The Luxury Data Gap – Overcoming Privacy and Anonymity in Luxury eCommerce
Sep 4, 2019
Luxury has its own subtleties and challenges when it comes to data, personalisation, and customer experience expectations.
- Data challenges
- Data sharing
- Anonymity in luxury
- Brand reputation
- Closing the data gap
- In-store data
- Exclusive offers
- Going mobile
The luxury experience is fundamentally rooted in personal, elevated relationships between consumers, brands, and products. In this sector, knowing your clientele and understanding each individual’s preferences is key in delivering the tailored, polished experiences these customers expect.
Data and analytics fuel these experiences across all retail verticals, online and in-store. The more data brands have regarding location, preferences, interests, and spending behaviours, the more personalised the experience can be.
Plus, the more data brands have to contact the same customers via various channels – email, push notifications, social media, chatbots, messaging apps, direct mail – the easier it is to connect with a target audience.
However, these experiences require customers to share some level of data. In the current climate of GDPR, data breaches, and cyber-crime, consumers are often only willing to share very limited amounts of data, if any.
Particularly in the luxury industry, where consumers often enjoy levels of anonymity, discretion and exclusivity, the data gap can be a concern for brands looking to embrace niche targeting and personalisation.
Thanks to the proliferation of data, plus the evolution of AI-driven retail tools, CRM systems and programmatic marketing platforms, brands are now able to segregate and target specific audiences, and tailor personalised experiences both online and in-store.
Using geo-specific and lifestyle data, such as visits to luxury stores, hotels, spa treatments, even connected devices, brands can qualify audiences and deliver highly-targeted campaigns. A new open banking model could also open new financial data regarding spending patterns, which would appeal to luxury brands in terms of qualifying high-value prospects.
The luxury sector has subtleties of its own to consider, too. It’s not uncommon for high-end luxury customers to purchase anonymously, through unconventional payment methods, third parties and even offshore accounts, which essentially leave a black hole when it comes to data.
Barely a week passes without a story about the latest cyber-attack, a large international business suffering a major data breach, or a company being accused of mishandling or abusing data. Whilst the frequency of these issues means their impact on reputations is less than it might’ve been a few years ago, luxury brands are reliant upon brand perception.
Closing the data gap
Luxury brands were initially uncomfortable with the idea of eCommerce, believing it cheapened the shopping experience and removed a layer of personal, authentic service that the luxury industry was founded upon.
But times are changing, and brands must accommodate younger generations, who have greater spending power than ever. Only recently has luxury embraced social media, digital marketing, and online shopping experiences, meaning many brands do not own the stack of data that long-established eCommerce merchants do.
As with many other advancements including social media, new technologies, fulfilment options, and payment methods, it’s often worth looking to retail trends in China to see what the future may hold. Here, less-stringent data regulations have allowed retail innovations to flourish, even in luxury.
What’s clear is that as luxury struts into eCommerce, those brands who can leverage data and use it effectively are expected to triumph. For those who feel it’s too intrusive, or too cheap for luxury brands, and see it as sacrificing a premium experience to collect data, this has the potential to undermine growth and see them fall behind competitors.
Drive data in-store
Physical retail is struggling across many sectors, but luxury still has a strong offering in terms of the in-store experience. Luxury customers want to touch and try products before buying, plus they enjoy the personal, intimate customer service that elevates the buying experience above an ordinary retailer.
The ability to access a customer’s personal data in-store enables staff to deliver a comprehensive, personalised customer experience. Data such as size, budget, previous purchases and preferences can allow customised recommendations and offers, accessed via endless aisle technology. Pre-determined payment and delivery information can facilitate frictionless transactions, which is expected by luxury customers.
The benefits are obvious, but brands need to be more transparent about how they use and store data, and the benefits should be clearly demonstrated.
Staff can be incentivised, not just on sales, but also on data collection. Brands who truly prioritise data understand that this can be as valuable in the long term, by breeding brand loyalty as well as sales via targeted campaigns.
We know that Amazon has had a colossal impact across all retail sectors in terms of fulfilment, customer reviews, convenience, and price. And Amazon Prime has been a trailblazer in terms of developing a membership offering with clear, exclusive benefits for its members. Many of these can be applied to engage the luxury consumer.
It’s the perfect time. Memberships are en vogue from Amazon to Netflix. We’re even members of shaving clubs and meal-kit subscriptions. Offering exclusives and incentives as part of a membership can be an excellent way to promote loyalty in return for data. La Prairie, for instance, offered a free in-store treatment for subscribing to its email.
Think same- or next-day shipping, first-to-know exclusives, new product trials, limited editions, and members-only events. It’s this kind of exclusivity that luxury clientele crave, and could be willing to offer their data as a trade.
Apps are an excellent way of delivering a personalised digital user experience, in exchange for a small amount of personal data.
For example, Farfetch’s mobile app has integrated visual search to help shoppers find specific products via their smart phones. Users take their own photos or can link to Instagram or Pinterest posts, and the app curates a selection of recommended products or outfits to match the photos.
Visual search is still in its infancy, but could is an example of a differentiator for early movers. For tech-savvy luxury consumers, the benefits of the app make downloading and registering a small price to pay.
Similarly to mobile apps, connected technology – smart devices, wearable technology, connected vehicles – are increasingly being used by luxury customers. These items rely on data for full functionality, from email and phone numbers, to e-wallets and financial data, to geo-location, preferences and interests. Without this data, users do not experience the full potential that these products can provide.
Luxury brands could partner with manufacturers in these areas, and develop apps, experiences, products, and events to glean their slice of data, as well as tapping into potentially new audiences. Louis Vuitton partnered with BMW previously, as have Barbour and Land Rover. Luxury brand Hermès crossed into wearable tech, developing a range of straps for the Apple Watch, whilst Luxottica and its leading eyewear brands Ray Ban and Oakley formed a partnership with Google Glass.
The goal of advertising is to deliver the right message to the right person at the right time. If a data vacuum is going to make it difficult to personalize campaigns, then finding the right person at the right time might be difficult. It then becomes about finding the perfect message to form a connection. A message that resonates with a target luxury persona.
Luxury brands often lead the way with creativity, curating compelling stories and experiences that resonate with their niche audiences. These brands have the budgets to partner with top musicians, directors, artists, designers, architects, and leading brands from other sectors, meaning the experiences, products, and campaigns they create should continue to push the boundaries, and captivate audiences.
If brands continue to create experiences and products that luxury consumers are compelled to want to be the first to own, the trade of personal data is a small price to pay.