Luxury brands are some of the most successful at creating not only hype — but generational loyalty — around high-quality products. Just consider some of history’s most long-standing luxury fashion houses, like Louis Vuitton and Prada, which have been around since 1854 and 1913, respectively. For any brand, let alone those selling luxury products at high price points, these institutions’ longevity reveals several powerful truths about how luxury brands can mix time-tested strategies with disruptive new tactics and technologies in order to succeed in a big way.
Using web3, luxury brands have the opportunity to retain — and better understand — their customers by offering captivating yet accessible experiences that turn the act of buying any product into something more: an enduring digital connection.
What do luxury brands do best? In an increasingly saturated market, they’re experts in maintaining a loyal customer base of people willing to pay high prices. They do this through unmatched brand recognition, audience analysis, and conscious evolution.
While the toolkit around these strengths has evolved (it’s safe to say customer analytics looked different in 1854 than it does today), it’s an ability to keep up with the times while carefully expanding on their prestigious reputation through experimenting with new technologies that has helped them thrive.
However, the way these technologies come to life for brands is not always equal in delivery, optics, and impact. In web3, we’ve learned that simply “doing it” is not the same as “doing it right” when leveraging web3 to grow and retain an audience.
This realization becomes even more pressing when you consider how fast web3 technologies evolve, which is both a potential hurdle and a massive opportunity for smart brand leaders.
If you want the best ROI, you need to consider what’s working and why.
The emerging, ideal fit for web3, NFTs, and luxury
Disruptive innovation often thrives at a philosophical level as much as a technological level — and this is undoubtedly the case for web3 and NFTs. In luxury and fine art, NFTs provide digital provenance, transparency, and proof of authenticity in an industry where counterfeits and murky ownership history have long halted progress, reputation, and customer confidence.
In luxury, art, and digital fashion, for example, onchain assets can be tracked and verified by anyone. This access to entirely new sets of transparent data has become a complete game changer for the next generation of investors, owners, artists, and brands.
For brands that launch products, sell assets, and create onchain experiences that blur the digital and physical, they can deeply benefit from what web3 data infrastructure provides.
- Wallets are the new emails – Every brand is on the hunt to collect more contacts or leads, and the most common way to do this is still an email or SMS pop-up form. This kicks off a brand’s automated ‘welcome series’ for converting or nurturing leads. Wallets are just as easy to create and connect from site to site, but can carry much more personalized data at first glance than an email address.
- Tokens are the new cookies – Brands can ‘read’ what tokens are in a given wallet as soon as it connects to their website or app, and instantly glean actionable consumer behavior data. Not only can brands tell if a given consumer owns one on their NFTs, but also those from other brands as well – along relevant transactional data such as trading history, selling prices, holding periods, etc. And that’s not all!
- Tokengates are the new login/signup pages, including paywalls – Today, brands ask you to login with your email address in order to validate your membership and show you personalized information. This is powered by their customer data platform, which synthesizes all the available demographic and behavioral information they have on each customer, and links each profile to their email login. This infrastructure is inherently siloed from all the other information that each customer has sprinkled across other brand’s customer data platforms, and limited even internally by how integrated a brand’s various consumer touchpoints are on the backend. Moving a consumer’s data profile to the blockchain can enable the same if not smoother login/signup, but also power a more powerfully personalized experience with less tech infrastructure to build and maintain.
Wallets, tokens, and tokengates can leverage both onchain and off-chain data, which means a combination of both public and private data. Tokens can be seamlessly distributed or earned or updated dynamically in response to virtually any consumer touchpoint: newsletter signup; survey, poll or game; online or in-store purchase; digital or physical product; ratings and reviews; follow and engage on social media; attend a digital or physical event; refer a friend. And since tokens metadata can link to arbitrary, rich and dynamic datasets, this evolutionary infrastructure enables a whole new world of personalization possibilities for luxury brands and beyond.
Welcome to the future of customer analysis, engagement, and retention: a stepping stone to knowing your customers and delighting them through experiences and personalized opportunities that will keep them deeply excited for what's next.
How do luxury brands not just "do it," but "do it right"?
Web3 empowers an entirely new, digitally-native generation. As The Relevance's Nicole Booth wrote in The Drum, these users "seek modern, online experiences" led by luxury brands who want to "maintain exclusivity while fostering a sense of community" among their customers."
Referencing web3 success stories from iconic luxury brands like Louis Vuitton Moet Hennessy (LVMH), Prada, Cartier, Tiffany, and Balmain, the article outlines web3's potential to improve the technological infrastructure of luxury and art (traceability, IP, verification) as well as the philosophical (creativity, collaboration, perceived vs. received value).
For Louis Vuitton in June of 2023, realizing this potential recently came into full effect. In June, the brand dropped a few hundred limited VIA Treasure Trunks, priced at €39,000 (around $41,600). The trunks were digitized versions of LV's iconic luggage trunk piece, and upon the successful purchase of the token, buyers will receive its physical counterpart (or twin).
Our .02 ETH
Why was this approach particularly brilliant, considering its extremely high price point, full waitlist, and current market conditions? Here are a few reasons why:
- Easy onboarding experience and loyalty-focused mechanics: The Treasure Trunk tokens (non-transferable “Soulbound” tokens, which are forever linked with their original recipient and cannot be traded), gives the brand clear visibility and insight into their audience — i.e., their biggest, most likely to spend customers). Additionally, the trunks could be bought in fiat or cryptocurrency, offering a more approachable and frictionless buying experience.
- Reading between the price tag: Who would spend nearly $40K on a digital trunk? Well, how about someone who already is interested in spending, say, $11K on a vintage, unverified trunk and, as a savvy, forward-looking investor, is interested in the NFT’s potential to unlock additional, valuable experiences for years to come.
- Following Louis Vuitton’s initial trunk drop, they released the first exclusive product from the collection — a Pharrel-designed Orange Speedy Bag (purchasable for $9K). This structure is about appealing to an audience who ultimately want exclusive access to high-value physical assets in a more exciting, gamified way that personifies and also elevates your brand ethos and history.
- Careful, strategic planning: Louis Vuitton was smart enough not to go too "big" on their first drop, which could have distanced their diehard supporters (those who were most likely to spend) and appear impatient or ingenuine to a web3-native audience. Rather, they made their way into web3 by launching Louis the Game. In the mobile game, users collect exclusive “NFT postcards” to learn more about their brand and engage with interactive, IRL experiences. It’s a similar community-loyalty-focused approach to Starbucks Odyssey’s limited edition stamps and one that didn’t require potentially unpredictable reliance on outside web3 communities (i.e., Tiffany x Cryptopunks, Adidas & Prada x gMoney).
Future-Proof Luxury Brands Must Deliver Fun, Dynamic and Forward-Looking Experiences
World-class artists and the historical, cultural, and traditional institutions that handle their sales have also made their way into web3. The playbook for those institutions has drastically changed. At Mojito, we've brought Sotheby's into the era of web3 through digital art auctions with artists like Sam Spratt, whose immersive art project, LUCI, culminated in The Monument, a gamified experience that invites collectors to embark on a journey where they must acquire multiple NFTs to engage with Spratt’s paintings, thus unlocking other exclusive perks.
Similar to the strategy of Louis Vuitton and most recently, the French fashion house Maison Margiela, The Monument brilliantly blurs the lines between traditionally physical assets and unique digital access, successfully attracting big spenders to niche, yet still "accessible" (i.e. open to anyone willing to spend) experiences.
In November, Maison Margiela made waves with the launch of their debut web3 drop — a gamified experience where collectors can collect all 24 tokens, numbered 0 to 23, an immediately recognizable play on the brand’s iconic numeric label design. Similar to Louis Vuitton’s Treasure Trunks, Margiela used non-transferable soul-bound tokens and an instantly recognizable visual identity that would quickly grab the attention of their audience and get them excited for the opportunity to claim high-value future drops.
In another move towards accessibility, Margiela utilized a free mint on the user-friendly Polygon blockchain with no gas fees and a high token supply with a diminishing number of available NFTs per each “number” of the drop (a nod to their visual identity) — all elements that represent an approachable, yet still limited onboarding experience.
Know Your Consumer (and Product). Then Build Accordingly.
So what do all of these brands who are “doing it right” have in common? From Louis Vuitton to Maison Margiela, these leaders know their products, IP, audience, and how to build long-term loyalty between the two with carefully constructed, dynamic, and incredibly fun experiences that appeal to their highest-spending clientele while garnering attention from a younger generation.
It’s a drastically different approach from the purely speculative digital assets from the “NFT 1.0” era around 2021, where many drops lacked future utility and the opportunity to gain something tangible.
It’s a testament to the potential of web3 that so many institutions are successfully deploying digitally-native strategies to sell their most historic, recognizable products in new, digitally-native environments. These strategies above should be a signal to brands that are looking to better retain, excite, and understand their audience in a time where dwindling attention and consumer competition are at an all-time high. Build accordingly — and if you need some help, contact Mojito to discuss your project requirements and get a demo.