To receive the Vogue Business newsletter, sign up here.
Are customer loyalty programmes fit for purpose? For luxury companies seeking a competitive edge in a post-pandemic world, that’s become a pressing question.
Through customer loyalty programmes, luxury brands have an opportunity to gather important data about their customers. This has become more significant now that big tech platforms like Apple and Google and browsers like Firefox are blocking third-party cookies. “Privacy is a huge problem. Retailers give their loyalty programmes a fancy name, but at the end of the day, it’s a way to navigate the seas of GDPR and other regulatory influences and a mechanism to get consumer consent to interact with them,” says Ludwig Voll, partner at EY Parthenon, Ernst & Young’s global strategy consulting arm.
Many luxury fashion brands do not offer loyalty programmes, although they may reward their highest spending customers with invitations to fashion shows and a dedicated concierge service. “It’s a very top-down approach and for years that has been limited to a very small group of people,” says Olivier Vigneaux, chief executive at BETC FullSix, a digital agency within the Havas Group network, with clients including Chanel, Louis Vuitton and Rimowa.
In a digitised world, brands recognise they need to step up. “You need a minimum of first-party data to know who all your clients are, and you’ll need to nurture a relationship with them whether it’s through content, services or surprises. That is going to become almost compulsory,” says Vigneaux. “When you think of Airbnb or Uber, they’ve not just sold a product but a caring journey. Luxury can learn to do the same. It’s not enough to keep on selling expensive handbags and shoes.”
Offering an experience
Loyalty programmes are typically associated with points-based tiers. The more customers buy, the more rewards they earn. They redeem points for discounts, cashback or free products. But that is not the game luxury brands are in. “In luxury, it’s about creating intimacy with customers and building brand ambassadors,” says E&Y’s Voll. “You don’t get there by pushing promotions.”