There is an old phrase, often used by marketing and advertising departments – ‘fish where the fish are’.
Nowadays, this translates to is a fairly simple concept. The best way to sell your product is to understand your customer and communicate with them through the channels they use and on the topics they are most interested in.
On the face of it, this is a relatively basic tactic. But it is made a lot harder by the fact that a target demographic, especially for luxury goods companies, is constantly shifting and changing.
For example, the wealthy customer base is now younger than it used to be. These customers demand a much younger, fancier product and they have different demands to an older, more established wealthy consumer.
This means that luxury brands have to reinvent themselves to be en vogue with a younger customer base and meet those changing demands to be state-of-the-art and deliver the design requirements of today’s luxury consumer. Perhaps this is most obvious for fashion brands but it applies to car brands too – prestige vehicles must meet the levels of design, safety, comfort and technology required.
This growing demand over the last 10-15 years brings another complication; the average quality of products has improved to meet that demand and, as the market gets more competitive, manufacturers have to add more and more content in order to make their products more luxurious, more comfortable, safer. The more content gets added, the more ‘normal’ that becomes to the buyer and the more they get used to it.
It's a vicious circle that is only becoming more dangerous for brands, as they constantly have to reinvent themselves in order to make a product that actually stands out to the buyer.
Alongside this, the expectations that today’s luxury consumer has, not just from the product but from the brands they choose to engage with has changed.
Research* into the luxury consumer market shows that, compared to the traditional luxury buyers of the 19th Century, today’s consumer is defined by youth culture – GenZ and millennials. These are high-earning millennials but individuals who aren’t necessarily rich yet. At the moment, they make up around 35% of the luxury goods market but that figure is expected to rise to 50% by 2025.
The psychology of the luxury shopper suggests that purchasing a luxury item is hedonic – it releases ‘feel-good’ dopamine. Deloitte research also shows that these consumers are often impulsive; over 20% of buyers made a purchase for a specific event and over 18% did so when they wanted to treat themselves.
Importantly, the research shows that modern luxury buyers prefer to be less conspicuous about their purchases, compared with the old luxury elite. In an era moving towards more social equality, they want to be more discreet about their big purchases so they don’t necessarily want a prestige car with a conspicuously ‘luxury’ badge or, indeed, a handbag emblazoned with Louis Vuitton. In fact, a report by HighSnobiety found that only 6% of luxury buyers made a purchase as a direct reflection of their wealth.
This, in turn, means they are turning to brands that are also more discreet about their luxuriousness.
Understanding this about the consumer leads to another important conclusion. If luxury shoppers are shying away from simple conspicuousness, then brands need to understand what makes their customers truly tick.
The only way to truly understand what your customer wants – perhaps before they even realise themselves what they want – is to build a proper relationship with them and to communicate with them on a personal level.
The COVID pandemic has only made this even more important for luxury brands. Lockdown has made us more appreciative of human connection and interaction so now brands need to develop, more than ever, more emotional and value-led connections with their customers.
We see this in the luxury fashion sector. Today, when you go to a luxury store, they quite often ask for a phone number and they communicate with you through normal channels like WhatsApp, in a very personal, intimate form of engagement that no-one would have thought possible even three years ago. There is so much competition today that it is absolutely imperative to be this proactive in communicating with your customers before your competition does.
At ARES, we do this with each of our customers – our process involves the buyer from conception to delivery and we communicate constantly with them throughout the design and engineering of their car. And over a very intense last 12 months, we have opened our salon-style showrooms in Dubai, St Moritz, Kitzbuhel and a host of other places where we know our clientele like to spend their time.
Proactively taking the ARES brand direct to our customers is already yielding results – today, around 50% of our orders come via the showroom network, with the other 50% being enquiries direct to our factory in Modena.
Another example of how we are doing this is our pop-up showroom in the luxury enclave of Porto Cervo in Sardinia. While the landscape and the sea and the nature are stunning, the reason for ARES to be there this summer (as we were last summer) is because the crowd you find in Porto Cervo is almost a 100% perfect fit for the ARES customer.
You go to Sardinia because you want the best quality, the most beautiful places, the most luxurious yachts, the best hotels, and so on. That’s why it is the perfect place for ARES, as the pinnacle of luxury cars, to show its products. We spent two and a half months there in 2020 and, despite it being during the pandemic, we had record-breaking sales during our stay.
This year, we have extended our stay there and we have collaborated with the most important restaurants, clubs and bars to display our products. It’s a sensational place and, when people are relaxed and in a good mood, they are more likely to think about purchasing beautiful products like ours.
By becoming an integral part of the summer vacation period in Sardinia – and other places like Marbella – rather than attending events where we would be one of many exhibitors, we are not only ensuring that we are the crowd-gathering, eye-catching element but we are starting those proactive conversations with our customers and future customers.
*2021 Crobox Luxury Report