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Chatbots in Luxury – Curse Or Blessing?

January 15, 2018
chatbots in luxury

Chatbots – The next level of customer service?

We are approaching a brave new world of doing business online. Apps, mobile payments, cryptocurrencies, blockchain applications and AI will surely revolutionize not only eCommerce but other areas of our daily lives as well.  In Asia (especially Mainland China) it is already happening, with apps like WeChat providing a platform architecture for other companies to develop applications on. The cashless, always connected, big data infused and optimized future is inevitable some would say.

But what about the luxury industry? For a long time, the great heritage houses in jewellery, leather, and fashion were very hesitant to sell online at all and only slowly some of them have embraced the concept under constant growing market pressure. In that sense, they have become more “accessible” to the wider public.

Devaluation

The business practices of some of the major luxury conglomerates, how profitable they might have been, have surely led to a vulgarization in a sense of what “luxury” really means. The beginning of this has been long in the making though, with tactics like licensing fragrance and cosmetic lines, creating cheaper diffusion brands and an increasing number cooperations from luxury designers with fast fashion retailers like H&M just being the beginning of this trend.

Today the term “affordable” luxury is thrown around to describe brands that often barely qualify as premium. A concerning trend for newcomers and industry veterans alike, a wonderful thing for investors looking for quick returns and large cashouts nonetheless. So what will happen once you introduce chatbots into luxury customer service on a large scale? Will this technology just propel this downward trend and will true luxury VIP service eventually completely disappear? Let’s take a look at what chatbots currently can do.

But what can a chatbot do?

chatbots in luxury

Burberry and Audemars Piguet are two famous examples of brands who have so far already embraced this new technology on Facebook. WeChat Service or Subscription Accounts (something we often help our clients set up with our Chinese marketing services) have been offering these functionalities for a while now. Does this of tech lead to better customer service in eCommerce? More conversions from Facebook or In-App Mobile Marketing? Probably. Otherwise, technology companies are already using chatbots on their homepages wouldn’t be so fond of this development.

For people who don’t know, currently, your average chatbot provides a  multiple choice like tree-structure. You want information A – then click button A, You want B – then click B and so on. This allows to automatically redirect customers from the chat to certain pages or products, you can connect them with a sales rep and so on. This makes answering frequently asked questions obviously much easier and frees up resources from customer service departments by providing the (so far not very convincing) illusion of a real customer service rap talking to you.

The danger of chatbots in luxury

chatbots in luxury

Here in my opinion lies the danger or downside of chatbots in luxury. Real luxury per definition should be personal. The relationship between the person selling the brand and the person buying into its luxury dream used to be the very core of every luxury sale. If you replace the sales rep or customer service rep, which used to be an educated person skilled in psychology, conversation, well groomed and knowledgeable about the brand and typical needs of an affluent customer, you get a very monotone, cold, in human interaction. The illusion of human care and attention to detail can so far not easily replaced by pre-scripted bots.

In my opinion, unless a brand is heavily invested in eCommerce, with so many requests coming in that your Facebook or WeChat team cannot handle them in person anymore, you might consider chatbots to cover the most basic questions. But if you are getting that many sales requests, is your brand then not too mass market already to be called a luxury? The profitability in luxury should lie in the margin and brand value of the product, not it’s scale and cost-efficiency. I would rather sell 10 products for 10 000$ each, develop rapport and a connection to my clients and get referrals and more business down the line that way, maybe even have the opportunity to sell even higher priced items to them, then sell 100 products for 1000$ via chatbots anonymously to anybody who asks. But that is just me, and in the larger scope of things surely there is a place for both business models, only that some brands should then accept the fact they have indeed become premium and are not luxury anymore.

My advice on chatbots

chatbots in luxury

Instead of just answering FAQs and redirecting your customer to sales pages, try to educate the consumer about the brand. Offer insights and history about your heritage, give incentives to visit a retail POS or sales office, combine mini-sites and rich media experiences with your chatbot to open up the world of the brand to the customer and make sure that the end of the chatbot funnel is always the direct connection to a human person who has the time and energy to listen to the customer, learn about his or her needs and this way fill your CRM with useful insights and data which later allows for cross-selling, up-selling and all kinds of other interesting measures. In a nutshell:

Don’t use technology to replace the human element in luxury sales or customers service, rather use it to enhance the discovery, research and interactive media experience, so that the customer feels empowered and educated once he approaches the customer service representative or sales manager. That is how you create loyal brand followers, not disengaged, cynical eCommerce shop hoppers that are looking for a bargain.

For now, chatbots are new terrain for the luxury industry and not widely adopted, like digital marketing, eCommerce, custom apps and marketing in China there is still a lot of hesitation and confusion on the side of business owners who have conducted their business the same way for the last decade. But the world is turning and with the advent of AI, we might see virtual sales reps or robots in luxury sales at some point who are smarter and more sophisticated than any human person could ever be because they have the access to all the data from thousands if not millions of interactions. But we are still far away from robotics and AI being that sophisticated. But one day the luxury industry and commerce, in general, will look very different from what it looks like today, and the smart business owners should prepare for that day and educate themselves now.

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