The luxury market is no longer content with selling exceptional products, but seeks above all to offer an ultra-personalized customer experience, in order to meet an ever more informed and demanding clientele.
To strengthen customer loyalty, the luxury retail sector must carefully navigate the collection and use of customer data. In this article, discover the challenges encountered, in particular on international data protection regulations, and the innovative solutions that allow luxury brands to transform data into enriching and privacy-friendly customer experiences. Happy reading!
Presentation of the luxury market and its specificities
Strong growth on a global scale
The luxury industry sold 1,500 billion euros in 2023, representing a growth of between 8 and 10% compared to 2022. A new record beaten that once again demonstrates its resilience in an ever more difficult context. Regarding the luxury goods segment, which includes fashion, leather goods, jewelry, watches and beauty, the market grew by only 4%. Slow but sustainable growth, which could last until 2030 with a sustained growth rate of 5 to 7% per year, according to experts at Bain & Company. Chinese buyers have a lot to do with it! In 2021 and 2022, they represented between 17% and 21% of the global luxury personal goods market. A rate that should reach 40% by 2030, again according to the firm. From a geographical point of view, each region is progressing. Except for the Americas, which fell by 8%, despite occupying the first place in the global luxury market with Europe. This significant drop is explained by macroeconomic uncertainties and declining aspirational consumers. However, a recovery on the North American market is expected from the second half of 2024, according to Federica Levato, author of the study. Southern regions and minority consumer spending are contributing to this new trend. Asia, for its part, is experiencing strong growth, led by Japan, with a 17% increase. China is experiencing a 9% increase in sales, less than expected. South Korea is in decline while South-East Asia is recording very strong local demand, especially in some countries such as Thailand. Finally, the luxury goods market in Europe grew by 7%. A timid increase but which nevertheless exceeded the values of 2019, thanks to tourist purchases and an increase in the average ticket.
The importance of customer experience in the luxury sector
Offering quality luxury products is not enough to satisfy your increasingly demanding customers. Today, consumers are in high demand and have the feeling that they have already experienced everything. It is therefore essential for brands to differentiate themselves, to maintain novelty in order to create a unique and memorable link with customers. With an optimized customer experience, you:
- Promote loyalty and trust
- Increase brand awareness
- Build customer loyalty so that they can later become ambassadors
A good customer experience is characterized by ease of access, comfort, consistency, and hospitality. So we find an approach customer-centric where people are at the heart of concerns. As a result, extreme personalization tends to become the strategy par excellence for offering a unique experience of its kind.
The importance of hyperpersonalization and data collection
Hyperpersonalization for a high-end customer experience
Hyperpersonalization is a marketing strategy that involves tailoring offers, messages, and experiences to consumers based on their individual preferences, behaviors, and data. Therefore, brands can create exclusive and unique offers, in order to reinforce the feeling of exclusivity and prestige. A powerful strategy, because 91% of consumers are more likely to buy from brands that offer them personalized offers and recommendations, according to a study by Accenture. A thorough study of your customers is essential to personalize the experience in the best possible way. That's where customer data comes in! By collecting the most relevant information, you are in a position to offer a five-star service.
Collection and use of customer data
For a better understanding of your customers, it is essential to develop your knowledge on:
- Demographics (age, gender, geographic location, income, profession, etc.)
- Online behaviors
- Brand interactions
- Personal preferences
- Transactional data (payment method, purchase frequency, average basket, etc.)
- Shopping history and habits
Once this data is collected, you are in a position to more easily identify the customer in store and thus offer them a service that meets their needs. This can be in the form of a privilege such as access to:
- VIP squares
- Shopper Assistant
- Other exclusive accesses
As a result, your customers immediately experience a sense of exclusivity and privilege, enriched by exceptional customer service.
Challenges of collecting and using high-end customer data in stores
In general, collecting and using sensitive data is no easy task. Between confidentiality and customer consent, collection can be tedious to set up. This is all the more true in the luxury sector where discretion and high standards are the order of the day.
Optimizing clienteling
Above all, your customers are looking for a unique experience where a close relationship is established with sales consultants. That's the whole point of clienteling! This strategy consists in actively retaining the consumer by maintaining continuous contact with them. Hence the importance of creating a customer account! It will keep all the key information about your customers, including:
- Personal information (name, email, telephone, address);
- Their preferences (product categories and preferred brands, clothing sizes or measurements);
- Purchase history (including date and place of purchase)
- The loyalty program (Program status and accumulated points)
- The preferred method of payment
- Personalized services (appointment with a fashion designer, etc.)
- Information and delivery method (A third party can receive the products)
Using previously collected data, salespeople can greet customers by name and learn about product preferences. All while offering personalized recommendations based on their specific needs. Be aware that creating a customer account is particularly essential for expensive purchases. By maintaining their purchase history, you make it easy to track orders, exchanges, or refunds, and can also help keep a record of their own collection. An interesting asset to guarantee a relationship of trust with your customer Be careful not to collect data in too much detail. Collect only relevant data!
Operational management of in-store data capture
However, creating a customer client file presents difficulties in its implementation. Indeed, the time required to enter customer information can impact the in-store experience. As is the difficulty of exchanging with a mostly international clientele. Hence the importance of being multilingual! Staff should also be trained in the collection and use of customer data. Each country has its regulations in terms of legal notices, consent, and compliance. Any violation can result in financial penalties and damage to the company's reputation. This training not only ensures compliance with applicable laws and regulations, but also the protection of customer privacy. By understanding the specific requirements of each jurisdiction, staff can better adapt to compliant practices that promote trust and transparency in your interactions with customers. Be aware that the more sensitive the data, the more stringent policies and procedures are needed to manage it, which requires a significant investment in resources and training.
Confidentiality of sensitive data
One of the specificities of a luxury clientele is the need for discretion. They often expect a high level of privacy because of their status (VIP/Famous) or the expensive nature of their purchases. If their personal information is compromised, then they run into privacy risks such as phishing or identity theft attempts. As a result, this type of customer may be reluctant to give their personal information directly at the checkout.
In-store tax and duty free management
Some retailers, especially luxury brands, practice tax exemption, allowing customers residing outside the European Union to benefit from an exemption from VAT on their purchases. To be eligible, the traveller must be:
- Aged 16 or older
- Passing through France for less than 6 months
- Habitually resident in a state that is not a member of the European Union or a third country
The purchase must be retail, tourist and non-commercial merchandise. The amount of purchases including VAT must be greater than €100 and must have been made in the same store, on the same day. To obtain this exemption, there are two options:
- Or the seller grants tax refund directly at the time of purchase, the sale being then carried out without tax (HT)
- Either the sale is made including VAT, then the VAT is returned when leaving the European Union. In this case, the merchant must provide an export sales slip containing a bar code, which must be validated at the time of departure.
But first and foremost, the merchant must ensure that the customer is eligible. To do so, it must gather delicate information such as the customer's address, age, and passport number. This sensitive data is often communicated reluctantly out loud, due to its confidential nature.
Solutions to meet these challenges in luxury retail
Customer base extension for better identification in store
You probably already have a customer registration tool in your luxury stores and you still want to optimize data collection. Customer base extensions significantly improve the customer experience and optimize sales operations. The Wallet Crew extension integrates with existing CRM tools:
The Wallet Crew registration forms are designed to provide a smooth and personalized experience to manage multiple scenarios such as enrollment, identification, enrichment, and consent management. The icing on the cake is that the registration forms are multilingual and adapted to each customer, especially for those who want to obtain VAT exemption on their in-store purchase. The form provided will gather all the information that is essential to verifying tax-free eligibility, including the customer's passport number. With simple and intuitive information filling, your sales consultants save time in taking care of customers. No more filling out long forms on paper! Customers can access their registration form simply by scanning a unique and secure QR code on their own mobile device. Perfect for preventing unauthorized access and protecting the confidentiality of customers' personal data. 📌 Note: The Wallet Crew does not require the addition of a new application for sellers, but integrates easily as an extension to existing clienteling applications. Therefore, the data collected through the registration forms can be immediately integrated into the store's customer relationship management (CRM) system, facilitating real-time updating of customer profiles. The risk of manual entry errors decreases dramatically, which ensures more accurate and reliable data collection. As a result, retailers that use The Wallet Crew to delegate customer support have significantly improved the quality of their data with a 20 to 40% increase in usable data. Just like the fact that retailers embed up to 98% of their customers via QR code. Enough to get a serious competitive advantage! 💡 Tip: Do you want to register a customer but they are in a hurry? Instead, send a The Wallet Crew link via Whatsapp, inviting them to create their account later. It's also a great way to develop social selling in stores!
Strengthening data protection and consent
The implementation of customer base extensions such as The Wallet Crew offers serious advantages in terms of personal data protection. These systems are often designed to incorporate the latest legal requirements, thereby reducing the risk of non-compliance and potential penalties. They also allow for effective management of customer consents, ensuring that data is only used for purposes explicitly approved by the customer. This builds customer trust and ensures compliance with privacy laws.
Conclusion
To stand out in the highly competitive luxury sector, it is crucial to offer exceptional customer experiences. Hyperpersonalization must be at the heart of your strategy, by putting people at the heart of interactions. It requires a thorough collection of various types of data to offer services and products adapted to each individual. However, data collection should be done in a way that does not compromise customer privacy and comfort. To do this, customer base extensions integrate with existing CRM tools in order to facilitate and secure the registration of information via multilingual forms, accessible by QR code or unique code. As a result, data protection and customer consent are strengthened. An undeniable asset to improve the customer experience and maintain your competitiveness on the global luxury market!
.png)
.png)