How influent is a good digital engagement strategy in the luxury sector?
Digital engagement can contribute to 40% of the revenue growth, according to data from Contactlab-Exane BNP Paribas. Today, the digital strategy is at the top of the priority list for all CEOs in the luxury fashion sector, needing to take key decisions which have an impact on every aspect of the product supply chain.
Since 2013, Contactlab – provider of digital customer engagement solutions in Italy and across the world and promoter of this blog – has been monitoring, along with Exane BNP Paribas, leader in equity research, the digital strategies of luxury fashion brands, producing as of today 22 in-depth reports examining their performance in detail.
These studies show extremely different levels of digital proficiency between the companies, with some significantly more advanced than others in the development of digital activity integrated with or as a complement to their other business activities.
Exclusively for our Insights Blog, we interviewed Luca Solca, Managing Director Equities, Luxury Goods, at Exane BNP Paribas.
Contactlab: What pricing policies should brands adopt online and in stores? How do the two channels interact with each other?
Luca Solca: Prices in digital and physical distribution must be identical so that you don’t have one channel competing against another, but two channels working together. In the same way, communication campaigns and initiatives through various channels need to be in synergy and coordinated: too often I see initiatives on social media which you can’t find a trace of in the store, and vice versa.
C.: Has the arrival of the digital offer altered the reference target?
L. S.: The digital offer helps to bring generally younger customers closer to the brands, but I don’t think the segments of the various customers have changed.
C.: Are there more profitable targets? Can they be stimulated further?
L. S.: Most brands have a group of “heavy users” which are significantly more profitable. The development of digital strategies opens up new opportunities to build up a direct dialogue with them, in order to increase the number and depth of these customers.
C.: What does a luxury brand need to do nowadays to build a relationship with customers, engage them and create loyalty?
L. S.: Both acquisition and retention are important factors in doing business. No brand can survive without attracting new customers. Equally, little has been done up until now in terms of creating engagement and loyalty – CRM is still an area which needs to be fully exploited and which can lead to a 40% growth in like for like revenue.
C.: How sensitive are customers to prices? Does this sensitivity change from one country to another?
L. S.: The price is a key factor for any customer, regardless of what country they are in. This sensitivity is inversely proportional to disposable income, so price is a fundamental aspect for middle class customers.