How to Increase Sales in Luxury Retail [2020 Updated]
The introduction of e-commerce retail stores has changed the way customers shop for luxury goods. Showcase websites are no longer relevant, competition is at an all-time high, and sales are highly dependent on the ability to build a loyal customer base.
And while this may seem like common knowledge to the bunch of us familiar with digital marketing, many luxury retailers are hesitant towards the shift. They believe that visiting a brand’s physical store is an essential part of the customer experience.
Let us blatantly say that this belief is outdated. Visiting luxury retail stores is not always pleasant, especially when the shopper knows the brand better than the staff. The expectations of customers are often so high that sales associates fail to deliver, costing them the sale and hurting the brand’s reputation.
As such, it is important to understand how to increase sales in luxury retail without falling into “expired” marketing tactics that worked in the past. In this article, we introduce 5 tips that can help high-end brands get the most from their audience.
How to increase sales in luxury retail
Improving sales numbers depends on many factors, most of which are dynamic in nature. What worked well a few years ago may no longer be relevant. Therefore, a brand should always follow and adjust according to sales and marketing trends. The following options are a great starting point.
1. Focus on customer experience
Luxury brands would benefit from allocating a part of their budget into practises that help them offer a unique customer experience. This mainly concerns personalization tactics and the ability to provide an omni-channel approach (same online as offline).
E-commerce has made it easy to collect data on your customers. This information can be used to personalize the experience of the customer, whether they are shopping on your e-commerce website, or the brick-and-mortar store.
- According to a 2018 study of Monetate, 77% of businesses that exceeded their revenue goals in 2018 implemented a personalization strategy
- The same study found that 74% of businesses have a dedicated budget for personalization strategies.
- RedPoint Global found that 63% of consumers expect personalization as a standard of service both online and offline.
An omni-channel approach refers to two distinct things:
- The ability to offer the exact same customer experience online and offline. For example, if your website makes it very easy to find and purchase a product, the same should be true in the store's physical location.
- The ability to connect (integrate) all channels that affect the customer experience. From delivery service and promotions to loyalty schemes, most channels can interact by the help of APIs.
Most luxury shoppers expect brands to offer an omni-channel approach and large studies have shown that they lead to an increase in sales. The following TED talk helps you get a better understanding of the process, and how it affect the customer experience:
The importance of customer experience testing
Finally, when it comes to the customer experience, we should briefly talk about the importance of testing. There are many different ways to wrap a shopping experience into a personalized filter, but not all are guaranteed to improve sales.
- Luxury retailers need to have a good understanding of their target audience to estimate what practises would lead to an improved customer experience.
- Once a company finalizes its strategy, it can proceed to test it on different segments of their audience to determine its effectiveness and adjust accordingly.
2. Empower sales associates
While many business leaders are wondering how to increase sales in luxury retail, the majority fails to understand the influence sales reps have in the decision-making process. Employees need to have extensive product knowledge, a helpful intent and, most importantly, the right tools to provide a great customer experience.
It is always best to hire people that have an interest in your brand and the ability to understand what a customer is looking for. The best way to go about this is to ask specific questions that only brand enthusiasts would know during the early stages of the recruitment process.
Helpful intent - knowing how to act in a high-end store
The behaviour of your staff should reflect the audience you are serving. By this we don’t mean the “over the top” pampering that is often seen with expensive brands, but rather a genuine interest to be helpful to the customer in a personalized manner. This is mainly done through luxury sales training.
Using the right tools
It might be wise to invest in a CRM software tool that helps sales reps keep a better overview of the products and the customers. One such tool, built specifically for retailers, is Retail CRM Cloud.
- Our tool offers a specific module that helps sales reps keep an overview of available stock and recognize their loyal customers.
- Sales associates can simply download a dedicated app that integrates with their existing CRM solution in order to offer personalized recommendations to the customer.
- Finally, the tool is really helpful for recognizing and rewarding loyal customers and has additional modules that help brands develop tier-based loyalty programs.
3. Focus on speed and convenience
Knowing how to provide a seamless shopping experience is not only important when selling luxury goods, but it is much more important when dealing with “exclusive” customers. Here are are a few strategies you can implement:
- E-commerce stores - minimize the amount of clicks required to find and purchase a product, offer free shipping, make the return policy as simple as possible, offer many different payment options.
- Physical store locations - adjust store outlay based on existing customer data (place best sellers in a visible location, etc), eliminate the need of physical receipts in case of returns, offer luxury service training to new employees.
4. Target millennials
Millennials are becoming more familiar with luxury goods, especially when it comes to fashion. The huge target group is heavily influenced by modern music, social media trends, and other channels that showcase luxury brand marketing.
There are several tactics that luxury brands can implement to attract and acquire this generation:
- One such tactics is to create loyalty programs. Millennials that choose to shop luxury goods often feel the need to be perceived as special, and expect a brand to behave accordingly.
- Another way is to invest heavily in email marketing and retargeting ads to create a top-of-mind association. The latest is essential for younger generations as the average attention span is significantly lower compared to previous years.
- Improve your social media presence by being present on multiple channels and adopting a tone of voice that associates with the target audience. This is, once again, a result of data-driven analysis and a well-defined target audience.
5. Focus on (psychological) value
Knowing how to increase sales in luxury retail often derives from marketing efforts. Luxury brands focus more on the psychological value that the product offers rather than its usability.
For example, a brand that sells a $5000 handbag will focus on the emotional benefits (e.g. boost in confidence), rather than the bag’s size and dimensions. Here is an example:
This is partially the reason why luxury brands’ digital marketing looks so different that promotional strategies of low-cost brands. Brands that know how to attract high end clients understand the importance of emotional value and often present it in an abstract but engaging manner.
While low and mid-priced retail brands are slowly “catching up” to the trend, most well-known luxury brands have built their reputation by executing such strategies for decades. This, in turn increases the lifetime value of customers that seem to change their state of mind as a result of these emotional reactions.
When it comes to luxury retail, it is important to consider what type of customer you are trying to attract. Factors that are important with lower-priced stores (e.g. price point) are less important with this audience. As such, more weigh should be given to the power of community and the presentation of psychological benefits. In summary, here are the main points we discussed:
- Focus on the customer experience by adding personalization elements and adopting an omni-channel approach
- Empower sales associates with the right tools and sufficient product knowledge
- Make speed and convenience a priority as it is one of the determining factors for a positive customer experience
- Consider adding Millenials as a segment of your target audience
- Focus on the psychological value of your product instead of its price or features
Now it's your turn to implement the points above. Make sure you share this article with your team and start adjusting your strategy to increase your sales.