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Experiences Over Savings: How Premium Brands Retain Customers Through Promotions?
Anna Dawal
Anna Dawal
January 10, 2024
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Experiences Over Savings: How Premium Brands Retain Customers Through Promotions?

Whether it's stylish clothing, beautiful jewelry, exquisite dining, or exclusive travel, luxury brands always push the boundaries of sophistication. Their innovation and style extend beyond their products to the carefully planned marketing strategies they use. But the question is, how can luxury brands implement promotional campaigns without risking their prestigious image?

In this blog post, I will talk about the challenges that luxury brands face in retaining customers, explore ways in which premium brands do promotions without harming brand image, and provide best practices for marketing high-end goods. 

Do luxury brands have sales?

Traditionally, luxury brands often avoid explicit sales or discounts to maintain premium image. However, the landscape of luxury retail has evolved, and many luxury brands have carefully adapted to changing market dynamics. Why?

Luxury brands have faced challenges in retaining customers over time due to factors such as: 

  • Increased competition: The luxury market is highly competitive, with numerous brands vying for customer attention. With many options available, customers may easily switch between brands, making it challenging for luxury brands to retain their customer base.
  • Changing consumer behaviors: Luxury brands grapple with the rise of resale and second-hand markets for high-end items as consumers increasingly opt for sustainable and cost-effective alternatives. This shift in behavior challenges traditional notions of brand loyalty, requiring luxury brands to navigate new avenues of customer engagement and retention.
  • Growing popularity of online sales: Historically skeptical of online retail's compatibility with a luxurious experience, luxury brands have shifted their stance due to the pandemic and the accelerated growth of e-commerce. Recognizing the evolving landscape, these brands now prioritize a robust online presence.

According to statistics, the global revenue in luxury goods is projected to rise steadily, especially with the growth of online luxury sales.

Diagram: Global luxury market revenue 2020-2028

Luxury players must adapt to meet changing customer needs, particularly among younger generations with high standards for their shopping experiences. This shift emphasizes deploying quality promotional tactics that resonate with high-end customers, posing the question of not just "do luxury brands have sales?" but especially how they build lasting customer relationships while maintaining their prestigious brand image.

How to retain customers in the luxury industry without harming brand image?

1. Create a VIP loyalty program

In 2021, as the pandemic effects lessened, people engaged in what Vogue Business calls "revenge shopping," using their savings to explore luxury brands they hadn't considered before. To face this challenge, luxury brands revamped their websites for better online experiences, and this is how loyalty programs emerged as a game changer in the luxury market.

Implementing a VIP loyalty program has, therefore, become a cornerstone in retaining customers within the luxury sector. By offering exclusive perks, early access to new collections, and personalized experiences, brands can make their high-end clients feel valued.

2. Personalize promotions with experiential rewards

In the realm of luxury, personalization is key, as high-end customers expect tailor-made solutions. By leveraging customer data and analytics, luxury brands can craft personalized promotions that not only meet but exceed the expectations of their customer base. 

Experiential rewards play a crucial role in this personalized strategy. They revolve around unique, personal, and memorable experiences. Picture a customer reaching the platinum tier of a loyalty program not with a traditional coupon but with an exclusive opportunity to have a consultation with a fashion designer or an invitation to fashion week. 

Likewise, the HUGO BOSS Experience rewards program focuses on providing such VIP experiences available to all members right from the get-go. Exclusive perks include complimentary alterations, personalized style advice, access to members-only products, early access to sales, promotions, and invitations to special brand events. Members can also return items without a receipt by logging in or assigning the purchase to their account.

Hugo Boss Loyalty Program: Hugo Boss Experience

Learn more: How to Effectively Use Customer Attributes for Personalized Promotions

3. Mark your mobile and online presence 

Recognizing the evolving landscape of luxury retail, brands must establish a robust online presence. The increasing trend of luxury brands embracing digital marketing and selling their goods online is undeniable. Ecommerce and multi-brand digital sites have become crucial touchpoints for engaging with customers. 

In response to this digital evolution, luxury retailers have invested in mobile technology. Take Neiman Marcus, for example, with the introduction of NM Connect, a dedicated section within its app. This innovative feature allows store associates to access personalized views of individual customers. Simultaneously, customers can engage in a "stylist match" exercise, linking them with a dedicated Style Advisor. 

Neiman Marcuss: NM Connect Mobile App Feature

Such integrations of technology are crucial in improving personal relationships with luxury customers who look for exclusive solutions. 

4. Offer exclusive gifts with purchases

To further enhance the allure of luxury products, offering exclusive gifts with purchases can be an incentivizing strategy. These exclusive gifts not only add tangible value to the purchase but also contribute to the overall sense of exclusivity associated with the brand. Such promotions create a unique and memorable shopping experience, reinforcing the customer's emotional connection with the luxury brand

Dior, for instance, has prepared some exclusive advantages for those who made purchases in their e-boutique:

  • Free travel-size product: For all orders over €100, customers enjoy a free travel-size product from a regularly renewed selection.
  • Free iconic Dior gift box and personalized message: Each order is carefully prepared in the special gift box where products are arranged and wrapped in pleated silk paper. Dior also offers the possibility of enclosing a personalized message card, ideal for gift-giving.
  • Free choice of samples: Customers can choose up to two complimentary samples from a selection of iconic Dior fragrances, make-up, and skincare products.
Dior: Free gifts with exclusive purchases

5. Create member-only discounts

Private promotions reserved for members enhance exclusivity and serve as a compelling incentive for customer loyalty. Customizing members-only discounts to align with the luxury brand's image helps uphold a high perceived value. This approach not only encourages repeat purchases but also fosters a sense of belonging among the brand's exclusive clientele.

Furthermore, private promotions provide an exclusive alternative to site-wide discounts, commonly promoted broadly on brands' websites. Site-wide discounts pose challenges for luxury brands, potentially diminishing the perceived value of their products, making it difficult to maintain profit margins, and interfering with the brand's exclusive image. Moreover, the use of promo codes in site-wide discounts may be susceptible to exploitation by unauthorized parties, whereas private discounts and exclusive deals are less prone to fraud.

Yves Saint Laurent has introduced the YSL Beauty Club, a member-only loyalty rewards program that provides exclusive benefits and rewards. The program is structured into three tiers, each offering increasing privileges.

Yves Saint Laurent: Tiered Member Rewards YSL Beauty Club

6. Go omnichannel 

The modern luxury customer seeks a cohesive experience that integrates both online and in-store interactions. Embracing an omnichannel marketing strategy enables luxury brands to create a cohesive and frictionless experience across various touchpoints. By understanding and leveraging customer behavior in both online and physical spaces, brands can provide a unified and sophisticated journey that aligns with the expectations of their distinctive customer base.

Consider Burberry. This brand was among the pioneers in the luxury retail sector, offering a Click & Collect service. What’s more, the Burberry app enables features such as: 

  • Personalized product recommendations.
  • An easy access to style and gifting advice.
  • Customizing items by adding the customer’s initials. 
  • Tracking orders and managing accounts.
The Burberry App: Discover the possibilities

7. Be luxurious, charitable, and conscious 

An effective strategy to retain customers is to infuse luxury with a sense of social responsibility. In the end, modern shopping can become much more than pure commercialism. Therefore, luxury brands can encourage customers to allocate their discounts toward charitable causes, such as environmental conservation or poverty alleviation. This not only adds a philanthropic dimension to the brand but also resonates with socially conscious consumers, creating a positive association between luxury and commitment.

The Kering Group, the owner of renowned luxury brands like Gucci, YSL, and Balenciaga, has shown its dedication to sustainability and social justice by announcing their 2025 Sustainability Strategy. The plan establishes clear goals for reducing greenhouse emissions, enhancing resource management, and ensuring fair labor practices throughout their supply chains.

The Kering Group: 2025 Sustainability Strategy

How to market designer goods – best practices

For luxury customers, standard discounts, like 10% off, are not enough to grab their attention. Instead, the focus should be on creating lasting connections with VIP experiences that resonate with sophisticated audiences. 

Here are a few strategies for luxury brands to retain customers and foster long-term loyalty among high-end customers:

1. Be creative in the media

To meet changing preferences, brands are embracing social media, offering real-time behind-the-scenes content, making fashion shows inclusive beyond exclusive audiences, and featuring popular bloggers in event front rows for live coverage. While the online brand experience varies from in-store, brands use diverse strategies to craft a compelling digital presence.

For example, Dior's "Dior Eyes" VR set allows users to go behind the scenes of their exclusive fashion shows. Virtual reality is entering haute couture, enabling brand enthusiasts to admire top fashion shows.

2. Embrace NFTs as incentives

In the ever-evolving realm of luxury retail, staying ahead demands innovative strategies. Non-fungible tokens (NFTs) have emerged as a potent tool, particularly within the luxury sector, where exclusivity matters. These unique cryptographic assets, residing on the blockchain and representing digital files, align with the luxury ethos of individuality and rarity.

Luxury brands are quick to recognize the allure of NFTs, incorporating them into their arsenal for customer retention. A good example is Clinique, which used NFTs as rewards for its Smart Rewards members. By offering the opportunity to win free products for a decade and exclusive NFT artworks, Clinique not only acknowledged and enhanced customer loyalty but also attracted new patrons in a smart way.

Clinique: Introducing NFTs

Much like how a VIP loyalty program became pivotal in responding to the "revenge shopping" trend, the integration of NFTs signals a forward-thinking approach to customer retention.

3. Base your promotional ideas on data

Data-driven decision-making is crucial for luxury brands seeking to tailor their promotional strategies. Utilize customer purchase history to understand preferences and anticipate future desires to prepare your stock. For example, if certain products or styles are consistently favored by a segment of your audience, create targeted promotions or limited-edition releases to cater to those specific tastes. 

Furthermore, using data analytics strategically allows luxury brands to fine-tune their inventory and pricing strategies, enhancing the upselling of designer products. By examining consumer behavior and purchase patterns, brands can pinpoint the ideal price points that strike a balance between staying competitive and upholding the brand's premium image.

4. Engage influencers

In the past, luxury brands avoided social media and influencers to preserve their exclusive image, but the digital age has changed this. Now, luxury brands carefully use these platforms to stay relevant online. Because of platforms such as TikTok, the days of celebrities showing off products dripping with gold are long gone. Luxury brands need to move with the times, as social media influencers raise the bar higher on an everyday basis. 

Take Gucci, for instance. The brand went full steam ahead with their influencer campaign by partnering with Francis Bourgeois, a  21-year-old TikToker known for his love for trains, and the videos they've released together have received a highly positive response. 

Gucci Influencer Campaign Example

To expand their audience, luxury brands should carefully select influencers who not only resonate with their brand's identity but also authentically connect with their customers. Simply hiring celebrities is not enough. To build a successful influencer campaign, it’s crucial to concentrate on influencers whose followers align with your target customer base.

5. Foster community engagement

Create a sense of community around your designer brand by organizing exclusive events or virtual forums. Invite loyal customers to participate in VIP-only gatherings, where they can interact with designers, preview upcoming collections, and share their insights. This fosters a deeper connection and a feeling of exclusivity among your customer base. Virtual forums, webinars, or live Q&A sessions can further enhance customer engagement, allowing enthusiasts to connect directly with the brand and participate in the dialogue surrounding your designer goods.

The above-mentioned promotional strategies share common elements such as:

  • Tiered loyalty structures: Offering different levels of benefits based on customer loyalty.
  • Exclusive member experiences: Providing unique perks and experiences reserved for the most loyal customers.
  • Shift from savings to experiential rewards: Placing greater importance on experiences that resonate emotionally rather than simple discounts.
  • Personalized offerings: Tailoring promotions to individual customer preferences and behaviors.
  • Mobile-friendly approach: Ensuring accessibility and engagement through mobile platforms.

These elements collectively shape a promotional experience that strives to provide customers with more engaging and personalized content and rewards – experiential benefits over 10% off promotional campaigns. 

How Voucherify helps luxury brands build promotional campaigns?

Voucherify is a Promotion & Loyalty Engine suited for luxury brands, offering features to create engaging promotional campaigns, such as:

1. Tiered loyalty programs

Voucherify empowers luxury brands to build multi-tiered loyalty programs, where they can provide premium rewards only for the most loyal customers and standard rewards for others. With features like reward mapping, the platform allows exclusive perks to be designated solely for the highest tiers. This capability ensures a tailored loyalty experience, enabling brands to provide VIP access or special discounts only to their most dedicated customers.

Voucherify's Dashboard: Establishing Tiers in VIP Loyalty Program

Learn more: How Tiered Loyalty Programs Can Boost Your Business Strategy in 2024

2. Tracking without limits

Voucherify's robust tracking and reporting features enable luxury brands to analyze campaigns in real-time, covering redemption rates, customer engagement, and overall campaign effectiveness. 

Voucherify's Dashboard: Analyzing Campaign's Redemption Rates

In addition, the integration with CDP platforms, such as Segment or mParticle, streamlines the management of customer data. This collaboration ensures that luxury brands can easily access comprehensive insights into individual customer profiles, simplifying the process of creating targeted and personalized promotions.

Learn more: Maximizing Customer Loyalty with CDP-Powered Incentives

3. Comprehensive Rule Engines

Voucherify helps luxury brands maintain exclusivity by allowing them to set validation rules, like minimum purchase amounts, for redeeming promotional codes. With its Rules Engine, brands can personalize discounts not only based on price limits but also on specific collections, customer segments, and custom attributes. Additionally, Voucherify offers dynamic discounts, allowing the discount value to change when additional conditions are met. This ensures a personalized approach to promotions while safeguarding the brand's premium image.

Voucherify's Dashboard: Comprehensive Rule Engine

4. Personalization: Customer segmentation

Personalization is key for luxury brands aiming to create a unique and tailored experience for their customers. Voucherify enables segmentation based on various factors such as customer demographics, purchase history, and preferences. Luxury brands can target specific customer segments with personalized promotions, whether it's offering discounts on specific product categories or providing exclusive access to new collections.

Voucherify's Dashboard: Customer Segment Personalization

5. Qualification API: Discount recommendations

Qualification API is a smart discount recommendation tool, offering a specialized endpoint that provides relevant offers like generic promo codes, unique coupon campaigns, and cart promotion tiers. Tailored to both product and customer contexts, this intelligent mechanism enhances the promotion experience by enabling features like digital wallets, product bundling, upselling, and SKU-based discounts. 

Voucherify: Qualification API for VIP Discount Recommendation

Need promotions for luxury brands?

As the world warms up to the charm of luxury brands, it's crucial for these high-end names to tweak their marketing game and keep customers on board. Selling luxury products comes with its challenge – how to make the customers stay?

The answer lies in a bit of smart investing in a good Promotion Engine and VIP loyalty programs. It's like adding a sprinkle of luxury to your shopping, making it personal and leaving customers feeling special and appreciated. After all, in the world of luxury, a little promotion and a dash of loyalty go a long way. It's not just about selling; it's about building a relationship that sparkles brighter than the finest gem.

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