Luxury Institute: Luxury Brands Missing Big Opportunity In Building Trust With Affluent Clients On Relationship Building And Data Sharing

New York, New York, UNITED STATES


NEW YORK, May 19, 2020 (GLOBE NEWSWIRE) -- Control and privacy protection of personal data are prominent concerns for affluent consumers around the globe. According to New York-based Luxury Institute’s new State of the Luxury Industry 2020 report, 55% of affluent consumers worldwide would voluntarily provide data to companies and brands that they trust in return for reassurances of privacy protection and delivery of advanced personalization. The major hurdle that companies must clear is earning high trust.

Luxury brands, by their very nature, should be expected to excel at building deeper, more trusting relationships with their clients than transactional mass-market brands, but affluent consumers indicate otherwise. They point to significant gaps between what luxury brands do to earn trust, and what they have accomplished. While two-thirds (64%) of affluent consumers agree that luxury brands want to build trusted relationships with them more than mass-market brands, barely more than half (52%) say that they trust luxury brands with personal data more than they trust mass-market brands.

Age is the most important demographic factor determining whether greater trust is placed in luxury brands: 75% of affluent consumers younger than 40 years of age indicate a greater willingness to share personal data with luxury firms, while only 39% of those 40 and older say the same. The greatest generational differential exists between affluent consumers in the U.S. and Canada across nine countries, where younger consumers are more than twice as likely as older ones to place a higher degree of trust in luxury firms. While younger consumers are the future of luxury, Boomers and GenX consumers still control most current high spending and are expected to live and spend far longer than previous generations, especially on luxury services.

Geographically, it is also in the U.S. and Canada where luxury brands have gained the lowest trust differentials vs. mass-market brands, with only 31% of affluent consumers in both countries indicating that they have greater confidence in providing data to luxury brands than mass brands. The situation is similar in the U.K, where 34% of affluent consumers place greater trust in luxury firms. At the opposite extreme, higher levels of trust in luxury brands are abundant in China, where 89% of affluent consumers trust luxury brands with personal data more than they do mass-market brands. Helping to explain the disparity between countries, it is worth noting that the average age of affluent consumers surveyed in China is 34, while in the U.S. the average age is 54. Given the greater propensity of younger consumers across the globe to place greater trust in luxury, it makes sense that luxury brands enjoy higher levels of trust from affluent Chinese consumers.

Gender also plays a role in determining relative levels of trust. On a global basis, men (54%) are slightly more likely than women (50%) to place greater data sharing trust in luxury brands. In the U.S., men (35%) vs. women (27%), are more likely to do so. Only in France are women (58%) more likely than men (45%) to place more trust in luxury brands than mass-market brands.

Trust in luxury rises with income and net worth. Higher income consumers (59% vs. 46%) and those with higher net worth (56% vs. 51%) are more likely than those with lower levels of income and wealth to agree that luxury brands want to build a trusted relationship with them than do mass-market brands. The differential is pronounced throughout Europe, and in the U.S., where 41% of consumers earning more than $250,000 per year place greater trust in luxury brands, compared to 25% of those earning less than $250,000. With regard to net worth, wealthier Australian and Italian consumers demonstrate higher levels of trust with luxury brands than they do with mass-market brands.

“Affluent consumers globally consistently make high value, high risk, high investment and high emotion purchasing decisions with luxury goods and services brands,” says Luxury Institute CEO Milton Pedraza. “It stands to reason that they should overwhelmingly trust luxury brands with their data far more than mass market brands, but this is not yet the case. In a digitized world where privileged access to personal data for advanced personalization and deeper relationship building will be absolutely critical, luxury brands need to step up their trust quotient far above commodity mass market brands immediately.”

This survey is the latest in a long line of pioneering breakthrough studies over the past two decades by the Luxury Institute, including Internet Habits of the Wealthy, The Wealthy and Social Media, and The Wealthy and Social Responsibility. Luxury Institute also educates executives and front-line associates on the fundamentals of building emotional intelligence to nurture client relationships with its Luxcelerate System. This latest research confirms that privacy and personalization will be major action items for luxury goods and services brands that aspire to build affluent client loyalty in 2020 and beyond. Privileged access to personal data for advanced personalization will reverberate throughout the entire enterprise and match sustainability as the most important drivers of trust-building in client relationships.

The complete State of the Luxury Industry 2020 report, including detailed information by country, is available for purchase. For more information, visit www.LuxuryInstitute.com.

About Luxury Institute
Luxury Institute is the world's most trusted research, training, and elite business 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 business 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. Luxury Institute has conducted more quantitative and qualitative research with affluent, wealthy and uber-wealthy consumers than any other entity. This knowledge has led to the development of its scientifically proven high-performance, emotional intelligence-based education system, Luxcelerate, that dramatically improves brand culture and financial performance.


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