Why Do Luxury Retailers Need a CDP to Drive Growth?

Partner Content

Why Do Luxury Retailers Need a CDP

Luxury Retail Brands Market Overview and Trends 

To fully understand how a Customer Data Platform can help luxury retail brands grow, let’s start drawing an overview of the global landscape, highlighting the trends in the Industry.  

The luxury goods industry saw a 12% drop in revenue in 2020 due to the pandemic. which caused a shift in consumer habits towards digital channels and e-commerce, leading to initial difficulties for luxury brands but ultimately resulting in a return to growth in sales. Younger generations, particularly Gen Z and Gen Y, and the increased use of mobile devices and social media as shopping tools have also played a significant role in boosting luxury sales. 

As brick-and-mortar stores are still crucial for the luxury experience, luxury brands have begun blending online and in-store channels to create a unified experience for customers. They are also experimenting with new ways to reach customers, such as virtual try-ons, AR, mobile apps, virtual worlds and branded NFT accessories. 

As luxury brands continue to evolve and reach customers in myriad new ways, it is important for them to maintain the traditional luxury experience of seamless ordering, product personalization, high-end packaging and premium customer service.

With the rise of digitalisation and the unpredictability of ever-changing customer trends, it is essential for luxury brands to deliver personalised experiences across all customer touchpoints. One way to achieve this is by using a Customer Data Platform (CDP), which allows luxury brands to understand their customers and deliver a tailored experience. 

What is a Customer Data Platform? 

CDPs are the type of software that aggregate customer data collected from a variety of sources, structure it into central customer profiles and then share data with other marketing technology systems. 

CDPs build these customer profiles by combining data from a variety of stores across different data types, including first, second and third-party sources. That means that they can collect and organise data from the Company’s CRM, DMP, data lakes or warehouses, websites or mobile apps, and/or POS systems. 

With these profiles created, marketers can then create audience segments, and activate them across other channels such as paid media, SMS marketing, customer service tools and even website personalisation. 

The end result is the ability to not only manage data in a compliant and structured way but also to be able to efficiently deliver targeted, personalised experiences at scale across the whole of the customer journey, bringing commercial outcomes in no time.

How Does a Customer Data Platform Generate Business Outcomes? 

Marketer interest in CDPs increased significantly, by 32%, between 2021 and 2022, according to Gartner.

One factor driving this trend is the increasing importance of customer experience. CDPs, in fact, allow companies to gather data from various sources and create a comprehensive view of the customer. The need for timely data gathering, AI-assisted segmentation, and personalization of interactions is increasing.

As third-party data becomes less reliable, businesses are turning to CDPs to strengthen their first-party data and comply with privacy regulations by sharing data through clean rooms.

CDPs allow for cross-device identification and identity resolution, consolidating and normalising data from multiple touchpoints to create a single customer profile. This is essential for providing an optimal customer experience across all interactions, including marketing, sales, and customer service.  

Finally, CDPs make data readily available to other systems to improve the efficiency of marketing campaigns. 

Customer Data Platforms (CDP) provide a valuable tool for staying ahead of evolving customer expectations and competition, offering a broad range of benefits, including: 

  • Delivering unified views of customers and their interactions across every touchpoint 
  • Maintaining strict compliance and privacy standards in the handling of customer data 
  • Creating the ability to activate customer data to deliver personalised experiences across every marketing and service channel. 

How will CDPs Drive Growth for Luxury Retail Brands? 

Customers are leading the way in the digital landscape by pushing the boundaries of their online experience. Whether it be through online shopping, social commerce, advanced chatbots, or subscription-based models, the key focus is always on delivering a superior customer experience.

In the luxury retail sector, digital trends are evolving at an unprecedented pace, driven by the preferences of Millennial and Generation Z customers. To meet these changing demands, retailers must offer an elevated, white-glove experience that is tailored to individual tastes and styles.

A Customer Data Platform can be the solution to stay relevant. Getting in more specific details, CDPs for luxury brands are crucial for:

  • Create a 360-degree view of the customer stitching online/offline data to be able to leverage personalisation to delight customers

    The luxury retail industry has seen significant growth in e-commerce, but the increase in first-party data assets is not as fast or as significant as in other sectors such as fast-moving consumer goods (FMCG).

    Purchase volumes and frequencies are not as high in the luxury retail space, and customers are not driven by value or price. Therefore, luxury brands cannot rely on monetary incentives to increase newsletter subscriptions or website and app memberships. With limited actionable customer data, luxury retailers must focus on improving the scalability and addressability of their existing data by using Customer Data Platforms (CDPs) to create a 360-degree view of the customer. CDPs can help break down legacy data silos and bring together various data points, such as online behaviour, loyalty program and membership data, and offline data from CRM and POS systems.

    In some cases, luxury retailers may be able to benefit from cross-group data sharing. For example, a luxury group could use demographic data from one brand and purchase history from another to create an advanced single view of a customer, and then use that data to retarget the customer on special occasions.

  • Create a better segmentation of the target audience to be able to offer unique customers’ special moments on each preferred media platform

    Another benefit of using Customer Data Platforms for luxury groups is to create different audience segments based on different customer signals across the marketing funnel. Behavioural data collected through web and app data sources can be used to tailor messages and personalise branding campaigns.

    Using CRM data can help identify high spenders, loyalists, collectors, and dormant past brand enthusiasts. This information can be used to create segments based on purchase recency, frequency, and lifetime expenditure, and activate them across preferred marketing and advertising channels.

    When it comes to activating these segments, CDPs can make the process seamless by providing native channel integrations such as TikTok, Snapchat, Facebook, and YouTube. They should also have the capability to achieve substantial match rates when pushing out first-party data and have features that handle consent orchestration and privacy in accordance with GDPR regulations, allowing customers to choose how, where and which data is being used.

  • Create time to value commercial outcomes, leveraging on customers’ data and optimising the media budget

    Many luxury retailers, like other e-commerce and retail advertisers, allocate a significant portion of their paid media budget to the Google advertising ecosystem. To optimise this spending, it can be beneficial to find a Customer Data Platform (CDP) that has a partnership with Google.

    These CDPs use partner APIs to populate matched segments directly in brands' Google advertising accounts. This allows for faster data onboarding using a user-friendly interface and native connector, without the need for building an in-house Google Ads API or managing login credentials. Additionally, these CDPs can use additional first-party customer information, such as email addresses, phone numbers, and alternate emails, to increase the segment size.

  • Guarantee Data Security and Customer Privacy

    With the increase of digital data, customers are becoming more aware and concerned about data security breaches. Regulations such as GDPR in the EU are changing how organisations handle customer data.

    Failing to comply with these regulations can result in significant consequences for businesses. It is essential for luxury retail brands to ensure data security across all systems. CDPs can assist in creating secure, compliant lists to adhere to the diverse data protection protocols, activating customer data putting consumer privacy and compliance front and centre. 


At present, the ability to accommodate evolving customer tastes is pivotal to sustaining luxury market share. This is a strategic imperative to identify growth opportunities and strengthen competitive advantages. Younger generations are increasingly considering the social impact of their purchases, and tend to favour brands that align with their values. Therefore, tailoring the customer experience to align with customer interests is more important than ever. Providing an exceptional luxury customer experience is a key factor in business success. 

Therefore luxury brands' future success will depend on their ability to use customer data to create personalised strategies that increase loyalty and sales. As millennial and Gen Z consumers become more important to luxury brand revenues, these brands must provide premium experiences that meet their expectations across the entire customer journey. 

In this regard, CDPs are a crucial part of the tech stack in the age of data-driven marketing to be able to navigate the unpredictable nature of customer journeys. By analysing and activating the data available to them, luxury brands can gain insights into how to improve and personalise the customer experience both online and offline.