I was surprised to read a report from the Luxury Insititue in the US last week that claimed that luxury brands are not capitalising on the full benefits that online communities can bring. Of the 175 companies interviewed in this survey a majority were operating online soley in a transactional capacity; making some or all of their product range for sale online. Almost 40% say they have advanced SEO campaigns and a futher 30% were implementing such SEO.

However, the most interesting (and potentially shocking) statistic from the survey is that most brands don't track customer comments online. They are not watching what their customers say about their brand online and so fail to use this as input or to work with these comments to help build the brand.

Almost 85% of wealthy customers claim to visit ratings and review sites, a figure higher than for consumers as a whole. Yet only 14% of the luxury brands in the survey monitor the comments these people leave, and less than 12% allow comments on their own site.

We've found that companies who allow comments on their own site see a marked increase in conversion to sale. And when given the chance to rate a product or service online, customers are overwhelmingly more positive than negative. Brands miss out on the opportunities that these discussions offer, and with a particularly affluent and active customer-base, luxury brands could really benefit from entering the conversations that happen online.

What is more, online is a perfect place to build brand image. You can control and increase your brand image in a medium that has been proven to be treated as more trust-worthy.

The good news from the survey is that 40% of the brands plan to host their own online communities. 25% however don't. I'd expect to see a marked difference in performance here - those brands hosting their own communities reaping the benefits of Web 2.0 that the FreshMinds Research report wrote about almost two years ago.

Source: FutureLab