The luxury market has always relied on personalized experiences, and delivering personalization online will be the key to continued growth. Brands are recognizing that as Millennials begin to move into their prime earning years, they will become the customers who will contribute to the majority of sales. In fact, Millennials are predicted to account for over half of the luxury market by 2024. Thanks to younger shoppers, online sales in the sector are growing at a rate nearly three times faster than physical store sales, and brands are starting to pay closer attention to data.
Bridging The Gap Between Online And Personal Experience
The appeal of luxury brands has always been status and personalization. Shopping at a high-end retailer or jeweler almost always means one-on-one experiences with staff and items pulled specifically for the individual customer.
However, Millennials are used to interacting with brands online and shopping online – they don’t necessarily remember a world without social media or Amazon. And though their spending capacity is increasing, their desire to interact with brands online has not waned. Now, thanks to data, brands can recreate an online version of the in-store experience, delivering personalization for its customers.
Many luxury brands are dipping their toes into data-driven marketing. Waldorf Astoria Hotels and Resorts recently launched an online campaign they called “Live Unforgettable.” The campaign was designed to reach customers online, but bridge the gap to the in-person experience. It centered around 15-second videos that showcased a concierge catering to offbeat guest requests. The campaign highlights the unique intersection where luxury brands are currently living – the world is becoming increasingly digital, but luxury hotels provide personalized attention to their guests.
Cultivating Profitable Clientele
Versace, one of the most well-known luxury brands has experienced significant growth by leveraging customer data. People who were shopping for entry-level Versace items like wallets and sunglasses made up a large proportion of the business, but those shoppers were uniquely different from those who were purchasing bigger ticket items.
Versace analyzed and segmented its customers, identifying the most valuable shoppers and developed a model for their ideal prospective customers. The brand began scoring customers in real-time based on purchases to help refine that model. The resulting campaign tailored to their most profitable shoppers and prospects yielded a 35 percent increase in online sales, a 300 percent increase in average order size, increased foot traffic and incremental marketing ROI of 400 percent.
The luxury market is primed for personalization. By leveraging customer data, brands can bridge the gap between online and in-store experiences, tailor experiences to individuals and lift sales.