Kering’s Q1 earnings call on 23^rd April, as warned weeks ago, shared overall performance would slide double digits. With the exception of Japan, the APAC region underperformed against 2023 with decreased retail foot traffic and affected consumer confidence impacting spending behaviour on luxuries. China was notably the market having the most impact on the global business, despite strong performance from Japan and steady resilience seen in Western European and North American markets.

While the days of rapid growth are past and the latest from Bain expects single-digit growth in China in 2024, the market remains undeniably significant to luxury brands’ global business – a mainstay in the global luxury ecosystem.

For Gucci, the earnings call reiterated that consumers will have to wait a while longer for Sabato de Sarno’s collection to fully hit stores by Q4, so this brand won’t be able to rely on ‘newness’ to drive foot traffic to stores in the interim.

It is under this climate, when HNWIs remain resilient, that brand elevation has become the latest focus of luxury business. It is expected that Very Important Customers (VICs) – constituted mostly by Ultra High Net Worth Individuals (HNWIs) – will continue to carry the majority of spending in the luxury sector, helping companies like Gucci and many others in the broader luxury segment to sustain growth in a challenging climate. Brands across the luxury pyramid are eyeing brand elevation to gain shares of revenue from HNWIs.

In luxury, the continuous exercise of elevating brand perception underpins every fibre of being for brands from retail staff training to sales ceremonies, through to excellence in artistry and craftsmanship. Naturally, turning (or returning) focus to the roots of luxury business makes a lot of sense.

Brand elevation essentially boils down to clienteling. In China, where digital has penetrated much of the consumer journey, and even more so since COVID, clienteling for luxury brands involves a deep integration between the offline and online consumer experiences, which largely rests on the shoulders of the WeChat ecosystem.

WeChat has been the most prevalent messaging platform in China since 2013. Brand ambassadors from offline storefronts have been using WeChat to liaise with their clients long before brands set up an official presence on WeChat. They would connect directly via their personal WeChat accounts and directly message clients with pictures of products and collections as soon as they came into stores. When they moved onto work for a different boutique, so did their client relationships.

Then in 2016, Tencent launched WeChat Work, now known as WeCom – a WhatsApp for Business in China (but much more). This application within the WeChat ecosystem enabled brands to start owning their client relationships, connecting consumers to brand ambassadors in a brand-owned ecosystem. They could support and enhance their sales teams with best practices, guidelines, tools, and assets to manage their client relationships and communications. At the same time, it offered brands assurance in the consistency of their elevated brand presentation at frontlines.

Today, brands regard the WeChat ecosystem as the DTC channel in China, with their digital equity within – Official Account, Mini Program, Channels, etc. – covering the complete consumer journey.

For brands to establish their clienteling practice, there are five major building blocks.

Essential to all brands is the architecture. The architecture is necessary for the brand ambassadors to serve their clients and for the brand to consolidate consumer data clearly. It involves three components: Management and Administration via a SaaS solution, Services through Mini Program(s), and Communication through WeCom. The great debate here, as always, revolves around the infrastructural investment required for setup, which tends to be overstated in China, where a range of clienteling solutions exist to cater to different brand needs. Since this is essential, the questions of architecture are what and how, not if, to move forward.

For brands in the early stages of developing their clienteling practices, the focus should be on Connection and Reaction. Identify the most valuable set of clients for the brand to prioritise resources around establishing stronger connections. Leverage the sales ceremony or the unboxing experience to onboard clients to WeCom or WeChat. Further that relationship with timely responses, answering queries ranging from product recommendations, fit, collection introductions, store events, product availability, and more.

For brands seeking to expand their practices, identify ways to extend clienteling services to encompass not only the most important clients but also prospects. The practice does not need to be limited to clients captured through transactional data, but in China often includes a larger group of potential consumers that have interacted with the brand in various ways identified by behavioural data.

Proactive Outreach tasks brand ambassadors with leveraging lifecycle communications to reach existing and potential consumers with relevant communication at relevant points along their journey.

Finally, brands, along with brand ambassadors, can Enrich Profiles by tagging relevant behaviours and preferences to further personalise the brands’ connection with consumers, both online and offline.

In this approach of clienteling in China, brand elevation is viewed through a wider lens. It is not just a focus on the HNWI or VIC consumers in the CRM database. Instead, investing in clienteling tools and practices is seen as a long-term vision that enables brands to build a more resilient private domain filled with their most important consumers today and those of the future.

Find out more in the replay of the latest DLG Webinar Series #18: ‘How to court VICs through clienteling?’, including an updated China market perspective on Q12024.