Luxury Consumer Demographics: Mining Your Database to Lower Customer Acquisition Cost
Everyone is looking for new customers for luxury marketing. What you may not realize is that a great source of new business is your existing customer database. By understanding the demographics of your luxury consumers, you can identify effective ways to strengthen your existing customer base. Here’s how you can mine it to lower your customer acquisition cost.
Reduce Your Customer Acquisition Cost
The key to reducing your customer acquisition cost lies in how closely your past customers match your current target luxury marketing customer profile. The better the match, the more likely you’ll attract wealthy clients and have repeat customers. By evaluating luxury consumer demographics, you can gain a deeper understanding of your existing customers. Correctly mining your current customer list can provide an abundance of prospects for your latest products or services.
Certainly, it’s important to grow your business and increasing your number of net new customers. Yet, the first step in proper luxury marketing is to go back to your existing database, to cultivate and nurture your customer relationships.
Getting Past Customers to Buy
Not only is it less expensive for a business to retain past customers, it’s also more profitable. A Bain & Company study found that just a 5% increase in customer retention can increase a company’s profitability by 7%. Also, the average amount spent by a repeat customer was two-thirds more than a new customer.
According to a MarketingProfs.com article, getting your past customers to buy from you again can also result in more ongoing revenue. If you can convince your customer to make a second purchase, that customer is more than twice as likely to buy a third time. And that customer is more likely to buy even a fourth time! If you’re able to make even a small increase in your conversion rate for second-time purchases, you’ll see serious revenue growth.
So honing in with the right targeted marketing for your one-time buyers will increase the amount of second-time purchases. And once you’ve gotten them to make that second buy, it’s often only a matter of time before they make their next purchase. You’ll also reduce the customer acquisition cost.
Mining Your Luxury Marketing Database
Customers who happily made a purchase from you are more likely to buy again. The question is: what do these consumers look like? Do they have common traits that lead them to make a purchase? Of course, you can start with purchase data to help determine what else they may buy from you. But purchase history alone may not be a good indicator of future luxury purchases.
Say you bought something at a fashion retail store. You’ll be in that retailer’s customer database. They may have your email address. They may have your name. But they have no idea what your potential is to buy more in the future. These are just some examples of luxury consumer demographic information you can leverage to understand how best to reach your customers.
Previous spending is also a key component of luxury marketing, but it should not be the only data point you’re using. Not all existing high net worth customers will have the abilty or capacity to spend more with you. So, identifying those who do is essential to enhancing your revenue and driving a higher customer lifetime value.
Finding Repeat Luxury Marketing Customers
Luxury consumer demographic data beyond income or net worth will be valuable in determining your luxury marketing focus. Besides wealth, there are plenty of other data points to consider.
“We advise our customers to take their database and append it with our Wealth Engine information,” explains Bischoff. ”Appending means we match their records with ours. We have a database of 240 million individuals in the U.S., covering about 85% to 95% of the adult population. We match these individuals with our data and our system. Then we can add to the information that our clients have.”
One person may have a net worth of $5 million. Another person’s net worth is over $500 million. Plus there are up to 1,200 different data points on likes, affinities, donations, causes they support, etc. All this WealthEngine information is reported back to our clients. That allows them to start pinpointing their luxury marketing efforts toward people they already know. They already know to contact these people because a lot of them gave contact information in a prior buying session. That is the starting point.
Locate Your Best Luxury Marketing Prospects
Once you understand all of these things about your existing database, you can then start to make use of other resources. Those include AI, machine learning, and any kind of predictive modeling to score that database. By scoring, you can determine the best of the best luxury marketing prospects.
Should your database be segmented or categorized? Should you not market to the entire database, only two segments of it for certain products or services? The real trick is that score, which is a very unique feature of WealthEngine.
Getting specific about who you’ll be marketing to can make your work much more efficient. It is imperative for brands, both luxury and non-luxury, to prioritize and segment their customer base. Then they can identify who they should focus their time and budget on in their marketing campaigns.
Going Beyond Your Current Luxury Customer List
In addition to pulling your best repeat prospects from your own list, you can apply that modeling score to new prospects. The WealthEngine database is full of individuals with whom you have not had any previous interaction. Combining your data with WealthEngine data will model those potential luxury market buyers so that you can reduce your customer acquisition cost. Luxury marketing is not just about previous buying habits, but identifying others who are most like you past buyers. They are prospects who have the tendency to make purchases and have wealth to do so.
In that case, WealthEngine will give you the most “lookalikes” to your best customers. Those are people you know as your best customers based on how well they fit your target profile. Then, you will actually be marketing to the people who look most like those who already have some relationship with you. That will definitely reduce your customer acquisition cost.
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Comprehensive and informative data is a prerequisite to everything marketing today. It’s the foundation. You need to know demographic information on luxury consumers before you can customize your engagement strategies.