Understanding and attracting luxury consumers thanks to digital technology

by | 23 Mar, 2021 | CUSTOMER EXPERIENCE

Acquiring new customers is an essential – if not inescapable – step for brands, including in the luxury goods industry. Everyone has to be profitable, and that can only start by attracting customers on the brand’s different channels in order to generate sales. Nowadays, consumer behaviors are changing in the luxury sector. In other words, high-end brands would do well to revamp their strategies designed to acquire affluent consumers and enrich their customer base.

La carte cadeau en ligne fait, bel et bien, partie des nouveautés à prendre en compte aujourd’hui. Elle est déjà largement adoptée par les plus grandes marques et enseignes aux Etats-Unis comme Walmart ou encore Starbucks.  Les consommateurs américains sont d’ailleurs totalement conquis et les cartes cadeaux dématérialisées sont ancrées dans leur habitude.

Where are luxury consumers these days? They are all connected, browsing the internet. The figures speak for themselves: 78% of luxury consumers research items online beforehand, and online purchases now represents 10% of all luxury sales. * Despite some reluctance, luxury brands have started to go digital. Some have even been able to take full advantage of the web like Burberry which now devotes 60% of its marketing budget to digital.

What customer acquisition strategies work for luxury consumers?

* Bain & Company “luxury goods worldwide market study, Fall–Winter 2018”

Luxury consumers don’t have the same expectations

Online, customer acquisition is a different kettle of fish. Internet users are fickle, and with just a few clicks, they can easily go on your competitor’s website. To put it simply, acquiring new customers has become the crux of the matter.

Relying on products to stand out has become very difficult since the competition can quickly copy them. Brand differentiation is not that obvious and requires a lot of work and efforts to be effective. That is why many consumer brands frequently trim their margins to hold special promotions on products at basic prices. This strategy has proven successful time and time again but cannot really apply to luxury brands because it goes against the very principles of luxury: brand values, emotion, excellence, … Aside from that, the fundamental issue that arise is the following: what are the expectations of affluent customers?

Are they looking for good deals? Is price a key factor in their buying decision? The answer is quite simple: no.

When they visit a high-end store, they want to be pampered and take their time, not find the best possible prices. Their expectations are the same when they shop on a luxury brand’s website. They base their purchasing decision on customer experience and brand imageThey are hedonists who want a unique relationship driven by emotion.

There is a tool, already used by some brands, who enable brands to attract consumers on their website without compromising luxury codes: digital gift cards. They are instantly created and customized, and enhance the customer experience while promoting the values of high-end brands. A luxury brand can very well offer a free digital gift card on their website with a limited amount in order to encourage shopping for pleasure. In the eyes of consumers, a gift card is first and foremost a gift, with all the positive connotations that come with it. When luxury consumers receive an e-gift card from a high-end brand, they perceive it as a thoughtful present which creates a unique bond between them and the brand. Moreover, digital gift cards have the advantage of encouraging impulse purchases.

Exclusivity, the digital strategy favored by luxury brands

Luxury brands use another strategy to attract customers: exclusivity. Brands regularly offer exclusive collections on their websites, often available for a limited period of time. Affluent consumers are particularly receptive to this kind of event which often trigger impulse purchases.

Dior perfectly illustrates this customer acquisition strategy, in 2016 they worked with Bergdorf Goodman, a New-York luxury department store. They offered on the latter’s website a limited and exclusive shoe collection which met a huge success. How come this strategy works so well? The temporary and exclusive nature of the products immediately makes them rare, which happens to be one of the cornerstones of luxury goods. Online limited editions lead affluent customers to whip out their wallet for online purchases. The notion of temporality ignites the desire for luxury consumers to possess the said products, that way, the purchase itself becomes a special experience.

In line with the idea of products limited in time, luxury brands can consider offering digital gift cards with a preset amount and validity period. They become an invitation for consumers to make their “dream” come true by buying on the brand’s website, or as an invitation to come discover the new exclusive collections in their stores.

Affluent customers want it omnichannel

But the strategy that is probably most used by luxury brands is customer acquisition via digital tools to encourage in-store visits. It is very relevant considering, as we have said, that 78% of luxury consumers do online research before buying luxury items.

In short, high-end brands mostly base their strategies on ROPO (research online, purchase offline). Via their website, social media, blogs and other third-party websites, they create online content in order to show affluent customers that they have what they are looking for. Then, they use specific tools to lead them straight to their physical shops where they will live the outstanding experience the brand carefully designed and perfected.

Among these tools, there are services that allow you to save a product to try it in store (e-reservation) or the famous click and collect. But another equally effective tool can be used: digital gift cards. Once they have spotted interested affluent consumers doing some online research, luxury brands can decide to send a customized digital gift card spendable in physical stores for a limited time. The card will be seen as a welcome gift, a personal invitation from the brand to discover its world.

Acquiring new consumers is the first step for a successful business. This applies to all brands, the luxury goods market included. However, some things have changed for luxury brands: their affluent customers are now online. This could shake things up and provide new opportunities regarding customer acquisition on digital devices. But careful not to use the same strategies as customer brands because luxury consumers have completely different expectations. Exclusivity, customization, emotions, uniqueness are the hallmarks of luxury. And digital gift cards are part of the new key tools for customer acquisition, they perfectly meet affluent consumers’ expectations.

Suggestions for further reading

Luxury: 7 tips to draw Millennials in

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