What Is Relationship Market & How Does It Benefit Luxury Brands?
By flipping traditional marketing efforts on their head, relationship marketing can be a powerful tool for luxury brands. Instead of focusing only on generating leads and closing sales, relationship marketing is about building customer loyalty so they keep coming back. Read on to learn more and draw inspiration from some stellar relationship marketing examples.
What Is Relationship Marketing?
At its core, relationship marketing is about fostering long-term customer engagement and loyalty. Rather than short-term sales and acquisition goals, relationship marketing focuses on building long-lasting, two-way relationships with customers—and this can be endlessly fruitful for a luxury brand.
Not only does it result in ongoing business, but it also can generate free, word-of-mouth promotion and allow access to valuable customer information. Relationship marketing goes beyond closing sales and attracting new customers and, while the former is still important, more luxury brands are opting to prioritize relationship marketing as part of a long-term strategy.
The Benefits of Relationship Marketing
There are three key benefits that brands can enjoy thanks to relationship marketing.
UNIFIED CUSTOMER JOURNEY
When a brand focuses on building meaningful connections, it creates a consistent experience for the customer. This applies across all touchpoints and channels where they interact with your brand. It also streamlines the process from a business standpoint, allowing all teams across an organization to focus on the same goal: the customer experience.
This approach pays off, too: 86% of buyers say they are willing to pay more for a great customer experience and, according to research from PWC, the more expensive the item, the more customers are willing to pay—great news for luxury brands!
INCREASED CUSTOMER LOYALTY
Building a loyal customer base is undoubtedly a good thing. The more that customers feel connected to a brand, the more likely they are to continue giving it business.
When executed properly, relationship marketing inevitably leads to customer loyalty. When a brand can personalize the experience, maintain regular communication, offer loyalty programs, and provide exceptional customer service, customers are far more likely to stick around.
HIGH CUSTOMER LIFETIME VALUE
Loyal customers mean repeat purchases, which inevitably leads to a higher customer lifetime value (CLV). Yes, returning customers are great, but there’s more to it than that.
When a customer feels an affinity with a certain brand, they’re likely to become organic advocates, recommending the brand and its products to their friends and family.
Why Is Relationship Marketing Important For Luxury Brands?
For luxury brands, 80% of revenue comes from 20% of their customers. This means that returning customers and very loyal customers represent the majority of their business. This is why relationship marketing is so important for success.
Truly effective luxury brands treat their marketing like a customer loyalty program, focusing on the strong, ongoing relationships that their revenue relies on. Brands will do well to identify their top 1% of customers and roll out the red carpet for them with a unique, personalized, one-to-one experience.
Relationship Marketing Strategy & Ideas For Luxury Brands
Now we know just how effective relationship marketing can be, here are some examples of brands that have gotten it right to draw inspiration from.
MAKE IT INTIMATE
Luxury consumers want to feel part of something larger, while still experiencing an intimate connection. You’d think it’d be impossible for a massive luxury brand to offer customers something so candid, but Dior did exactly that.
The brand’s Instagram account may boast 10 million followers, but the content posted by the brand speaks directly to the consumer. Behind-the-scenes content and celebrity campaigns humanize the brand, taking the audience on a journey that brings them into the fold. In turn, they feel more connected to the brand, leading to meaningful relationships.
SHARE CUSTOMER VALUES
Luxury customers hold brands to high standards. They value those who openly showcase their values, particularly when they align with their own.
Take Patagonia as an example. The high-end outdoor company openly lives and breathes its brand values, encouraging like-minded customers to do the same. From clothing recycling programs and free repairs, to ecological education on its social platforms, Patagonia makes it clear it believes in the causes it champions.
FOCUS ON PERSONALIZATION
Luxury customers want to feel seen and heard. Studies show, time and time again, that consumers are consistently willing to pay more for personalized goods, particularly in the luxury sector.
Gucci listened. The brand offers a unique personalization service for shoppers, in the name of “championing the idea of self-expression”. Customers can personalize knitwear, tote bags, and sneakers with letters and insignias in different colors and materials, allowing them to take something from the brand and truly make it their own.
This allows customers to be a part of the coveted experience of shopping with Gucci, and owning a Gucci product, while still making it special and unique to them.
Gucci personalized handbags & luggage
REACH CUSTOMERS WHERE THEY ARE
Relationship marketing should be focused and targeted, based on a brand’s audience. If your target audience is Gen Z, you should focus your efforts on TikTok and Snapchat. If your core customers are Millenial, look at Instagram and Facebook.
Legacy luxury brand Fendi is an excellent example of a high-end brand reaching customers where they already are. Through a curated Instagram presence, the Italian fashion house stays relevant and relatable for a young audience.
It’s not just about posting regularly. From creating bespoke filters to being an early Reels adopter, Fendi aced the game when it comes to building customer relationships.
OFFER INCENTIVES AND REWARDS FOR CUSTOMER LOYALTY
Loyalty programs are a great way to reward customers, as are exclusive offers and discounts for returning customers. Often, if a customer is on the fence about making a repeat purchase, a personalized discount will be enough to encourage them to follow through.
Look to Hugo Boss Experience as a great example. Rather than the typical ‘spend money and earn points’ reward program, customers who sign up get a variety of perks. It’s completely free to join and encourages loyalty through perks like complimentary alterations, VIP events, personalized styling sessions, and door-to-door Uber delivery from the store.
Instead of rewarding customers after a certain amount of purchases, it incentivizes them with an instantly-available perk system.
Ready to implement these learnings to strengthen your luxury brand? Work with Block & Tam to create a relationship marketing strategy today.
