How Luxury Brands Use AI to Stay On-Top

Written by
Frederik Bussler
August 4, 2021

The luxury market is one of the most competitive in the world, with brands today competing for ever-smaller shares of the global luxury market. Rival brands even go as far as to copy each other’s logos, colors, and marketing campaigns.

This is not surprising, given that the media income in the US is just over $30,000, while a pair of designer sneakers or other luxury item can cost thousands of dollars. At the same time, the global luxury goods market imploded, with fashion and luxury brands losing hundreds of billions of dollars.

Many luxury brands are struggling to maintain their status and have been forced to adapt to changing consumer behavior. Whether you're operating in health and beauty, travel and hospitality, or another vertical entirely, Commerce.AI can help by providing insights through billions of product data points.

In this article, we’ll explore how AI can be used by luxury brands to build better relationships with customers and drive more revenue.

Leveraging Personalization

One way luxury brands can make a customer emotional connection is by using personalization — tailoring content and messaging based on the specific needs and preferences of individual customers. The goal is to deliver personalized content through channels such as email, print campaigns, or social media posts that can help a customer connect with the brand on an emotional level.

Personalization also helps build strong relationships between a brand and its customers by letting them know that they are valued as individuals — not just as members of large groups like “men” or “women” or “people who live in New York City.” 

Personalization also helps build trust among customers because it shows that a brand cares about their needs and wants, which will ultimately lead to more purchases from said brand. This strategy has proven particularly effective at building brand loyalty among young people who value personalized content over mass-produced content from traditional news sources or social media platforms.

For example, a luxury brand could use AI to instantly determine which type of wine a customer enjoys and then send them personalized content that offers suggestions of similar wines. Using machine learning, the company could also take into account other factors such as a customer’s age and gender to provide even more personalized content.

In another example, luxury brands could leverage AI to deliver personalized content based on past purchases from their customers. For example, if a customer previously purchased an expensive watch, AI could be used to recommend watches in similar styles or colors as a way of encouraging repeat purchases. The goal would be to make sure that the recommendations were relevant to the individual customer so that they didn’t feel like they were being sold products based solely on their demographics.

If you know what types of content your customers engage with most often — whether it’s articles about travel or music — you can create machine learning models that automatically recommend different types of content (e.g., stories about travel in Asia) based on your customers’ interests and lifestyle (e.g., travelers who enjoy Asian cuisine). This type of approach would help ensure that your customers don’t get bored with your content and start looking elsewhere for interesting content related to their interests (i.e., you become their “go-to source”).

Using Data-Driven Insights

Data-driven insights give luxury brands the ability to provide better recommendations for potential customers based on what they have bought before or what they currently own.

This helps build better relationships with existing customers because it allows them to see how well their previous purchases fit into their current lifestyle (e.g. does this item compliment my current wardrobe?).

It also prevents new customers from feeling overwhelmed by too many choices based on their previous purchases.

Further, data-driven insights help increase revenues because they allow brands to offer more customized collections of products at a lower price point than other luxury brands that don’t use data-driven insights.

Moreover, analyzing reviews of luxury products informs product teams of what features customers are and aren't interested in, enabling them to release better products in the future.

Return to blog