November 11, 2014
Data collected from consumers is essential for engaging and maintaining relationships with ultra-high-net-worth clients, according to a new study by Wealth-X.
The “Luxury Sentiment Survey Report” looks at the fourth quarter prospects of luxury brands in light of new product launches that can potentially boost sales. However, brands still face challenges in amassing the right data points to approach UHNW individuals.
“At the end of the day the more you know about someone, the more you can craft a customized approach for engaging them,” said David Friedman, president of Wealth-X, New York.
"Many luxury brands are moving toward lifestyle marketing, which means they are trying to engage their audiences outside of the areas they are selling to them," he said.
"If you can engage the ultra affluent consumer in all areas, it will help strength the relationship and therefore generate long term revenue."
Respondents to the “Luxury Sentiment Survey Report” come from various sectors within the luxury industry including clothing, shoes & leather; watches & jewelry; household furnishings; electronics; spirits & wines; antique, art & collectibles; hospitality & services; planes & helicopters; yachting & boating and motor vehicles. The survey was conducted between September 15th 2014 and October 3rd 2014. The survey was sent to over a thousand different brands across all sectors of the luxury industry.
Many luxury brands are optimistic about the fourth quarter and the holiday season. In the third quarter there was a decline in the luxury sector largely due to the lack of inventory and competition. However, with anticipated product launches, this is likely to change.
Forty-five percent of respondents said that they see 75 to 100 percent of their revenue driven by UHNW clients. However, in traditional luxury sectors, such as apparel, shoes, leather, jewelry and timepieces, UHNW individuals are thought to have the smallest impact on the total revenue of the brands.
With big luxury items, such as cars, planes and yachts, there is a much higher reliance upon UHNW consumers for the total revenue.
Hospitality and services brands tend to have the most detailed datasets for their clients, but often do not think data is very important in retaining and engaging consumers.
However, big luxury item brands were unanimous in thinking that data is essential to engaging and retaining the UHNW client.
Traditional luxury brands were the most likely to collect data, but the use of the data has been low, primarily used for marketing strategies.
Alternative luxury brands, such as art, collectibles and wines and spirits, turn to data to improve their products, services and consumer loyalty. These brands leaned more to automatic data collection at the time of payment and have internal research teams that help to compile data on individuals.
Most brands collect data to improve their services and build loyalty among clients. This data is primarily collected by internal research teams.
Most of the companies polled intend to collect more data on individual clients in the future.
Luxury brands are delving into more bespoke options and marketing, according to Wealth-X’s president at Luxury Retail Summit: Holiday Focus 2014 Sept. 9.
Mr. Friedman spoke about the necessity among brands to understand their consumer, who they are, what they do and who their friends and family are in order to gain a full understanding of these individuals in order to effectively market. Luxury brands can learn from Wealth-X’s research on the UHNW individuals to create specific marketing strategy for the ultra-affluent (see story).
Knowing the consumer through data points allows brands to take the information they learn and use it to benefit their marketing strategies.
"The survey highlights the fact that the more information you have about the prospects and the clients, the more targeted you can be and the more relevant," Mr. Friedman said.
"So much of the marketing to the affluent community is done by word-of-mouth, so understanding the top clients is essential to knowing who might be a referral, this is what big data analytics is about," he said.
Nancy Buckley, editorial assistant on Luxury Daily, New York