LUXURY INSIDERS NAME THE THREE RULES FOR BRAND LOYALTY
Luxury brands are not necessarily the first category that leaps to mind when we think of loyalty or rewards programs. In a fascinating article from Vogue Business, it is clear that while loyalty programs appeal to nearly all shoppers, the gold mine lies in affluent shoppers and the luxury devotees.
Another common mistake retailers make is seeking out new clientele versus fostering the magical bonds they have already created. We call this 80/20 in Full Effect – the art and science of digging deeper and creating lasting relationships with your most ardent fans.
Ludwig Voll of EY Parthenon put it perfectly:
“In luxury, it’s about creating intimacy with customers and building brand ambassadors. You don’t get there by pushing promotions.”
Immersive Commerce FTW
Reward redemptions are only one reason shoppers join loyalty programs. As humans, we all seek a sense of belonging, and brands have long been a part of our personal stories. The bonds you work to create with your customers will pay dividends.
Establishing positive emotional connections with customers means a 27% increase in their spend with your brand.
Luxury brands, in particular, rely upon these emotional connections with their followers. Those followers, in return, feel genuine joy and membership through both their purchases as well as their perceived relationship with their favorite brands.
Luxury & Lifestyle
Italian luxury fashion retailer, LuisaViaRoma (LVR), introduced a loyalty program in 2017. The tiered rewards cost the brand nearly $1M€ in the first two years, but netted a $16M€ increase in revenue. Other KPIs were impacted, as well. Eight months’ into the launch, LVR’s customer retention rate jumped 59%, and they saw a complete reversal in customer loss trends.
This particular system is not limited to the luxury fashion market. Bear this staggering stat in mind as you consider your brand’s path forward:
37% of customers are willing to pay a fee for an enhanced tier of membership in loyalty programs
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As you focus your attention further and further in on your top 20% customers, that narrowing allows for incredible innovation. Gone are the days of sending thousands of coupons to a printer – your brand can hand-select those tiers of shoppers you would like to invite to truly exclusive experiences.
95% of members want to engage with their program through emerging technology
Immersive clienteling, phygital shopping experiences, as well as access to invitation-only product launches are just the beginning. You and your best customers are about to make some memories together.
