NEW YORK, Jan. 28, 2021 /PRNewswire/ — If you thought 2020 was a massive challenge, get ready for the balance of the decade. Yes, 2020 was a grind, full of visible and invisible threats. It forced the hyper-acceleration of previously emerging trends such as work-from-home, virtual everything, optimizing business travel, and surging e-commerce. It was also a year to underscore humanity and inspire creativity as an individual, and as a brand, in order to thrive post-2020. The balance of the decade will bring many challenges but even more opportunities for innovation. While COVID-19 accelerated and created key trends, it is a mistake to explore emerging trends through a 2020 pandemic lens. The risk is that brands will continue to play defense rather than offense. Brands must look at emerging opportunities with fresh eyes to determine how to remain relevant and viable by creating new massive value for clients, employees, constituents, and society at large in 2021 and beyond.
Here are Luxury Institute’s seven unconventional luxury trends that will determine who thrives in the emerging decade:
1. Luxury discovers that the digital transformation engine is fueled by rich, relevant, and timely customer data
Digital transformation is the new mantra in the luxury industry. Luxury is rapidly digitizing the business model from sourcing, to supply chain, to the front lines. Software as a service (SaaS) is making it easier to digitize at a rapid rate. E-commerce is the centerpiece of the customer-centric transformation. However, there is a growing realization that the missing fuel that powers digitalization is rich, relevant, real-time (3Rs) customer data. Without the rich customer data to fuel and scale predictions and recommendations across the business model, the luxury enterprise is stuck in Industrial Age processes and 20th-century business intelligence tools. Look for the leading-edge luxury brands, particularly the biggest brands, to bypass the third-party data brokers and adopt licensing authentic-source customer data as a service (DaaS). Brand leaders will begin to directly procure, license, and analyze customer data to generate critical business insights and effective business solutions to win in a hyper-competitive customer-centric world.
2. Luxury marketing masters AI as customer-centric prediction and recommendation engines power the luxury enterprise
Most luxury marketers continue to rely on online programmatic ads as the mainstay of their precious marketing investments. They now know that more than half of their advertising is wasted on attracting people who would have purchased anyway, overstated platform metrics, fake ad views, and worse. Marketers have identified the need to directly access authentic customer data and master insight-generating state-of-the-art analytics, including machine learning, to identify most likely prospects, deepen existing customer relationships through personalization, and identify major new trends that lead to product and service innovation opportunities. Without prediction and recommendation engines that rival the power that drives the success of the likes of Amazon and Alibaba, and continue to improve exponentially, luxury brands will be at the mercy of digital platforms. They risk commoditization, irrelevance, and potential demise.
3. Creative directors at luxury brands begin to shamelessly use unique data-driven insights to innovate
The most innovative brand creative directors and their teams know they need to get to know their customers far more intimately going forward. Currently, they use many sources of formal and informal research for new product inspiration and development. In the 2020s, brand creative directors, and creative agencies, will seek out the richest customer data that will be analyzed for customer and prospect desires, needs, and passions. This will empower them to take intelligent creative risks that have a much higher probability of success. The creative leaders will no longer rely mostly on pure instinct and judgment to develop unique offerings. They will use rich data and AI to help generate, simulate, and validate their hypotheses to scale great creative ideas that turn into commercial success.
4. Luxury leaders champion data dignity as part of their brand purpose
Luxury has a long history of championing many great societal causes that help humanity. The latest are sustainability and inequality. However, the exponentially growing quest for personal data privacy, security, and control rights for all humans can no longer be treated as trivial by luxury goods and services brands. Data dignity will be one of the top three social issues in the 2020s. Look for the luxury leaders to take on this just cause and become the exemplary business models of privacy and personalization within the emerging personal data economy. As luxury leads, the mass goods and services brands will begin to emulate this trend just as they have with so many other innovations that started in the luxury industry and spread throughout society.
5. As data and AI flourish in luxury, emotional intelligence surges in importance for nurturing client relationships
In the luxury goods and services industry, where high value, high investment, high risk and high emotion decisions and purchases are made regularly, the proliferation of AI generated personalized predictions and recommendations will not simply replicate the soulless, transactional Amazon business model. Trusted expert advisors, who have complete mastery of the emotional intelligence pillars of deep empathy, trustworthiness, and generosity, will be developed and sought after for their fiduciary judgment and decision support in every luxury goods and services category. As is happening in patient-centric medicine, once the data-driven algorithms take over many of the tasks that require increasingly accurate predictions and recommendations, luxury’s omni-personal curators will each handle more clients with far more nurturing, care, and emotional intelligence. Look for luxury leaders to dramatically accelerate effective emotional intelligence education and deployment programs to drive personalization and business performance in the digital world.
6. Customer lifetime value metrics will include customers who buy the most, and share rich data and insights the most
The personal data revolution will usher in a decade where new and better performance metrics will emerge. Through Luxury Institute’s newest initiative, the Advanced Personalization Xchange (APX), customers can legally, securely, and privately license their social and digital platform data to brands they trust and love in exchange for benefits and rewards. Based on his review of APX, Peter Fader, renowned professor at the Wharton School of The University of Pennsylvania, and author of The Customer Centricity Playbook, predicts that in the near future Customer Lifetime Value will not just measure the value of a customer based on lifetime purchases and referrals, but also by the quality and quantity of relevant and timely personal data they share with luxury enterprises over time. This will lead to deeper relationships and value generation for customers and enterprises alike.
7. As predictions and recommendation engines become more accurate, luxury businesses redefine their business models
Amazon’s famous recommendation engines are estimated to account for about 35% of sales. In the epic book Prediction Machines, authors Ajay Agrawal, Joshua Gans, and Avi Goldfarb share that Amazon has filed a patent for a shipping system to cut delivery times by more accurately predicting what buyers are going to buy well before they buy it. The objective is for Amazon’s data and algorithms to get to know customers so well, and for the algorithms to become so accurate at prediction, that they anticipate what customers want before customers know it, or before they ever click “buy.” Amazon will transform their business model from shop-then-ship to ship-then-shop with far fewer returns. The luxury goods and services industry, which prides itself on delivering the optimal customer experience, cannot afford to be left in the dust on prediction and recommendation engine mastery. The industry must use earned consumer trust to gain privileged access to the highest grade of customer data and insights to hyper-personalize for each customer. Soon, luxury brands will deliver advanced personalization with the deep humanity and emotional intelligence that eludes Amazon. This is the new definition of an extraordinary customer experience.
The Roaring 2020s will be unlike any decade we will experience for a long time. Data utilization at hyper-speed will generate innovations beyond our current ability to predict. What we can predict with confidence is that the luxury brands that master the skills of data management, AI, and emotional intelligence will dominate their respective premium and luxury goods and services categories. The advanced personalization games are not just about to begin, they are well under way.
About Luxury Institute
Luxury Institute is the world’s most trusted research, training, and elite business and personal data technology solutions partner for luxury and premium goods and services brands. With the largest global network of luxury executives and experts, Luxury Institute has the ability to provide its clients with high-performance, leading-edge solutions developed by the best, most successful minds in the industry. Over the last 17 years, Luxury Institute has served over 1,100 luxury and premium goods and services brands.
The Institute has conducted more quantitative and qualitative research with affluent, wealthy and uber-wealthy consumers than any other entity. This expertise has led to the neuroscience-based emotional intelligence education system, Luxcelerate, that dramatically improves sales performance. Luxury Institute has also innovated the Advanced Personalization Xchange (APX), powered by DataLucent, to empower affluent consumers to license their digital platform data to premium and luxury brands they trust legally, securely and privately in exchange for fair value rewards and benefits.
To learn more about Luxury Institute, please contact us at LuxuryInstitute.com.
Contact: Milton Pedraza, CEO: [email protected]
SOURCE Luxury Institute