From Harrods’ festive holiday displays to Louis Vuitton’s exclusive invite-only shopping events for top clients, the luxury retail space has long been defined by imaginative in-store experiences and service tailored to the customer’s desires. Though this remains true of the industry as a whole, many luxury retailers have struggled to adapt their unique approach to the digital world. And with more customers shopping on digital platforms than ever before, it’s imperative that retailers find innovative ways to leverage technology to bridge the gap between in-store and online, provide exceptional clienteling, and deliver a truly immersive omnichannel experience.
The best way to achieve this level of seamless ecommerce integration is to implement customer relationship management (CRM) and enterprise resource planning (ERP) systems designed specifically for the luxury retail sector. To gain a greater appreciation for how retailers can benefit from implementing CRM and ERP technology, let’s review some of the features a luxury retail CRM or ERP can provide.
Top Luxury Retail CRM Features
1. Digital Black Books
Luxury shoppers have high expectations about the type of personalized customer service they receive from the brands they patronize, and these expectations extend to digital customer service. Luxury retail CRM software enables retailers to create digital “black books”— detailed customer profiles based on customer data, including contact information, recent purchases, order history, repair history, affiliations, and more.
Sales associates can then use this information to anticipate customers’ needs, provide personalized product recommendations, and differentiate the in-store experience. By providing a 360-degree view of the customer all from a single interface, a luxury retail CRM also makes it possible for associates in store locations around the world to quickly pull up key customer data, so customers receive a consistent customer experience regardless where they shop.
2. Loyalty Rewards Programs
Not all loyalty rewards programs are created equal, and affluent shoppers expect a program of the highest caliber. Rather than redeem points for product discounts, luxury retail loyalty rewards programs should focus on the “rewards” portion by enabling shoppers to redeem points for exclusive experiences and limited-edition product offerings. Luxury retailers can give their programs an additional boost by turning them into tiered systems that further reinforce a sense of exclusivity and elevated status.
A luxury retail CRM system not only makes it easier for customers to keep track of their points and which rewards they’re eligible for, but also for luxury retailers to identify high-value customers, trigger automated real-time loyalty messaging, and provide a more tailored engagement. Grouping customers into tiers within a CRM allows for further customer segmentation and more in-depth data analysis, so retailers can derive additional insights from customer data.
3. Targeted Marketing Campaigns
As mentioned above, luxury shoppers place great value on personalization. This is true not only for customer service and product offerings but for marketing campaigns, as well. Luxury brands with run-of-the-mill, one-size-fits-all marketing campaigns are less likely to draw customers’ attention — in fact, marketing campaigns without content relevancy have an 83% lower response rate, according to analysis from Constellation Research.
Marketing campaigns without relevancy have an 83% lower response rate.
Luxury retail CRM software features customer segmentation tools that enable retailers to drill down into their customer database and create unique customer sub-groups based on shared characteristics such as age, location, and behavior. By gaining a better understanding of customer demographics, retailers can tailor their direct marketing efforts — such as email, online advertisements, and SMS messages — to appeal directly to the interests of each of these segments, as well as identify potential leads.
Luxury retail CRM systems also enable customers to create and manage product wish lists, which retailers can use to strategically deliver in-stock and out-of-stock notifications, price reduction alerts, custom promotional materials, and targeted product recommendations.
4. Direct Messaging
Luxury retailers serve an elevated tier of shopper — the kind that knows exactly what they want, and for whom money is no object. Another even more targeted form of marketing — one that accounts for this elevated tier of shopper and is proven at enhancing customer engagement — is direct messaging.
Included in most luxury retail CRM systems, direct messaging enables luxury retail associates to interact with top clients in real time and field special requests. For example, if a customer wanted to purchase a particular model of Rolex from a jeweler, they could contact the store directly via this messaging system to request it. When the customer arrived in store to pick up the watch, the merchandise would be ready for them upon arrival. Similar to digital black books, this luxury retail CRM functionality allows for a high degree of personalized service and replicates the experience of working with a personal shopper.
5. Social Sentiment Analysis
Today’s luxury shopper has access to more channels than ever before, both for shopping and for communicating. From Twitter to Instagram, Facebook to Pinterest, there are any number of platforms that consumers can use to share information about the products they’ve purchased and their experiences with different brands, all of which contribute to social sentiment. Also known as brand sentiment, social sentiment is a way for luxury retailers to gauge customers’ attitudes toward their brand via social media engagement.
Luxury retailers can leverage social sentiment to their advantage in a number of ways, such as following hashtags on Twitter to keep up with trending topics or partnering with influencers on Instagram to showcase their products to a wider audience. Luxury retail CRM providers have become savvy to this growing trend and have started to include sentiment analysis algorithms in their solutions, thereby enabling retailers to further segment customers, identify brand ambassadors and detractors, launch new products, and more based on social sentiment data.
6. Omnichannel Engagement
Social sentiment analysis is just a small part of the much larger luxury retail trend of omnichannel engagement. Whether its manning showroom floors with knowledgeable sales associates, running targeted ads on customers’ preferred social media sites or using live chat or AI-enabled chatbots to provide customers with quality service and support while they browse online, luxury retailers must make a concerted effort to maintain open lines of communication across all channels.
Once a retailer has successfully established its online presence, it can configure its CRM to collect the data generated by these interactions and use it to inform future engagement. For example, if a customer visited a purveyor of designer shoes in search of Gucci sneakers only to find that their preferred style was out of stock, an enterprising sales associate might ask that customer for their email address and enter it into the brand’s CRM system, as well as additional details about that customer’s preferences. Based on this data, the retailer might send the customer an email a few days later to notify them that their preferred style was back in stock. The customer might then go to the retailer’s website and order a pair of the sneakers, as well as a few other items recommended to them based on their unique taste. This level of omnichannel engagement, enabled by a luxury retail CRM solution, leads to a more positive overall experience, one that the customer won’t soon forget.
Top Luxury Retail ERP Features
7. POS Clienteling
As mentioned above, luxury retail customers have high expectations when it comes to personalization. This personalization is central to clienteling, the process by which sales associates develop long-term relationships with consumers. Clienteling enables luxury retailers to attract and retain customers. Luxury retail ERP POS clienteling functionality enables sales associates to gather and store more information about customers — such as, say, the fact that a customer buys a new piece of jewelry for their partner for their anniversary every year — to better anticipate shoppers’ needs. Using these insights, employees can offer personalized product recommendations and take advantage of upselling and cross-selling opportunities, all of which foster greater employee engagement and customer loyalty.
8. POS Integration
In order to keep up with the demand for luxury goods and services, retailers should look for a luxury retail ERP that offers mobile point of sale (POS) system integration. In addition to providing real-time reporting on customer transactions, mobile POS systems offer advanced, intuitive capabilities such as the ability to add products to a transaction, to select product variants, and to choose a warranty plan.
ERP and POS integration also automates data entry, saving time that would otherwise be spent manually entering data into an ERP system and eliminating data redundancies and inaccuracies that occur as a result of human error.
9. Product Warranties
Many luxury items come with warranties, so the ability to offer multiple warranty plans at the time of purchase, as well as post-sale, is vital. Luxury retail ERP solutions make it possible for sales associates to provide combo warranties, to pull up previously sold items if a customer wants to purchase a warranty post-sale, and access warranty reporting. This last capability is especially important because warranty reporting enables associates to quickly access information about a previously sold item, including item description, price, purchase date, register transaction number, sales order number, warranty sold, price of the warranty, and purchase data of the warranty, as well as send warranty files to the warranty provider.
10. Merchandising Capabilities
Sales associates in the luxury retail industry are under immense pressure from employers to provide an exceptional customer experience during every customer interaction. By empowering associates with advanced ERP technology, retailers can ensure that their employees consistently exceed these high expectations. Luxury retail ERP solutions enable associates to find the merchandise their clients are looking for faster, as well as merchandise that complements what clients already have, which leads to higher sales.
Certain luxury retail ERP systems provide associates with a holistic view of store merchandise broken down into individual categories. From there, an associate could drill down into a category to view available items, as well as into products to see descriptions and attributes, all in the interest of providing customers with detailed product comparisons. A luxury retail ERP can also identify upsell and cross-sell opportunities so associates can increase revenue and, ideally, customer retention — an especially significant capability given that each additional purchase increases a customer’s lifetime value.
11. Supply Chain Management
Supply chain visibility and good inventory management practices are just as essential to the luxury market as they are to any other in the retail sector. Recent trends have seen luxury retailers taking vertical ownership of their supply chain in the interest of guaranteeing the exclusivity of their products. Though this is a savvy move, it’s also one that requires impeccable supply chain management in order to be successful.
Luxury retail ERP systems make it possible to digitize the entire supply chain, optimizing fulfillment and reducing costs in the process by synchronizing commerce across sites, warehouses, and transportations modes. With a clear understanding of where products are as they move through the fulfillment process and what inventory is available to them, retailers can better respond to customer demand, automate order-to-cash and procure-to-pay processes, and drive revenue.
12. Data-Driven Dashboards
To maintain an edge in a competitive industry, luxury retailers must regularly re-evaluate product and sales associate performance to see which products and people are performing best and to create a plan of action to adapt to purchasing trends.
Luxury retail ERP systems present key data, including gross sales and profits, sales based on individual associate, and sales based on product name, in clean, easy-to-read dashboards. Retailers can use the information within these dashboards to identify top-performing products and people, make more informed purchasing decisions, and realize potential sales opportunities. Certain luxury retail ERP systems provide higher level, advanced price and inventory optimization analytics for even more granular insights. As its name implies, price optimization analytics helps retailers determine optimal pricing for specific products, seasons, and stores by using data to analyze lost sales, inventory turn, selling patterns, and more. Inventory optimization analytics enables superior inventory management based on inventory data, demand data, and season.
As technology continues to evolve, luxury retailers will find innovative ways to use it to benefit both their customers and their bottom line.
The right luxury retail CRM and ERP systems, especially when used in combination, have the power to optimize business operations, increase customer loyalty, and improve employee performance. Microsoft Dynamics 365 for Luxury Goods combines the power of the Microsoft cloud, Power BI analytics, and Hitachi Solutions’ D365 Commerce to deliver real-time reporting, marketing campaign management, merchandising management, and more so that retailers can continue to innovate and grow their business for years to come.
To learn more about Dynamics 365 for Luxury Goods or Hitachi Solutions, reach out today — we’re happy to answer any questions and help you find ways to grow your luxury retail business with technology.