In a wake-up call to mass and class brands globally, according to new research from the Collinson Group, the affluent are quickly losing interest in loyalty programs. In 2014, 18% of consumers said they “can’t be bothered” with loyalty programs. That number has doubled, says Collinson’s latest survey. The traditional method — points programs — is losing steam with customers. And also with the smartest luxury brands seeking to “surprise and delight” them.
Interestingly, the most savvy luxury marketers are already rethinking how they engage and cultivate loyalty among their best customers (the ones with investible assets of $1 million or way more) by combining loyalty (not points) programs and bespoke special events (a powerful one-two punch) that are real-time, more aligned with best customers’ interests (learning what makes the best the best) and, importantly, on a platform of their best customers’ choosing. These programs thank, celebrate, reward and, in a non-condescending, experiential way, educate their very best customers.
Data point: Only 10% of the “big” money in the U.S. is inherited ("inherited/old money" is 4% of this 10% and shrinking) or celebrity: sports, music, movies: 6% and growing. Ninety percent of the “big money” are middle=class folks, not born to the manor, super successful, super rich, a growing community of luxury connoisseurs who are hungry to know and experience what makes the best product or services the best. Once they know, price is no object.
Research shows it costs between four and ten times more to acquire a new client than to retain an existing one; making effective loyalty programs highly cost-effective. The new loyalty programs have a different, more exciting, more engaging spin. One way is for luxury brands to ask their best customers to invite their best friends to bespoke events.
Clearly, leveraging best customer relationships and “hugging” (do read Jack Mitchell’s Hug Your Customers) these most “productive, repeat customers” can have a massive impact on sales and profits. These best customers typically spend 67% more than new customers. How to better engage them?
Here are some key ways luxury brands are now combining loyalty and bespoke special events to profit and, most importantly, inspire their best customers to spend more and refer more customers like them.
• Bespoke customization of loyalty rewards and communications — one-to-one — with their top customers including; follow up with hand-written custom notes, special offers, incentives based on best customer history of buying, complimentary upgrades, invitation to by-invitation-only events (“bring a friend”), finding ways to "hug" best customers: celebrating wedding anniversaries, children’s birthdays, small but powerfully personal gifts based on customers’ interests, e.g., a catalog from an recent gallery exhibit to art lovers, a bottle of superb olive oil for foodies, good wine (doesn’t have to be overpriced) tickets to a concert or theatre for music lovers, theater goers etc.
• Serious investment in highly personalized social marketing including; Facebook, Instagram, Snapchat, Twitter and Tumblr.
• Partnering with kindred-spirit brands to mutually invite best customers; neither of which customer group has truly experienced the other’s product or service.
• Inspiring employees to heighten their level of customer service by better learning, capturing and using information on best customers.
• Working more closely with key publishers to find customers in their data bases exactly like best customers and together hosting experiential/educational event(s) as a loyalty perk and sharing costs.
As luxury retail brands face increasingly challenging times and marketing budgets come under scrutiny, luxury marketers must provide their CFOs and CEOs more compelling qualitative and quantitative measures (return on investment and return on opportunities) of success of every facet of the marketing mix.
Frederick Reicheld’s classic, The Loyalty Effect: The Hidden Force Behind Growht, Profits and Lasting can be a great ally. Reicheld’s work provides a powerful approach and formula for measuring, qualitatively and quantitatively, the lifetime value of a brand’s customers; lifetime value being a calculation and prediction of the net profit attributed to the entire present and future relationship with a customer or segments of customers.
For luxury marketers loyalty programs integrated with bespoke, experiential/educational events is one of the most powerful strategies to deepen the relationships with best customers (and profit) while inspiring those best customers to refer prospective customers exactly like them. And, by far, at the very lowest cost of acquisition, bar none.