The concept of “clienteling” is nothing new, at least not in physical stores. The sole objective is to foster long-term relationships with frequent, usually high-paying customers.
Think of it as white-glove service, like a next-level personal shopper with the goal, of course, being continued sales. However, with a limited number of in-store associates, physical stores can only provide this service to so many customers at a time, especially as the customer journey starts online more often than not.
The luxury industry has always set the standard for clienteling in-store, and with the continued and future growth of the ecommerce luxury goods market, luxury fashion and beauty brands are already looking for ways to leverage new technologies to ramp up their clienteling services online. Enter AI and chatbots.
With these technologies becoming more and more democratized online and retail settings, luxury brands can now offer usher a new era of digital clienteling. This new disruption in customer service (or customer experience) is a total game-changer for the likes of Dior, Chanel, Givenchy, Fendi, Balenciaga, Louis Vuitton, and co.
Earlier this year, McKinsey & Company revealed that nearly 80% of luxury sales were “digitally influenced” and that high-end spending online is expected to more than triple to €74 billion ($87 billion USD) by 2025. How AI and chatbots will contribute to this growth with clienteling at scale remains to be seen, but the potential is vast.
This excitement about its potential is echoed by those working in the luxury industry, too. I was lucky enough to chat with Laurent Claquin, General Manager of Kering Group North America (Gucci, Balenciaga, Alexander McQueen, YSL) at a FrenchFounders event at one of his SoHo stores in New York City. In his talk, he stated that “although it accounts only for approximately 10% of Gucci’s current sales, digital is a key pillar of our future: 90% of the decision-making and product discovery is done online before the customer even shows up to the store.”
One might reasonably expect multi-billion dollar luxury brands to have already nailed the online experience, to have already seamlessly integrated white-glove service into their offerings, but that’s not the case. At least not yet.
Luxury brands have been surprisingly slow to embrace ecommerce and its potential, and perhaps with good reason. They’ve been wary of experimenting with offering online because they were worried it would affect brand perception and customer experience. Until now, they’ve had no way of effectively scaling their in-store experience digitally while preserving their reputation.
Enter the chatbots
With AI and chatbots now being able to augment sales and customers services teams, the most forward-thinking brands are starting to embrace them. For example, one of our clients, LVMH, whose brands include Louis Vuitton, Dior, Fendi, MAKE UP FOR EVER and Sephora, is proactively seizing opportunities to use technology to connect with customers through 1:1 conversations and recreate that luxurious, personalized, VIP service.
AI-powered clienteling presents luxury brands with an enormous array of opportunities. But where to focus? We’ve identified five key areas that we believe should form the foundation of an ecommerce white-glove service.
1. Leverage the power of storytelling
If you walk into any luxury store on the high street, you’ll be greeted by a sales associate who can tell you just about everything about the company, from its history, its products, and ultimately, personalized recommendations just for you. They’ll be able to tell you when the company was founded, the different seasons and lines, how the design process works, what materials are used, and more. More than just selling you a brand, they’re selling you a story.
More often than not, luxury purchases are emotionally-driven, and nothing drives emotion quite like a story. By connecting stories to shopping experiences in context, sales teams are able to build stronger connections between the brand and its customers.
As customers increasingly prefer to contact businesses via messaging apps like Facebook Messenger, chatbots are becoming the new extension of the brand online. 1:1 conversations are a tremendous opportunity to leverage storytelling to engage customers and nurture them over time.
2. Online to offline, seamlessly
Today’s customer has one foot in the digital world and one foot in the physical world. The best brands combine the two worlds to create a unique, omnichannel, VIP shopping experience. Luxury brands are no different. They can leverage the convenience of online shopping to pre-qualify leads and assist them through the product discovery phase, towards a sale.
Chatbots can be the glue to a rock-solid omnichannel strategy and bridge the gap between your physical and digital stores. As prospective customers visit your site, you can welcome them with an instant message and assist them as they research products. These virtual AI-powered advisors can act as extensions of your in-store team, capture leads, and escalate the most promising ones to your human sales associates. This hybrid approach is introducing a new era of clienteling that is both human and AI-powered and that covers the full spectrum of customer interactions across the online-offline journey.
They can also be very handy when it comes to helping people find the nearest store, book an appointment with an in-store advisor (e.g. Sephora) or buy online and pick up in store.
Beyond chatbots, these tactics are invaluable for modern day retailers. For example, British luxury brand Holland Cooper (reported annual revenue of £10 million (13.2 million USD)) has leveraged a “click-and-collect” strategy to funnel traffic to their store, which accounted for 60% of sales through their Shopify Plus website.
3. On-demand VIP services
Customer expectations are higher than ever, and that rings even truer for luxury brands. It’s time for brands to act less like advertisers, and more like personal butlers if they want to succeed. This means being smart and strategic about how they combine AI chatbots, customer service reps, live chat, messaging apps and automated workflows.
Assistive selling is the best way to maximize each customer’s lifetime value and average basket size. Get it right, and you’ll reap the rewards of being able to offer a helping hand everywhere and anywhere.
For example, Make Up For Ever uses a Messenger chatbot powered by Heyday to help shoppers find the right concealer and foundation for their skin tone, but shoppers can always speak to a human make up artist if they wish. The idea is not only to guide customers toward the right solution for their need but also design a customer service channel that feels tailored and readily accessible on demand.
Another example is Net-a-Porter and Mr. Porter, who offer premium assistance in selected cities to so-called EIPs (Extremely Important People, aka top customers who spend a lot). Assistance comes in the form of at-home shopping consultations, and a “you try, we wait” delivery service.
4. Create culturally-relevant experiences
Global brands now feel the pressure to have a local approach to be culturally relevant. “Glocalization” as we like to call it needs to be a core pillar of any global brand’s Conversational AI strategy, especially as natural language becomes the premier consumer interface.
For example, French in France is different from French in Canada. But these differences go beyond just greeting shoppers in their native language. At Heyday, we’re constantly developing better natural language processing modules that take those cultural specificities into account. We know that psychographics — interests, passions, morals etc. — are often driven by demographics, meaning brands must adjust their tone for different markets in order to feel more personable and relevant to their customers.
5. Emphasize exclusivity and scarcity
Exclusive or hidden content can help to pique shoppers’ curiosity and drive sales of higher priced goods. At London Fashion Week in 2016, Burberry employed a Messenger chatbot to complement its show, as it allowed users to learn more about the collection and dive into a stylized maze game in which users could uncover hidden pieces.
L’Occitane also created a sense of scarcity and exclusivity in 2017, driving social sales by offering a Mother’s Day gift which could only be purchased through Facebook.
Emphasizing exclusivity and scarcity is at the heart of luxury shopping. In a digital-first world, brands must recreate that sense of urgency and exclusivity online by injecting emotion into the experience. Limited editions, real-time stock availability notifications, storytelling, and handpicked recommendations are some of the key factors which set luxury shopping apart from the more mundane, commodity shopping.
Personal shopper meets AI
The efficiency of ecommerce has a lot of upsides, but the experience still all too often feels imperfect and impersonal. With new technologies such as virtual customer assistants and conversational AI promising to change commerce forever, luxury brands are presented with a new era of opportunities.
Their challenge now is to strike the right balance between convenience and experience, between automation and the human touch, and between the physical and digital store experience.
At the end of the day, luxury is all in the details. It’s not just the products, but the experience and feelings surrounding them. AI technology is perfectly placed to complement luxury brands, but we must learn to employ it at the right time for the customer’s sake and to use it in a way that augments human teams, not replaces them.
By putting tech at the service of their customers, luxury brands may finally be able to deliver the same level of clienteling and white-glove service online as they do in-store. The end goal? To enable personalization at scale across all channels to usher in a new era of bespoke customer experiences.