Apps Go Upmarket

No, the typical “mobile app” for today’s affluent consumer is not a butler who scurries around to do the master’s bidding. A new report from the Luxury Institute finds significant numbers of upmarket Americans getting into the apps act as they deploy their mobile devices as tools for luxury shopping.
A survey for the report finds 34 percent of affluent respondents saying they’ve downloaded applications to their smartphones, with another 11 percent saying they intend to do so in the near future. Those who’ve already done so have downloaded an average of 13 apps and use seven of them regularly. Fifty-seven percent report using mobile apps “multiple times per day,” and affluent downloaders average 13 instances of use per week.

The most popular categories of apps for this population include weather, news, games, travel, business/finance and music. (Polling for the report was conducted in March among consumers with gross annual income of at least $150,000.)
While 76 percent of affluent downloaders said they’re “familiar with applications that are associated with known consumer brands,” many fewer — 29 percent — said they’ve downloaded such apps. Naturally, brands whose apps these people have downloaded are often connected to luxury goods. Nine percent of such respondents have downloaded apps from BMW, and the same percentage has downloaded apps from Mercedes-Benz. Eight percent have downloaded from Louis Vuitton, matching the number that downloaded from Ralph Lauren or Chanel.
Overall, though, luxury brands have been slow to embrace mobile apps and to make the best use of them. “They should be using them to enhance the in-store experience and to let people buy directly from their mobile device,” says Milton Pedraza, CEO of the Luxury Institute. “They may not have something rich and relevant that allows the consumer to buy directly.” He suggests luxury retailers ought to be tapping into services like Foursquare “so that when you walk into the store they can immediately address you by name.”
Luxury marketers’ sluggish pace in using mobile apps reflects a more general slowness in employing new media, Pedraza adds. “They were slow to have a Web site, and then slow to put their inventory online. Now they’re feeling all bushy-tailed because they’ve started to use social media. They think of mobile as a separate channel when they should think of it as a unifier of all channels.” Part of the problem is that many luxury brands are small operations that lack new-media savvy.

“They’re often led by a family that may or may not listen to its younger generation,” Pedraza says. Still, luxury marketers aren’t a bunch of bumblers, even if many are, as Pedraza puts it, “neophytes” at using new technologies. “They’re smart, they’ll figure it out.”
When luxury brands do offer mobile apps, they’d better think twice about making affluent consumers pay anything to use them. Living up (or, perhaps, down) to the stereotype of the skinflint rich, 39 percent of affluent consumers who download apps confine themselves to the free ones. Indeed, the report says, “Having to pay extra for downloaded applications is the leading barrier to more widespread use of mobile apps,” cited by 54 percent of non-downloaders. Sure, these people can afford to pay. (Among those who do pay for apps, the average outlay in the past year totaled a less-than-bank-breaking $84.) But many don’t want to.
“Consumers have gotten so used to getting everything online for free,” Pedraza notes. “Even the wealthiest consumers will say they want free shipping, even though they can afford to pay for it.” Moreover, people who spend a lot with luxury companies are accustomed to some pampering in return, and this also limits their willingness to pay for apps. “Wealthy people feel entitled because they’re so used to getting freebies,” says Pedraza.

Happy to get things for free, affluent consumers are also happy to have someone else pay their way for them. And, as is the case with media more broadly, this translates into a willingness to encounter advertising on the mobile apps they download. Fifty-eight percent of the survey’s affluent downloaders agreed (including 22 percent agreeing “strongly”) with the statement, “I’ve noticed advertising on mobile applications.”

 Pedraza doesn’t think they take it amiss. “I think they are willing to tolerate it,” he says, since they understand the revenue to support such apps has to come from somewhere. “Since they’re averse to paying for things, they’re willing to have advertising be the revenue driver, as long as it’s not too intrusive. It’s a pact that they’re willing to make to get things for free.”
Another of the survey’s findings suggests that brands score points with some of the well-to-do by offering mobile apps, even if the consumer doesn’t use them. Fifty-six percent agreed (25 percent “strongly”) that “I consider brands that have a mobile application to be innovative and cutting edge.” And 38 percent agreed (14 percent “strongly”) with the statement, “I view brands that offer a mobile application more favorably than brands that do not.”
The caveat, of course, is that the application can’t be a stinker when affluent downloaders go to use it. Offering an app “gives you a little more sizzle,” says Pedraza. “But there’s a second level of scrutiny. If it’s trivial or not relevant, it will set up expectations and then disappoint the consumer. Reputation is everything. It’s part of the customer experience.”