Though considered a niche category by some, luxury goods - including high-end fashions, accessories, footwear, and beauty products - are a hot commodity. Findings in a recent study by Boston Consulting Group highlight that organic consumer growth will be the main driving catalyst in luxury category growth over the next several years. Emerging customer segments (for example, millennials) and increased spending among core luxury shoppers will help drive growth in existing markets and channels, far more so than any new sector expansion.
What's the moral of this story? Engaged and satisfied customers - both old and new - are going to be vital for growth among luxury brands and retailers.
"Engaged customers are going to be vital for growth among luxury brands and retailers." (CLICK TO TWEET)
In the era of the empowered customer - one who has access to information 24/7 - it is more critical than ever to engage in ongoing conversations. Understanding what is important to customers, how they want to be serviced, and how luxury brands fit into their lives can not only help brands and retailers make more strategic decisions, it can help foster a better connection between shopper and brand (with the intent that a strengthening relationship will move some moderate buyers into the top echelon of luxury consumers). It is simply not enough to solely market to them. They now expect a two-way conversation with the brands they buy from.
It is no longer a 'luxury' to engage with your customers - it's a market necessity for growth. Insight communities - built to connect luxury brands with their core customer groups - are an effective way to capture insights on an on-going basis. Below are 5 key examples of how an ongoing dialogue through an insight community can help answer key business questions as well as strengthen relationships with key customer groups.
- Reach young, affluent consumers
Millennial consumers are an important target audience for luxury brands. An industry once dominated by middle-aged affluent buyers is now seeing a strong cohort of younger shoppers holding off on buying homes and cars, and instead splurging on limited-edition sneakers or the latest collection by an emerging designer.
Younger consumers live and breathe in social networks; they are used to communicating with each other and the brands they prefer (be it through Facebook, Twitter, Instagram, etc.). It's almost an expectation that reaching this target will require frequent dialogue, but it's also a way to learn about the unique needs and preferences for this younger cohort.
Marketing to millennials will likely require a diversified strategy (founded in a better understanding of this group) in comparison to targeting an older demographic that historically has been the "go to" audience.
- Validate insights from your sales associates
Sales associates are an integral part of the luxury shopping experience. Though skilled in being a critical brand voice to the customer, the relationship is often one-sided (speaking to the customer about the brand, not hearing customer feedback or input), or limited in capacity (some dialog with active or preferred customers, yet missing out on the concerns of lapsed or infrequent customers). In some instances, customer information may also be filtered through associates if the information is damaging to associates or the store performance in general.
Broader, on-going dialogue in the form of a customer advisor community can help complement and/or validate the information captured by sales associates - while also providing customers a forum to express themselves to the brands without necessarily going through their sales associate.
- Understand how to enhance the omni-channel experience
An optimal in-store experience is fueled by a variety of elements, including talented sales associates, a welcoming ambience, and well-curated assortment. How can the in-boutique experience translate online or through a mobile experience? Does it have to be the same to ensure brand consistency? How should online and mobile be different from one another? Why does a customer choose in-store for one type of item, and online for another?
Research has shown that omni-channel customers are often the most valuable from a spending perspective. Understanding how to optimize all channels and encourage cross-channel use can help enhance brand loyalty and foster stronger spending among customers.
- Develop a strategy for optimizing global tourism
Acquiring high-end goods when traveling abroad is not a new phenomenon among luxury consumers. What is missing, however, is the 'why' behind this 'travel path to purchase'. Why do some Chinese customers prefer to buy handbags in Europe (even if readily available in their home country) yet are fine with purchasing shoes or belts at home? What is different about the in-store experience in Italy that makes it more appealing for American consumers (and in what capacity)? These questions may seem feasibly answered in a point-of-time study, but an on-going dialogue through an insight community can help reveal how the nuances may change over time.
- Balance exclusivity with ubiquity
The on-going battle between exclusivity and ubiquity is common struggle for luxury brands. Limited availability of product can help support brand exclusivity (in turn supporting a higher price tag), yet being too limited can impact the bottom line if there isn't enough sales volume to make it worthwhile.
On the other hand, some luxury brands have diluted some of their luster by being 'too available' to everyone everywhere. Where is the fine line? Are some accessories acceptable if more widely produced, while select handbags should be reserved for those few and far between? What are your customers saying? And does this conversation differ depending on where the customer lives (e.g. Asia versus America)? This should be an on-going dialogue.
These five examples only scratch the surface for the types of worthwhile conversation that luxury retailers and consumers should have. Many of the most successful luxury companies are already engaging their customers and giving them 'virtual seats' in their boardrooms. Why might your brand be waiting? Don't miss out on critical insights and the opportunity to strengthen relationships. Now, more than ever, is the time to contemplate opening your conference room to meet with your empowered luxury customers.