NEW YORK, NY--(Marketwire - April 1, 2009) - There is no doubt that luxury brands have been
slow to embrace the Internet in all its dimensions. From search engine
optimization and marketing, placing ads and e-commerce, the luxury industry
is clearly not an online innovator. In fact, the industry lags mainstream
retail by a wide margin. This is a reality the industry can ill afford in a
severe economic crisis. Old habits die hard, especially when true luxury
brands have been so successful without participating in the online
revolution. Many Luxury Institute surveys, along with common sense
experience, document the fact that luxury consumers have embraced all of
the Internet's benefits and are clamoring for more from luxury. Luxury
must, and will, embrace the online world wholeheartedly, on its own terms.
Here are 7 Rules of the Road that will help make the journey a profitable
one. The rules are inspired by rich conversations with top executives at
luxury conferences and one-on-one meetings with all the critical
constituencies involved in online luxury.
1. The European luxury brand leaders must let the children lead for a
change.
European luxury brands are mainly family-owned, or behave like family-owned
enterprises. This has been a great source of strength and brand consistency
and integrity for generations. Yet today, the rapid morphing of the
Internet, its effects on the cultural and behavioral habits of the wealthy
and a severe economic crisis all require that luxury icons behave like
flexible, adaptable and sustainable organisms. Most European luxury firms
are top-down, command and control organizations built for the industrial
age. They are run autocratically, usually by the creative genius, who is
the heart and soul of the brand, and a few trusted insiders. It is time for
those leaders to open up, have the courage to relinquish a degree of
control to the younger generations of leaders at the front lines across the
world, and allow them to experiment with online innovations. In fact, these
wise mentors should require that the young leaders of luxury not just copy,
but significantly surpass, the innovations of Amazon and other mainstream
web retail leaders. Luxury must, and will, deliver far more online than the
average retailer.
2. The interactive and digital agencies that serve luxury need to innovate
beyond the commoditized mainstream.
The interactive agencies, by and large, are encouraging the luxury brands
to adopt exactly what the mainstream retailers are doing online. That is
insufficient. It is true that it is hard enough to convince luxury brands
to adopt and meet the standards of the best mainstream retail brands
online. However, it is absolutely legitimate for luxury brand leaders to
expect their agencies to innovate and customize for luxury rather than copy
what
best-in-class mainstream retailers are doing. Luxury requires a highly
surgical level of differentiation in online customer experience, and luxury
brands have a legitimate right to demand that level of performance. It is
time for the irreverent 30-year-old geniuses at the web agencies to prove
they can go beyond commodity functionality in the luxury space. Commodity
products may have worked for Bill Gates, but luxury is a different species,
and a valued client such as Bill should get a truly unique and customized
online luxury experience from any luxury brand.
3. The luxury media needs to innovate online beyond editorial plugs,
banner ads and videos.
As the print world loses its momentum, luxury brands are asking what media
is doing online to innovate its way out of a death spiral. Most luxury
media brands are essentially online versions of their print brethren, only
they get updated faster and have a few moving parts like all other
mainstream media. Both wealthy consumers and luxury brands have the right
to expect that luxury media deliver a breakthrough content and advertising
experience that is beyond copy/pasting the print text, photos and videos
onto a web site. And it is not enough just to aggregate wealthy consumers
for a living. Instead, they should be generating extraordinarily unique and
exclusive customer and advertiser experiences online that both consumers
and luxury advertisers will find worthy of paying a premium.
4. Luxury CEOs and their senior management teams need a crash course on
the fundamentals of the Internet.
On a scale of 1-10, today's luxury CEOs and most of their executive teams
probably rate a generous 5 on Internet knowledge and expertise. In a
high-growth environment, these executives were too busy growing the
business via traditional channels. In a severe downturn, they are busy
making sure the business survives. Internet innovation is not on the list
of the top three most critical courses of action needed to run the business
in a severe economic crisis. And yet, the Internet will become the flagship
store and strategic centerpiece for most luxury brands (and, yes, there
will be successful exceptions), although many executive teams do not yet
realize this. What is needed is profound, objective, unbiased education on
consumer habits and online selling and marketing options. Only then will
senior luxury executives be able to make strategic and tactical decisions
on the current and future customer experience. And only by educating
themselves first, will they be able to lead their brands to innovation
beyond the commoditized customer experiences one finds today on the
Internet.
5. Luxury executives need to get over the "lack of control online" issue.
The truth is that the only thing they control is their customer experience.
The heated discussions about controlling your brand online, especially what
is said about your luxury brand online, are pure nonsense. In an open and
transparent online and offline world, the only things you can control are
your business values and ethics, your offerings, your business model and
the customer experience that you choose to deliver. If you deliver
extraordinary customer experiences, the natural "buzz" surrounding your
brand will be overwhelmingly positive. The web will amplify your
reputation, good or bad, among consumers and other constituents. While
public relations tactics can help, the truth will eventually be known. If
the truth is that you deliver extraordinary experiences, detractors will be
drowned out and many advocates will come to your immediate defense. The
opposite is also true. So, get over the "lack of control" issue online and
start innovating. It's a non-issue.
6. Rapid Cycle Testing and Learning is the only way to go with online
innovations.
Beware of Internet gurus, especially the ones that tell you that everything
online should be free while charging you $10k per day for their sage
advice. They cannot predict the future or tell you what will work. You will
need that crash course on the fundamentals, but you need to know that,
ultimately, the only way to go in an organic online world is to experiment
your way to success. Fail smart, fail fast and fail cheap is the mantra.
Start innovating with the confidence that you can invest small amounts to
test what will work. You also need to know that most things will not work.
Learn to accept failure in order to achieve success. Finally, if anyone
tells you that you have to bet big dollars on any one online innovation,
fire them!
7. You have to be reasonable with Return on Investment.
Many luxury executives who have been spending significant sums on print,
events and other non-measurable marketing spends over the years are now
demanding that the Internet deliver instant measurable ROI. You have the
right to expect concrete returns from any investment, but the reality is
that the profit impact of most marketing investments cannot be measured to
the nth degree. The Internet comes closest, but still fails the perfection
test. Give Internet marketing an opportunity to prove itself and it should
deliver solid results above print and other offline marketing investments.
If you are committed to testing and learning you will control the dollars
in a way that allows you to innovate economically and intelligently.
In many corners of luxury, there is optimism that perhaps the worst has
passed, and, that while profound changes have occurred, we will once again
become leading innovators who deliver massive value to our clients. Online
marketing and selling is an opportunity we need to embrace with vigor and
skill. We need to go beyond mainstream retailers into new breakthroughs. A
few years from now, the friendly, heated discussions about luxury online
will be seen as just another step towards the rapid evolution of the true
luxury industry.
Milton Pedraza
CEO
The Luxury Institute, LLC
www.luxuryinstitute.com
About the Luxury Institute
The Luxury Institute is the uniquely independent and impartial ratings and
research institution that is the trusted and respected voice of the high
net-worth consumer. The Institute provides a portfolio of proprietary
publications and research that guides and educates high net-worth
individuals and the companies that cater to them on leading edge trends,
high net-worth consumer rankings and ratings of luxury brands, and best
practices. The Luxury Institute also operates the Luxury Board
(
www.luxuryboard.com), the world's first global, membership-based online
community for luxury goods and services executives, professionals and
entrepreneurs. To reach the Luxury Institute, please call 646-792-2669 or
go to
www.luxuryinstitute.com.
Contact Information: Contact:
Evins Communications, Ltd.
Phone: (212) 688-8200
Dotty J. Giordano
Director
E-mail: dotty.giordano@evins.com
Enid Lewin
Vice President
E-mail: enid.lewin@evins.com
The Luxury Institute, LLC
Milton Pedraza
CEO
Phone: 917-657-4988
E-mail: mpedraza@luxuryinstitute.com