Why luxury brands need to rethink their contact strategy for new customers

Paolo Pedersoli, 03/04/2013

After the 2009 crisis that affected the whole industry, Luxury companies started to feel the need to interact with current and potential customers, in order to increase the effectiveness of their marketing actions.
Consequently the main players invested in gathering information about their customers when shopping at boutiques and they implemented processes and IT infrastructures to monitor clients behaviors, tracking purchasing transactions.
After almost five years of CRM programs history, the bad surprise for Luxury Companies marketing managers was to discover that loyalty was a narrow scope phenomenon within their customer base; analyzing purchasing frequency indeed, the number of customers accessing luxury brand products one shot in their life represents the vast majority and it can vary from 80 to 95% of the whole customer base.

The good news is that the decay percentage dramatically slows down on the following purchasing acts, i.e. it is easier to incentivize a third buy, a fourth buy and so on.
Therefore the priority is to act on new customers with dedicated contents, media and tools in order to maximize the probability to convert them into repeaters in an adequate time span. In this perspective, analytics can provide with crucial insights about the next best product to promote into a personalized communication or to prioritize the most interesting new customers according to return propensity models.
One thing is for sure: growth of luxury brands is not only linked to the acquisition of new customers but to the capability to convert them into new loyal customers whose lifecycle can go far beyond a single shopping act.

 

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Paolo Pedersoli

Manager

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