Why Even Luxury Brands Need Email Marketing

Why Even Luxury Brands Need Email Marketing

I was recently shopping at Neiman Marcus, and at checkout, the associate asked me for my email address. Normally I decline to give my email because my inbox is already cluttered, but I wondered what sort of messages Neiman Marcus would send, so I reluctantly gave up my information.

I was very surprised to find that I immediately began receiving emails about discounts from this luxury department store.

screenshot of neiman marcus emails

Not only did the company send me emails mostly about sales, but they also sent me an email offering $25 off of a $50 or more purchase. This is something I would expect from a more affordable store like Macy’s, and not so much from a company like Neiman Marcus that sells brands like Gucci, Prada, and Louis Vuitton.

screemshot of email from neiman marcus

My first thought was, “what in the world could I buy at Neiman Marcus where $25 off would make a difference?”

I went on their website and started browsing. Turns out there is actually a lot you can buy for under $250, where $25 off would make for a significant savings of 10%. There are even plenty of items in the $100 range where $25 off is a 25% savings. I ended up buying a bottle of my favorite perfume.

By the way, don’t bother trying to use the promo code THANKS25 that you see in my screenshot because you have to input your email address on the website to get the code to work. If they don’t have your email on file, or if you have already used the code before it won’t work for you. If you want the code you’ll need to go buy something in-store and give up your email address at checkout. This is actually a good technical barrier for companies worried that discount codes will get passed around and abused.

This whole experience got me thinking about the state of luxury marketing and where emails fit in. Traditionally, luxury brands like Gucci, Prada, Cartier, and others have built an allure through exclusivity. In the past brands like this would not offer sales or discounts.

According to a study by Deloitte, “Dior in Paris holds sales only twice a year and for very short periods.” They also only hold these sales at “rented locations and never in their flagship store.” This is because luxury brands need to be seen as exclusive and desirable to maintain their high price points.

Marketing Luxury Brands to Millennials

The thing is, the shopping habits of millennials are changing the way luxury brands execute their marketing campaigns.

According to an article published in Fortune, 18-to-35-year-olds, the millennial generation, account for 85% growth in the luxury market. Additionally, “they will represent 45 percent of total high-end spending by 2025.”

Today brands are already seeing the benefits of reaching millennials. The luxury brand, Balenciaga, saw three-quarters of growth thanks to this generation. Now, millennials “account for 60% of the consumer base for this iconic brand.”

Gucci is another brand that has experienced phenomenal growth due to the millennial generation. According to an article by Forbes entitled “What Luxury Brands Can Learn From Gucci About Millennials”:

“While many other luxury brands have struggled to tap into the growing millennial demand, Gucci has found an eager and expanding base.” According to the CEO of the parent company for Gucci, “millennials account for nearly 50% of Gucci’s total sales.”

You may be thinking, “but aren’t millennials all living at home with their parents and barely scraping by with side gigs like Uber and Postmates?” That definitely represents a segment of millennials, but there is another segment known as HENRYs. This acronym stands for High Earners Not Rich Yet.

According to the Forbes article, “What’s Ahead for the Luxury Market in 2019,” HENRYs have “higher incomes relative to the majority of the population, between $100K and $250K in the U.S.” The article goes on to say that this is “where luxury brand’s traditional ultra-affluent customers are found. Since true affluence comes with age, the millennials aged 23-to-38 in 2019 are only now beginning to hit their stride in terms of income and wealth.”

HENRYs are super important to luxury brands because they have many years of purchasing power ahead of them. Brands like Cartier, Louis Vuitton, and others not only offer “entry-level” products to bring customers like this into the fold to be upsold throughout their lifetime as their earnings increase, but they are also buying entry-level brands.

For example, the same parent company that owns Louis Vuitton also owns Benefit Cosmetics, which is a popular cosmetics brand with millennial women. The price point is affordable by most who hold professional jobs.

The Forbes article says, “Compared with the rest of the millennial generation, the young HENRYs are better educated, more informed and set the trends that their lower-earning peers will emulate. And even more important for the long-term prospects of legacy luxury brands, most people who reach ultra-affluent levels of income start out as HENRYs. These are the customers that luxury brands need to identify now in order to nurture for future growth.”

How do you nurture these HENRYs for future growth? The same way you nurture any millennial along the purchase path: by using social media and email marketing.

Emails to Millennials From Luxury Brands

If luxury brands hold their allure through exclusivity and scarcity, why would they want to send mass emails out to a group of people who might only be able to afford “entry-level” goods today? Because the brands are setting themselves up for the future.

Millennials are more likely than any other generation to buy luxury goods online, and they also spend more hours per day reading emails than any other generation.

According to Adobe’s Consumer Email Survey Report published on CNBC’s website, “The results highlight an enduring obsession with email among those in their 20s and 30s.” The article goes on to say, “workers between ages 25 and 34 spend 6.4 hours a day checking their email, with more than a third checking their work mail before they even get out of bed.”

Kristin Naragon, Adobe’s director of email solutions says, “email has long been the best way to reach millennials.” An article in the Harvard Business Review reveals, “email is not only relevant for millennials, it also happens to remain the channel where direct marketers get the highest ROI.”

That being said, millennials have preferences when it comes to email marketing and even luxury brands would do well to be aware of these. The article in the Harvard Business Revenue cautions, “email marketing to millennials isn’t about sending more of the same. Many millennials want to see fewer emails.”

This tidbit provides perfect synergy for luxury brands who want to look-and-feel like their products are in-demand.

For example, earlier this year I made a purchase from Cartier, a luxury jewelry company. Since I made that purchase in February of 2019, which was almost four months ago now, they have only emailed me four times. Of those four emails, two were requests to share my opinion about my shopping experience.

screenshot from cartier

Contrast that with non-luxury goods retailer, Victoria Secret, that sends two emails a day pretty much every single day.

Victoria Secret doesn’t need to maintain the air of superiority or scarcity. Their goal is to sell as many products as possible to as many people as possible, and they are happy to offer daily sales and discounts to do so. If Cartier took this same approach they would no longer be viewed as an exclusive brand and some of their allure would be lost.

This is exactly why the Deloitte report mentioned that Dior not only limits their sales to twice per year but they also never host the sale items in their flagship store. Keeping up appearances is important for luxury brands but that doesn’t mean those appearances can’t come in the form of email from time-to-time, especially when trying to nurture HENRYs, who are long-term prospects.

The most successful luxury brands will “find a balance between exclusivity and accessibility” says Deloitte. That balance should include an omnichannel mix that leans heavily on digital campaigns, especially email, to reach millennials.

Next Steps for Luxury Brands

If you manage email marketing for a luxury brand, it would make sense to build out a long-term automated email sequence that sends a new email to customers at infrequent intervals. Once a month or even once a quarter could make sense – I would test to find the right intervals for your brand.

I would also include informational emails in the mix but only when relevent. For example, opening a new physical store location or announcing a major partnership would make sense and be interesting to consumers. Sending an email just to share “tips” or advice on a weekly or even bi-weekly basis would make less sense, research suggests.

Like all companies, even luxury brands will need to test and optimize their email campaigns to find the right balance. The key thing is just that email¬†is included in the overall strategy, because tomorrow’s best customer, the HENRY millennial, is checking email several times per day.

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