Secrets of Luxury Loyalty Programs [+examples]

January 17, 2024
9
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I’ve personally heard some of the wildest stories about lavish spending sprees and exorbitant lifestyles. With such high-ticket clientele, luxury brands use exclusive loyalty programs to glorify their VIPs. 

Indeed, the basic loyalty marketing model doesn’t exactly fit luxury brands. Loyalty points certainly don’t accomplish anything and can even deteriorate a brand's identity. Luxury brands tend to practice preservation, a process of safeguarding their perceived value. Instead of relying on more sophisticated approaches.

Luxury brands are more concerned with creating an exclusive experience, so any loyalty program must enhance this appeal. A luxury brand's identity is often delicate, how you structure your rewards is what truly matters.

Some brands go to great lengths to maintain their brand image. I remember hearing how Louis Vuitton goes as far as to burn their excess stock to prevent grey market sales. It seems almost extreme, but preserving the idea of excellence happens to be more important for them. This principle defines the luxury industry which seeks to leverage scarcity and maintain value.

Customers who can afford to splurge on the excess expect a certain standard of service. After all, there aren’t many people who can spend on the same level as them. Luxury establishments often go to great lengths to familiarize themselves with high-value customers. Top spenders contribute to a major portion of their revenue, so treating VIPs with extra care is warranted.

Where luxurious quality begins, dedicated service is necessary. Luxury brands are in large proportion about experiences as much as they are about the product. Luxury loyalty programs are an important tool in an industry with particular requirements, so how you craft your program is critical. Let’s explore luxury loyalty programs in detail.

Luxury is a delicate topic

Like with all delicate things, a gentle touch is necessary. Luxury concepts can take substantial time to forge and their reputation can be quickly lost. Since your customers are such affluential individuals their needs can often be very sharp and expectations exceedingly high. 

Almost all luxury shoppers seek status and service over price discounts. That’s why top luxury brands see little value from price compromise. It is highly unlikely that we would find luxury brands offering discounts in their windows, which is a clear sign of what direction we should be heading. A lot can go wrong with broad approaches, suggesting a more conservative approach.

"Need to Know" is a luxury strategy

Secrecy is a tool used in luxury retail to cultivate exclusivity. The main goal is to keep things elusive and emotionally engaging. With a touch of intimacy, we can delicately offer something that only a select group of customers can access. 

There is a reason why only a few people are aware of some of the world's most popular luxury loyalty programs. They tend to keep things on a “need-to-know” basis and use tiers with high requirements to limit members. Limiting exposure can be effective in restricting supply, using the principle of scarcity as a central part of their loyalty programs. 

Once more, this helps preserve the allure of luxury. It wouldn’t make much sense to market your luxury loyalty program to the mass public, potentially tarnishing their image. This goes to show how typically loyalty programs won't work for luxury.

The drawing power of luxury brands

While the title of a luxury is difficult to maintain, it comes with some serious drawing power. Luxury represents status, exclusivity, and affluence. Carrying a renowned emblem can mean access to exclusive circles and can even elevate you in certain rooms. This influence can be even greater for rare and highly sought-after items.

Luxury is deeply symbolic, when we think luxury we are transported into a world of bright lights and fashion shows. Some shoppers will jump through literal hoops for what they represent. You’ll find that if anybody can walk into a luxury store and demand their rarest items, that would tarnish the experience for the most important customers.

Loyalty tiers in many luxury scenarios, mean access to some of the rarest products and events. The more inaccessible a particular item, the more recognizable and desirable it becomes. This is where status is born.

High expectations of VIPs

One thing that all luxury shoppers have in common is high expectations, a luxury customer can be as affluential as the brand itself. A conscious shopper is well aware of their importance and that makes them especially sensitive to how they’re treated. Handling VIPs is something that is commonly trained and luxury loyalty programs can enhance that experience.

A great start to a luxury loyalty program is simply recognizing important customers, and treating them as they expect. Being on a first-name basis, and treating them with familiarity across all sales points is necessary for a consistent experience. 

Effective communication and branding

Unlike a mass market brand, where loyalty rewards are meant to attract, in luxury surprises are your best friend. Effective communication can mean a lot since the term is a bit ambiguous. What we mean is an emotional connection, which can be the foundation of a long-lasting customer relationship.

Your rewards are the primary tool coupled with your customer service. These two things can deepen and deepen customer experiences and product unrivaled loyalty.

Branding equity is valuable in luxury and so when communicating your loyalty program, keeping things aligned will enhance your offer. Luxury loyalty programs must remain consistent with brand identity and serve as a vehicle to enhance perception or deliver heightened service.

When we deal in luxury, we cannot take the beaten path and simply explain the value of your program. Instead, we need to use more sophisticated and reserved approaches. And when we offer rewards any simple reward will not suffice.

The process begins with understanding your unique proposition or allure and keeping in line with those desires. Something along the lines of exclusive products or special access to events fits the agenda.

Synchronizing online and offline channels

For many luxury brands that use e-commerce, ensuring consistency between in-store and online experiences can be challenging. An authentic luxury experience must be felt in person to be truly appreciated. The same principle applies to luxury loyalty programs which are primarily based on experiential rewards.

Ensuring that you are smoothly transitioning loyalty members to the authentic experience is necessary. Furthermore, ensuring cooperation between in-store employees with loyalty member expectations is essential. The genuine loyalty experience relies greatly on staff to make them work.

Rewards that will spoil shoppers

Image of a luxury car in front of a luxury building

Rewards are what define any loyalty program, and in luxury, expectations are high. We’ve established that maintaining a luxury image is a delicate matter, below are a few ways that you can spoil your most valuable shoppers while keeping things aligned with your brand identity. You will certainly not be receiving a stamp card at a Gucci Store, so think about the presentation as well.

  • Private in-store fitting: To enhance the loyal customer experience consider organizing private fittings, to give shoppers a sense of importance.
  • Include a meaningful gift: The unexpected gift can be a joyous delight, and the rare and more memorable a gift, the more influential it can be. With wealthy customers, that return multiples.
  • In-store cocktails and concierge service: Luxury customers can spend substantial time shopping and can spend a fortune. Offering dedicated service can enhance their experience and leave a lasting impression.
  • Exclusive access to high-demand items: Some of the most well-renowned products are easily recognized and highly desired. They also come with a very restricted supply, offering first access to your most valued VIPs can be a redeeming reward.
  • Red-Carpet Events: Luxury is synonymous with fashion shows and red-carpet events. Offering access to these events through loyalty rewards can make your luxury loyalty program seem like a dream come true.
  • Special Consultants and Meetings: Designers are like icons to some luxury shoppers. Consider organizing special meetings with these famous individuals for some of the most desirable rewards.
  • Member-Only Parties: Imagine gathering your most loyal customers in members-only parties. Inviting your most affluential shoppers can mean many big names and a party to never forget.
  • Personalization: Personalization is a sign that you understand your customer and their interests. Using what data you can gather, narrow down your customer's interests. This information can be used to enhance the overall experience online and offline.
  • Loyalty Tiers: Tiers are highly sought after as a way of creating levels of importance. Tiers can also help you control who and how shoppers can unlock your most advantageous rewards.
  • Contributing ideas: Many luxury shoppers want to see their ideas manifested. It's possible to gather customer opinions and use those ideas to make customers feel like a part of the brand.

Whenever designing your luxury loyalty program, it's important to design your rewards with an emphasis on limiting access. We want to be able to offer many rewards but their value diminishes if too many people can access them. It’s also highly advisable to incorporate employees into your plans, this is your best chance of creating a consistent experience in-store and online.

01. Ferrari and their endless waiting list

Ferrari is one of the most recognizable brands on planet Earth. While they may be well over the average person’s price range, the demand for their cars is endless. There are typically two challenges: affording the car and actually getting a hold of one. The rarity of some of their models makes it nearly impossible for a first-time buyer to buy them.

There is a unique form of customer loyalty at play here. Ferrari has to think about who they want driving their cars as well. It would be much easier for Charles Leclerc to get a hold of their rarest cars since his name enhances their prestige. You’ll find that some of their customers have the influence to even make demands. Perhaps this isn’t a commonly discussed topic in luxury, but certain elements such as these do exist.

Exclusive Ferrari that is very difficult to obtain

02. Jacob & Co. personal consultations with Jacob himself

What a wild world we live in where an item that fits on your wrist can range in millions of dollars. Customers who can afford these timepieces can reserve personal consultations with Jacob himself. Once you demonstrate a genuine interest in buying one of their most exclusive watches, you can sit one-on-one with the mastermind behind these masterpieces.

With enough buying power to splurge on a million-dollar watch, you can buy a ticket into one of the most elite circles. Whether you can survive is another question, but owning such an item will undoubtedly make you stand out from the crowd. I should warn you, that it is inadvisable to go out in public without security wearing one of these pieces.

Jacob & Co. CEO of luxury watch brand

03. Hermes and the allusive Birkin Bag

There are videos of people walking down crowded streets with a Birkin Bag and drawing awe and shock across the board. Even to the unacquainted, the luxury and quality of this handbag is obvious. Have you tried getting your hands on one? Good luck, they aren’t available to just anyone.

Rumour has it that you would have to spend thousands and thousands just to be offered one. These particular handbags are exclusive to the most devoted customers and are chosen individually. When offered one of these Hermes bags it's like a comment of delight, acceptance, and surprise.

Birkin Bag by Hermes, one of the world most allusive luxury products

Conclusion

Luxury loyalty programs have existed under the guise of discretion for years and years. The only difference from ordinary programs is the values that they represent. They work hard to preserve their brand identity and their rewards are highly exclusive. By this logic, keeping knowledge of their loyalty programs is best kept limited. Do not make the mistake of thinking they are not effective. Luxury loyalty programs are known for having stellar experiential rewards. This article discusses the principles of luxury loyalty programs and how to build your own.

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