Why relationship marketing is the new marketing model of luxury
brands in a digital world
Whilst most luxury brands have been looking from a distance, if not with suspicion, at
the rise of social media and digital innovation, we believe that social media marketing
and CRM are in fact a unique opportunity for many luxury brands. These new digital
tools give them a chance to reconnect to their core values, employing marketing tactics
that were at the foundation of their history: building relationships.
A bit of history….
The success and longevity of luxury brands are typically based on values of
craftsmanship, innovation, exclusivity driven by premium pricing and social
prescription. Modern luxury brands such as Louis Vuitton (created in 1854) or Chanel
(in the 1930s) have built their initial success within a close community of fans. When
Vuitton advertised on his shop on Boulevard Haussmann that the Empress Eugenie was
a customer, he was already using social endorsement as a marketing strategy. Although
from a popular origin, Coco Chanel built her initial success by developing close ties with
the Paris fashion community. Most creators still today have built their initial success by
building strong relationships with a small community of clients in the show biz or
In a word, relationships have always been key to the success of luxury brands.
The end of the XXth century, however, has marked a change of paradigm for luxury. The
development of a larger wealthy customer base and the globalization of some leading
brands under the leadership of structured industrial groups, such as LVMH and Kering,
has taken those brands far from their roots and to a new level.
The marketing paradigm of mass luxury:
The huge success story of luxury brands over the last 20 years has been largely due to
two phenomena: the invention and execution of a new marketing model and a
burgeoning need by consumers to feel special. People of a wide swath of affluence aspire
for singularity, quality and a need for identification.
This new marketing paradigm has been based on two main pillars:
1) Brand platforms have focused on institutional messaging, aiming at building a unique
brand image and creating a sense of exclusivity and social aspiration. The awareness
and image of the brand must be carefully constructed with a particular attention to
sophisticated advertising, placed in the most selective outlets.
2) At the same time, leading brands have developed an integrated global distribution
network and opened retail outlets in the most exclusive shipping venues (for example
the TSUM in Moscow, Wafi Mall in Dubai, Santa Monica Place in L.A. or Westfield in
London) with the view to bring the luxury experience and personalized service closer to
Interestingly, this specific marketing model has now become a well identified-standard
that has been used in an expanding range of non-luxury sectors with brands such as
Apple or Nespresso.
This model, however, is already being challenged. The development of retail outlets as a
singular point of contact with clients requires huge investments and will not provide
infinite proximity. In an environment characterized by increased competition and the
stagnation of purchasing power (excluding the hyper wealthy), growing penetration on
existing customers has become a key business objective, requiring more frequent and
relevant engagement. Digital media is also changing the way customers spend their time,
shop, build and maintain relationships or expect to engage with brands.
Building the new model of luxury marketing:
1) CRM as a way to engage with customers
Customer relationship management in luxury must take into account a multitude of
factors that are specific to the affluent population. First, communications should be
considered with discretion. Secondly, privacy of personal data is sacrosanct. Thirdly, a
customer must be considered as the same customer wherever she/he is. In other words,
when a Platinum customer walks into any store around the world, that store personnel
must be able to pick up where the last store left off. According to the customers’ habits
and devices, the relationship and communication channels must be adapted to where
and how he/she wants.
2) Omnichannel in an exclusive world
If being everywhere and exclusive are seemingly conflicting terms, the reality is that the
customer’s context and reality is seamlessly interwoven among different devices,
platforms and physical locations. If luxury brands are to succeed in creating value
through the omnichannel existence, branding must be consistently excellent and, yet,
thoroughly adapted to the context in which it is being consumed. Such a challenge is
rendered even more complex by technical (bandwidth), technological (compatibility)
and compliance (CNIL) issues.
3) Social media: the opportunity for relationships?
Most luxury brands have been looking with suspicion at the rise of social media and
wondering if and how this could fit into their brand model.
Competing for fans and likes was not an obvious fit for many and they started adopting
the leading social media platforms only when they realized they could be used just as a
new media on which they could broadcast their institutional campaigns.
Luxury brands, however, cannot ignore social media as a conversational platform
Social media means that brands have already lost the monopoly – if not control – of the
public conversation on themselves in the public sphere. The presence of luxury brands
in forums and social media platforms comes with an inherent risk of commoditization of
the brand’s content and values.
New and strong social communities are rapidly developing on social media. Social
influence has expanded online. The customers (and prospective customers) of luxury
brands are building their perceptions, desires and behaviors based on conversations
and interactions with their peers online, including friends, family and influencers.
Beyond bloggers – toward a social business
Luxury brands need to look beyond fashion bloggers to understand how they can
leverage social media to build advocacy and recommendation online through
relationships with key customers, prospects or stakeholders.
Influencer marketing programs for luxury brands will not aim to develop loose perk-
based engagement mechanics. They will look to generate authentic recommendations
and advocacy that will expand the brand’s values within its identified target audience
and territory. Building such programs in a luxury world will require going through the
following main stages:
1) Clearly define objectives and the related target audience. Specific programs could
focus on brand advocates, socially active communities in specific territories
associated with the brand (travel for Louis Vuitton, horse riding for Hermes) or
important stakeholders such as employees
2) Identify, recruit and select program members that are committed to the brand
and can best expose the brand’s content and values
3) Design exclusive content that will generate authentic engagement and
endorsement by program members
4) Measure, optimize and iterate. It is not about campaigning; it is about building
long term and personal relationships.
Planning and executing successful influencer marketing programs will require specific
influencer technologies (such as Traackr*), but also a new focus from marketing. Re-
allocating budgets and attention away from media spend to relationship programs will
be a major switch in the mindset of most CMOs.
Addressing the challenges of social media however goes beyond influencer marketing.
To be effective in their relationship building with affluent customers (or, at least, to
demonstrate the added value within their brand), luxury brands need to embrace the
full concept of a deeper social business. As defined by the IBM Social Business report, “a
social business is an organization whose culture and systems encourage networks of
people to create business value.” To harness the full power of social media, per se, a
successful social business will embed the social tools, media and practices within and
throughout the organization, not just in the marketing or PR departments.
Relationships at the core
It is time luxury brands get back to where it all started: relationships.
Luxury brands were born out of building relationships through traditional high net
worth networks. In an age of mass luxury consumption and strong challenges on the
growth potential of many luxury brands, the digital revolution opens a new and unique
opportunity to refocus on building relationships at scale through strong CRM programs
and social media relationship programs.
It is time to start identifying key stakeholders online, advocates, contextually relevant
influencers and key customers and to build strong and structured relationship programs
with them. This will involve a corporate-wide transformation, to have everyone
galvanized and focused on each client as a single, valuable and long-term customer.
About the authors:
Minter Dial, President and Founder of The Myndset Company, is a professional speaker,
coach & consultant on branding and digital, working for international blue chip
companies including Orange, Kering, Redcats (ex PPR), Samsung, L'Oreal and Tencent.
Previously, Minter led a 16-year international career with the L'Oréal Group, including
being GM Worldwide of Redken and MD of the Canadian Professional Products
subsidiary. In his last post with L'Oréal, Minter was a member of the worldwide
Executive Committee of the Professional Products Division, responsible globally for
Business Development, e-Business (Internet, intranet, CRM) and Communications. He is
a frequent contributor to Social Media Today and has been published on The Brand
Channel, Huffington Post and Business Insider as well as appearing as a commentator on
France24 and TechToc TV. Find more on about.me/minter
Nicolas Chabot is an investor and VP EMEA at Traackr, a San Francisco-based
technology start-up in the influencer marketing space. Traackr works with leading
agencies and brands such as Publicis, Orange, Asos or SAP to help them build scaleable
relationships programs with key online stakeholders. Previously, Nicolas worked at the
Boston Consulting Group and has extensive international experience at the executive
level in leading retail brands Darty and Carrefour where he was head of the Electronics
and Appliance Division at Group level, managing a $5B turnover business. Nicolas
graduated from HEC Business School. Contact details @nicochabs on Twitter and on
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