This guest post is written by Lior Levin, a marketing consultant for a company that provides a to do list app for businesses and individuals, and who also consults for an inspection company that offers various Pre shipment inspections in China.
Millennials, meaning those between the ages of 18 and 29, are easily the fastest-growing market for luxury goods. Not only did they spend 31% more on such goods in 2011 than they did just one year prior, but due to their age, they have the potential to continue that growth for a lot longer than their older counterparts.
Clearly, Millennials are going to be a core target for luxury brands, however, they also pose an interesting set of challenges. Simply put, Millennials don’t buy luxury products in the same way as baby boomers or other generations nor do they value the same things in a luxury brand.
If luxury brands are going to appeal to Millennials, they need to start thinking about how to shift their marketing and their message to prepare for a very different type of consumer with very different wants and needs.
Luxury Alone is Not Enough
One of the biggest differences between Millennials and boomers is that, for Millennials, saying that a brand is a luxury and pricing it accordingly is not enough to convince them to buy.
Previously, buying a luxury good was as much about showcasing wealth as it was buying a superior product. Simply pricing something higher and marketing it as exclusive was enough to get most luxury buyers in the door. However, Millennials want to know what they are getting for the extra amount they are paying and how it will benefit them.
A recent study by Luxury Society found that shoppers favored quality, craftsmanship and design over brand name when promoting a luxury brand, making these elements key to showcase in any promotion.
If you can’t convey clearly why your brand is worth more than cheaper alternatives, Millennials will not be likely to spend their money with you. They simply feel no need to show off their wealth and will gladly buy a cheaper product if they feel it’s of the same quality and meets the same needs.
The Human Element
Luxury brands that do well with Millennials, such as Whole Foods, do so in large part because they focus on the human element of selling and marketing.
This includes both telling the story behind their brand and their products (including how and where it was made and who made it), but also treating the customer with respect and looking out for their best interests beyond merely trying to get the next sale.
Whole Foods stores tend to be warm and inviting places, Apple Stores tend to have legions of well-trained staff, and they do so not to ensure that they maximize sales, but to provide the best customer experience possible.
However, this appeal comes at price. Whole Foods doesn’t carry a lot of high-margin brands that don’t fit with their image and Apple Stores tend to have a lot of wasted floor space. But like all human connections, it’s a matter of give and take. The brands that give more to their customers will find them more willing to buy from them.
Brands that have thrived on being exclusive and unapproachable are going to have to change their customer-facing operations to better appeal to younger consumers that seek out a more human connection with what they buy.
The Use of Technology
Obviously, Millennials are much more comfortable with and eager to use technology than their older counterparts. Millennials grew up in a post-Internet age, and they expect the brands they buy, especially luxury ones, to be tech-savvy as well.
This use of technology isn’t just about how brands promote to customers, such as with online campaigns or high-tech in-store displays, but also about how they communicate and maintain contact with them. Email newsletters, text alerts, live chats and even video conferencing are just some of the ways brands can keep in touch with customers or have their customers contact them.
Luxury brands need to be where their customers are, and this means online, on social media and on mobile devices. This not only increases convenience for the customer, bringing the brand to them rather than the other way around, but it helps keep the name relevant and modern, two things Millennials value.
If a brand can’t stay current, it’s likely to be left behind and forgotten by younger customers.
All in all, Millennials are far more demanding of luxury brands, and they don’t necessarily reward the brands that they do purchase with an increased amount of brand loyalty. Millennials, as a group, tend to enjoy exploring and trying new things, even if it means leaving behind a brand that worked hard to get them as a customer.
Turning Millennials into customers isn’t going to be a matter of creating an exclusive group and daring them to join. Even the wealthiest Millennials don’t feel the need to flaunt their wealth or be a part of a “club”.
Millennials want facts to back up their purchases, a real human connection with the company they’re buying from and to have access to their brand wherever they are and whenever they want to.
Providing that is going to mean making a major shift for many luxury brands but those that can do that, such as Apple, will be able to ride the wave of the fastest-growing and, most likely, longest-lasting growth segment for luxury goods.
Those that don’t, such as Cadillac, will likely find themselves being viewed as antiquated and struggling to reach a younger audience as their current target market ages.