The Luxury MarkeTers guide To engaging and Winning

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MarkeTing is Changing. and quiCkLy...From the ways consumers gather information, to the ways marketers identify, influence and engage their customers and prospective customers, we are seeing a true shift in the marketing process. For luxury marketers who want to stay on the forefront of best practices and maximize their ability to attract and retain customers, learning how to infuse their marketing practices with the science of analytics and Big Data is the answer.

In this luxury marketing guide series we share some of the ways the application of data and analytics can help your marketing:

+ Produce more targeted and less costly acquisition of high net worth prospects and customers

+ Gain more qualified leads + Inflate average contract value, and + Open new opportunities through customer retention, cross-selling,

upselling and referrals.

The Luxury MarkeTing LandsCapeLuxury marketers must do everything they can to keep the customers they have and seduce the ones they want. Several trends in the luxury marketing landscape illustrate the importance of personalization and relationship marketing:

+ Digital channels allow a direct dialogue with micro-segments of your customer base; personalized dialogue is needed to make the most of these new opportunities

+ Customers are researching online; give them what they need, information specific to their personal needs that educates

+ Consumers are tired of spam; get to know them so that your communication is seen as personal outreach, not blind prospecting

+ Luxury is no longer a product strategy; it encompasses the entire engagement lifecycle - deliver a personal luxury experience from the first communication, through each and every touch point during your relationship

+ You already have customers who have experienced your offering; data about them is your starting point to finding new opportunities

+ Luxury marketers are turning to techniques like big data and analytics to help with their strategies; but many have experienced challenges in making them relevant to their specific business needs.

FroM seLLers’ MarkeT To Buyers’ MarkeTOver the past decade, consumers have changed the way they gather information, interact with brands and ultimately make buying decisions. In the past, consumers were at the mercy of advertising and brand messaging to get information on buying choices; forced to engage with sales and marketing personnel to get their questions answered; and once on that path of engagement, often made the decision to buy as a default. Luxury consumers especially tended to align with specific brands that reflected their self-appraisal and made a statement to their peers. Price, service, and customer-centricity had little influence over their decision to buy. It was a seller’s market.

Enter the digital age! Today, most consumers have done much or most of their research before ever engaging with a brand. A GE Capital Retail Bank study finds that 81% of consumers do research online before shopping. Consumers and buyers are:

+ Researching online, in a marketplace flooded with content;

+ Seeking and finding unbiased reviews and peer recommendations;

+ Participating in and initiating online conversations about products and brands;

+ Doing all or most of their research before they ever connect with an individual or even visit the company’s website.

Consumers are controlling their own purchasing journey: it’s a buyer’s market. Brands who want to stay ahead of them must be prepared to engage prospective clients earlier in the process than ever before.

SELLER’S MARKET BUYER’S MARKET

key TakeaWayWe’re experiencing a shift from a seller’s market to a buyer’s market.

suggesTed aCTionLuxury marketers will need to work harder to acquire and retain high net worth customers. Make sure your website, social communities and blog have relevant and valuable content that grabs attention early in the customer decision making process.

exaMpLeFrench fashion label Louis Vitton used digital media to build buzz and excitement leading up to a runway show by cataloguing the impressions of photographer and blogger Todd Selby on his journey to the site.

ConsuMers expeCT More FroM Luxury BrandsWith consumers taking the reins in terms of the information they are able to gather on products, services and companies, they are also raising their expectations. Consumers want to do business with companies that both know and appreciate them. One study found that 75% of consumers prefer companies to use personal information in order to improve their shopping experience . Consumers are no longer asking “Why are you collecting data on me?” but “Why aren’t you using the data you are collecting on me to give me a personal and satisfying experience?” A recent report from Janrain, Inc., indicates that 96% of consumers report having been miscommunicated with or mistargeted by companies they receive marketing messages from. And evidently, they don’t like it. 94% of those report taking some action as a result of being mistargeted: they immediately delete emails, report emails as ‘junk’ or ‘spam,’ or unsubscribe from future communications.

There is a clear disconnect between what consumers expect, desire and deserve, and what brands are delivering. Consumers have quickly adapted to the world of instant communications, interactive relationships and the empowerment it has afforded them. Brands, unfortunately, have been slower on the uptake. Marketers know they need to build personal relationships with their customers, in fact 94% believe that personalization is key to business performance . In a Conversant study, 3 in 4 senior-level US marketers agreed that “personalized one-to-one marketing is the future.”

One study found that 75% of consumers prefer companies to use personal information in order to improve their shopping experience.

key TakeaWayConsumers want to be known and are looking for personalized communication. Most brands have been slow to respond to this new dynamic.

suggesTed aCTionKnow what data you are collecting on prospects and customers, make sure it is accurate and relevant; then use it to establish or grow relationships.

Luxury MarkeTers MusT respond To ConsuMer desires or FaCe irreLevanCeThis shift in consumer decision-making and their expectations of personalized communications requires an agile and swift response from brands who want to remain relevant and drive consumer loyalty. Marketers who don’t get it, or refuse to get it, will lead their organizations into obsolescence.

Consumers want to know that the brands they are engaged with know them. They balk when basic informa-tion, such as their name, age or gender, is botched. They want to receive relevant offers, rather than offers that clearly disregard their interests and behaviors. And they reward brands who do know them, and demonstrate that knowledge with appropriate and considerate communications, with loyalty and even love.

Consumers want to know that the brands they are engaged with know them.

key TakeaWayLuxury marketers can find the tools they need to maintain relevance by embracing data and analytics.

suggesTed aCTionCollect or append additional data to truly understand your customers and engage them, they will reward you with love.

exaMpLeRetailer Williams-Sonoma uses Big Data and analytics to track some 60 million households on metrics including income, housing values, and number of children. Their emails obtain response rates 10 to 18 times as high as those sent randomly.

The ChaLLenges oF Big daTaMarketers know they must shift to more personal, intimate communications. And they know the key to success lies in leveraging data and analytics. But they face significant challenges. Many are struggling to adapt to new technologies, to manage large volumes of data and/or to successfully mine actionable insights from the data they do have. In fact, in some cases, too much data is as big a deterrent to effective action as too little data.

The availability and accessibility of data has been increasing at an alarming rate. IBM estimates that as of 2012 an additional 2.5 exabytes of data is created every day – the equivalent of all words ever spoken by every single human being in history. This explosion is occurring in part because data is being created from social media, smart phones, tablets, cameras, satellites, remote sensors and other emerging technologies.

The key for marketers wishing to utilize data to power effective, personalized communications is to translate that Big Data into concise and actionable ratings and scores that will enable them to segment their constituents – customers and targets – in a meaningful way. The marketer’s job is to craft the right communications to the right prospects at the right time. Most are excellent communicators and are increasingly becoming skilled in data understanding and analysis. But let’s face it, most marketers are not trained, prepared or able to take on the challenges of Big Data.

key TakeaWayLuxury marketers must concentrate on their primary responsibilities, leaving analytics and Big Data to specialists who can deliver actionable insights.

suggesTed aCTionConcentrate on your primary function: the right message to the right person at the right time.

harnessing The poWer oF Big daTaUnderstanding the power of Big Data and analytics, and harnessing that power are two different things. Data and analytics can provide the knowledge you need to quickly understand your prospects’, leads’ and customers’ wealth and their propensity to spend.

But the key to mining Big Data for Big Insights is not as simple as sifting through a haystack to find the needle. In fact, actionable insights can only be extracted from Big Data by collecting a vast array of data from a vast array of sources. This data is aggregated and sifted to find hidden patterns and correlations that could never surface from a single data source. These patterns and correlations can then be rigorously tested and statistically validated to deliver insights and understandings that translate into actions and results.

Doing this on your own could be an expensive and time-consuming proposition. In order to ready Big Data for analysis, you would need to:

These processes and activities would require more resources than most businesses have at hand. So how can marketers leverage Big Data without investing inordinate resources on data collection, curation, and analysis? By selecting the right Big Data partner.

CAPTURE

CURATE

TRANSFORM

NORMALIZE

PARSECOMBINE

VISUALIZE

REPORT

ANALYZE

key TakeaWayThe resources needed to leverage Big Data and extract value from it are greater than most businesses have at hand.

suggesTed aCTionSelect the right Big Data partner using the guidelines on pages 14-15.

seLeCTing The righT Big daTa and anaLyTiCs parTner

Choosing the right Big Data partner can make your marketing messages resonate with your unique audiences and allow you access to the best prospective customers for your business. While using Big Data in your marketing is simple, there is a lot that goes on behind the scenes. That makes selecting the right partner to help you execute data driven marketing campaigns essential. When you’re shopping for a data partner, consider the following questions:

+ DOes this partner unDerstanD wealth?

While behavior is an important element, wealth is the true driver for both purchasing and donating.

+ DOes this partner have experienCe Curating Data?

For all of us who have tried to merge two spreadsheets of different sizes, or import data into an existing structured CRM, we can begin to grasp the many challenges of working with Big Data. A partner who routinely works with data sets of all types and sizes is a best bet.

+ is the pOtential partner willing tO wOrk with yOu tO seleCt the Data yOu neeD tO appenD, anD tO CustOmize a Data sOlutiOn fOr yOur neeDs?

Too much data can be as bad as not enough data. Make sure you get the right fit by selecting a partner who can assist by understanding your needs and providing a customized solution.

seLeCTing The righT Big daTa and anaLyTiCs parTner

+ DOes the partner aDD value?

Data is the foundation for knowledge and insight, but you need a partner with a robust analytics understanding who can add value to your data with ratings and scores, predictive modeling, cluster analysis and other techniques. Analysis is where the true value of data is derived.

+ will the partner wOrk with yOur Data?

Much of your most valuable data resides in your own CRM. By combining the data you have with additional Big Data sets, you can extract the most value. A partner who can work with both, and who understands your business needs and challenges, will achieve the best results.

+ DOes the partner have all the Data yOu neeD?

Shopping piecemeal for data is time consuming and difficult. Finding one partner who has wealth, demographic, lifestyle, behavioral, and biographic data at the individual and house-hold levels will save you hours – no, weeks, or months – of aggravation.

Luxury brands of any size and any level of data competency can harness the insights of Big Data with the right partner. And the potential rewards are immense. McKinsey research indicates that companies who are Big Data Leaders within the retail space recognize 13% higher revenues than the competition and that those who put data at the center of their marketing and sales decisions improve marketing return on investment by 15%-20% .

Consumers have quickly adapted their research and buying patterns in response to social media, the ubiquitous nature of information, and new technologies and applications. Their expectations of brands have also risen steeply. They want personalized, transparent and respectful relation-ships. While marketers know this is a critical time to pivot and engage with consumers in a new way, they are facing the challenges posed by the abundance of data and how to capture and glean knowledge from it. The following are best practices for luxury marketers wishing to respond to consumer needs and desires in distinctive and discriminating ways:

1. knOw yOur CustOmerIt’s frightening that 40% of brands don’t target any specific customer or prospect segments. And that 28% of marketers don’t know which high-value customers they should focus their efforts on. Companies can gain knowledge and insight on their customers and the keys to segmenting them through analytic practices such as profiling and cluster analysis. If you don’t know your best customer segments, or use effective segmentations in your communications, let this be the starting point in your analytic journey. Having recently completed such a process, one leading five-star hotel marketer explained, “The value of knowing more about my customers is frankly invaluable.”

2. knOw yOur gOalsOnce you understand the attributes and relative value of various segments within your customer base, it will be much easier to make evidence-based decisions on where to allocate resources, which strategies and tactics to expand, and which to shrink. Analytics can identify the point of diminishing returns for targeted campaigns, giving you more return on investment while safeguarding your budget.

BesT praCTiCes For personaLizing reLaTionships WiTh ConsuMers

BesT praCTiCes For personaLizing reLaTionships WiTh ConsuMers

3. knOw yOur neeDs Once you’ve established your goals and the strategies you will be using to reach them, you can identify the data that you have to support your initiatives, and then discern the data you need to append in order to truly understand the mind of the consumer and to create compelling, personalized content, messages, and offers.

4. knOw yOur prOspeCtsYou don’t need to broadcast your unique products to the world. You need to approach individuals with the financial ability and the behavioral propensity to join your exclusive circle of loyal and bonded customers and ambassadors. Find these special people from the outset, using your best customer profile developed in practice 1. Find others like these excellent customers, and speak to them with the confidence that you already know them. Because, with data backing you up, you already do. As one Senior Director of brand marketing commented, “My purview is about finding new customers. We’ve done the work to understand our current customers, and that has helped define who we want to reach and how we engage them. It’s a process that works.”

5. knOw yOur DataData is not static; it is changing by the minute. Each time a prospect takes an action on your website, engages with a sales person, or visits your business, the web of data associated with that consumer flutters and expands. New connections form between your brand and your prospect, and between your prospect and others in your circle of influence. Keeping current with data appends, analytic profiles and prospecting lists is an ongoing necessity that will pay dividends in spades.

BesT praCTiCes For personaLizing reLaTionships WiTh ConsuMers

reFerenCes + eMarketer, Marketers Respond to Consumer Demand for Personalization Feb 19 2014

+ GE Capital Retail Bank, second annual Major Purchase Shopper Study July 2013

+ IBM, IBM Expands PureSystems Family to Help Clients Tame Big Data Oct 9 2012

+ McKinsey & Company, Big Data, Analytics and the Future of Marketing and Sales Jul 22 2013. Forbes

+ McKinsey & Company, Big Data Big Profits

+ Monetate, From Big Data to Big Personalization

+ Monetate, Mass Marketing Versus Personalization

+ Piwonka, Bill, Consumer Research: Did Marketing Improve in 2013? Jan 14 2014. Janrain

aBouT WeaLThengine, inCTM

WealthEngineTM, Inc. is a leading provider of sophisticated wealth identification and prospect research services to charities, hospitals, institutions of higher education, political campaigns, advocacy groups, and other nonprofit organizations, as well as to firms that offer luxury goods and financial services. Four thousand clients use WealthEngine’s products for comprehensive research on individuals, companies and foundations. Headquartered in Bethesda, MD, WealthEngine serves both the United States and the United Kingdom. For more information, visit www.wealthengine.com.

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