As we emerge from the pandemic, people are ready to once again spend money on high-end items like jewelry. Signet Jewelers, for example, recently reported online sales of $346.3 million, an increase of 110% compared to the same quarter in 2020. Now is the time for luxury brands — brands that sell high-quality, long-lasting and rare products at a high price point — to capitalize and increase customer engagement.
But here’s the catch: To capture more market share, luxury brands need to motivate customers to interact with them more. Adding a premium loyalty program is an ideal way to do that.
Although luxury brands face unique challenges when deploying premium loyalty programs, adding a program that offers exclusive experiences, instant benefits and VIP status will encourage customers to opt in and stay.
Luxury Brands’ Unique Loyalty Challenges
Premium loyalty programs are an increasingly common offering for many retailers. In fact, 95% of retailers with traditional loyalty programs have discussed launching a premium loyalty program in 2021. But for luxury brands, these programs are less common. This is because luxury brands face unique loyalty challenges including:
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- Order frequency: Luxury brands sell products that are not everyday commodities, and their high price point products lead to a lower order frequency. A luxury brand might sell a single purse to a customer, but then not interact with them for a year or more.
- Reputation: Luxury brands traditionally view loyalty programs as training customers to only shop when promotions or offers are available. Since luxury brands exude a high level of status, they worry that discounting their products cheapens their brand.
- High level of service: Premium loyalty programs are designed to improve customer experience. But luxury brands already provide a high level of service that sets their customer shopping experience apart. Luxury brands frequently offer their customers experiential benefits, such as champagne for in-store shoppers or a designated shopping assistant, so it can be hard to build in additional benefits for loyalty members that aren’t already given.
But these challenges shouldn’t stop luxury brands from creating a premium loyalty program. A premium loyalty program offers immediate, top-tier benefits in exchange for a membership fee — setting it apart from a traditional loyalty program that’s free and offers discounts after customers accrue a certain amount of points. Now that people are spending again, it’s time to launch a program that turns customers into loyal brand ambassadors.
How to Leverage Luxury Brands’ Challenges to Drive Loyalty
A premium loyalty program with relevant, exclusive benefits encourages shoppers to interact with your luxury brand more often. In fact, 70% of customers who are not currently in a premium program said they would join if their favorite retailer offered a program with valuable benefits. You need to create a program with benefits attractive enough to entice customers to opt in when they make their first purchase.
For example, RH offers the RH Members Program, which gives customers 25% off full-priced items and 20% off sale items as well as early access to clearance events, lower RH credit card interest rates and free interior design services. If a customer plans on spending at least $400 per year, their $100 annual enrollment fee in the program is immediately worthwhile. Customers who enrolled in the RH Members Program after buying a big-ticket item like a couch are more likely to go back to RH for smaller purchases that they otherwise may have shopped for elsewhere.
Members-only products and exclusive experiences are another great way to drive customers to your loyalty program. Luxury brand shoppers want exclusivity, and they want the image projected by a high-end item like a Chanel handbag. You can take advantage of this by offering benefits like early access to products that have a limited stock or are only available for purchase to premium loyalty program members.
The most important thing to remember when creating a premium loyalty program is that you need to offer benefits that are instant. Customers want to immediately see that their investment in a program is worth it. And instant benefits will create almost instant results for you, too. In fact, 62% of retailers with premium loyalty programs that provide benefits within the first week experience ROI within six months.
At the end of the day, the development of a premium loyalty program is the right next step for most luxury brands. By creating a program that leverages exclusivity and increases the sense of elevated status, you can drive customers to opt-in and interact with your brand on a more consistent basis.
Tom Caporaso is the CEO of Clarus Commerce, the only company specializing in building, managing and optimizing premium loyalty programs. He has been in the loyalty and subscription space for over 25 years, empowering brands to build better relationships with their top customers for the long-term. A solidified thought leader across the retail and loyalty sphere, Caporaso has been quoted in national publications like CNBC, Reuters and U.S. News & World Report. In addition to his loyalty expertise, Caporaso also has a 100% CEO approval rating on Glassdoor, a 2020 leadership award from The Hartford Courant, and has helped Clarus Commerce earn the Connecticut Top Workplaces award every year since 2013.
