Asked in our recent, qualitative survey, “What are the trends that must be addressed by top management of luxury brands in 2016?,” C-suite executives responded as follows, ranked in order of importance.
1. The juggernaut of the Millennials
Eighty-six million of them compared to 80 million boomers. This community represents the future for luxury brands. The boomers, who no longer need “stuff,” are buying experiences and memories. The Millennials are still in their home-buying, nesting, acquiring and furnishing stage. Recent media coverage suggests they are or soon will be the biggest buyers of luxury products and services. McKinsey, Bain, Shullman Research Center, and Boston Consulting Group are universal in saying the Millennials are far from a homogenous group. From a marketing perspective, brands that ignore this fact are missing a major opportunity. Most CEOs and CMOs agree that this is a segment that demands greater focus than ever before. Many acknowledge they need to do much more to engage them.
2. Competitive intelligence
Regrettably, many, if not most, luxury brands pay lip service to taking a more rigorous approach to better, strategically understanding what top competitors are doing to win greater loyalty, a greater share of the most sophisticated customers’ wallets and more referral of customers like them. Ironically, the web now provides brands with all the tools. One can now track waves of coverage following public relations and events initiatives, quantify the rise in awareness of the impact of recent competitors’ advertising and counter with advertising or public relations and marketing as well. Too few brands take the time to track, understand and plan, given the benefit of the available technology and the intelligence it delivers.
3. The power
of good corporate citizenship and giving back
Traditionally, luxury brands saw promoting their support of important not-for-profits and causes as déclassé, a form of inappropriate touting of their good deeds and giving. Those that needed to know would surely know, or so they thought. With the disturbing and increasing disparity between the “haves” and the “have nots” and the Millennials’ strong preference for buying only brands that are genuinely good corporate citizens, luxury brands must step up. The smartest are doing two things: consolidating their corporate giving to a limited number of causes that have direct relevance to their businesses and sensitively promoting (not boasting about) their good works.
4. Better listening to top customers and associates/employees
Recent research shows that those luxury brands that have a strategic and disciplined approach to listening are more profitable, win greater loyalty of their customers and, within their organizations, have much higher morale, and so are able to inspire a significantly enhanced service ethic, and higher quality of service by treating their employees as partners. This opportunity was universally recognized by all surveyed with the frequent observation that more luxury brands are dedicating more of their marketing budgets to this goal.
5. Moving away from promiscuous discounting to segmented, special offers based on top customers’
history of buying
Especially in the holiday season, when luxury brands (not just some) stampede to mindless, radical discounting, the smartest luxury brands are resisting the temptation to discount. Instead, they are targeting their best customers with time-limited, special offers based on their best customers’ history of buying within specific brands. So, for example, buyers of Brioni who buy only accessories or casual wear will receive an offer to buy formal evening wear or suits. The benefit: expanded buying by best clients in categories of the brand they’ve never experienced and the ability to measure and track additional spend.
6. Collaborations and partnership
Twenty years ago, the notion of competing brands partnering, sharing databases, co-sponsoring special events was, at best, suspect. If 100 brands in a room were asked if they engaged in partnerships or collaborations, perhaps half a dozen would have said they did. Today, conservatively, 75 would say they do. The reason? All luxury brands share 60% of the top customers. Just not the same 60%. The fear of having one’s brand cannibalized is without merit. These customers can afford both a $250,000 Vacheron Constantin timepiece, a Bentley or a $1,000-a-day Azamara cruise. They don’t have to choose. The absolutely lowest cost of acquiring best customers like one’s own best customers is to partner with kindred-spirit luxury brands. This continues to be one of the most powerful marketing strategies for luxury marketers that “get it.”
In our next column we’ll address the leverage of social media/the conundrum of the web; segmentation, segmentation; making special events more special; the new public relations; better recognizing and talking to niche markets; suppliers and publishers — the new consultants; beyond “.com” — opportunities, threats, pitfalls, challenges.