The world of luxury is changing beyond recognition. This year, luxury brands will need to think differently about how they engage post-pandemic consumers who are dictating a new set of expectations and requirements. Today, as two key luxury retail markets, China and South Korea, tentatively look to return to ‘normal’, high-end brands must act fast to connect with new and existing consumers of today and reactivate consumer interest and loyalty.
Lacking the option of merely discounting products to gain short-term attraction from consumers, luxury brands are now increasingly turning to partnerships with financial institutions that can offer cashback to credit card holders who spend at certain merchants.
Mutual benefits of card-linked offers
For both the brands and the banks, these partnerships, also known as 'card-linked offers', are a harmonious match. It’s a win-win situation for both parties; the banks gain a competitive edge to attract new customers, while luxury companies can tap into a larger pool of high net-worth individuals.
As China and South Korea are on their journey to recover from the pandemic, these markets will provide ideal environments for card-linked offers. Now lacking the option of international travel, affluent consumers from these regions are redirecting their spending into luxury purchases across fashion and accessories — both readily accessible domestically and purchasable online.
In particular, China’s luxury market has seen an impressive rebound of sales growth, with some brands already returning to pre-Covid norms. While South Koreans have been more cautious with their spending, the country's millennial population has helped drive up luxury spend during the pandemic.
However, an appetite for luxury should not detract from the fact that China and South Korea are home to some of the savviest fashionistas, who will go out of their way to get the best deal or mitigate the higher costs of local mark-ups on imported goods. Competition amongst luxury brands is rife, and standing out against your rivals in terms of price point is a minefield. Heavy discounting is regarded as tarnishing brand value, leading some, like Burberry, to burn excess inventory rather than slash prices.
This is where card-linked offers can help. Banks pass on the brand’s offers to their customers in the form of cashback rebates, while at the same time heightening their prestige through partnering with premium brands.
Strong collaboration is required between the two organisations to make this partnership work. Brands need to provide consumers with enticing offers, while banks then promote these offers to their audience, which in turn helps them acquire new credit card customers.
Connecting with millennials by going viral
Millennials and gen-Z consumers made up 35% of the global luxury market last year. In a post-Covid world, high net-worth millennials will be the ones holding up the luxury industries in China and South Korea, with many turning to “revenge spending” as an antidote to the isolation gloom.
Gaining eyeballs from these audiences is achievable through the usual marketing toolkit of paid search, display ads, social media and influencers. However, banks will reap greater rewards in terms of engagement by tapping into their luxury partners’ rich histories and loyal audience, and using the power of earned content to create awareness about card-linked offers.
Earned content is written media that is created by a third-party, such as bloggers or influencers, without the brand’s endorsement. When garnered enough attention, these content can ‘go viral’. Viral media is particularly powerful in both China and South Korea, with messaging app WeChat and search engine Naver playing crucial roles in spreading new news.
In South Korea, Naver dominates the search market in place of Google. The platform is designed to promote content creation which makes it a prime outlet for earned media. Once a post gains enough popularity, it has a chance to be boosted to the top of Naver’s organic rankings and eventually going viral.
So how do banking and luxury brand marketers take the first step into this partnership? One of the most effective ways is via affiliate networks, which can connect brands with the right financial institutions, create the most effective offers and reach more customers.
So while consumers are sitting idle for the foreseeable future, financial and luxury marketers have the opportunity to collaborate and introduce new experiences, campaigns and customer loyalty incentives that will long outlast the global pandemic.