Mobile and Online Hold Sales Promise for Diligent, Savvy Luxury Brands

By John Consoli -- Broadcasting & Cable, 1/23/2013 2:12:22 PM

According to a recent comScore survey, consumers spent a whopping $42.3 billion in online shopping during November and December, up 14% over 2011. And if that bit of holiday cheer isn't enough, another study, this one by analytics company ForeSee, found that more luxury brand customers are using mobile to buy products digitally than non-luxury brand customers. So, as ForeSee sees it, this opens up significant opportunities for mindful luxury brands to cash in throughout 2013.

"Mobile is a huge area of opportunity for any retailer, but particularly for a luxury brand," says Eric Feinberg, senior director of mobile, media and entertainment at ForeSee. "Our study shows that luxury brand shoppers are already adopting the mobile channel faster than non-luxury brand shoppers. It's now up to those retailers to deliver what luxury consumers want from mobile in order to keep them coming back to the brand and to influence purchases across all channels."

The ForeSee survey found that luxury shoppers are "more mobile," with 59% of luxury brand shoppers saying they have used mobile to interact with a company compared to 42% of overall shoppers. Also, 56% of luxury brand shoppers use their mobile phone to research products compared to 40% of overall shoppers; 24% of luxury brand shoppers use their mobile phones to comparison shop in person in a store, compared to 18% of overall shoppers; 25% of luxury brand shoppers go mobile when making a purchase, compared to 16% of overall shoppers; and 13% of luxury brand shoppers use retailer-developed mobile apps to shop, compared to 10% of overall shoppers.

The survey also found that 38% of luxury brand shoppers used their mobile phones to interact with a company during the recent holiday season, compared to 29% of non-luxury brand shoppers. However, the non-luxury brand shoppers reported a slightly better satisfaction level interacting via mobile, by 80 to 78 on the survey's satisfaction index. Of luxury brand shoppers, 36% used a mobile device to shop this holiday season, while 25% of non-luxury brand shoppers did. Those satisfaction levels were almost equal at 77 and 78, respectively.

The top two luxury brands in terms of online satisfaction on ForeSee's index are Tiffany & Co. and Coach, both with scores of 80, but close behind are Saks Fifth Avenue and Nordstrom with scores of 79 each; Hugo Boss, Tory Burch and Burberry with scores of 78 each; and Ralph Lauren and Neiman Marcus with scores of 77 each. Rounding out the top 10 is Brooks Brothers with a score of 76.

The ForeSee survey found, however, that even the best luxury sites are not measuring up to the best and most satisfying customer online experience. Amazon continues to set the standard with an index rating of 88.

Luxury retailers have some catching up to do with mainstream retailers, says Larry Freed, president and CEO of ForeSee, who authored the luxury brands study.

So what is the profile of the luxury brand customer? What are the characteristics they exhibit that can give luxury brand marketers and their media buying and planning agencies some insight into their shopping habits?

The survey finds that regular customers of luxury sites are more satisfied than first-time visitors or visitors who come to a site only rarely. Thirty-six percent of those surveyed said they visit a site at least once a month and their satisfaction index was 81. Another 25% said they visit a site several times a year and their satisfaction level was 79. The other 39% who visited a site for the first time had a satisfaction index of 73. So motivating shoppers to visit sites more frequently seems to improve their confidence and satisfaction levels.

Motivating consumers through marketing to visit a luxury brand website to make a purchase rather than just browse and do research also leads to a higher satisfaction level. The survey found that 39% of visitors to a luxury website are coming to make a purchase and they have a satisfaction level of 81, compared to 41% who visit a site to research a product and posted a satisfaction level of 76.

Among those who research for luxury brand product preference, 65% research and buy products online, 22% research online and make their purchases in-store, 6% research in store and purchase in-store and 4% research in-store and purchase online.

The survey found that pricing might not be the most overwhelming factor in motivating luxury brand shoppers to make a purchase or tout a website to friends and family. The survey also found that while customer satisfaction is key, many elements go into creating an overall impression of satisfaction, including the merchandise offered, the content of the site and its functionality, as well as the price.

While 41% of luxury shoppers said they did not make a purchase because the price was too high, ForeSee said brands should not overreact to that just because it is what customers complain loudest about. In the long run, ForeSee concludes that 71% of luxury sites would get more "brand for their buck" if they improved merchandise, and 43% will see more return on investment from improving site functionality.

How important is a satisfied luxury brand shopper? The survey found that a highly satisfied luxury website visitor is: 69% more likely to recommend that site to others; 76% more likely to buy online; 65% more committed to the brand overall; 69% more likely to buy the brand offline as well; 65% more likely to make a return to the site; and 71% more likely to make a purchase next time they visit the site.

Conversely, a dissatisfied luxury brand shopper is: 41% less likely to recommend the site; 43% less likely to buy online; 39% less committed to the brand overall; 41% less likely to buy the brand offline; 40% less likely to return to the site; and 42% less likely to make a purchase next time.

ForeSee tells brands that if they don't measure the customer experience, they won't be able to manage it. The analytics company also says brands should measure success from the customers' perspective in addition to the organization's. Another comment from ForeSee: Mobile is creating unprecedented power for the consumer, and customer satisfaction drives conversion, loyalty, retention and word-of-mouth publicity, all of which can lead to more financial success for brands.

ForeSee polled 3,500 shoppers for the survey and the data was compiled in November and December of 2012. The satisfaction index is based on a 100-point scale.