Luxury Marketing’s “Platinum Bullet”:
Engaging Influencers through Affluent Micro-Communities

We all know it’s been a tough year for luxury brands. Luxury sales in the U.S. are predicted to fall 15% this year and 78% of 860 Luxury Marketing Council members say that financial events have negatively affected their business.

Luxury brands are exploring new ways to engage consumers and grow sales in this harsh economy. Given smaller budgets, it will be all the more important to spend marketing dollars wisely and focus resources in areas of the most opportunity. For luxury brands, an underleveraged opportunity lies in growing revenue by actively engaging brand influencers through their micro-communities, such as social and professional affinity groups.

The current economic downturn has hit luxury brands and changed affluent consumer behavior substantially. Wealthy consumers are becoming more self conscious and less willing to buy conspicuous luxury items - at least publicly. When they do buy, they want to rationalize those purchases by clearly understanding product quality for the price paid. Luxury “aspirational” buyers will no longer use credit (or are unable to get banks to extend credit) to buy something they can do without in uncertain times.

To achieve growth, luxury brands have made considerable marketing and new product investments in new global and youth markets. Coach very successfully line-extended into the youth market with Poppy by Coach. Short term, new global markets are regarded with cautious optimism as luxury sales in China rose 12% this past year, but at the same time, the once gilded Dubai has begun to shine less brightly.

With limited marketing dollars available, luxury brand marketers often overlook increasingly accessible affluent micro-communities that are quietly emerging as part of a fundamental shift in the US socio-economic landscape. Increasing brand loyalty and share of wallet with these affluent micro-communities through leveraging the targeting precision and cost effectiveness of the online channel is truly “low hanging fruit” for many luxury brands.

The opportunity: Moving from passive to “Active Engagement of Influencers”

Many companies have successfully grown revenue through merely “paying more attention” to existing consumers and the concerns of their micro-communities. Examples include Kimpton Hotels’ unquestioned women and gay/lesbian consumer loyalty and Lexus’ recent initiative to attract black women customers by connecting sustainability to the critical health concerns of urban communities. For luxury brands in an offline world, engaging such targeted high-value communities has been cost prohibitive due to their small size. However, as wealthy consumers shift towards online channels to find information, purchase products and actively engage in social media (60% of the affluent are now doing social networking), luxury brands now have the opportunity to develop similar “Active Engagement” strategies by activating “gently tapped” affluent sub-segments already engaged in established groups and
organizations online.

Even as consumers move into more active online media, luxury brands have responded with passive, one way messaging. Banner ads and transactional e-mail marketing are both passive. All the money invested in visually stunning websites won’t get the returns
you want and need unless you target your consumers with a relevant message in a way that’s actively engaging.

Active Engagement is a two-way conversation that involves and empowers consumers. It provides relevant experiences in line with their lifestyles and values. This develops far more meaningful relationships and a strong connection to the brand. Benefits include
long-term brand affinity, increased advocacy, greater loyalty, deeper consumer insights and a rise in both online and retail traffic.

To get the most out of Active Engagement, it is important to understand who your high value segments are and focus resources on who influences them. To engage the Influencers, look to micro-communities. Here, members are already highly engaged and
receptive to messages, giving your brand a unique platform for continuous interaction.Win with your Influencers, and you’ll win with others as they spread the message to broader and broader circles of qualified consumers, generating incremental revenue.

How to do it
There are 4 steps to actively engaging your Influencers in their micro-communities:

Step 1: Identify your high value segments

    · Who are your high value consumer segments?
    · What do they need/desire from a brand?

Step 2: Identify Influencers and their micro-communities

    · Who are the key people/groups influencing your high value segments?
    · What micro-communities (associations, groups etc.) do they interact in – on and offline?

Step 3: Develop your message

    · Is your message clear and relevant to your Influencers?

    · Does your message trigger ongoing engagement?

Step 4: Leverage compelling engagement platforms
    · What platforms can you use to reach your Influencers and actively interact with them?

Engaged micro-communities can deliver startlingly higher response rates.

Engaging consumers through their micro-communities heightens receptiveness to your messaging. A recent email survey conducted by the Mill Square Group and the National Brotherhood of Skiers (NBS) was sent by the affinity group President to their affluent African American members. It achieved a stunning 33% open rate. Furthermore, 87% of those completed the survey, with over half of the survey respondents desiring direct offers and invites from luxury brands. Two factors contributing to these high response rates are:

    1) Communication came via the affinity group’s key Influencer – the NBS President
    2) Members knew they were engaging together to provide a unified opinion

When you compare the 33% email open rate to an average email prospect list open rate of 8.6%, you can see why marketers are excited.

“Our Club”

Our Club is an innovative online social networking/shopping tool that reaches affluent consumers through their affinity groups. Launching in January 2010, it will initially target affluent African American affinity groups, followed by women and Hispanics. Our Club was created by Mill Square Group, which for many years has successfully created value from new and emerging customer segments for its Fortune 500 clients.

For more information on Our Club or segment marketing, visit http://www.millsquare.com, or email us at ourclub@millsquare.com.

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All Rights Reserved, Mill Square Group, Inc. 2009