Data-driven marketing for luxury brands: shifting focus from products to clients

Customer Experience 8 February 2019

Customers in the luxury world are a super-connected population. According to a Google study, 98% of them use the Internet daily and more than 80% of sales are influenced by digital media. Today, these users have come to expect a unique experience offered across their favourite channels whether this be online (websites, social media, video outlets) or offline (shops, events).

These new expectations and touchpoints mean that luxury brands must redesign their strategy and focus on the customer experience, and not just the product. But transforming distribution and communication practices for luxury brands may be easier said than done, as these companies have historically focused marketing campaigns on products alone. This used to lead to a top-down communication model, instead of a strategy focused on data and client needs. So, how can brands offer luxury-as-a-service, and a seamless experience? Answers below!

Why is data such a precious asset for luxury brands?

Whether used to analyse in-store transactions or on-line behaviour, data is a goldmine in the luxury industry, allowing players to identify opportunities for repeat purchasing, cross-selling, or up-selling.

Predictive analysis means that luxury brands can anticipate clients’ upcoming purchases (based on products or life events) or identify the most successful product combinations which can then be recommended to clients making a purchase. Purchases are more likely to be one-offs, which means that every client interaction counts as a chance to maximize possible services and, in turn, maximize transaction value.

In addition, brands can (and should!) use data collected online to offer personalized experiences. Anonymous browsing data analysis should encourage luxury players to tailor the online client experience, such as offering relevant content and products, to mimic an in-store experience. For example, brands could adjust their emailing strategy depending on latest purchases and user engagement with various products (products viewed online, added to a wish list, or re-visited).

Data is thus the key to a successful omnichannel experience which bridges the gap between the physical and digital worlds.

Breaking down internal silos to better understand user paths

Thanks to the digital world and the data it brings about, 360° client knowledge is now a reality, and is nurtured thanks to each touchpoint and each channel. This helps to define the most effective engagement strategy throughout the client path, up to the moment of purchase and re-purchase.

Digitalization in luxury sales is on the rise and this trend will strongly contribute to industry growth in the coming years. Indeed, according to a recent Altiant study, 67% of customers find that it is more practical to make luxury purchases online – and 66% find it easier to locate a desired product online.

Luxury brands must therefore define innovative engagement scenarios to grow client loyalty and maximize sales while maintaining their luxury appeal: rarity, exclusivity, privacy, something that arouses emotion, quality service, and non-intrusive interactions.

At each step of the client path, the right message must be communicated over the right channel (e-mail, ad, phone call…). These choices take client behaviour and previous client/brand interactions into account, to avoid overselling.

These choices should be accompanied by efficient performance measurement for each channel. There are several ways to do this, such as providing individual concierge lines for each client to match a final over-the-phone sale with the traffic source (display, SEA, e-mail) that led to the website visit and initial contact. To avoid wait times and respond in as much detail as possible to client needs, several luxury brands offer in-store appointments directly on their websites.

This 360° client knowledge, made possible through data analysis, means increased opportunities when the client makes an in-store appointment and visits the boutique. Recommended products could for instance be shared with salespeople ahead of the appointment, so that he or she could personalise the client experience, anticipate needs, or ensure products are in stock.

Implicating an omnichannel measurement strategy

Over 90% of luxury purchases are still made in-store. This means that understanding the contribution of various digital touchpoints to these purchases is a strategic must for driving marketing and digital ROI.

Luxury brands’ digital presence is now a key part of client decision making, as clients have often made up their minds before entering the store. Comparatively, car manufacturers noticed a drop in average number of dealership visits from 4 to 1.4 before purchase. It is more essential than ever to analyse client paths before a purchase is made, to measure the impact of digital efforts (media campaigns, websites, e-mails, call centres, social media). These analyses are useful in determining how brands should invest to reach their goals. Today, technology exists that can carry out these analyses – and often point to the resulting strategic insights. These types of tools can quadruple digital ROI according to a study done by fifty-five!

Creating a data-driven corporate culture

These new data-driven practices are shaking up companies, which until now have often been organized into distinct and siloed traditional departments (communication, marketing, business, CRM), with the digital side often only present as a distinct add-on. The challenge is thus to establish reliable governance and new roles which will facilitate information sharing, coordinate data initiatives, and lastly develop a client-centric culture in an industry where product marketing has been king. These new roles might include chief data officer, chief transformation officer, data coordinator, client experience officer, or chief client officer… Whether temporary or permanent, these new roles must foster updated marketing tactics designed to bring the brand closer to clients.

These data-related challenges mark a new frontier for executives as they must make budget decisions based on established facts and numbers (results of online and offline media campaigns, performance of various creative assets, performance measurement of boutique appointments, etc.)

Meanwhile, the data-driven culture must be diffused constantly and across all levels of luxury companies, particularly with vendors and CRM teams. Knowing how to interpret digital data – such as page views for a given project, or “add to cart” numbers over the past month – has become a necessary part of a successful and powerful omnichannel client experience. Technology is most effective when it is understood both in terms of interpreting results and in believing that it can improve performance and better serve the client.

This is the challenge facing luxury brands if they wish to keep up and flourish in today’s super-connected and competitive world.

Data is the cornerstone of a customer-centric strategy for luxury brands, and has become a great asset for both marketing and sales. Anticipating needs, simplifying the purchase process, and understanding which touchpoints drive revenue most will be important levers for these brands to continually adjust their digital strategy and ultimately serve their brand and their business. This opportunity also brings the considerable undertaking of digital transformation and organizational change. The client, across channels and media, is disrupting the traditional model of historically closed-off luxury businesses that avoid risk, keep closely-guarded secrets around the brand, and are centred on the product rather than the client. However, there is little doubt that companies that can take digital transformation in stride and constantly integrate new innovations will continue to come out on top!

Would you like another cup of tea?