Millennials and Generation Z are ushering in the rise of a new data-driven experience economy, and to the luxury sector that traditionally prides itself on offering top-notch goods and services, they must realize that today’s younger customers are looking beyond that. They want to be engaged on an emotional, sensorial, or even intellectual level. In short, they want an unforgettable experience, and often they want those experiences to be personal and exclusive. Therefore, it’s become crucial for luxury brands to provide customers with the right service at the right moment. Artificial intelligence (AI), which uses the latest technologies to learn from buyer experiences, offers them the best solutions.
In our conversation with Daniel Langer, CEO of the luxury and lifestyle brand development company Équité, Jing Daily attempts to discover what exactly AI means to the luxury industry today, what obstacles are keeping some brands from fully embracing this technology, and if there are any foreseeable consequences in applying AI to the luxury business.
Why do you think the luxury industry has been relatively slow in embracing artificial intelligence compared to others?
The luxury industry has been slower to digital [platforms] than other sectors. Just about ten years ago, most luxury CEOs I talked to told me that there would be no luxury brand selling online ever. Those CEOs either retired or were fired for a good reason. Now, digitization is on top of the luxury industry’s agenda. Hence we see brands that are much more open today, with some players like Gucci, Dior, Chanel, and even Rolls-Royce shifting an enormous focus to digital. Advanced data querying, machine learning, and AI require much more competency than many in-house teams have. Few companies in the world truly master AI, and very few can combine AI with luxury strategies as Équité does.
How can AI improve the customer experience?
First of all, let me clarify that when most people speak about AI, they mean something different. The word is very often overused. “Advanced data querying” would be more precise in many cases. AI is just a component of it and makes sense in specific cases where complex connections between data points need to be identified. Advanced data analytics can help to document and improve the consumer experience by generating insights and making sure that each customer always receives personalized service. As an example: Imagine that you regularly shop at your local Louis Vuitton store, let’s say in Shanghai. They know you, and the service experience is tailored to you. Then you travel to Hong Kong on a business trip. Ideally, the store staff should know all about your history and preferences, and you should feel at home. What you don’t want is to feel like a stranger just because you are not at your home store or because you access the brand online. All touchpoint experiences need to be connected and seamless. But that’s not yet AI, that would be a holistic CRM [customer relationship management] system.
On top of that CRM infrastructure, AI can now help you identify complex patterns, predict what you may like, and trigger personalized customer journeys, perhaps through an automated email with specific content based on predictive analytics. Hence, the AI system ideally triggers an interaction precisely at the right moment. The ideal result is a personalized experience that excites consumers across all touch-points with relevant content.
What are some mistakes luxury brands usually make with AI?
The biggest mistake is to underestimate how game-changing this technology is. I believe that in the future, brands will either succeed by powering their customer journeys with AI-generated insights and actions or they won’t survive. That’s because competing without it means not generating enough insight, wasting digital advertising money, and using content that isn’t optimized. This is simply not sustainable over time. Brands should run on data, not on gut feeling.
Can you name one luxury brand that you think is good at utilizing AI?
The auction house Sotheby’s has impressed me with how they use advanced data technologies like AI to determine, for example, which types of paintings might receive the highest bids. Hence, the application goes far beyond the customer journey. A brand should know if a specific advertising campaign triggers a particular sale. AI can provide that if applied in the right way.
Luxury is emotional while AI is logical. Will AI change the nature of luxury?
AI is an enabler. It allows us to identify the roots of issues, make sense of behavior, and reveal otherwise hidden patterns. This, in turn, helps a brand run in a much more efficient way. Which allows us to be more creative. To me, it is not logic versus emotion. AI can lead to emotion on steroids.