SOCIAL MEDIA: LUXURY BRANDS & CONSUMER BEHAVIOR

A female affluent consumer walks into a Saks' shoe department. She tries on several luxury brand shoes and then has to decide between two designer brands. The prices are the same. The look, heel, color are all the same. The shoe's comfort is the same. What is the deciding factor?

Another female affluent consumer is internet savvy and has no problem purchasing luxury items online. She is a keen follower or fan of two luxury brands. She is also an evangelist of both brands. She is in the market to buy luxury brand shoes and must decide between the two. The prices are the same. The look, heel, color are all the same. She has owned both brands before and is satisfied with the quality and comfort of both. What is the deciding factor?

How is social media and digital platforms affecting consumer behavior with luxury brands? There is a lot of  information, research, studies on how these are changing the way consumers purchase. Does the female affluent consumer feel an affinity toward one luxury brand in particular because she is a "fan" of that brand? Does she purchase luxury brand X instead of Y because X has done a better job with its digital presence? Is she more apt to buy brand X because she saw today an image on X's facebook page of actress Angelina Jolie wearing X shoes? What exactly is the deciding factor that pushes the consumer to purchase X rather than Y and what then can luxury brands do to harness these changes in consumer behavior?


Below is the 2010 Luxury Lab Index which ranks the top luxury brands according to digital excellence:

http://www.l2thinktank.com/luxury2010digitaliq/luxury2010digitaliq.pdf

Top Ten Luxury Brands with the highest digital IQ (as ranked by Luxury Lab):

1. Coach

2. Ralph Lauren

3. Louis Vuitton

4. Gucci

5. Hugo Boss

6. Burberry

7. Dolce & Gabbana

8. Giorgio Armani

9. Swarovski

10. Tiffany

According to L2 Founder Scott Galloway,
"... 2010 has been a seminal year for the luxury industry, some brands have put the weight of their organization behind digital, while others have stood still and have been left behind.”  “The ‘it’ product in luxury is not a handbag or watch, but innovative social media programs.”

REPORT FINDINGS:

• "Traffic to brand sites from Facebook more than doubled in 2010, growing from 3.4 percent to 7.1 percent with 73 percent of luxury brands registering the social media giant as a top eight source of traffic. Traffic from Twitter and YouTube decreased.
• Brand sites with social sharing recorded annual traffic growth of 42 percent versus 18 percent for brands without social sharing suggesting the increasing importance of social media optimization.
• Digital competence leads to more site traffic. The 21 brands that increased their Digital IQ demonstrated annual traffic growth of 52 percent versus traffic growth of just 8 percent for brands that registered IQ decreases.
• The 39 brands that sell online boast a Digital IQ of 117 versus an average IQ of 79 for the 33 brands that are not e-commerce-enabled.
• Only half of brands engage in email marketing, only two in five are purchasing search terms and only 10% have mobile sites. "

Luxury Brands & Social Media Marketing

Burberry acquires 3 million fans on Facebook and has a social network Art of the Trench that is truly engaging. Jimmy Choo runs with its treasure hunt on Foursquare and Louis Vuitton partners with Foursquare to offer a designer badge. Tiffany wears its Engagement Ring iPhone app.  DKNY is doing fashionably well on Twitter.  It is especially exciting for marketing professionals to watch what is going on with social media and luxury brands. Who would have thought that something so exclusive, so closed doors, so v.i.p. as luxury brands would utilize social media to not only get "in touch" with their present followers but to acquire new fans and thus consumers? It is fantastic to see what some of these companies are doing to really harness the power of social media.

Forbes recently wrote that according to a Forrester Research Survey, "in 2008 only one third of international luxury firms actively sold online, yet 8 out of 10 affluent consumers actively used the internet to research and purchase luxury goods on a daily basis."  Another survey shows how these numbers are growing. EMarketer published in 2007 in   "Affluent Internet Users: How The Rich Live Online" that these users will grow from 43.7 million in 2006 to 57.1 million in 2011.  So we know that the affluent purchase more and more online on a daily basis so why aren't more luxury brands taking advantage of this?

This is astounding and signifies that those few luxury brands that are embracing the internet have an extreme advantage over their competitors who refuse to budge. What else can luxury brand designers do to remain at the cutting edge of social media and attract a new generation of luxury consumers?

1. Research

• Study the trends and behavior of  online visitors and customers to identify new opportunities 
• Find creative ways to increase consumer engagement with the brand and product online

 2. Social Media, Mobile & SEO

• Work with in house departments and third party firms to define and execute the mobile strategy 
• Maintain total brand consistency throughout all digital platforms while building  brand awareness, engagement, purchase intent, repeat purchase and brand advocacy
• Direct search engine marketing and optimization
• Utilize digital platforms, stores and third parties to increase e-mail address acquisition 

3.  Ecommerce

• Identify innovative ways to enhance consumer interactions with the brand and product through Ecommerce and especially via mobile devices.

 4. Follow up 

• Analyze performance and tweak and retweak according to results.  Remeasure.