What e-commerce retailers are learning from luxury in-store experiences

Luxury brands are renowned for their ability to forge strong emotional connections with customers. This is especially true of in-store experiences, where sales associates understand the art of providing individualized and personalized service. They greet customers by name, anticipate their needs and provide tailored recommendations. This level of client-centric service builds trust, loyalty and a sense of belonging.

Since brand reputation is everything in luxury, every facet of their marketing strategy must be pristine — including their owned digital channels. It’s crucial that the level of customer care and attention they provide in-store extends to their online presence.

Big-box retailers and mid-size e-commerce brands are following suit. According to Wunderkind’s 2023 consumer spending report, the most poignant driver of brand perception is the all-important brand website (46%), followed by brand-owned channels (27%), meaning marketers are strategically optimizing these channels to deliver a fruitful customer experience.

Luxury retailers are optimizing their owned channels

In high-end luxury, offering loyalty programs is kitschy. Instead, luxury brands operate their entire business as a loyalty program for their most important customers.

“Eighty percent of luxury brands’ revenue comes from 20% of their customers,” said Margaret Kazmierczak, associate director of strategy consulting at Wunderkind.

When a top-tier customer visits their website, they need to know who they are and what they want, so they can cater to them accordingly.

“Identify who your highest value customers are — that top 1% — and give them a very unique, personalized, one-to-one experience,” said Jack Riker, vice president of revenue at Wunderkind.

Brands of all shapes and sizes are taking steps to provide a similar experience.

Identifying customers across channels is foundational for relevant outreach

Investing in a cookieless customer identification tool allows marketers to recognize existing customers returning to a brand’s site and identify new visitors who may have never shopped with the brand. A customer identification tool prevents any irrelevant or superfluous onsite prompts from popping up, such as a “welcome” notification for returning customers, and vice versa.

In physical stores, sales associates should collect customers’ contact information, such as their email addresses, when they make a purchase and log it into the retailer’s database. That way, if a customer makes an in-store purchase and then comes to the website for their second purchase, they’ll be identified as an existing customer and treated as such.

Segmentation unlocks opportunities for tailored emails and text messages

According to the consumer spending report, email is the most preferred brand communication channel across the U.S. and the U.K. At the same time, more than 30% of respondents state interest in only text outreach. Granular segmentation is the key to success with both channels.

“Make sure your texts and emails are hyper-relevant to the types of items they’ve already shown interest in,” Kazmierczak said. “If they’ve only ever purchased leather goods, don’t send them an email for your new straw purses.”

Marketers are segmenting by specific cohorts of customers. For example, a brand may only engage with customers who interact with a certain product line on its site. Along with product affinity, brands are segmenting by previous order value, purchase frequency and even times of the year customers tend to purchase.

Brands and retailers send emails and texts to their customers to announce new collections or special offers based on shopper preferences, extend invitations to brand events and even offer discounts or complementary next-day shipping (especially for customers who shop frequently or spend a lot).

Understanding consumer preferences is vital for optimized online experiences

Brands are creating a better product discovery experience by using a customer’s real-time behaviors to make recommendations across their owned channels.

When a customer is perusing an e-commerce website, retailers can serve onsite recommendations based on their prior behaviors, as well as the behaviors of lookalike customers. For instance, say a customer has purchased loafers at an upscale apparel store in the past. The store could then deploy onsite ads showing other styles of loafers that the same customer may like.

In another example, consider a 35-year-old mother living in Miami named Samantha. If other mothers in their mid-thirties living in Miami are putting a particular pair of loafers in their online carts, the algorithm can determine Samantha might like them too and offer them as a recommendation to her (whether it be via an onsite ad, email or text).

The common thread is that brands and retailers know who their customers are and how they’ve behaved in the past. This is what luxury brands are so good at.

In lieu of the ability to walk up to customers and recommend a pair of shoes a seller is sure they’d like, brands can optimize their website and owned channels to ensure shoppers come across and have access to items they’re most likely to purchase. No matter the brand, there’s no excuse not to operate through the lens of a customer-centric luxury retailer.