Luxury Institute: 7 Digital Luxury Myths Choking Your Brand's Performance in 2022
NEW YORK, Jan. 11, 2022 /PRNewswire/ -- Digital transformation is the hot project of the new decade. COVID-19 has forced affluent consumers of all ages to embrace digital engagement and has accelerated emerging digital trends. However, Luxury Institute 2022 trends research, conducted with its Global Luxury Expert Network (GLEN) members, indicates that luxury and premium goods and services brands are operating with inaccurate assumptions. Here is a reality check that will help brand leaders to debunk the seven most dangerous digital myths and empower them to free their organizations from false beliefs that can damage their brands in 2022 and beyond:
1. The Digital Innovator Myth: Our brand is a true digital innovator in our industry.
Reality: To make clients feel good, and keep selling them digital services, many consultants and digital agencies proclaim that any basic client improvement is an innovation. That's a false narrative that makes brand teams delusional and complacent. Creating a website and developing strong e-commerce capabilities is not innovation. Becoming digital in all its new, commoditized forms is not an innovative achievement. Brands that confront reality head-on, and quickly, learn that competitors always adopt the same tech from copycat vendors who sell their clients' best practices along with their software. Brands that want to be true innovators must completely reinvent the industry rules and business models to their advantage. However, game changing innovation is rare; brands must focus mostly on making smart, adaptive, agile improvements much cheaper, faster, and better than competitors. To do so, brands must earn customer trust to access the most predictive data, and use top-tier analytics, plus deploy maximum creativity and emotional intelligence to generate competitive advantage. This mindset empowers brands to consistently generate ever-improving, profitable, extraordinary employee and customer experiences over major time intervals. True innovation is rare. Executing brilliantly daily, in the moment, to gain competitive advantage, most often wins the game.
2. The First-Party Data Collection Myth: Since traditional digital data collection practices are under assault, the best ways for our brand to collect first-party customer data are sweepstakes, contests, and surveys.
Reality: A recent Wall Street Journal article reported that brands and their agencies are desperate to figure out how to collect data in a post-cookie, privacy regulated world. The traditional customer data collection model that used onerous and coercive terms of service is dead. Brands and their agencies assume that now they must settle for first-party data crumbs gathered with 1980s methods such as sweepstakes, contests, and polls. An entire AdTech/Martech ecosystem, addicted to unethically and illegally exploiting consumers to collect data, is looking for solutions in the old paradigm, reverting to using inefficient and ineffective old tools. Reality is that trustworthy brands can now go directly to consumers to license data legally and ethically, for fair value. That simple solution, which should have been adopted decades ago, seems too simple and elegant for the vendors who are fully invested in surveillance capitalism to grasp. However, brands are not invested in the unethical past. They must create the future. Reality is that rather than being led by their vendors, brands need to control their own destiny and leverage the new paradigms of data trust and data licensing to maximize performance.
3. The Inappropriate Data Outreach Myth: Even if they offer all legal protections and fair value rewards, it is inappropriate for true luxury brands to ask their customers to license them their data.
Reality: The luxury industry can often work against its best interests in the short term. It took the industry a long time to embrace sustainability, rap music, sneakers, women's rights, and racial diversity and justice. Now some brand executives are assuming it may not be "appropriate" for a luxury brand to ask its valued customers to license their highly descriptive and predictive data. In the USA, two-thirds of affluent consumers say they are willing to license digital platform data they own to brands they trust for fair value rewards. Now is the time to build deeper, mutually loyal luxury customer relationships by adding the new relationship dimension of sharing data for fair value to deliver true personalization. The current practice of acquiring data from questionable third parties is no longer moral, ethical or legal. Trusting relationships are the key to data access in 2022.
4. The Transaction Data Myth: Our transaction data is the most predictive data for scoring consumers on lifetime value and propensity to buy.
Reality: Historical transaction data has predictive power. That said, post-sale data does not reveal anything about the path-to-purchase, or the relevant behaviors that led to the transaction, or what behaviors can lead to future purchases. Today, vendors and brands guesstimate path-to-purchase and lifetime value, and they fail miserably given the poor quality of data they source. Social and digital platform data such as Google, Instagram, Facebook, TikTok, and Amazon data, where consumers now buy more, combined with direct brand transaction data, can generate massive improvements in conversion rates and lifetime value metrics. Brands can now request and access that data directly from consumers, but don't expect vendors stuck in the past to tell you that. They don't know.
5. The Data Cooperative Myth: It is highly beneficial for brands to join a data cooperative and freely share precious customer data with competitors.
Reality: Data cooperatives were created for the mail-order catalogue era. There are three critical reasons why it is a loser's game to participate today. First, in data coops, the precious first-party data and insights of big brands are being given away to competitors, giving them the ability to pick away at the customer base. Second, the data the brand has collected, on the customer, belongs to customers, too. Companies and cooperatives are not getting informed consent from customers to share data. Claiming it is anonymous data is bogus. The law is changing, and brands may soon be liable for sharing second party data. Third, and most importantly, brands can now go direct to valued customers, legally and ethically, and license the most descriptive and predictive data, digital platform data (Google, Instagram, TikTok, Facebook, etc...). Customers own and can now easily download that data. This makes customer data coops and data sharing schemes with other brands totally counterproductive and obsolete.
6. The Unbiased Algorithms Myth: Our vendors and data scientists are confident that we deploy unbiased algorithms.
Reality: Algorithms are created by biased humans, using biased data. There are no risk-free algorithms in business. Once brands understand this reality, they can take steps to dramatically manage risks. Brands must minimize negative algorithm effects and be ethical and legally compliant as regulators, consumer advocates, and lawyers begin to take legal action. One of the major ways the algorithms become biased is due to the inaccurate, ill-gotten third-party data often used. That's why brands must go directly to consumers to access the most authentic, unbiased, descriptive, and predictive data. Even then, marketing actions driven by algorithms may be sexist, racist, prejudiced and exclude certain members of society. Biased pricing can be illegal. The best way for a brand to protect itself from inexperienced, biased algorithms, created by biased vendors and internal data scientists, is to have an independent team of data, analytics, and legal experts who monitor the data, oversee algorithm development processes, and track the results of marketing campaigns. Algorithm audits are a critical set of risk-reduction tools in the age of AI.
7. The Metaverse Opportunity Myth: The metaverse is the next massive opportunity in the luxury industry.
Reality: The media and the pundits are outdoing each other with gargantuan estimates of the size of the metaverse. If all the projections were true, people would spend more than half their lives in the metaverse. The reality is that most people, young and old, will be mostly immersed in life-enhancing, digitally enabled experiences in the real world, not the metaverse in all its forms. We predict that since all humans, especially the young, crave and need real-life human interaction to survive and thrive, the metaverse will be, at best, a tempered part of their lives. Plan for the growth of the emerging metaverse but invest most of the brand building digital resources in the real, digitally powered and enhanced world.
In the luxury and premium industry, it is easy to buy into predictions from false prophets and armchair quarterbacks with failed track records who deliver them with confident rant and bravado. Often luxury and premium brand executives buy into lore and myths that have no factual or empirical basis. Examine these myths, review the reality, and make up your own mind. Your brand performance and destiny depend on it in 2022.
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 solutions developed by the best, most successful minds in the industry. Over the last 18 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. Luxury Institute has also innovated the Advanced Personalization Xchange (APX), powered by DataLucent, to empower affluent consumers to license their digital platform data to premium and luxury brands they trust legally, securely and privately in exchange for fair value rewards and benefits.
To learn more about Luxury Institute, please contact us at LuxuryInstitute.com
Contact - Milton Pedraza, CEO: [email protected]
SOURCE Luxury Institute
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