NEW YORK, United States — BoF and Affirm brought together executives from leading industry companies to discuss how fashion can adopt connected consumer strategies to create competitive advantage. Leaders from Kering, Grailed, Estée Lauder, Ralph Lauren, Mansur Gavriel, Hudson’s Bay Company, Intermix, Sotheby's and Armarium gathered at the NoMad hotel in New York to share their experiences in innovating their consumers’ journeys to purchase, guided by data insights.
Co-hosted by BoF and Affirm founder and chief executive Max Levchin, who co-founded Paypal, the discussion began by acknowledging that the relationship between consumers and some companies has evolved from episodic transactions to one of continuous connection.
A number of key themes emerged from the discussion conducted under Chatham house rules — which precludes the attribution of statements made to specific individuals or companies.
Connecting With Consumers Earlier
The conversation began by acknowledging the shifting consumer profiles of fashion's newest generation of customers. This month, Bain & Company reported that Millennials will control 50 percent of luxury spending by 2025. Companies willing to pivot not only their product ranges and communications strategies, but also their relationship building, distribution and engagement tactics in entry-level transactions can build competitive advantage.
It’s about being authentic in forming a two-way conversation.
In the context of connected consumer strategies and the formation of relationships with longevity, how and when brands first connect with consumers was recognised as increasingly important. The talk continued to discuss how some brands are tapping technology to identify individuals they believe will bring lifetime value to their businesses and connect with them earlier.
One participant stressed that as the accuracy of the data improves identifying such individuals, arguments for investing in strategies that optimise first-time connections with customers and build communities of younger consumers are growing.
Nurturing Customer Behaviour With and Without Content
While the group raised that fact that the most successful brands benefit from high levels of emotional connection with their consumers, creating the potential for strong engagement with customer outreach strategies, it accepted that there were distinct challenges for the luxury industry.
Gifting was raised as a potential avenue for engaging consumers in automatic execution strategies, such as those adopted by Stitch Fix, in which consumers delegate responsibility for selecting clothes to an algorithm trained to meet their needs. However, the group did not settle on a solution for luxury brands and retailers to convincingly replicate the more regular use case advantage of other sectors, including grocery businesses like Hello Fresh or ride-services such as Uber.
Discussion then turned to lessons that could be learned from the beauty industry. Skilled at seeding user-generated content at a fraction of the cost of traditional fashion campaigns, the beauty industry has successfully tapped into its consumers desire to build communities and share their identities.
However, it was consumer interaction independent of any created or curated content that had the most impact on attendees. By adopting messaging strategies built around relevant push notifications of curated product, brands have the potential to maintain connection with consumers independent of the need to create or curate costly content. Though requiring significant investment in product and community development, its potential was notably appreciated by a number of participants.
Balancing Consumer Insight and Brand Identity
Attendees later deliberated on how best to use those insights in a balanced manner, enabling companies to reflect emerging consumer preferences in their product and service offerings without sacrificing brand identity.
“If we let the customer influence us too much, all brands would become the same thing,” said one participant. Another shared that at their business, any action taken as a result of customer feedback and data insight, no matter how potentially profitable, had to be monitored and assessed to ensure short term positioning did chip away at brand equity over time.
However, while the need for caution was stressed, the potential to tap valuable consumer demographics such as "HENRYs," a marketing term which stands for High Earners Not Rich Yet, who can be encouraged to invest in higher quality products if their value is clearly communicated, was identified.
Remove the Transactional Nature of Reengagement Strategies
Comments on varying reengagement strategies to create more interactions with consumers post purchase stressed the importance of authentic personalisation, and an increasing awareness that consumer engagement should not always be rooted in interactions with potential transactional value. “It’s about being authentic in forming a two-way conversation," another attendee said. "Everybody knows we are doing this. Why not ask them? Have a dialogue. Build a relationship. The conversation might evolve into a sales opportunity, but it can’t be the focus,” they continued.
You have to speak to the consumer throughout the journey, not only when you get to a place of need.
Nike, which benefits from the inherent performance-element of its products' wear-occasions, was introduced as an innovator in the space due to its successful integration into its customers' exercise habits. Nike offers trainers that electronically monitor workouts, sharing data to be analysed by software the company developed and a digitally connected community enabling its customers to share progress, receive advice and be connected to revenue generating products.
In the absence of brand engagement arising through customers' lifestyles, the need for a consistent output of high-quality and relevant content was stressed. “Continuing to engage the consumer with relevant content throughout their journey really works when you do it right. But you cannot welcome a consumer to a brand with great pomp and circumstance before entering radio silence, followed by a [sales focused] desperate email when you need them. You have to speak to the consumer throughout the journey, not only when you get to a place of need,” said another attendee.
The Availability of Accurate Attribution
One of the participants enquired as to the ability of the group to identify the true start of a consumer journey in an omnichannel world, where discovery can occur on and offline. In response, another shared that in their experience, the tools and services currently available to retail businesses did not accurately attribute the first step made in a specific purchase journey.
“Everyone is looking for the holy grail of attribution tools, that nobody has created yet," an attendee said. "There are some players in the market, and we have tested some tools, but to be honest we have not found any solutions where you can attribute accurately where a journey is beginning and ending. Our very simple solution to that is that we are sort of agnostic. We treat it all as one brand and one experience. Anything we have tested so far we have not been able to prove that it is any more accurate than what we are doing already.”
Others shared their interest in emerging technology that may make this attribution possible. “Authenticating who customers are when they cross the threshold of a store location and connecting that back to the online experience is still in its very nascent stages and I think there is a lot more to come in that."
Impact of Privacy Laws
Additionally, the likely impact of new privacy laws in the United States, as well as the existing legislation already in place in Europe, were identified as potential challenges to overcome and adapt were raised.
“On the one hand privacy [laws] are certainly driving us all to think, I have to offer you all the same vanilla experience, on the flipside the whole point of these privacy laws is identifying that the customer is special and unique and that the conversation is between just the individual and the brand," an attendee said.
On that note, the conversation came to a close with one attendee sharing their excitement at the potential for a more genuine connection between company and customer due to the introduction of new technologies and greater understanding. "I'm looking forward to getting back to a real conversation between us and consumers, not using wider trends or shared traits, but real connections. That is increasingly possible and I find it exciting."
This is a sponsored feature paid for by Affirm as part of a BoF partnership. To learn more about Affirm, please click here.