The stakes are higher for luxury brands, with it being harder to track buyers. Rumble Romagnoli of Relevance explains how they can utilize their digital presence.
One question that luxury brands often ask us is: what conversion rate can be expected when marketing luxury goods, and what is the cost per lead (CPL)?
Conversion rate and CPL can be harder to track for luxury brands, especially for big-ticket items such as, say, a luxury yacht, as the purchasing habits of ultra-high-net-worth individuals (UHNWIs) differ to a mass market audience.
This is because, for luxury goods, customers are not typically paying online via a shopping cart. Instead, prospects will normally download a brochure or join a mailing list to enter the sales funnel, making it harder to track.
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So, how can you calculate ROI for luxury brands?
The best way to calculate ROI for luxury brands is to divide all sales received, both online and offline, by the number of inquiries received. You should then divide that number by the weight of each channel, country or page. Doing this over several years can also help take into account repeat clients.
What is a good conversion rate for luxury brands?
Typical conversion rates for luxury brands targeting UHNWIs range from 0.5% to 20%, with an average of around 1-2%. The cost per lead starts at around $28 and can go significantly higher.
In order of highest conversion rates, the best channels for marketing luxury brands are: Google, Bing, referral, LinkedIn, Yahoo, and e-mail signature.
As for best conversion rate by source, it goes: newsletters, 10-20%; retargeting, 5-10%; referral traffic, 5-15%; direct, 2-6%; long-tail SEO landing pages, 1-30%; Trustpilot, 2-8%; search ads, 14%; LinkedIn organic, 2-15%; Instagram, 0-25%; and YouTube 0.2-6%.
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How to create high-converting content for luxury brands
Central to any digital marketing strategy – including luxury brands – is content. But how do you create content that converts for luxury brands?
Google’s ‘Helpful Content’ update provides some insights. Content must be written for humans by humans, and must provide answers to the questions your audience is asking.
Google’s updated search rater guidelines have also added an extra E for Experience to its acronym E-A-T, with Google now evaluating content based on the creator’s expertise. Here are some effective ways to develop content that converts for luxury brands.
Thought leadership
In-depth, authoritative editorial content is an effective way to reach and engage your audience and build brand loyalty when they are typically at the awareness stage of the sales funnel. When done correctly, this content format can provide a great conversion rate by answering your audience’s questions.
Video
Video is a highly impactful form of content, with short seven-second videos shared across social media platforms converting exceptionally well. Brand-building content must be timely and carefully targeted to an audience that is ready to convert.
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YouTube
YouTube conversion rates can be as high as 25%, particularly for how-to videos, virtual tours, and case studies. The key to a successful YouTube strategy is careful planning and, again, ensuring your audience is ready to convert.
Press releases
When finessed, press releases can generate fantastic ROI. Crucial to this is sending promotion at the right time, to the right journalists, and with a strong news hook. In our experience, PR that includes tangible data and/or facts drives a higher conversion rate.
Newsletters
Prospects that have opted in to receive a newsletter are typically already interested in your product or service. Newsletter conversion rates for luxury brands can typically be around 2–6%.
Best social media platforms for conversion rates?
Social media platforms can be highly effective for luxury goods and services, with the best-performing platforms being LinkedIn, Twitter, Facebook, YouTube, Pinterest and Instagram.
Twitter often has the best conversion rates due to its conversational nature, while links and engagement are the driving factors behind the high conversion rates found on Facebook and Pinterest.
LinkedIn is especially powerful for targeting a UHNWI’s entourage, including financial advisors, lawyers, family offices, travel agents, personal buyers and executive assistants – individuals deemed integral to the decision-making process of a UHNWI.
Instagram has shown low conversion rates in the past; however, this is changing thanks to the addition of posts and stories with links.
While TikTok’s conversion rates are currently low, this will likely change in 2023 as short-form videos are now ranking in search engine result pages.
