be addressed. Luxury buyers are all about the experience, so make sure yours is as close to perfect as it can be. When you’ve addressed your pain points, you should let all your members know, in communication that is honest and clear. Your transparency and willingness to improve service will only make them love you more. 

Data-driven win-back campaigns

Yes, it’s obvious, but sometimes the obvious answer is the best one. The first step to reinvigorating a dying relationship is to realize it’s dying -- and then do something about it. In this case, that “something” may amount to a simple data cut (i.e., customers who haven’t purchased in three months) and a personalized email. It’s an easy way to get someone back on board.

A case in point: Sephora will never let my wife leave them. If they even suspect she may be buying her Laura Mercier tinted moisturizer at some department store, she’ll receive a wave of carefully timed emails promising her discounts and exclusive high-end samples. Ultimately, the right offer will persuade her, and the black-and-white box will arrive, packed with her makeup and half a dozen fancy-looking travel-sized bottles and tubes.  

Other brands can learn from this. If you’re in retail or travel and you’re running a loyalty program, you have loads of customer data -- what your customers have bought for themselves or others, when they’ve bought those items, how they’ve redeemed their points and more. There’s a lot of opportunity for personalization in that data.  Win-back communications can be highly customized to the customers you’re trying to reactivate based on this data. In my wife’s case, Sephora could have recognized that she was probably out of her makeup and, realizing that she liked to save her points for larger bonuses, offered her double-points with her purchase.  That would be a win-win.

Customers like you also liked…

Data, again, can be the luxury marketer’s best friend. We’ve all launched stimulation campaigns in the past, and, hopefully, we’ve also retained the data from those campaigns. If we can identify look-alike customers from our past data and determine which campaigns were effective in reactivating those dormant customers, surely launching a similar campaign today is likely to stimulate similar customers. If women who bought four designer handbags in 2010 were motivated by an invitation to the “Fashionista Club,” women who exhibited similar behavior in 2011 are likely to respond to a similar offer. Wine buyers who were thrilled by the invitation to an exclusive tasting last year could be a guide for this year’s less enthusiastic club members.  

By the same token, we should be able to learn who not to target with these campaigns. The buyer who spends a small fortune between Black Friday and Christmas Eve, then disappears for the warmer seasons, is probably not a great candidate for a Spring stimulation campaign.

Be delightful

Ultimately, what drives loyalty is a wonderful shopping experience. Luxury buyers expect knowledgeable sales staff, excellent support and quality goods as much as they expect a fantastic loyalty program. Your loyalty program isn’t half as much about the points and perks as it is about quality and service. Remember, too, that while your brand benefits from the loyalty program, it’s really about delivering value and prestige for your customer. Shine on all fronts, delight the customer at every turn, and you won’t have to spend too much time thinking about reactivation.