Why some luxury brands are using ‘passive’ CRM programmes

Here in the world of digital marketing best practice, we’re pre-disposed to think that customer data is there to be used – after all, data has long been the ‘new oil’ (groan), and using it effectively can be highly valuable.

But digital maturity may not always be prioritised in this regard, when it comes to the world of luxury maisons. “Each maison has its own strategy on data activation,” says Ricardo Catalano, Global Vertical Lead Luxury Retail at WPP agency VML.

Indeed, a C-level executive at one of the major luxury maisons told Catalano that the brand does have a CRM programme – but it is a “passive CRM programme”. “They gather data to understand the clients – but don’t activate it. … It’s only for customer knowledge.”

Three tiers of digital maturity

Digital plays a very specific role in luxury in terms of information-seeking and brand storytelling, something that luxury brands have catered to with emotional, detailed, and immersive storytelling experiences online or even in a dedicated app.

At each touchpoint of the luxury customer journey, “the data that is generated by the customer can be collected – or not – based on customer preferences and the legal context,” says Catalano.

He groups luxury brands into three ‘tiers’ based on their approach to digital: ‘Tier 1’ luxury brands are “extremely advanced in their digital maturity … They do collect data, they do process data, and they activate this data in a measured and very precise way.”

‘Tier 2’ brands are aware of the digital maturity of tier 1 brands and are actively working to reach that tier – “There are huge investments going on in Tier 2.”

Tier 3 luxury brands, however, have made a strategic choice to keep things “traditional” – “and that has to be respected. It’s a very conscious choice.”

Even if a luxury brand opts for a ‘traditional’ approach, knowledge of the customer is something that can’t be compromised on. Different customer segments exist in luxury, from ‘one-timers’ who are buying a one-off luxury item for a specific event, gift, or milestone; to VICs who spend upwards of $50,000 in a year; to ‘hyper-luxury’ collectors who may buy every new piece from their preferred brand.

“Each segment has specific journeys and needs specific treatment by the maison,” says Catalano.

The role of messaging apps in luxury CRM

Messaging apps like WhatsApp, WeChat in China, KakaoTalk in South Korea, and even sometimes luxury brands’ own in-house messaging tools, play a pivotal role in direct, personalised communication with the customer.

While messaging apps are not a new trend, dating back nearly a decade to around 2015, Catalano says they are “getting bigger,” and we “don’t talk about them enough”.

Boutique salespeople will use messaging tools like WhatsApp and WeChat to communicate with clients one-to-one in real-time. This brings “a lot of benefits for the maison, and a lot of benefits also for the customers; in real-time, they can ask specific questions about new products, or product usage, or features – to a trusted salesperson.”

For example, in 2019, Burberry collaborated with Apple on a direct messaging platform called R Message that allowed VIP customers (or as they’re known in the luxury world, VICs – Very Important Clients) to directly communicate with Burberry store staff, who could in turn access customer information like birthdays and shopping habits in order to tailor the experience (though customers could opt out of data sharing).

In-house solutions have been particularly important for luxury brands who wanted to retain total control of client relationships – since there was a time when losing a salesperson could potentially mean losing all of the client contacts they had access to. Nowadays, however, chat apps like WhatsApp and WeChat have developed features that give the brand control over their contact database.

Although luxury brands maintain ultimate control over customer relationships, however, many of them give sales representatives on the floor considerable freedom over how these relationships are conducted. “Our job is to provide them with the right tools to do their job,” Catalano explains.

What these tools are is less important than how they’re used; “tools are tools, and tech is tech”, but the most crucial thing is “connectivity … making information available [throughout] the customer[’s] relationship with a maison. That’s the most important thing.”

Omnichannel is meaningful only if there’s “value at every touchpoint”

“The customer journey is already omnichannel”, says Catalano, and this is “probably the most important opportunity in the luxury industry,” he adds.  Luxury brands are well aware of the need to keep a close relationship with customers as they move between online and offline touchpoints, but they haven’t yet solved the problem.

“The interaction between online and offline is super high in luxury,” Catalano explains. “[In] the classic customer journey, the customer will get information online; will go and test offline; and eventually, may buy online or may buy offline.

“Even in the stores – they will be checking online.”

However, in the digital age, customer journeys are complex – it can be difficult to understand the relationship you have with your customers. Catalano notes that “It’s important for maisons to define the role of every channel on the path to purchase. At every touchpoint, there’s a specific role to play.

“Omnichannel is meaningful only if the maison adds value at every touchpoint.” Hence the laser focus on the worth, and potential value-add, of every single communication.