We are in an era where technology is enhancing, disrupting and integrating into the world of luxury, yet so many misconceptions exist regarding the entwined worlds of luxury and loyalty. Here is where we dispel the myths.
1. Luxury customers are silver haired and digitally backwards
The average age of customers for luxury brands is surprising in that the customer who is most able to make repeated luxury purchases has no children, is aged between 25 and 45 and is from either Asia or the Middle East. I think luxury brands often have decision makers in the marketing team who are nervous of change and of using new technology and scaring off the older generation. However, the older generation still uses apps and love loyalty schemes. It’s important to not let your view of your audience stay in the past and be careful not to make too many assumptions about your audience, thinking that all luxury consumers are old or western.
2. Luxury customers don’t want a loyalty scheme
A study by Bond revealed loyal customers spend 67% more than new ones. It costs five times more to attract a new customer than it does to retain an existing one, and in luxury cost per acquisition is supremely high. So why then do so many luxury brands not invest in a loyalty scheme? Burberry, Ralph Lauren and many others do not have a scheme in place. Luxury customers do repurchase, gift and return time after time. Meanwhile, non-luxury e-commerce loyalty is thriving. Asos A-List, for example, is a points-based tier scheme. Not having strong loyalty schemes in place can result in missing out on millions of pounds of revenue.
3. Loyalty schemes are about ‘points mean prizes’
A loyalty scheme doesn’t have to be points-based either, especially in luxury. A great example of loyalty and elevated customer experience cross-channel, and particularly in mobile, is from John Lewis. The John Lewis app has features such as e-receipts, loyalty cards and many other great shopping tools. Not surprisingly, it is its highest converting sales channel. Its most loyal customers love the app. Meanwhile, retailers such as Walmart offer in-store context so when it detects you are on wifi in-store it gives you wish lists and helps with wayfinding rather than selling to you like you are on a sofa. Smart solutions, experiences and empathy are more powerful than asking your customers to convert points into value in their head. Which brings us on to experience.
