How Analytics, Marketing Automation, Artificial Intelligence and are Transforming the Luxury Retail Segment

Hong Kong. China - December 8, 2016: Street scene with double decker bus and a Dolce Gabbana store in central district of the Victoria island on Hong Kong

The retail industry depends and thrives on relationships. Especially in the luxury segment, spending significant funds necessitates a process that is tailored to your needs and builds on past interactions. That’s why increasingly, as customer experience moves closer to the central selling point, data, analytics, marketing automation, and artificial intelligence are driving luxury retail sales across the world.

The Need for and Advantages of Customer Experience

Any great service-oriented business knows about the importance of a great customer experience. If a customer walks into your store, they expect to be treated the right way. As it turns out, the same expectations exist long before and after that in-store encounter.

Current and potential customers expect to be understood. They may not tell you everything about themselves, but they expect you to understand their needs nonetheless. If you can effectively follow their customer journey, and respectfully insert yourself into the conversation as they’re ready to buy, you’ll get loyal customers who maximize your long-term revenue.

That statement is especially true in luxury retail. As McKinsey points out,

The most successful luxury brands will be those that build a compelling mobile presence, engage and influence consumers through targeted use of social media, and focus on a carefully chosen set of digital-performance metrics. 

To get to that point, you have to gather extensive data about each individual customer. But perhaps even more important is how you use that data in order to effectively reach, convince, and convert your audience that your luxury brand is the right choice for them.

Behavioral Segmentation to Increase Message Relevance

Any marketing customization has to begin with behavioral and  market segmentation. The age of simply sending blast messages to all of your current and potential customers are over. Instead, use the data you’ve gathered about your audience to send targeted, relevant messages.

As CMS Wire suggests, you can segment your audience according to a variety of factors. Past purchase behavior, audience demographics, customer loyalty, and digital behavior are all potential variables that could become the base of targeted marketing outreach.

For example, you may seek to introduce a new product line within your luxury brand. To increase a sense of scarcity, a crucial marketing tactic for this segment, you can roll it out specifically to your most loyal customers first, who will share it with their friends. Before the full roll-out, you will have suggested a sense of exclusivity and wonder about the product that a simple mass roll-out could not have achieved.

That type of segmentation, of course, is only possible with effective data gathering tools. You need to be able to categorize your audience into various, relatively homogeneous segments to make sure that each marketing message they receive is relevant to their needs. Through machine learning, for example, you can recognize patterns in your customer data that allows you to more accurately segment your audience.

Using Analytics to Determine the right KPI

For the luxury retail industry, determining (and reaching) relevant Key Performance Indicators (KPI) are especially important to measure and improve the success of your digital marketing. You cannot afford to spend a significant portion of your budget on the off-chance that a large banner ad or remarketing campaign will or will not succeed.

Instead, you need to make sure that you have the metrics in place to help you show your results. Through thoughtful analytics, that goal is increasingly achievable.

If the goal is to connect your KPI to actual buying behavior, you need to find exactly what surface-level metrics are common predictors of that action. For example, you may find that clicks to your website from a digital ad actually don’t correlate with regular purchases. In that case, focusing on alternative metrics (such as website conversions or in-store visits) make more sense.

KPIs can range from the number of page views per visit to the percentage of ad clicks that lead to store visits. Find the right metrics, then spend your time optimizing your marketing strategy for these metrics.

Building the Customer Journey From Your Audience’s Perspective

Above all, data and analytics have allowed luxury retail brands to build a more comprehensive view of the customer journey. As mentioned in the beginning, customer experience is a crucial component to the emotional decision that tends to come with buying a luxury brand. Understanding the journey your audience took to get there, from their perspective, can help you speak to their needs and maximize your success.

Customer experience is a complex process. It begins with a series of marketing touch points, but quickly morphs into a more personalized conversation as a potential customer moves from awareness to decision. The key to understand that journey is to put yourself into your audience’s position.

That, of course, is easier said than done. Put simply, sending an email blast will do little to convince a real estate developer about your luxury shoe brand. That’s why, as McKinsey points out, you need to make sure that each touch point speaks to your audience’s needs, and presents itself as a precursor of a personal and mutually-beneficial two-way relationship.

That goal, in turn, is impossible without an efficient means of gathering, analyzing, and applying data insights. Find ways to collect information directly from your consumer, and gather behavioral data to determine actionable pattern. Then, turn these insights into a more powerful, convincing, and successful message.

Tailoring the Message to Achieve Self-Actualization

The goal of any luxury brand is to help their audience achieve self-esteem, social acceptance, and self-actualization. Rather than fulfilling basic needs, audiences who shop luxury tend to want a product that goes above and beyond its competition in terms of quality and reputation. Even more, they tend to prioritize experiences and takeaways that are easily shareable on social media to tangible benefits of the actual product.

Tailoring your message to these needs is a crucial part of succeeding long term. You don’t want to be the faux-luxury brand that is really available anywhere. As mentioned above, exclusivity is and should be a vital part of your marketing message. Tailoring your message to each individual audience member is a perfect way to achieve that goal.

Think of the difference between parking your own car and getting valet service. The personal attention you receive immediately make you feel more valuable. With the right message, a luxury retail brand can have the same effect.

That degree of personalization, of course, is only possible if you can not just gather the data you need about your customers, but also find ways to apply it to your marketing messaging in real-time. That, at last, is where artificial intelligence enters the equation.

Using Artifical Experience to Custom-Build Experiences

When customers shop for luggage at BlueSmart, they will soon encounter a live-chat agent looking to make their experience as personable and pleasant as possible. That agent, as it turns out, is not actually a real person; it’s an AI ChatBot applying data insights into valuable advice in real time.

Real-time, personalized customer service, especially for international luxury brands, can be difficult 24 hours per day. Artificial intelligence, on the other hand, can ease that process.

Of course, artificial intelligence does not have to be that complicated. In fact, as a Forbes article from last year points out, 70% of US millennials would appreciate retail brands using more artificial intelligence in order to recommend more interesting products based on their personal preferences.

In short, the possibilities of the luxury retail segment using data, analytics, and AI are endless. Through the new technology, luxury brands in all niches can finally build a marketing strategy at scale that personalizes messages and experiences for each audience member.

The resulting improvement in customer journeys and messaging effectiveness has the chance to propel luxury brands who are leaders in these areas toward the front of the pack. It’s no longer difficult to imagine a future in which each potential luxury customer gets a 100% custom buyer’s experience, specifically built to help that customer convert.


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