Data-driven marketing for luxury brands

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Luxury brands need to drive change to reflect new consumer behaviours.

When it comes to digital marketing, luxury brands have a massive advantage over the other purchases we make. Spending a month’s salary on a truly beautiful object is a big choice for anyone. It should be a pleasurable experience, but the agony of judging what it will say about us and the doubt about whether there might be a slightly better choice is always there. After all, even a billionaire can only wear one set of earrings at a time.

Many luxury houses would proudly confess to being unashamedly product focused. But digital marketing offers new ways of understanding your customer’s intentions. The challenge is to retain your brand values while taking advantage of these signals. If you will, being “smart” in both of the traditional meanings of the word.

"Can I help you, madam?"

When you are planning to buy, say, a piece of diamond jewellery, you create a cloud of clear buying signals. As you browse websites, make searches on Google and share your views on social media, you leave a scent that, with the right analytical skills, can be used by a brand to glimpse your intentions. This need not be based on creepy access to your private data – actions can simply be anticipated based on matching your digital journey against thousands of previous customers’ behaviour.

The buzzword today is 'experience' – consumers young and old want to have a connection to places and people that can become part of their personal story. Our job is to give them precisely that – something that they perceive to be completely special to them. This illusion is created by both luxury products and digital personalisation: even though the customer knows that her 'experience' is actually mass produced – whether crafted in workshops or generated by programmatic tools – when she takes a picture on her phone and shares it, it becomes her own.

In luxury branding it has always been understood that people have made deeply held decisions long before they get to the store. Data science helps you question your instincts about how the customer is making these decisions. Brands should challenge their established ways of doing things by re-examining new buying processes – such as social influencers, comparison and review sites, and aggregators – to understand how these emerging channels affect brand salience.

“The usual, sir?”

As consumers we willingly participate in the process of having our data used to make the process of getting to the next stage easier. Every app you use on your phone, every call you make to a helpline, the forms you fill in as you complete your booking of an international flight, you are completing back-office data-entry jobs that used to be part of a service. As the customer weaves her path to purchase between the physical and digital world, she exchanges data that we want in return for information that she wants… With the right mix of data activation and data science, the consumer’s touchpoints can be mined to understand the likeliest next action – be it a store visit, a phone enquiry, booking of an appointment, or leaving never to return. Of course, perhaps as much as 90% of the traffic on your website is just window-shopping, but the other 10% is gold dust to luxury brands – the behavioural data of people close to making a purchase.

In a post-GDPR world, it is critical to persuade customers to share their data in return for something of value that you can give them, in terms of service, offers, recommendations, private viewings, and so on. These trappings of exclusivity are values that the mid-market retailer can rarely offer to consumers.

This type of digital “closed loop” opens up a wealth of opportunities. The in-depth customer knowledge of their buying history and their online enquiry enables a greatly enhanced in-store appointment. Product recommendations based on this data can for instance be shared with salespeople ahead of the appointment, so the customer can have a completely personalised experience, with their needs anticipated and any ideas for matching or ancillary purchases curated to be ready on their arrival.

Thriving in the brand new world

Many online retail marketers are flummoxed by the mass of reporting (results of online and offline media campaigns, performance of various creative assets, performance and engagement measures, page views for a given project, or “add to cart” numbers over the past month) without knowing how to turn “traffic” into a recognisable selling process. The art of this work is to craft these visits into brand experiences – rarity, exclusivity, privacy, something that arouses emotion, quality service, and non-intrusive interactions. The very essence of selling luxury.

The difficulties of undergoing digital transformation and organisational change should not be underestimated, as you challenge the traditional model of a historically closed-off luxury business built on craft, cult of personality and closely-guarded secrets around the brand. The technical work of combining data with inspired marketing also is not easy to do. There is a large number of Martech vendors who will tell you that you can add a few tags to your site and these processes will happen automatically. This is not true – it is a complex task to create the links, permissions and insights to drive this new type of brand conversation.

But the rewards for getting this right are high. Some luxury brands are showing the way and are already advanced in this process – Burberry, L’Oreal and De Beers are using social media, mobile and even blockchain technology to safeguard their connections with consumers into the future.

The need to change is not in question, indeed there is a real risk that if your brand fails to create these connections a new insurgent will do so instead.

The question is: which brands will thrive in this new world, and which ones will fade?

Richard Wheaton is managing director at Fifty-five London

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