Why Digital Mastery is Needed to Survive COVID-19

    When a brand without a digital infrastructure hits a crisis like COVID-19, it's already too late. Here's what brands must do to survive hard times.
    When a brand without a digital infrastructure hits a crisis like COVID-19, it's already too late. Here's what brands must do to survive hard times. Photo: Vetement/Shutterstock
      Published   in Hard Luxury

    Months ago, I spoke with one of the most luxurious food sellers about how to prepare for a digital future while creating a more persuasive purpose for the brand. In a rapidly changing world, the owners felt action was needed. Sales were flat, and the company wanted to start attracting more Gen Zers and young Millennials. They had deficits in brand positioning and storytelling, which made it difficult for the brand to connect with younger audiences (its core demographic was primarily in their 40s and 50s). Like many brands, it was aware that it needed to move toward a digital transformation but preferred to focus on its physical stores.

    And then, when it was time to pull the trigger and implement some necessary measures, the brand postponed. The CEO gave me his reason, stating, “Our brand was built over 50 years in a traditional way. We don’t need to change at this point. We have time. We understand luxury. We will adjust when the right time comes.”

    Sadly, the business completely crashed this month. The brand’s restaurants and retail shops around the world closed. Since it passed on the opportunity to build a digital brand, create new brand communities, and engage with customers on social media, it went out of business in just three weeks. Fifty years of heritage evaporated in an instant because the brand chose not to prepare for the future when it could have. Instead of spending a fraction of its advertising budget on improving the brand's storytelling and digital footprint, it kept doing “business as usual” when the market had already been wildly disrupted. Complacency — not the virus — killed the brand.

    Over the last few weeks, I’ve had many discussions with CEOs of brands in all categories about what to do during this moment. Brands that chose a wait-and-see approach to digital transformation in the past have now been left in the dark. If they are still in business, they don’t know nearly enough about changing customer sentiments, since they lack digital, real-time, consumer-insight tools. Before this crisis, many companies thought of those tools as “nice to have,” not realizing they would soon be essential lifelines. As a result, they're unable to move quickly enough to engage with online consumers and compensate for their lost physical sales.

    Succeeding in the digital realm takes a lot more than just deploying a web store. I refer to it as “cyber-luxury” — the ability to create highly-engaging and relevant end-to-end digital experiences that closely connect to physical buying experiences. For most brands today, the purchase journey starts online. Recently, I reconfirmed with brand owners in all categories including luxury beauty, luxury fashion, high-end jewelry, and luxury cars that even before the COVID-19 crisis most consumers decided they were going to purchase from a brand before they even entered the store. Today, going into a store is just about confirming a purchase.

    What does this mean? It means that if consumers decide upon purchases before a store visit, a brand has to win them over digitally. And they have to address all aspects of the customer journey, including consumer sentiment changes, competitive dynamics, trending topics, concerns, and content. Brands that haven't prepared for the digital age — and that's most of them — will need to right now, or they risk not attracting consumers.

    But the need for digital agility isn’t just limited to digital infrastructure. It starts with brand storytelling. Most brands still follow a style of positioning logic that was created before the dawn of digital media, one based on designs (logo, shape, features) and consumer awareness. This brand-building approach was relevant until about five years ago when recognition stopped being a decisive factor for driving growth.

    Since Gen Zers are now digitally influencing the buying behaviors of the other generations, a brand's main equity driver has become its purpose. Yet very few brands clearly or distinctly express their purpose. For example, after auditing a variety of luxury car brands, we found that most lacked a discernible purpose and clear storytelling. That was okay in the pre-digital age, but that’s not acceptable to today's young and digitally-savvy customers. We found similar results in most luxury categories, including fashion, jewelry, beauty, and hospitality. They all lacked this precondition for success on digital channels.

    If a brand’s digital interface is well-managed, it won’t just weather the current storm but will also dramatically improve its competitiveness. There are always enormous opportunities for agile brands, even in traditional, physical sectors like luxury cars, fine watches, or jewelry. A crisis can become an opportunity when brands stay ahead of market changes using digital means to create extreme value. And the best part? It doesn’t need to be expensive. Times of crisis call for smart investments with high ROI.

    I am often asked why a brand in a traditional market like luxury must lead digitally. I respond by saying that a luxury brand must always lead. Our research shows that the perception of luxury is dependent on how innovative and inspiring a brand appears to consumers, which includes its ability to create social currency with social media and influencers. A brand that doesn't master the digital realm won't be perceived as a leading luxury brand. It's as simple as that. I’ve seen a brand become irrelevant in only three years once consumers decided it was no longer an industry leader. The ability to digitally inspire creates extreme value.

    That’s why complacent or passive luxury brands lose during a time of crisis, or even worse, become obsolete. It’s important to manage cash flow and keep operations running, but if it’s done at the expense of connecting with customers, a brand won’t survive. When life gradually returns to normal, the most innovative, agile, and creative brands will undoubtedly come out much stronger. Those are the digitally-savvy brands that create extreme value by empowering their employees to find outside-the-box solutions and relentlessly focus on their customers’ needs.

    Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the professor of luxury strategy and extreme value creation at Pepperdine University in Malibu, California. He consults some of the leading luxury brands in the world, is the author of several luxury management books, a global keynote speaker, and holds luxury masterclasses in Europe, the USA, and Asia. Follow @drlanger

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