Do luxury brands need loyalty programs?
Do people who pay hundreds and thousands of dollars on products need a rewards program? Or are they already loyal to those brands?
Customer loyalty programs help businesses build brand loyalty, turn first-time and not-so-frequent buyers into repeat customers. As these customers become more loyal to your brand, they also become your brand ambassadors or advocates.
But do luxury loyalty programs operate the same way? Why do luxury brands, like Dior or Neiman Marcus, need a rewards program?
In this article, we’ll be exploring statistics for the luxury retail market and its customers. Then, we’ll dive into several luxury loyalty programs from multiple industries and what they have to offer.
Finally, we’ll also provide you with tips on how to create your own luxury rewards program for your affluent customers.
When you think about a luxury brand, you probably don’t expect people to buy products worth thousands of dollars online. And you’d be quite right.
However, when the pandemic forced people to stay at home with the only means to shop being online, luxury buyers changed their habits.
Meanwhile, shoppers in general saved up on lots of money they would have otherwise spent on transportation, fuel, clothing…etc.
When the effects of the pandemic waned in 2021, these people began what Vogue Business describes as ‘revenge shopping.’
They had money and were, now, interested in exploring luxury brands they wouldn’t have considered pre-pandemic. At the same time, businesses selling luxury goods had to revamp their websites and provide their unique experiences online.
McKinsey reports that more US consumers have developed an interest in luxury shopping.
Louis Vuitton (LMVH) reported that its revenues from the Americas rose from 24% in 2019 to 26% in 2021. Similarly, French luxury brand Kering reported a revenue growth from US shoppers of 26% in 2021, up from 19% in 2019. (McKinsey)
Despite a ‘severe contraction’ in 2020 due to the pandemic, the luxury retail market made a comeback in 2022. Data by Bain & Company shows the luxury market reaching a value of EUR 1.5 trillion in 2021.
The market “surprised everyone in 2022 by further growing 19% [to] 21%, according to our estimates,” the research firm said.
Bain & Company expects the luxury market’s consumer base to grow to 500 million by 2030 from 400 million in 2022.
Luxury-product-buying consumers “are hungry for unique products and experiences, putting brands’ VIC (very important client) strategies into overdrive,” the report explained.
In 2022, Bain & Company estimated the luxury market’s value at EUR 353 billion. It expects this figure to surge by as much as 50% to between EUR 540 billion and EUR 580 billion by the end of 2030.
Most luxury retail brands don’t have rewards programs. According to Vogue Business, some luxury fashion brands used to “reward their highest spending customers with invitations to fashion shows and a dedicated concierge service.”
Lately, however, more retail luxury companies began offering rewards programs. One of the reasons for doing so has been to gain more information about their customers as browsers, like Google and Firefox, crackdown on third-party cookies.
One of the benefits of having a rewards program is that customers willingly give you information about them.
Customers feel in charge of the information they’re providing. They’re more willing to provide information if it gets them unique and personalized experiences with the brand they like.
But information is not the only reason. Every brand, luxury or not, wants to grow, wants more customers.
Luxury brands serve a luxury-seeking, high-spending clientele, whose interests, habits, and problems differ from day-to-day customers and other retail brands.
Data by Unity Marketing found that affluent customers were “highly engaged in brand loyalty and rewards programs.”
Over 80% of affluent customers, whose average income was close to $260,000 a year, were active in at least one rewards program.
“Such programs can be both a powerful tool to engage existing customers, and to attract new high-spending customers to a brand,” the report said.
With more brands going online since 2020, the e-commerce market offers many opportunities for brands and customers alike.
And by becoming part of the e-commerce and m-commerce scene, luxury retailers have bigger competition. It comes from regular and already-popular retail brands and from new-and-emerging luxury retailers, who are fighting for market share, brand awareness, and sales.
Luxury rewards programs are “about creating intimacy with customers and building brand ambassadors,” EY Parthenon partner Ludwig Voll tells Vogue Business.
Meanwhile, Mario Medved, partner at New York-based VC fund Sprint VC, tells Forbes that the higher the competition, the more “luxury brands have to reinvent themselves to maintain their status of rarity and access to a privileged life, the cornerstones of luxury products.”
He adds that this ‘reinvention’ should translate into “tangible value for customers” along with “highly unique and privileged experience.” Medved explains that this reinvention and these experiences “can be achieved through state-of-the-art technological upgrades.”
A clear example of this is luxury brand Neiman Marcus and its 2020 launch of the ‘NM Connect.’
NM Connect is a platform “designed to inspire clients, from offering personalized look books, to completing transactions remotely and instantly,” Neiman Marcus’s chief digital officer Katie Mullen said in a press release.
NM Connect generated %60 million in sales in the first 90 days of its launch. Talk about luxury success!
"It’s exquisite, it’s expensive and it’s exclusive. These values confer luxury status on a brand. These same values ensure that they stay relevant and in high-demand by consumers.”
Luxury operates at a different level than any other form of purchases or bookings you make.
The loyalty program that works for H&M won’t work for a luxury brand. A $10 gift doesn’t mean much to someone who spends hundreds and thousands of dollars a year on a brand.
If you’re considering building a luxury loyalty and rewards program for your business, then you should look at what others are doing first.
What are luxury brands like Neiman Marcus or Marriott or Hilton offering high-end customers?
We’ll be dissecting several of the world’s best luxury loyalty programs across various industries. From fashion to hotels, we’ll show you what these companies are offering their customers in benefits and experiences.
With each program, we’ll provide you with an overview, and something special they’re doing.
Loyalty programs are super popular among beauty brands in general. It seems that luxury beauty is no exception. Let’s look at 2 of the most popular luxury beauty programs and how they entice high-end customers.
When the name Dior pops up, you can’t help but think about dazzling actresses and fine, exotic perfumes and products.
Considered one of the world’s best beauty loyalty programs, the Dior rewards program is adequately called ‘My Dior Beauty.’ It instantly makes customers feel special and pampered.
My Dior Beauty is a 4-tier rewards program, with the tiers named Pearl, Silver, Gold, and Platinum. Customers are treated to a special gift when they rise from Pearl to Silver and every tier after that.
In the Dior rewards program, points are called ‘charms.’ Customers don’t earn ‘charms’ for purchases but for non-purchase-related activities like adding information to your profile, completing a survey…etc.
One of the world’s best loyalty programs is Sephora’s Beauty Insider. It also ranks high on several lists, including the world’s leading beauty rewards programs, the best omnichannel loyalty programs, and the best luxury rewards programs.
Sephora’s 3-tier regularly-updated rewards program gives customers exciting perks across all its tiers.
Of course, if you make it to the highest tier, the Rouge tier, you get extravagant perks, including a special Rouge-only reward, where you can exchange 2,500 points for a $100 voucher.
All Sephora customers get an annual birthday gift, which they can choose themselves from several products. They also get 250 points.
The word ‘jewelry’ is often synonymous with luxury, even if it doesn’t always come with a price tag. That said, when you think about luxury jewelry, brand names like Swarovski, Pandora, among others come to mind.
Though it’s common to find loyalty programs for jewelry and accessories brands, you may be surprised to learn about luxury jewelry rewards programs.
Let’s see what luxury jewelry brands offer their customers.
Like its dazzling and unique pieces, glass-crystal-maker Swarovski boasts a unique tiered loyalty program called The Swarovski Crystal Society.
Present in nearly 170 countries, the Austrian family-owned luxury business’s rewards program aims to entice long-term customer engagement.
Here’s how Swarovski describes its luxury loyalty program:
“The Swarovski Crystal Society is a members club unlike any other, a place where crystal enthusiasts, connoisseurs, and collectors can ignite their dreams. Designed to immerse you in our world of wonders, membership gives you access to exclusive products, benefits, and events so you can indulge your passion for all things crystal.”
This three-tier paid luxury jewelry loyalty program offers customers
As customers rise to higher tiers, they get
It’s worth noting that the Swarovski Crystal Society is a paid loyalty program.
And why should customers pay a fee to join this elite ‘society?’ Here’s what the luxury jeweler says:
“The SCS offers you unique material benefits and brilliant experiences and has great value for money. For example, the unique annual crystal membership gift alone has a higher value than the annual membership fee itself.”
To join the Swarovski Crystal Society, customers pay an annual fee of $55 or $125 for a 3-year subscription.
Notice what many of these luxury brands have in common when it comes to rewards programs?
‘Society,’ ‘Club,’ ‘Insider,’ it’s all about creating a community. It’s about making customers feel unique and part of a community and world of their own.
Denmark-based jeweler Pandora isn’t an exception. They’ve named their luxury rewards program ‘The Pandora Club.’
But unlike other loyalty programs on this list–and in general– Pandora doesn’t use a points-based rewards system. Customers can only get benefits by providing personal information.
At Gameball, we recommend businesses get to know their customers better by offering points or rewards in exchange for customer information. Which is what Pandora and Dior are doing.
So, what’s in it for Pandora Club members?
Customers, or members, get
From both a luxury and retail perspective, there’s always a lot happening in the fashion industry.
In the luxury fashion industry, there are several popular luxury perks programs including Neiman Marcus, HUGO BOSS, and others.
Luxury brand Neiman Marcus boasts the famous InCircle rewards program, which comes with its own currency, the InCircle Points.
It is one of the most rewarding luxury brand loyalty programs, but also one of the most complex. The InCircle rewards program comprises 5 tiers along with 3 ultra-luxury levels.
Each tier in Neiman Marcus’ rewards program is called a ‘Circle,’ giving the feeling of a close-knit circle of friends.
InCircle members “earn 2 base points” for every $1 spent for purchases ranging from $1 to $74,999 in a calendar year. Once customers complete or exceed $75,000 in a year, they earn 5 base points per dollar.
American Express customers, however, don’t get the same benefits as Neiman Marcus customers.
‘Circle One’ or the first tier gives customers the standard 2 points-per-dollar offering. It’s for customers who spend $1 to $999 in a year.
Circle One customers who reach 10,000 points get a $100-Point Card which they can use at Neiman Marcus, related brands, and for other services.
Starting the Circle Two tier, customers get a “Double Point Day.” Neiman Marcus lets customers choose one day each year where they can earn double points for their purchases.
Customers who enroll in Neiman Marcus’ InCircle loyalty program get a ton of perks including:
Among other benefits!
In the third tier, customers can get a $100 Perk Card, which they can use for various services including ‘monogramming.’
According to Vogue Business, customers who spend $10,000 or more a year make up nearly 40% of Neiman Marcus’ business.
In the ultra-luxury tiers, customers’ concierge services include “personalized travel itineraries, in-demand tickets,” and more.
It’s worth mentioning that the InCircle rewards program and Neiman Marcus credit card apply to the Neiman Marcus, Bergdorf Goodman, and Horchow brands.
Hotel loyalty programs are common. Hotels, and airlines, were among the first in the hospitality industry to create customer loyalty programs.
Today, many global hotel chains boast rewards programs. The reason? They want you to keep going to them regardless of the country you’re visiting.
The Marriott is one of the popular hotel chains that offers its regular guests luxury perks. Let’s see what Marriott’s rewards program has to offer.
The Marriott boasts its famous Marriott Bonvoy rewards program. Unlike most tiered-rewards programs which have 3 or 4 tiers, Marriott Bonvoy is a 6-tier luxury hotel rewards program.
The hotel chain offers “all” its members “unlimited travel possibilities.” It adds a brief explanation about how its program works, indicating “the more you stay, the more benefits you unlock.”
Its first tier, called ‘Member,’ is for customers who spend up to 9 nights in Marriott hotels. They also get “exclusive discount rates” along with “mobile check-in services,” which include using the Marriott mobile app as their room key.
In Marriott Bonvoy, customers can earn points through stays at the hotel chain, including its ‘homes & villas,’ for booking tours and activities, shopping with the Bonvoy credit card, and buying from specific “travel partners.”
Customers can use their points to get benefits at The Marriott’s “dining, golf, spas, and more” during their stay.
They can also use them to book flights and car rentals through The Marriott’s partners and ‘partner loyalty programs,’ and to get shopping gift cards.
As travelers and guests rise in the Marriott Bonvoy loyalty tiers, they get more perks including late checkout, room upgrades, and more points.
For example, customers in tier 3, the Gold Elite tier, get 25% more points for every eligible purchase at the hotel.
As you can see luxury brands operate differently from your average retailer. The premise is the same. A customer loyalty program that lets customers collect points that translate into customer benefits. Though there are exceptions to that rule.
But… luxury-seeking customers don’t just want points. They want perks as opulent and as sophisticated as the brands they buy from.
That’s why, if you offer luxury products or services, you’ll need a well-thought-out luxury loyalty program to support and grow your brand.
Here are our tips for creating that rewards program that makes comfort-seeking customers happy and that keeps them coming back.
The secret behind EVERY successful customer loyalty program is understanding your customers and what drives them to buy from you.
Are you a luxury brand that produces a handful of pieces for each product? Is it this exclusivity that entices customers to buy from you? Or is it your brand’s support of certain movements or activities like sustainability or creating eco-friendly products?
Understanding why customers come to you, you can maintain this message and mission in your marketing and rewards program.
Affluent shoppers don’t care about discounting, unlike bargain shoppers, for example. While few people will object to saving money, this is NOT the reason affluent customers are coming to YOU.
It’s NOT why they’re joining your rewards program.
You can still run end-of-season discounts or Mother’s Day discounts, but unlike regular loyalty programs, discounts aren’t the endgame for your target customers.
A customer who’s paying $10,000 or more a year on your products doesn’t care about a $10 or $20 discount. They care about the experience and ‘other services’ they can get.
While there are several types of loyalty programs, the one that works best with luxury products and services is the tiered rewards system.
Neiman Marcus, Marriott Bonvoy, and Dior use a tiered loyalty program to reward their customers.
While most tiered rewards programs comprise 2 or 3 tiers, luxury programs usually include 4 or more tiers.
You can increase the number of tiers in your rewards program as your business grows. So, you may start out with 3 tiers and then expand to 4 or 5 later.
As mentioned, customers aren’t really interested in small discounts. Though a $100 discount is something to consider.
Alternatively, you can include perks with a higher dollar value. For example, offering to provide your customers with a dedicated sales executive for special occasions like cocktail, engagement, or wedding dresses is a perk many will enjoy.
If you’re a luxury beauty brand, offering customers special gifts from products they like is a special reward.
Many luxury brands know that their customers like giving their products as gifts. So, they offer free gift-wrapping services.
Free delivery is a perk that’s included in almost every rewards program. Treat your luxury customers to free shipping and free returns.
Experiences matter A LOT to customers today and to luxury-seeking customers even more. The experiences you offer should cover all the places or locations where you sell your products.
This means offering an omnichannel customer loyalty program that extends to your physical store, website, and mobile app is the way to go. Your experience should also extend to your customer service team, and your post-purchase and return experiences.
Luxury comes with a degree of exclusivity. Not everyone can buy luxury products. You, as a brand known that, and your customers know it too.
Neiman Marcus’ InCircle has ‘member-only discounts.’ This means members who aren’t InCircle members don’t get these discounts. Exclusivity.
Swarovski takes luxury and exclusivity to a new level, offering its customers “member-only products.” So, if customers aren’t a part of its program, there are pieces they’ll never get!
Loyalty programs should make loyal customers feel special. Luxury loyalty programs should make your affluent customers feel even more special.
Your brand should offer a pampering experience that makes your customers feel like kings and queens.
Neiman Marcus’ concierge services and ‘Double Point Day’ do that.
Combine exclusivity and personalized experiences to make your customers feel ‘extra special.’ This will transform your entire brand experience and keep customers coming back.
To provide great service, you need to know what your customers want and what their problems are. Then, use this information to see what you can offer them that reduces their stress.
The simplest way to do this is to ask customers directly. Use email marketing or short surveys to get customers to provide you with information.
Let your customer support (or excellence) team take a few minutes to call customers, if they prefer responding to a call instead of an email. Have them ask those customers what your brand can do to make their experience better.
By figuring out your customers' top problems, you can find ways to solve them as part of your rewards program experience.
For example, if customers prefer to shop in-person but struggle with parking, consider offering valet parking at your in-person locations. Consider offering customers 2-hour daycare while they shop, noise and hassle-free.
Have you noticed a pattern in the above examples of luxury brand loyalty programs? They all have creative names for the rewards programs. Many include a name that signifies a community or clique.
Don’t overthink it but we recommend giving your rewards program a name that matches your brand and customers and implies opulence or extravagance.
Consider including words like family, club, clique, posse, society,…etc.
Or use this format to name your program: My [brand name] Club, The [brand name] society/posse, The [brand name] Insider(s)…etc.
We also recommend giving your tiers creative names. A basic or starter tier can be just that ‘basic,’ ‘starter,’ or ‘member.’ However, it doesn’t feel special. So, we don’t recommend it, especially for luxury brands.
If you have a variety of products, it’s better to make everyone feel special. After all, making customers feel special is the essence of today’s successful customer loyalty programs.
For more ideas, check out our list of best beauty loyalty programs. The beauty industry is all about making customers feel special and loved. So, it’s no surprise their rewards programs and loyalty tiers have unique names.
Customers who buy luxury products expect a certain level of care from the brands they buy from. When you add a rewards program, customers’ expectations are heightened.
They’re curious what ‘more’ you’ll offer them. As a luxury brand, you want to extend that feeling of extravagance through your rewards program.
Luxury loyalty programs can be more complicated than regular rewards programs because your target audience has bigger expectations. But you don’t have to reinvent the wheel.
Review the above examples and combine them with the tips we’ve provided.
And when it comes to loyalty programs, you don’t have to reinvent those either. You can simply use Gameball and customize your points, perks, and everything else from a single dashboard. You can also review your loyalty marketing metrics and create campaigns.
Need more help? Leave your questions in the comments or send us a message via our website.