BABY, IT’S YOU
The Pareto Principle is nothing new – people incorporate the “80/20 rule” in all kinds of ways, both professionally and personally. Look closer, though, and there are deeper levels of insight to be gained. A hyper-focus on your brand’s true-blue disciples not only validates their love, it also skyrockets your bottom line. Like a match made in heaven.
As we have discussed in previous articles, 80% of a retailer’s gross sales come from their top 20% of customers. Companies that take the time to analyze that data further find a truly staggering bit of intel: less than 1% of customers are driving between 70 and 90% of overall revenue.
How are you leveraging the most priceless tool, the one your brand has already spent years developing, your dyed-in-the-wool devotees?
I ONLY HAVE EYES FOR YOU
Sales of luxury goods have grown nearly three times faster online than in brick-and-mortar stores, even prior to the pandemic. Strengthened by brands’ efforts to deliver cross-platform shopping experiences, the luxury sector is seeing nearly 60% of sales originate from e-commerce.
The average age of consumers of high-end goods is trending younger, as well, with Gen Y and Zers accounting for nearly half of luxury buying in 2018. Don’t just market to them, show them their devotion matters. Reward their loyalty.
Loyalty programs are rarely associated with luxury brands, but 86% of affluent customers are active in at least one such program and redeem rewards at a higher rate than other income brackets.
LOVE ENDURES
Understanding the importance of offering shoppers experiences versus simply savings is key to the exponential growth of LTVs. Barneys New York introduced a loyalty program catering to their customers’ desire for special treatment. From exclusive engagements to complimentary salon services, the luxury icon is capitalizing on the limitless affections of their top-tier.
Loyalty partnerships are another untapped well of potential growth opportunity. Credit card companies have enticed customers with airline miles for decades, but this concept has evolved by focusing on emotional loyalty, as well. Marriott Hotels, for example, understands the importance of delivering unforgettable experiences. Partnering the with U.S. Open to offer VIP access to championship events means they don’t just raise occupancy rates, they become a part of their guest’s fondest memories.
Identifying your top 20% customers is only the beginning…
