As a loyalty expert, I’m often being asked: “Do loyalty programs work in luxury fashion?” Well, let me tell you: luxury fashion loyalty programs aren’t just a myth. A reward system can indeed work in this industry without cheapening the brand image; you just need to take the right approach. Loyalty programs are no different from any other tool in your arsenal, as you can consistently reshape them to fit your needs.
Luxury fashion lives and dies on customer engagement. People don’t come to you for discounts or bonus points, but for VIP treatment they can’t get anywhere else. This lesson is especially relevant in the post-COVID-19 era, where people are hungrier for impactful shopping moments than ever before. In order to stand out and forge long-lasting customer loyalty in the current climate, luxury fashion loyalty programs must focus on unforgettable experiences.
Are Customers Loyalty to Luxury Brands?
Followers of high-class fashion have high expectations when choosing their shopping destinations. Keeping customers loyal to luxury brands is only possible through an exceptional customer journey, with or without a loyalty program. Some luxury fashion labels such as Louis Vuitton don’t have a loyalty program and instead rely on a third-party agency to deliver reward experiences and services to top spenders.
Loyalty programs, on the other hand, are used for long-term customer engagement. For instance, they can be geared towards nurturing customers, increasing their basket volume or ensuring they make a second or third purchase, eventually turning them into the new top spenders. Exclusive loyalty programs and luxury fashion loyalty programs in particular excel in engaging privilege-driven audiences.
What Is a Luxury Fashion Loyalty Program?
There’s one word that describes luxury fashion loyalty programs perfectly: exclusivity. Affluent buyers wish to be rewarded just like anyone else, just with the added expectation of higher-class treatment. Therefore the reward system should focus on gifts and benefits that either hold higher value or only available for the upper echelon of the member base.
In terms of gifts, luxury membership programs have a higher tendency of featuring experiential rewards, including designer clothes that are otherwise unavailable for purchase, signed merchandise from famous fashionistas or influencers, as well as partner rewards from high-end restaurants and hotels.
As for exclusive treatment, luxury fashion loyalty programs offer VIP tiers that are only available to the top 100 highest spenders. Entering such a prestigious group requires a high customer lifetime value in exchange for an outstanding status within the community.
In this period of uncertainty in the luxury fashion industry, we needed to re-invent our marketing strategies and we needed to do it very quickly. Our luxury fashion-specific loyalty program is helping us retain our customers too: the increase in sales we are seeing in this period, indeed, is mainly due to our long-term customers rather than the new ones.
Senior CRM Specialist at LuisaViaRoma
The Biggest Customer Retention Challenges for Luxury Fashion
The lack of personalization is one of the biggest challenges luxury fashion companies face. In order to nurture top spenders and give them a taste of exclusivity, the personalized experience needs to be both scalable and readily available across all channels. Other challenges include:
- Most customers only purchase once, resulting in high churn rates
- The top segment is already loyal — with store associates sometimes knowing customers on a first-name basis — but there’s little to no incentive to make first-time buyers stick
- Luxury brands are often afraid of cheapening their brand with discounts and earn & burn style program elements
- One-on-one communication is highly important, yet hard to achieve
- Brands require benefits and rewards capable of exciting affluent VIP customers who have it all
The Evolution of Luxury Fashion Loyalty Programs
Luxury brands used to have hidden, inconsistent, and fluctuating prices depending on where and when you were shopping. eCommerce and digital changed that. Today the customer is much more tech-savvy and spends time to shop around to get the right deal. That means they have become less brand loyal. Post-COVID, the competition for full-price customers will be even more pronounced. With a glut of stock brands will be tempted to discount to incentivize but don’t want to damage their brands’ position.
Recruiting and keeping full-price paying customers is a massive headache. Also, hundreds of thousands of brands, that were retail or wholesale, have now opened eCommerce. Online it’s going to get even more crowded and increasingly difficult to be seen and heard especially against the backdrop of heavy discounts.
A loyalty program is a fantastic way to retain a brand’s communication with customers beyond the buying cycle. If you can get customers to engage and invest time on that program, and your brand is helping them on a journey, then you’re effectively building a strong bond and relationship. That’s the key to getting them to return to buy again.
Creative Director and Founder of Yulan Creative
Best Loyalty Program Features to Stand Out as a Luxury Fashion Company
Being able to change and adopt new strategies is the route to success. Transforming the ways you engage with customers will no doubt yield positive changes in their spending habits. Contests, exclusive clubs, or user-generated fashion content are other forms of gamification you can use for the luxury fashion audience without cheapening the privilege program. By making the program available on a smartphone app, you can unlock even more new opportunities.
The convenience and ease of accessing and managing a loyalty program via a brand’s retail app is critical for luxury brands to continue to retain customers and keep the brand at the forefront of shoppers’ minds. On the Poq platform, we see shoppers spend more time with a brand via an app than compared to any other digital channel. Utilizing this preference and rewarding engaging behavior with a loyalty program could see luxury shoppers continue to connect with a brand.
Chief Revenue Officer at Poq
Here are some other features that could benefit greatly your luxury fashion loyalty program.
1. Offer Membership Tiers Instead of Loyalty Points
It’s important to understand that earn & burn-style campaigns aren’t your only option. Instead of focusing your program solely on points, experiment with a system based on behavior, such as a tier system. That behavior could be spending habits (the more money your customers spend in the store, the higher the tier they will reach), or a combination of things, e.g. completing a challenge, donating to charity, or visiting your website every day for a specified period of time. All of these activities would, in turn, unlock tier-specific rewards.
These exclusive gifts should be one-of-a-kind items that aren’t available elsewhere. Designer phone backgrounds, limited edition product samples, and rare art prints are just a few examples. Be creative!
The benefits of tiered loyalty programs:
- Easy to understand
- Offer meaningful rewards
- Emphasize long-lasting VIP status
In a points-based system, a customer can easily run out of points by spending them. Alternatively, in a tier-based system, the benefits won’t disappear so easily. For more insights, check out our video.
2. Create Memorable Moments With Surprise & Delight
Not every reward has to be expensive to make an emotional impact. Simply giving something when customers least expect it is enough to form long-lasting loyalty and entice customers to make an unplanned purchase.
For instance, sending the valuable members a birthday message that, in addition to giving a small benefit, recounts their history of being a customer (mentioning their favorite products, best gifts they redeemed, current tiers, the day they joined and even the private or community events they attended) show that you, as a brand, truly care.
Obviously, executing such a hyper-personalized marketing campaign requires an established a CRM system capable of collecting and sorting such data. Additionally, you can collect further information — product preferences, favorite colors, likes and dislikes, personality, hobbies — with gamified profiling.
3. Keep Members Engaged With Experiential Rewards
Showing VIP customers that you are genuinely invested in building a relationship fosters trust and brand loyalty. Offering unique experiences is a great way to make this happen. You can maintain engagement in the following ways:
- Motivate social butterflies to share their latest purchase on Facebook and Instagram
- Hold members-only events and experiences, such as a meeting with a top designer
- Organize a limited-entry cocktail party
- Say ‘thank you’ to your top-tier customers with a signed gift
- Allow customers to contribute to new fashion ideas
4. Invite Them to VIP Clubs
Access (or lack of access) to certain benefits is what adds true spice to a privilege program. Knowing that only the crème de la crème of the community is allowed to access a certain feature makes that feature more desirable for customers across the board. For this reason, consider setting up special interest groups that revolve around your most popular products.
One stellar example is LuisaViaRoma’s Sneakers Club, where loyalty members can pay an entry fee in points in order to join. Once they’re in, they get early access to upcoming footwear releases ahead of the public. (Most of the time the product doesn’t even make it to the shop floor, because they are sold out to club members!) Special groups like this bring the true essence of exclusivity to a loyalty program.
5. Grant Them Exclusive Treatment With a Paid or Exclusive Loyalty Program
Paid or subscription-based loyalty programs are a bit similar to VIP clubs, but in this case, the membership requires a direct monetary payment, which can be one-time or recurring. There are two ways to approach the concept of paid loyalty programs: either make the whole program fee-based or offer it as an optional bonus on top of the default, free system. In case of the former, you need to ensure that the rewards and benefits are truly outstanding and worth the investment. As for the latter, consider using it to boost existing benefits. For instance, those who subscribe to the paid system can earn double points for each purchase, or receive more valuable birthday rewards.
The quality of customers in such exclusive programs is generally higher, as only those who are truly dedicated to the brand are willing to pay upfront for premium privileges. Plus, if it becomes popular, the program will have a high ROI.
5 Inspiring Loyalty Programs for Luxury Fashion Brands and Retailers
1. LVR Privilege – LuisaViaRoma
LuisaViaRoma is a luxury retailer based in Florence Italy. They sell established and emerging designer brands, such as Bottega Veneta, Gucci, and Off-White. The company’s loyalty program, LVR Privilege, is powered by Antavo and offers multiple features aimed at creating a unique and exclusive experience.
- Users can start earning points by completing a purchase (spending €1 earns 1 point), sharing their purchase, and completing a client profile.
- There are four tiers in total. At the highest tier, you can get the Privilege Card, which gives 15% off on all purchases for six months
- LVR Privilege also grants a gift on customers’ birthday
- The Sneakers Club is an insider VIP club that gives early access to upcoming products.
2. InCircle – Neiman Marcus
Neiman Marcus is an American chain of luxury department stores, including the Bergdorf Goodman luxury chain. The company offers InCircle, a loyalty program with eight different membership tiers, accessible through their NM and BG Credit Cards.
- Standard tiers range from Circle One through Circle Six, offering benefits from points to the concierge to free shipping
- The two additional tiers are called President’s Circle and Chairman’s Circle and offer the highest rewards
- Once members of the Neiman Marcus loyalty program reach Circle Five, they have access to the InCircle Concierge, a resource for planning vacations, getting event tickets, and obtaining popular restaurant reservations
3. Hugo Boss Experience – Hugo Boss
Hugo Boss is a German luxury fashion house selling men’s and women’s wear, fragrances, and accessories, specializing in creating high-quality tailored men’s suits. The loyalty program, Hugo Boss Experience stands out for ditching both the earn & burn and tiered approaches in favor of an instantly available perk system.
- The loyalty program is free-to-join with no points or levels
- All benefits are available for every member from the get-go
- Rewards include complimentary alterations and monogramming, private styling appointments, and VIP events
- The program even offers door-to-door Uber delivery from the store
4. The Curator – MatchesFashion
MatchesFashion is a luxury retailer based in London, offering hundreds of luxury brands such as Prada, Saint Laurent, and Burberry, for men and women. Their program, The Curator, awards points for purchases, allowing shoppers to progress through membership tiers as they shop.
- Spending €10 grants 1 Curator point
- Features a 5-level tier system, featuring experiential rewards, such as early access to private sales, free shipping, and styling consultations
- The Curator also offers birthday rewards and personalized edits to give members relevant benefits
5. Moda Rewards – Moda Operandi
Moda Operandi is a ‘fashion discovery platform’ that allows online shoppers to browse and shop directly from designers’ runway upcoming and current collections. The company specializes in the sense that it offers multiple services for customers. Moda Rewards is the loyalty program, and it’s a traditional earn & burn point system.
- Free to sign up, 500 points upon signing up
- 1:1 spend to points ratio
- For every 1,000 points earned, $20 reward on account
- Moda Private is a personal shopping service, tailored to the client’s shopping needs
Smart Customer Retention Instead of Discounting
High-end customers want to be pampered after reaching a new milestone. You can easily fulfill their expectations by offering exclusive gifts, unique services, and personalized experience. People will love it!
And don’t forget to download Antavo’s Customer Loyalty Report 2022, an in-depth report that showcases dozens of statistics as well as future industry trends to help you navigate the world of next-gen loyalty programs.