NEW YORK, July 14, 2020 (GLOBE NEWSWIRE) -- Most brands in the luxury goods and services industry were late to the last decade’s digital transformation party. Others are resting easy because they have a website, have adopted e-commerce, have finally caught up to conducting virtual curated client engagements, and are now using tech to communicate with, and deliver to, their clients from all channels. Those are all solid enhancements, but they are all now considered table stakes in the multi-trillion-dollar luxury goods and services industry.
The biggest customer experience opportunity now, pandemic, or not, is to understand and embrace the skills that support the blending of digital and emotional intelligence. To optimize their digital strategy brands must embrace the fact that they will need to master three critical skills: personal data expertise, AI expertise, and emotional intelligence expertise. Everything else, including product innovation, supply chain and channel management optimization, is dependent on that foundation. The pandemic has nearly paralyzed many luxury goods brands, as well as some luxury services brands. It has exposed the vulnerability of a primarily transactional, Industrial Age business model. Although no brand is immune, having cultivated deep client relationships pre-pandemic has provided resilience for a few brands. As some top executives and business development associates have told the Luxury Institute, “You know you have a deep, trusting client relationship when the client calls you first, to check how you are holding up during the pandemic, and then soon calls you back to tell you what they need to buy next.”
In the 2020s, executing digital transformation by deploying technology components without first planning and building the client relationship framework described here, is the equivalent of building a human body without the brain to synchronize the actions of the individual body parts. Performance is minimized or fails. For three years now, Luxury Institute has been mastering and assembling the deep expertise to guide and help clients manage what will become the competitive advantage in luxury: earning privileged access to personal client data in order make better, faster, cheaper AI predictions that lead to designing optimized and transformational experiences curated by emotionally intelligent trusted experts. Here are the essential details for each skill that will help brands execute their digital business strategy successfully to build and deepen client relationships:
1. Personal Data Expertise
Silicon Valley data scientists tell Luxury Institute that everything is not so great in the land of AI. The truth is that most AI projects fail. And the root cause is the lack of the right data, and the dismal quality and structure of even the right data. Data scientists spend up to 80% of their precious and expensive time doing “data wrangling” which is defined as the process of cleaning, structuring and enriching raw data into a desired format to feed the AI prediction machines. According to top data experts interviewed by Luxury Institute, “bad data” issues are rampant, and lead to bad AI predictions, high error rates, bias, and many other failures that AI experts and vendors fail to communicate to clients in the midst of all the hype.
Data is a complex topic, but let’s simplify the 7 critical requirements. First, data must be legally and ethically obtained, without coercion, with written permission. Second, the data must be protected with military grade cybersecurity and privacy tools. Third, data must be from the original single source such that it can be validated. Fourth, the data must be relevant and multi-dimensional such that data scientists can aggregate different elements to paint a full picture. For example, to help a patient get well, and stay well, data from their medical history, prescriptions, genetics, diet, exercise, and several other dimensions should be aggregated. Fifth, the data needs to be available for the relevant time period, spanning years, months, or real-time, depending on the prediction objective. Sixth, the data must be totally accurate, not derived from inference or sourced from third party brokers. And finally, the data must be structured into a format that makes it more ready to use for analytics and AI. The only way that all seven criteria can be met is if the brand gains access to personal data directly, by-consent, from each individual prospect, or client. This process that enables the exchange of personal data directly with clients and prospects exists technologically and is cost effective. It requires deep, verifiable trust. It aligns the best interests of the ethical brand and its valued customers. Direct, ethical access to personal data is not simply a moral or ethical imperative. It is about high efficiency and effectiveness in the digital age.
2. AI Expertise
Think of AI as simple, and super accurate, pattern recognition. AI can predict whether a credit card transaction is fraudulent, whether a patient has a disease, and what a customer is likely to buy next, far better, faster and cheaper than a human expert. Once the brand has created a direct client pipeline to the most relevant, rich and real-time data, the analytics and AI process can thrive. First, it must be said that with access to the best, most-timely data, a brand may not always need as much cutting-edge AI. Either the client will trust and desire the brand so much that they will communicate the need in real time such that no prediction is required, or the analytical insights can be generated with simple calculations and queries due to the superb richness of the shared data. There is no question that the combination of the best data, domain experts, and data scientists can create prediction engines that can outperform humans in accuracy and speed, and do it at massive scale. Not only has AI become more predictive, but its cost has plummeted to near zero. AI is becoming so commoditized that companies such as www.algorithmia.com are creating algorithm marketplaces to accelerate the rapid development and deployment of AI by enterprises. Perhaps the best part about AI is that in the near future, the brand will never need to touch each client’s data. The data will reside and remain in the client’s own device, protected and private. The brand’s AI algorithm will, by-consent, be able to enter the client’s device, train and learn, generate its prediction, and only the insight will travel securely to the brand’s cloud server to generate recommendations that can drive innovative experiences delivered by emotionally intelligent human curators.
It is the rich data, the powerful insights, the smart decisions, and the human initiatives taken as a result that are the high value resources in the digital age. The AI is a commodity. Take a real estate transaction. There may be 30 critical steps to selling and buying a home. Algorithms can help the right buyers and sellers find each other faster and cheaper, through a real estate advisor, by matching predictions. They can also execute many of the buying and selling process steps, such as verifying data, faster and more accurately than human beings. This frees up the human experts to use their judgment, decisions and actions to get better results for the clients. In the luxury industry, most tasks in a process are still done by humans. And many, such as craftsmanship and planning, will still be done by humans. But just as in the accounting, legal, financial and medical professions, luxury algorithms are destined to replace many of the rote, mechanical, repetitive tasks. Algorithms can only predict what they are programmed to predict. But algorithms don’t have real world context or emotions. Therefore they miss the nuances, serendipities and feelings that drive optimal decisions in the real world. Thus, algorithms, at least for the foreseeable future, will exist to support, not replace, human experts, especially during high value, high risk, high investment and high emotion purchases and decisions. Senior executives in the luxury goods and services industry need to step up now and build the organizational expertise and frameworks to implement AI while entrenched deep in the reality of what it takes to execute brilliantly. Failure to do so can be marginalizing, if not lethal, for luxury goods and services brands going forward.
3. Emotional Intelligence Expertise
As has been noted previously, over the last ten years, Luxury Institute has tested and distilled the research of the world’s top neuroscientists and worked with psychologists to create a proprietary and effective client and peer relationship building system, Luxcelerate. The Institute has conducted many quantitative and qualitative studies on the successful mindsets and behaviors of top luxury professionals. The most recent study was conducted in Q4 2019 in the luxury travel industry. Four pillars emerged as the critical drivers of a high-performing luxury expert: expertise, deep empathy, trustworthiness and generosity. Focusing on improving these emotional intelligence skills will help an executive or associate learn to deliberately, and creatively, inject them consistently, in a truly personal way, into every peer and client interaction. Human relationships build exponentially. Luxury Institute client results over the past decade show that even without all the best data and AI, human relationship building using emotional intelligence skills alone pays off in dramatic, double-digit sales increases.
Now imagine that the brand team has mastered the three skills that support a business model in delivering extraordinary and transformative experiences that build associate and client relationships. They have continuous access to rich, relevant, real-time client data, AI expertise that drives accurate predictions at massive scale, and are superbly better at making emotionally intelligent judgments and decisions, to innovate and curate extraordinary experiences. By humanizing while digitizing each brand achieves economies of scale (lower costs per client across many more clients) with economies of scope (higher share of client spend or portfolio). This business model, based on being right more often, while being more humanistic more often, drives exponential growth and profitability. It may sound too good to be true. So was the promise that the smartphone would become the center of an individual’s universe in less than a decade. It was impossible to fathom that the iPhone would become a digital extension of its owner, but it happened. In the 2020s, Luxury Institute predicts that rich access to customer data, AI, and emotional intelligence will converge into a triad of high-performance client relationship building enablers. It will be fascinating to see which brands lead and which brands fail. This is not a “rising tide lifts all ships scenario.” In the emerging digital world it tends to be a “few winners take all scenario” within each category of luxury. On which side of the digital landscape will your career and your luxury brand be in 2025?
About Luxury Institute and the Global Luxury Expert Network (GLEN)
Luxury Institute is the world's most trusted research, training, and elite business solutions partner for luxury and premium goods and services brands. With the largest global network of luxury executives and experts, Luxury Institute has the ability to provide its clients with high-performance, leading-edge solutions developed by the best, most successful minds in the industry.
Over the last 17 years, Luxury Institute has served over 1,100 luxury and premium goods and services brands. Luxury Institute has conducted more quantitative and qualitative research with affluent, wealthy and uber-wealthy consumers than any other entity. This knowledge has led to the development of its scientifically proven high-performance, emotional intelligence-based education system, Luxcelerate, that dramatically improves brand culture and financial performance.
To learn more about Luxury Institute, the Global Luxury Expert Network (GLEN), or to become an expert member, please visit Luxury Institute.
Contact:
Milton Pedraza
mpedraza@luxuryinstitute.com