By Richard Wheaton, MD of data company 55.
Spending a month’s salary on a truly beautiful, high ticket item is a big decision that every customer wants to get right. In recent years the initial ‘window shopping’ phase started with browsing websites for many shoppers, including making searches on Google and sharing views on social media. But in the times of the Coronavirus and the near worldwide lockdown, the online realm has become the only shop in any way for nearly all of us.
As even the most reluctant online shopper has started spending money on higher ticket items online for the first time in 2020, it is vital for luxury retailers to understand the digital journey and how to convert customers.
A new world for timeless brands
Luxury as a sector has been more traditional and resistant to digital transformation than some, and for obvious reasons. Even with the success of Farfetch and MatchesFashion, which have demonstrated the scale of the opportunity for high-end online fashion retail, many luxury brands perceive the internet as guilty of promoting only a ‘price-driven’ agenda. With an unashamedly product-focused approach, their marketing often relied on glossy adverts in traditional media and the expectation that prospective buyers will come in store physically to see the products before making a purchase.
That is now changing. With people spending more of their lives in the digital realm, luxury brands may be shocked to discover the new realities – that consumers will not put them on their consideration list if they do not have resonance and profile in the digital world of YouTube, Instagram and Twitter.
Following the data signals
Digital marketing offers new and exciting ways of understanding your customer’s intentions. With people spending more of their lives in the digital realm, there are new ways for luxury brands to understand the triggers of behaviour that indicate a potential buyer is in the market and then act on it.
For those planning to buy a high ticket item like an engagement ring, a clear pattern of buying signals can be detected, translated and acted upon. Through a user’s website behaviour, searches on Google and views expressed on social media, a clear trail and likely pattern of their pathway to purchase can be calculated, based on the previous data of other similar customers.
However, what is different in the post Cambridge Analytica world is this needn’t be based on creepy access to private data. Actions can simply be anticipated based on matching your digital journey against thousands of previous customers’ behaviour, all entirely anonymised.
A different picture in 2020
Two key factors arising in 2020 have meant luxury brands have really needed to put rocket fuel in their digital transformation. Firstly the impact of coronavirus has had a damaging impact on luxury as a sector. Bain and Company predicts that the global personal luxury goods market is set to contract between 20 and 35% in 2020. Secondly new privacy regulations have meant a radical new approach is what is needed for a market that hasn’t always been the quickest at embracing change.
On top of 2018’s implementation of Europe’s GDPR and California’s CPA imposing new laws for privacy compliance, in 2020 we have seen Apple extend its ITP safeguards to block the use of 3rd party cookies on their devices. Google is committed to following this, with similar blocks for its Chrome browser by early 2022. The upshot of these changes is that brands of all kinds now need to focus on developing their capabilities for using 1st-party data to obtain insights and activate their marketing campaigns, and that they will be more dependent on the targeting products of Google, Facebook, Amazon and Apple rather than buying 3rd-party data.
A wealth of first party data
The good news for luxury brands is that your customers make purchases over a longer period of time, typically making 4 or 5 visits before making a final choice. From these touchpoints you can generate a wealth of permission-based 1st-party rich data that provides everything you need to build predictive models – such as when a customer is in the market for a product and at what stage of the buying cycle. Using existing transaction and browsing data, luxury brands can create detailed audience profiles and personas and find smart ways to help your customers buy products, accessories, and follow-up purchases.
Brands that work to unlock the value of existing customer data will succeed. It is a complex process grasp the opportunity to build a trusting relationship with customers in the online world. Some luxury brands are really showing the way and are already advanced in this process – Burberry, FarFetch and De Beers are using social media, mobile and even blockchain technology to safeguard their connections with consumers into the future.
Prioritising speed in the mobile-first world
The overarching mindset that luxury brands need to nurture is a forensic focus on customer experience in the digital realm. Customer service is second-nature to luxury retailers in the traditional in-store environment… Now this painstaking eye for detail needs to be applied to online marketing, and even to the smallest of screens – mobile.
mCommerce is core to the modern shopping experience, and is growing at a phenomenal pace – according to an Emarketer report, it is set to double from 2019 to 2023, ultimately accounting for three quarters of total e-commerce sales. And in this mobile-first realm, speed is a critical factor in closing the deal. Far from wanting luxury brands to present sumptuous browsing experiences that convey the quality and artistic values of the brand, our recent study, commissioned by Google, and titled “Milliseconds Make Millions”, found that an improvement of just 0.1 seconds in the page-loading speed in four key areas of site performance increased the proportion of users moving from product detail to add to basket by 40%. This demonstrates the need to focus on the customer’s needs – the most beautiful experience online will mean nothing if customers are too frustrated by load times to wait to see it.
So to succeed luxury brands need to embrace a modern digital approach. The ongoing global Covid-19 pandemic has accelerated trends that were already evident, and there is no better time to embrace true digital transformation. This doesn’t mean sacrificing brand values. It really means a focus on a great customer experience in a new realm, working with the right experts to unlock the value of existing data and the wide range of ever-evolving digital tools.