How luxury brands can (carefully) use promotions to drive results
Jul 27, 2022
Editorial Content Writer
8 minutes to read
Many luxury brands mull over the possibility of running promotional campaigns, especially campaigns that can be run without adversely affecting the brand image.
It’s a genuine concern. Sales promotions (particularly coupons and discounts) can be a double edged sword for luxury brands: They can increase sales and cushion the impact of contextual shocks like the pandemic. However, such promotions can weaken brand perception, especially for loyal customers — if they’re not implemented wisely.
Why do luxury brands need promotions in the first place?
If discounts and coupons would mean running the risk of losing exclusivity for luxury brands, why not put them aside altogether and follow a no-discount policy?
Omitting discounts from your marketing strategy could be detrimental to your business because of:
Intense competition: According to Luxury Society, competition in the luxury market has skyrocketed over the past years as more players enter the luxury environment and customers become more sophisticated and discerning.
Growth of online platforms: Luxury brands used to dismiss online selling because they saw it unfit for creating a luxurious experience. They thought an online customer would never feel the uniqueness and exclusivity of experience at a physical store. Thanks to the pandemic and the rapid growth of ecommerce, things have changed now. Luxury brands now have a strong online presence because they know they have to embrace the new reality of online shopping.
Growth of reselling:Especially for high-demand items, the proliferation of resellers (and platforms dedicated to the reselling of high-end luxury goods) has meant that more consumers are having their first touchpoints with luxury purchasing through sales experiences that more closely mirror ordinary e-commerce platforms. To attempt to win back customers to primary sales, instead of losing them to resellers, some luxury brands are changing their approach.
According to Statista, the luxury market will continue to thrive over the next years particularly due to the growth of online sales:
Global luxury fashion market revenue 2012-2025
In the new environment of the luxury market, brands will lose out if they don’t retain their competitive edge through quality promotional solutions that match the quality and exclusivity of their luxury products or service.
7 techniques to offer promotions that don’t harm brand image
How can luxury brands benefit from the full power of promotions? How can they run promo campaigns with discounts and coupons without diluting the brand perception? Here are some techniques that help luxury brands use promotional solutions with panache and flair and avoid cheapening their image.
1. Discounting works best when you’re super selective
Relying too heavily on discounting may be a shortcut to more revenue but it will make your loyal customers disappointed. You should avoid the ubiquity of your discounts because according to Angela Ahrendts (former CEO of Burberry and current senior vice president of retail at Apple):
In luxury, ubiquity will kill you—it means you’re not really luxury anymore.
If you want to benefit from the real effects of discounts, you can run them only for your members. Members-only (Private) discounts will help you strike the fine balance between offering promotions and keeping your loyal customers satisfied.
Dior uses this technique in its My Exclusive Loyalty Program, only accessible to Dior members. The program has four tiers: Pearl, Silver, Gold and Platinum. Members of each tier receive exclusive benefits for their interactions with the brand.
2. VIP customers need VIP promotions
It is extremely important for luxury brands to create the best possible experience for their high value customers.
VIP promotions can make every touchpoint of the customer journey memorable and exclusive. These promotions can take the form of discounts, premium gifts, or special/early access to brand events.
Luxury brands can also use bundling to offer their loyal customers a range of high-price products for an offer that feels personal to the end-user, without harming the price perception of any individual item. Many high-end skincare brands offer bundles comprised of different complementary parts of individual collections. Each item that makes up the bundle is never discounted, which keeps the air of exclusivity, but customers are upsold on buying the whole range by a subtle price trigger.
The personal touch is key to offering value in luxury promotions. In Dior’s tier-based program, for example, Platinum members have a 45-minute virtual consultation three times a year as well as first access to Dior events. As this example shows, the right use of promotions can add to the prestige of a luxury brand.
3. Personalization is important; for luxury brands it’s vital
Personalization is now a key staple of every marketing campaign. Brands strive to create a personalized and even hyper-personalized experience for their customers because they know that generic interactions will fall short of driving customer engagement.
Creating personalized experiences is even more important for luxury brands because feeling exclusive is one of the main reasons that shoppers make a luxury purchase.
What can be a more effective personalization strategy than a promotional offer that creates a one-to-one relationship between the brand and its customer?
The Australian brand The Beauty Chef engages in personalized interactions with its customers through promotions. Their ‘Ask Carla’ scheme tells the story of their founder Carla Oates in a very intimate and personal way. On top of that, customers can ask their questions and receive personalized answers and solutions.
4. Ecommerce partnerships are no longer a nice-to-have
Luxury brands have realized the power of ecommerce platforms and multi-brand digital sites on the current shopping trends. Numbers published by Vogue Business confirm the rising inclination of luxury brands to embrace digital marketing and sell their luxury goods online.
The rising trend shows we should expect more partnerships between luxury brands and discount ecommerce platforms in the future.
What’s important for luxury brands is to find the right online partner that respects their brand values and pricing strategy.
The Swiss watchmaker, Bedat, established a partnership with Reebonz.com, a discount ecommerce platform focusing on fashion and luxury brands. The partnership was hugely successful as the discount online platform helped increase sales in physical stores too.
5. You need a unique omnichannel promotion strategy
Since customers want to connect their online experience to their in-store interactions, a luxury brand needs to create a seamless experience across channels.
This omnipresence requires an omnichannel marketing strategy, an approach that leverages customers’ online and in-store behavior to provide them with a frictionless, integrated experience regardless of the channel they’re using.
Luxury brands need to have a comprehensive promotions strategy that recognises the differences between different channels, but allows customers to get the experiences they expect across:
Such a promotions strategy must be underlined by a data-driven approach to ensure you offer promotions that suit the unique characteristics of each channel and the customers who visit it.
6. Promotions can help you be luxurious & responsible
A key trend is leveraging the power of promotions to fulfill social responsibility targets — and establish an emotional connection with your customers.
An effective discount strategy can nudge your loyal customers toward donating their discounts to charities or investing them in causes that aim to eradicate environmental damages, poverty, hunger, etc. You can give your target audience two options:
Keeping their discounts in their account and using them for future purchases
Donating their discount to charitable causes. In that case, your brand also donates the same amount. Similar schemes to link loyalty points to a good and sustainable cause would also be effective. You can raise brand awareness about your program on your social media platforms.
Some Talon.One clients use in-app events as triggers to plant trees, buy carbon offset credits or a number of other good causes.
7. You can now offer NFTs to your loyal customers
You can incorporate blockchain technology and NFTs (non-fungible tokens) into your luxury marketing strategy. This allows you to be appealing to an entirely new segment of customers.
The fashion industry is increasingly transforming and adapting itself to the requirements of the digital era. There are many successful cases in which luxury brands have made NFTs a key component of their promotions.
Louis Vuitton, for example, celebrated the 200th birthday anniversary of its founder by releasing a game called “Louis the Game” where players tried to find 30 hidden NFTs. The game was an innovative move which combited promotions, gamification and NFTs.
Discounts, coupons and other promotional solutions can help luxury brands improve their revenue and profits and retain the prestige and exclusivity of their business. The only requirement is finding quality promotions that not only boost your sales but also enhance your image as a high value and exclusive brand.
You can turn coupons and discounts into strategic solutions in your luxury brand marketing.
With the shift to online selling, luxury brands are increasingly dealing with complex customer journeys that involve touchpoints across in-store and online. For more information on how promotions can help to link the entire experience, you can check out Talon.One's Ultimate Guide to Omnichannel Retail.
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