Luxury brand marketers who are considering loyalty programs are often concerned that they won’t align with the image or appeal of the brand. Traditional spend and get loyalty programs reward customers with discounts and couponing, which many luxury brands could argue “cheapens” their offering. However, the most effective luxury loyalty programs in market today go beyond discounting to provide value for members.
In addition, consumer expectations are changing from a luxury retail experience perspective. According to a recent Deloitte Fashion and Luxury Report, findings indicate:
- 39% of luxury consumers want accessibility to more shopping channels, for example home delivery
- 44% want to be rewarded with gifts in exchange for their loyalty
- 45% want more personalized services and goods
In order to meet customer expectations and drive loyalty, specific strategies should be in place for luxury brands. In this guide, we’ll highlight the unique tactics luxury brands can implement in their loyalty offering to encourage greater spend and retention from customers.
1. Align program name with its benefits
Your luxury loyalty program name should convey the prestige of your brand and should indicate a certain exclusivity around membership. For example, the Paris Gallery Group of Companies, which sells luxury products including perfumes, cosmetics, watches and sunglasses, named their program “Luxury Club” and Rosewood Hotels Group, a global chain of high end hotels, named their program “Rosewood Elite.” Both of these names appropriately speak to the status of the members.
2. Structure the program in tiers
By structuring your loyalty program into tiers, you can offer better rewards and perks for your best customers and motivate new or existing customers to spend and engage more. The highest tier in a luxury loyalty program should be exclusive, and attainable only to a very small percentage (under 10%) of members. The benefits of this tier should be highly desirable to your customers, and should make those who attain it feel prestigious.
3. Reward customers for spending
Since luxury shopper purchases are high value, not high volume, level up loyalty program members based on how much they spend with your brand per year. The Saks Fifth Avenue loyalty program, SaksFirst, is structured across five tiers, with members spending $5,000 per year qualifying for the premier tier, and those sending more than $25,000 qualifying for the diamond tier. Uniquely the program even offers a super exclusive “invitation only” tier for its biggest spenders.
4. Surprise and delight
A simple way to make your customers feel special is by offering free gifts to commemorate special occasions. Swarovski’s loyalty program, Be Swarovski, provides members with a free gift every year for their birthday. Diamond members of the Coach loyalty program have access to exclusive gifts and personally selected items.
5. Offer experience-based rewards
Instead of offering discounts and free products, offer your luxury loyalty program members money can’t buy experiences that go beyond the offerings of your brand. High end fashion brand Luisa Via Roma goes beyond fashion rewards to offer loyalty members that reach platinum level status access to luxury hotel getaways, cooking classes, and exclusive dining experiences. Retailer Neiman Marcus offers members of its InCircle program access to personalized travel experiences, and hard-to-get tickets and restaurant reservations.
6. Provide valuable perks and benefits
In exchange for their loyalty, affluent customers want the types of perks and benefits that make their lives easier. Perks such as free and fast shipping or free giftwrapping in-store are all valued added extras that provide convenience and make members feel special. The Hilton Hotel Hilton Honors rewards program offers each member across each tier benefits including free Wi-Fi, late checkout and even the option to choose their room – giving them more flexibility and exclusivity than non-members.
7. Provide personalized brand experiences
Luxury customers want a memorable brand experience in return for their loyalty. Luxury brands can leverage customer data captured in loyalty programs to understand customers’ history of purchases, preferences, likes and dislikes to deliver personalized experiences. Luxury retailer Burberry leverages loyalty data to inform personalized recommendations for customers online and in-store. For example, when an identified customer enters a store, sales assistants use tablets to suggest products to the customer based on their purchase history and social media activity.
When the right strategies are in place, a luxury loyalty program can contribute to increased revenue and retention. It’s important to remember affluent shoppers are less concerned with price points and discounts, and are more likely to show loyalty to brands that provide memorable experiences and demonstrate they understand the benefits that are valuable to them, all while making them feel a part of an exclusive, elite group of shoppers.