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Luxury brands referral marketing

How to grow your customer base (without a discount in sight)

Sophia King
By Sophia King — November 16, 2021 -

Read time: 6 mins

Looking for the highlights? Here are three things you need to know:

  • 63% of consumers prefer to buy from brands that share their personal values and beliefs
  • Referral builds a sense of exclusivity and a strong community around your brand
  • 17% of referrals for luxury retailers convert into new customers

In the words of a poem published at the height of the pandemic, ‘we are in the same storm, but not in the same boat’. While high street retailers like Topshop and Debenhams have closed their doors for good, luxury brands like Gucci and Hermes have raised their prices amid skyrocketing luxury retail sales. Similarly, while some consumers continue to live anxiously pay cheque to pay cheque, few of the world’s wealthy – an increasing number of millennial and Gen Z shoppers among them – have felt any real hit to their bank balances. 

But that’s not to say that life is pre-pandemic peachy for luxury brands. The finances of their target consumers may not have changed much, but something far more important has: their outlook. 

Consumers across every demographic – from HENRYs (high earners not rich yet) to UHNWIs (ultra high net worth individuals) – are now thinking long and hard about their shopping habits. The pandemic has thrust our lifestyles under a glaring spotlight, forcing us to examine how we live, what we spend our money on, and how that impacts the people and planet around us. Recent research from Bynder found 63% of consumers now prefer to buy from brands that share their personal values and beliefs. This shift in consumer behavior highlights what is brand advocacy, where customers become advocates for brands that align with their values and beliefs.

Then there’s the sharp shift of global travellers becoming local shoppers. According to McKinsey, as much as 30% of revenue in the luxury industry comes from consumers making purchases outside their home countries – expenditure set to be limited by global travel restrictions until at least 2022. 

But that’s not to say it’s all over for luxury retailers. Far from it. It simply means a solid marketing strategy – one rooted in segmentation and targeting – has gone from important to critical.  

The very nature of being an exclusive brand means knowing who you want to include and who you don’t. Mass marketing does not a luxury brand make. There’s a reason Dior and Chanel advertise only perfume on television, saving their four-figure handbags for more targeted channels.

pexels-wendy-wei-4027948-jpg-1A well-renowned brand name no longer guarantees loyal customers for luxury brands.

The rocky landscape of the pandemic might tempt luxury retailers to scale back on their marketing budget – 51% intend to do so, according to Forbes – but this would be a fatal mistake. Now is not the time to disappear. It’s the time to double down: to hone in on your target audience and reach them in ways they can’t ignore. And there’s a surprisingly straightforward way to do it. 

Motivate your customers to tell their friends – people similar to them, with shared aspirations, needs and spending habits – about your brand, and you can reach target shoppers in a way that lands. 17% of referrals among our luxury clients convert into new customers – a strong statistic for a marketing channel that requires little day-to-day maintenance.

That’s because a customer’s recommendation of your brand is powerful. For luxury fashion retailer Farfetch, referrals increased new customer acquisition by 15% within just nine months. 

Your customer’s good word denotes their seal of approval. It eases any anxiety their friend has about treating themselves to your goods. It also saves them time, an increasingly precious commodity in today’s non-stop world. Their friend’s recommendation prevents them from spending hours scrolling through websites or getting lost in maze-like department stores. It gives them the confidence to buy a product they’ll love in just a few clicks. Most importantly of all, it welcomes them into an invite-only community for an already exclusive brand. They’re in the know, mingling with others in on the secret. 

Add in an incentive for your customers, such as early access to your latest collection or a charity donation, and introducing friends to your brand becomes a no-brainer. 

During the Great Depression, Coco Chanel didn’t slap a red discount sticker on her haute couture garments to drive sales. Instead, she created a high-jewellery collection, because she knew that ‘during the economic recession… there emerged an instinctive desire for authenticity.’ Almost 100 years on, the same concept applies.

Today’s consumers want to buy from brands they emotionally connect with. Brands offering goods they love, a service that makes them feel special, and a community they’re proud to be part of. 

A precision-engineered referral programme is the 21st century equivalent of ushering your best customers through the side door and giving them an exclusive look at your new collection before a personal tour of your boutique. It welcomes them in, gives them a knowing smile and greets them as members of a highly exclusive club. And that will always be far more enticing than any one-off discount or short-term promotion.


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