When it comes to understanding customers, luxury brands have some 'splaining to do. In fact, according to a study of 30,000 luxe shoppers, conducted by Epsilon, some brands are so disconnected from their customers that they lose up to 50% of their top clientele annually due to misidentified demographics and economic profiles, as well as a failure to create a personalized sales experience.
The study showed, for example, that many brands erroneously believe that their customers are typically female, around 45 years old, and boast a net worth over $1 million. However, Epsilon's research found that 57.5% of high-end shoppers are male, likely to be of Asian or Middle Eastern descent, and have a net worth over $500,000. In terms of what they shop for, 13.8% of shoppers with a net worth over $1 million invest mostly in modern, contemporary decor and gifts as opposed to high-ticket apparel, according to the study.
"Luxury brands need to truly understand who their customers are and what they're looking for in a luxe shopping experience," says Jean-Yves Sabot, VP, retail business development, at Epsilon. "This is critical in creating a personalized experience for the customer that drives engagement, retention, and satisfaction."
The study also found that online shopping accounts for less than a quarter of sales for multichannel luxe brands, because this type of consumer wants to see and touch a product before purchase. According to the study, 98% of luxury shoppers use the Internet regularly, but half the time they're researching products and comparing prices on mobile devices. Luxury shoppers, the research said, crave the experience of the brand and look for a VIP interaction.
In addition, the study broke down luxury shoppers into four groups:
- Aspirational Shopper: Shoppers who desire to own pieces from a brand but may not have the necessary means to do so on a regular basis.
- Moments of Wealth: Shoppers who save for a specific piece but don't purchase from the brand regularly.
- Dressed for the Part: Shoppers who purchase luxe items to give off the illusion of being someone who lives a luxurious lifestyle but may not have the financial stability to be a True Luxe.
- True Luxe: Shoppers who have the finances to purchase luxury items at will without concern.
This article first appeared on dmnews.com.