Luxury brands hold a unique place in the hearts and minds of consumers as they are often viewed as aspirational brands, and now through Digital ID enabled connected products, consumers are able to engage with these brands like never before. With a simple scan of a connected product’s data carrier (i.e. a QR code or NFC tag), consumers can engage with brands – luxury or otherwise – wherever and whenever they want. Through this emerging consumer engagement channel, brands are provided with the opportunity to deliver true in-moment marketing and build stronger relationships with consumers, while also leveraging it to comply with sustainability laws and transparency obligations like the EU’s Ecodesign for Sustainable Products Regulation (“ESPR”), Digital Product Passport (“DPP”), and California’s Responsible Textile Recovery Act.
Yet for Digital ID and connected products to be a profitable investment for brands, as demonstrated in the latest research from FarSight Research & Advisory On-Demand Brand: European Luxury Apparel & Footwear, Building Engaging & Profitable Digital ID & Connected Products Programs, brands will need to do three things:
- Educate consumers about how to engage with connected products (especially via NFC tags)
- Provide consumers with compelling reasons to engage regularly
- Drive repeat consumer engagement with the brand’s connected products with a long-term Marketing communication strategy
The new research from FarSight Research & Advisory reveals that low awareness and a lack of compelling reasons to scan connected products are severely limiting consumer engagement. FarSight’s research found that 29% of luxury goods apparel and footwear buyers in Europe did not know they could scan luxury goods apparel, footwear, outerwear, purses, or accessories to learn more about the products or access associated services, and another 21% reported being only somewhat aware. Underscoring the reported lack of a clear reason to scan a physical product, of those that reported being unlikely to scan a luxury goods apparel or footwear product, 95% changed their position and said they would be interested in scanning an item after being presented with valuable content and services examples such as virtual fitting, sustainability information, product authentication, and help with returns. These European luxury apparel and footwear focused research results demonstrate the limited consumer understanding and value perception of connected products, with this facet of the new research being similar to our past findings in our Digital ID and connected products research conducted on the overall US apparel and footwear industries.
How to Build Awareness and Drive Engagement?
Consumers have become much more accustomed to using QR codes, and to a lesser degree NFC tags, but in very specific scenarios (ex. restaurant menus). To build regular consumer engagement behaviors in new scenarios (ex. while shopping, post-purchase resale, donation, etc.), brands must integrate meaningful value-oriented content into their connected products consumer experiences, and effectively communicate this through the brand’s digital and physical touch points. FarSight’s latest research asked respondents about 17 different content types, and identified luxury goods buyers’ top content preferences as authentication, care instructions, and product reviews. However, the results also showed that content preferences varied significantly by scenario (while shopping versus post-purchase), age, gender, if they are resale buyers, and by top purchase decision driver.
Optimizing repeat engagement requires brands to stay top of mind while providing consumers with multiple reasons to engage, and re-engage regularly, over the life of the connected product items in their possession and their relationship with the brand. To accomplish this, brands need to integrate Digital ID awareness building and calls-to-action into new and existing communications programs. To get a jump start, new Digital ID and connected products content can often be woven into existing programs such as email order series messages (i.e. order confirmation, order shipped, order delivered, and post-delivery satisfaction / leave a review).
How to Make it Profitable?
Savvy luxury brands are developing the connected products opportunity into a two-way communication channel that, from the consumers’ perspective, improves their product experience and provides compelling reasons to engage on a regular basis. From the brands’ perspective, it increases the number of meaningful interactions where they can generate incremental revenue (e.g. cross-sell, support resale, etc.) and improve overall profitability through data monetization and efficiency improvements. This directly and indirectly helps brands become more profitable by:
- Adding new revenue streams adding to customer LTV
- Improving customer satisfaction that positively influences attrition
- Growing their marketable consented email and SMS databases
- Developing post-sale product lifecycle, customer, and consumer insights
- Creating a new mechanism to identify and combat counterfeiting
- Complying with evolving sustainability laws
While all of the benefits of developing a Digital ID and connected products program apply to non-luxury goods brands, luxury brands benefit from the uniquely elevated value perceptions of their products’ consumers. Digital ID and connected products offer these brands the opportunity to turn consumer luxury brand affinity into engagement with those who know their products best.
To download our latest research: On-Demand Brand: European Luxury Apparel & Footwear, Building Engaging & Profitable Digital ID & Connected Products Programs, click here.
To find our past research, including free downloads, click here.To learn more about Digital ID and connected check out our blog here.
Photo by Mitya Ivanov on Unsplash
