Luxury Brands Don’t Really Understand Their Customers

luxury brands study

Businesses need to understand their customers in order to succeed. They need to know who their customers are, what kinds of products they appreciate, what they expect in a shopping experience and more. But according to a recent study, there’s one type of business that isn’t really doing this effectively.

A study conducted by Epsilon concluded that luxury brands lose up to 50 percent of their top clientele annually due to misidentified demographic and economic information, as well as failure to create a personalized shopping experience.

For luxury brands, creating an experience is especially important. Since customers have to spend a lot of money to shop there, they want the experience to be more enjoyable than what they’d find at an average store.

Jean-Yves Sabot, VP or retail business development at Epsilon, told Direct Marketing News:

“Luxury brands need to truly understand who their customers are and what they’re looking for in a luxe shopping experience. This is critical in creating a personalized experience for the customer that drives engagement, retention, and satisfaction.”

When brands make incorrect assumptions about their customers, it can definitely alienate some shoppers. For example, the Epsilon study showed that many luxury brands think their customers are typically female, about 45 years old, and have a net worth over $1 million. However, according to the study, more than half of high-end shoppers are male and have a net worth over $500,000.

So if luxury brands cater the shopping experience to one group or demographic, but that group doesn’t make up the majority of their shoppers, they could be losing business.

To solve this problem, luxury brands should do some research to find out who their particular customers are. They could also create an easily customizable shopping experience so that different types of shoppers could easily enjoy shopping with them.

And while this particular study focused on luxury brands, the lessons can certainly apply to other types of businesses. Knowing who your customers are and creating experiences tailored to them is important for all businesses.

Shoes and Bags Photo via Shutterstock

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Annie Pilon Annie Pilon is a Senior Staff Writer for Small Business Trends, covering entrepreneur profiles, interviews, feature stories, community news and in-depth, expert-based guides. When she’s not writing she can be found exploring all that her home state of Michigan has to offer.

6 Reactions
  1. The problem with luxury brands is that they exclude. They always make an identity with their products and they exclude everyone else.

    • I think the exclusivity is often part of what draws certain people to these brands. But when they stick with one demographic it can definitely hurt.

      • I agree who wants to be a part of something that everyone has or is about to purchase? That makes it a ‘Basic’ item. Although I see that the luxury brands are simple my getting greedy. Raising prices doesn’t make it exclusive anymore. Just sometimes in poor taste. And for that I’m not willing to pay that price. Some brands I try my best not to purchase because they are so tactless.

  2. I don’t understand clearly which companies the author is talking about when he or she states that luxury brands to not do good marketing. An example, please?

    • The study cited includes a number of different luxury brands, though I don’t believe they cite them specifically. There’s a whole report you can download (linked near the top of the post) if you’d like more info.

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