Data affinity and customer centricity: what luxury retailers can teach wealth managers

The learnings from luxury retail

SPONSORED INSIGHTS BY APPWAY

The wealth management industry is by no means alone in serving high net-worth individuals (HNWIs). Travel, hospitality, healthcare, luxury goods, and other industries also cater to HNWIs, and have successfully introduced business models designed to attract and retain wealthy individuals. Their success should interest us.

In a recent study initiative conducted jointly with Aon, we looked at how private bankers and wealth managers can draw inspiration from hospitality when structuring their product and service offerings. One of our main takeaways was that there is a growing demand with travellers for convenient interactions with their favourite hotel brand – through an app, for example – rather than only through personal, face-to-face channels like a reception desk or a concierge. In response, hospitality operators have started collecting and utilising customer data to deliver better, more personalised guest experiences.

Together with Aon, we also examined service innovation in the luxury retail industry, specifically in Amazon Fashion – a new field of business opened up by the online giant Amazon – and in Dubai Duty Free, a traditional brick-and-mortar, yet amazingly successful, luxury retailer based at Dubai airport.

Looking first at Amazon Fashion, one of the key principles that its parent brand has put to work wherever it goes is customer centricity. Starting with the client and working backwards, rather than with your own product offering, is a key ingredient for Amazon’s successful foray into new markets, including fashion. One can wonder, how many wealth management firms prioritise a customer-centric culture over an investment-centric one, letting their customers rather than investment teams drive product and proposition development?

Build, buy, or borrow customer intelligence

A precondition for customer centricity is a high affinity for data. What we mean here is the systematic collection, analysis, and interpretation of customer data in real time. Making sense of data is not the average wealth manager’s or private banker’s core competency, yet it must become one of their core activities. In fact, as more and more interactions with HNW investors take place electronically, investment in data infrastructure has become a must for doing business. Wealth managers, therefore, need to carefully consider how they will develop this competency – they can build it, buy it, or borrow it from a third party.

Customer intelligence will not only create more memorable client experiences; it will also increase your firm’s speed to market, by allowing you to identify emerging customer demand more quickly than your competitors.

The second luxury retail brand we interviewed is Dubai Duty Free (DDF). One of the key learnings that we brought back from Dubai is how they leverage customer journeys for business growth. For them, a customer journey starts with the planning of a trip, i.e. long before travellers set foot in the Dubai airport. With this in mind, DDF partners with airlines and booking portals that are most likely to take their prospects to Dubai – rather than Abu Dhabi or Doha, for example – for a stop-over.

Apply this to wealth management, and you will notice the many adjacent industries that interact with your prospects. Identifying partnerships that can influence your clients’ “journeys” in a meaningful way can bring additional prospects through the acquisition channel. Furthermore, the DDF case teaches us that a typical customer journey involves multiple touchpoints – both digital and physical – all of which need to be managed coherently, so that relevant customer insight can be drawn to help shape your next customer interaction.

Many of the insights from luxury retail, travel, and hospitality feed back into our core market research, Innovate to Succeed, in which more than 270 investors articulated what they wanted from their wealth managers. If you haven’t yet done so, check out our report in addition to this article highlighting the learnings from luxury retail.

Download Innovate to Succeed: Lessons for Wealth, Drawn from Luxury Retail