[INFOGRAPHIC] Individual is Better Than Exclusive: Why Luxury Brands Should Embrace Social Media

The terms “Luxury” and “Exclusivity” are often used, if not interchangeably, then at least with a high degree of overlap. Social networks, on the other hand, are all about openness and sharing. Shouldn’t luxury brands shun social marketing?

The experience of luxury brands like Tiffany & Co and Burberry suggest otherwise: social and mobile marketing have paid enormous dividends for both of those brands, so why the apparent contradiction?

In a white paper – The Luxury Marketing Myth: Exclusivity is critical to maintaining luxury’s allure – Pam Danziger explains that the tight coupling between luxury and exclusivity is “an old-European myth.” For younger, more democratic luxury consumers, “exclusivity” has negative connotations of snobbery and manufactured scarcity. Exclusivity for its own sake is not what the growing market of young luxury consumers value. What they prefer, according to Danziger, is “an exclusiveness derived from the ability to express a personal point of view, an attitude and one’s uniqueness.”

The luxury brands that have been most successful in their use of social and mobile media marketing have recognised the importance of the “new exclusivity” and have build their digital presence around their customers’ strong emotional connections to – and identification with – that brand.

Tiffany & Co realised that their customers want Tiffany products to be part of their happiest moments, like weddings, anniversaries, birthdays and parenthood.   Recognising that there is an opportunity to deepen that connection, Tiffany launched their Engagement Ring finder iPhone app. This application allows users to virtually “try on” Tiffany engagement rings.

More importantly, in terms of deepening that sense of personal expression, the app allows users to share the rings that they are interested in with friends and to ask for their opinions. Tiffany & Co has become part of the conversation that their customers are having with their closest friends and family about a major life event. That’s a very privileged position to be in.

But does it work? Tiffany & Co saw a 20% increase in their sales as a result of their digital media operations, and they are proud of the ROI that they have achieved from this campaign. Burberry, too, have been very open about the impact that digital marketing has had on their bottom line. In an announcement that accompanied their Q1&2 results for 2011, Angela Ahrendts, the company’s CEO, said, “Burberry has delivered a strong first half, reflecting our continued investment in innovative design, digital marketing and retail strategies.” The company now commits 60% of its promotional budget to digital advertising, and has seen their revenue rise by 29% as a result. This shift includes a near-doubling of perfume sales due to one Facebook promotion alone.

Luxury shoppers are the most frequent users of social media. Households with incomes of over $100,000 spend the greatest proportion of their web browsing time on social networks, spending 39% of their time on Facebook (as opposed to an average of around 30% for lower income groups). The under-thirty-fives in social groups AB are much more likely to spend time on social networks than their counterparts in other social bands, and internet availability rises with social class, with internet penetration among ABs at 95%, compared to 92% for C1s, 84% for C2s and just 68% for DEs.

While expenditure on luxury goods online is growing across the board, it’s the young, digital-native shoppers that are responsible for the largest upswing in full-price, online luxury shopping. Generation Y shoppers (18-34 year olds) spent 31% more on luxury goods in 2011 than they did in 2010. Generation X shoppers increased their expenditure by 23%, while Boomers and Seniors only spent 19% and 6% more on average.

Both shoppers and the luxury brands that they want to connect with are increasingly present on digital media. While 68% of shoppers go directly to a brand’s website, 45% want to look for independent reviews and 13% go to social media sites to research their purchases.  Luxury brands are responding to that need, with 69% of all luxury brands having a Facebook presence, 46% of all luxury brands having a Twitter account and 34% offering a mobile application.

Mobile channels are also increasingly important to wealthy consumers.  Among the Business Elite, that is: individuals in the >$500,000 income bracket,  4/5 own a smartphone and 1/3 own a tablet. In the UK, households earning over £75,000 are nearly three times more likely to own a tablet as those earning less than £75,000. Already, 14% of luxury shoppers use their smartphones to browse luxury brands’ mobile content before committing to a purchase.

Post-purchase interactions are very important to luxury shoppers. Luxury purchases are a way of asserting identity and individuality, and as such, many luxury consumers choose to announce their purchases on social media platforms. When they choose to discuss their purchases online, 60% use Facebook, 17% use Twitter, 7% use their blogs and 16% use other social channels.

Mercedes-Benz has capitalised on their customers’ desire to express their identity as a Mercedes driver by setting up their own “Generation Benz” social network, which brings together young Mercedes owners in an online setting that reflects their lifestyle and identity. This deepens the connection between the buyer and the brand (they don’t just own a Mercedes, they are “Mercedes people”) and creates loyal brand ambassadors.

Kay Hammond, CEO of multi-award-winning social media marketing agency TAMBA, says that luxury brands should embrace the opportunities that social and mobile platforms afford. “The fastest-growing market for full-price luxury goods is the under 35, digital native sector. These shoppers relate to their luxury purchases on an emotional, highly personal, level. Used well, social and mobile media can deepen and strengthen those relationships.”

Kay’s takeaways are as follows:

1) Recognise that notions of “exclusivity” are changing. Young luxury shoppers are more concerned with brands that reflect their personality, values and identity over the notion of rarity. It’s safe to reach out to these potential new markets. Inviting them to become “your people” won’t dilute your brand.

2) Aspirations are about emotion, rather than ownership. Online luxury shoppers aren’t just looking to own something expensive. The latest generation of luxury shoppers is faced with a wide range of “big ticket” items that they could choose to celebrate their success and major life events. What consumers really want is something that reflects their personality.

3) Social media and mobile media are all about personal connections. The Tiffany & Co engagement ring finder is a perfect example of this effect in action. The app plays the part of a trusted advisor, and also becomes an important part of users’ social networks as they discuss their planned engagement.  Tiffany & Co have managed to develop a privileged relationship with their customers through the app, as they become a participant in their customers’ conversations about possibly the most important piece of jewelry they will ever choose.

4) The pool of social and mobile media users overlaps directly with the luxury consumer sector. The first generation of social media users has grown up and become more affluent. They have also become the fastest-growing group of luxury goods consumers. The wealthiest of these consumers are also the ones that are most likely to spend their time on social networks, and are more likely to own mobile browsing devices. These consumers spend most of their time connected to social and mobile networks, which makes the digital realm the best place to reach them.