What does digital transformation look like for luxury brands?
Broadly speaking, digital transformation isn’t a destination but a journey that brands take to improve their business performance and gain competitive advantage.
And this isn’t just in relation to digital marketing. There are many facets to a business that are impacted by embracing digital change.
For example, the automation of sales, including ordering, picking, shipping, and returns, and the integration of digital tools to improve productivity within the workplace itself.
From a digital marketing perspective, digital transformation can drive efficiencies with targeting and budget management: using technology to improve our knowledge of our target customer, make content more personal to their interests and behaviours online, and improve our investments through decreasing waste in our media spend.
In reality, digital transformation is unique to each business; what’s needed for one company won’t necessarily be right for the next.
And while some luxury brands have wholeheartedly embraced digital change, for example, Gucci and Burberry, the luxury sector in general is typically behind the curve with digital transformation compared to retail and FMCG.
The good news is, there’s lots we can learn and adapt to the luxury sector to help accelerate programmes of work.
Embracing digital transformation to drive greater value from your digital marketing strategy
If this is new territory for your luxury brand, or you’ve started on your digital transformation journey but realised there’s lots more to be done, this can all seem a little daunting.
So while digital transformation has much wider business implications, this next section focuses on digital marketing and how businesses can drive better value from its strategy, people, tools, and goals.
Deloitte has developed a digital maturity framework – a well-heeled approach to digital marketing that we’ll use as the basis for our explanation.
For brands, the key is to recognise where on this maturity scale you see your efforts. And, as you develop through the maturity index, each step should be mapped out in terms of needs for the business, teams, skills, technology, and costs.
1. Campaign & Channel Focused
This is typical of small businesses; they have smaller budgets, teams, and skills. So they keep activity tight and work within the confines of free tools they can use to help execute their programmes of work.
But with this we often find siloed approaches to execution and reporting, with each channel looking at what is important to them. This can result in underreporting or double counting of targets. This direction also stems from a ‘brand first’ approach – rather than the customer – so measuring impact can be harder.
2. Customer Journey Focused
Most luxury clients we speak to fall into this category, having mastered channel management, strategy, planning, and reporting.
They are looking to squeeze greater value from their activity, but have a short-term focus driven by business and campaign goals.
They may also start to face limitations within their tech stack as attribution and customer insights are siloed and – due to a lack of technology (usually a CDP – Customer Data Platform) – they struggle to measure lifetime value across the activity, making it challenging to close the loop on their value chain.
3. Customer & Value Focused
At this stage it’s most likely businesses need additional integration of enterprise technology to help drive the right business goals.
This means bringing in the right skill, tech, and partners to support an overall step change in digital performance to create a single view of the customer.
This includes the media spend invested, the targeting frequency, the attribution of channels, and the ability to ascertain the Lifetime Value (LVT) of customers against the activity and channels.
4. Personal Experience Focused
The holy grail for digital marketers over the last decade has been to develop 1-2-1 marketing programmes for consumers.
Consider the way you shop. If you’re presented with an item that is completely personalised to your needs, by way of imagery, content, call to action, price etc, you’re much more likely to buy it.
To a small degree, marketers have been able to do this today. They know about your shopping history and can look at selling you similar products or additional ranges. They have also been able to personalise (in target groups) the messaging and content that you receive. However, this is all about to change.
The introduction of AI as part of DIgital transformation
The advent of AI means we can personalise products and services to a much greater degree. We can build content in real time that resonates with our users’ TOV and content requirements.
For example, a company selling ‘luxury deck shoes’ has one key product that must serve the needs of different audiences.
Audience A is an alpha male who works in NYC for a finance company.
Audience B is a female athlete who advocates gender rights and is a professional yachtswoman.
Both these audiences search for ‘luxury deck shoes’, but their needs are very different. AI allows us to expand the needs not just of these audiences, but ALL audiences who search for ‘luxury deck shoes’.
In effect, the personalisation can be endless, even down to your mood, time of day, or period before payday.
With new technology comes greater sophistication in how you can target customers and make your advertising more personal. This results in greater efficiencies in your media budget while giving the customer what they want, when they want it.
While this is being adopted heavily within the retail space, this is also highly relevant to luxury brands. We know that wealthy audiences are the most time poor when they are online compared to other segments. They are looking for convenience and tailored solutions. They are not so interested in the price of the solution as long as it matches their needs, behaviours, and identity etc. AI and other sophisticated technologies help us to meet this requirement and provide the convenience that is demanded.
In summary
When digital transformation is embraced at a senior management level, it will have a significant impact.
As the brand progresses on its digital transformation journey – as exemplified by Deloitte’s digital maturity framework – business performance improves, competitive advantage is gained, and customers receive a much richer, more personalised experience.
Each brand’s needs are different and having a strong digital strategy to understand the specific needs of your business is key. There will also need to be a commitment by the brand to a long-term relationship with this type of transformation; remember, it’s not a destination, but a journey that should be continually improved.
Talk to Giant Leap today and we can help you understand where you are, your vision for the future, and the impact that a robust digital strategy will have on your business’s commercial objectives over the next 3-5 years.