Luxury Institute News

July 26, 2010

Love Thy Customer, The Importance of Client Relationship Management

Posted in Customer Service/CRM, Retail
Tags: clienteling —

The 2010 American Express Survey of Affluence and Wealth, which surveyed 2,500 respondents with discretionary spending between $100k-$500k, unveiled that 86% of participants prefer to shop in stores with a reputation for great pricing. The recession has affected consumer mentality even at the affluent levels of the spectrum where value is now paramount.

Earlier Fashion’s Collective introduced the importance of luxury brands cultivating a personal approach as a means of engaging customers (Cultivating a Personal Touch ). Now more than ever taking that personal approach with customers is a major focus for the luxury sector to garner sales.

Previously luxury brands only gave special attention to customers who proved themselves worthy through their spending habits with the brand. However today the tables have turned, customers seek more personal approaches as a means to justify paying premium prices, if a brand does not acknowledge them from the start it fails at capturing lifetime customers.

For instance a customer can spend $2,000 on the first purchase, he also has the propensity to come back three times a year to spend that same amount over the next four years, bringing the net value of $24,000. However such propensities need to be cultivated through positive experiences and relationships between the customer and the brand.

According to Milton Pedraza, the CEO of New York based Luxury Institute who specializes in consulting CRM initiatives for brands,”Luxury brands have become too transactional as opposed to relationship focused. Even if someone buys a simple necktie, there needs to be a level of consumer acknowledgement. This is the essence of clientelling, the foundation of building long lasting relationships between the brand and their customers”.

Rather than just acknowledging the customer who spends heavily on a first time purchase, luxury retailers are aligning to pay attention to lower tier customers. By building up a relationship with smaller spenders over time builds their customer spend and customer lifetime value to the brand as a whole.

As consumers evaluate their spending habits, Clienteling or otherwise known as Client Relationship Management (CRM) has become a major focus ever since the recession hit luxury retailers. Clienteling is the essence of a brand taking the time to get to know their customer, continuing the conversation after purchase, remembering special occasions and over all offering a bespoke customer service.

As brands aim to cast a wider customer net with clienteling inatiives we at Fashion’s Collective are seeing a few savvy luxury brands extending clienteling inatives into the web experience.

Over the next couple of weeks we will be sharing how certain brands and companies are innovating within the CRM space.

http://fashionscollective.com/FashionAndLuxury/07/love-thy-customer-the-importance-of-client-relationship-management/

Share and Enjoy:

0 Comments

March 18, 2010

How Carrie Bradshaw Could Have Prevented The Recession

Posted in Customer Service/CRM, Fashion, Jewelry, Luxury Market, Shoes

Wendy Furrer
March 18, 2010
STYLEITE

If you think luxury is dead, think again. The industry still has legs… long legs. Yes, 2009 was a rocky road for the industry, but it’s starting to look up. I caught up with luxury guru Milton Pedraza, CEO of the Luxury Institute, to assess the pulse of the market. He anticipates a slow but steady recovery in 2010, but he says unfortunately if unemployment hovers around 10% and housing remains stagnant, demand growth will be dampened.

I see exceptions to this, of course. I’m not condoning it, but if we all had the mindset of Sex and the City’s Carrie Bradshaw, and invested in Manolos before being able to pay for other necessities, like our rent (or a downpayment on an apartment, as it was in Ms. Bradshaw’s case), well then, the luxury industry might very well see explosive growth. Everyone, (moi included) loves beautiful shoes - and, they’re still considered very important necessities for the fashionable set. Perhaps this is why even last year, in a horrendous economic environment, apparel and accessories held up well.

One may argue it’s now more important than ever to look your best - job seekers need to look spot-on for their numerous interviews, before landing the perfect (or the only) job out there. Interesting to note that jewelry was a losing battle in 2009 - but if we’re creative, we accessorize various outfits using just a few special pieces. Pedraza also thanks Greater China for delivering specific demand to the luxury industry last year - after all, it’s an enormous market, with more fashionistas born every day… and they’re all looking to take over the world one day.

Our world looks much different today than it did a year ago - and there’s been a major shift in the consumer’s attitude. Milton Pedraza says consumers are looking for what they have always looked for in true luxury- superb design, quality, craftsmanship and service. He adds, “however, unlike in previous years, today they demand far greater evidence of those attributes and at a lower price. Today they place a very strong emphasis on the customer experience as a determinant of willingness to pay a premium.” Savvy consumers want luxury at a discount - thus, “luxe for less” is in. What’s another trend? With do-gooders on the rise, companies that give back to society are well-positioned with their clients. A recent survey from the Luxury Institute indicates consumers are more likely to be positively influenced by a brand’s charitable reputation. My advice to luxe brands? Keep on giving…

The million-dollar question is, how do luxury brands differentiate themselves going forward? Pedraza says they’ll need to reinvent their product lines for the 21st century even as they offer the classics. He says,

“with so many brands being able to deliver great design, quality and craftsmanship, the differentiator will be delivering an extraordinary customer experience beyond the product. Whether it’s online, at the point of purchase, or the after-sales experience, luxury brands have to go from being transactional to being relationship-driven.”

We know life is all about relationships… and we must cultivate them carefully. Luxury brands need to focus on superior service, deliver unique, one-of-a-kind experiences that will outperform any premium or mass brands. Time will tell, but this just may be the true test in determining future leaders in the luxe category.

http://www.styleite.com/retail/how-carrie-bradshaw-caused-the-recession/

Share and Enjoy:

0 Comments

News Release: Luxury Institute Launches the Luxury CRM Association: Luxury CRM Practitioners Network to Share Best Practices

Posted in Customer Service/CRM, LCRMA, Press Releases

NEW YORK (March 18, 2010) - The New York City-based Luxury Institute today announced the launch of the Luxury Customer Relationship Management Association (LCRMA), a network of Luxury CRM practitioners dedicated to building customer-centric luxury enterprises. The association’s key objective is to enhance the global education of the luxury industry on Luxury Customer Relationship Management (CRM) benchmarks and best practices through primary research, educational events, networking, and conferences.

LCRMA members’ benefits include:

Networking events focused on best practices, benchmarks, and vendor reviews
Luxury CRM webinars dedicated to luxury executive research, consumer research, and brand case studies
Affluent consumer and executive research coupled with industry insights issued twice yearly
Luxury CRM vendor assessment research to identify best-in-class resources to build and support your CRM strategy issued annually
Luxury Institute CRM workshops and additional surveys at special LCRMA rates

“We were approached by CRM executives at The Ritz-Carlton® with the request to create an independent and objective body, a safe haven, where Luxury CRM executives could network and share best practices,” says Milton Pedraza, CEO of the Luxury Institute. “We were honored by the request and saw a tremendous need for luxury brand peers to gather and learn best practices from the Institute’s research and from each other. Although we began recruiting members only in January, we now have top-tier members including The Ritz-Carlton, Jurlique, Team One, Bacardi, Buccellati, Moet Hennessy, The Capital Grille, Polo Ralph Lauren, and David Yurman.”

“The Ritz-Carlton is delighted to partner with the Luxury Institute in creating the Luxury Customer Relationship Management Association,” says Kevin Walsh, CRM senior director at The Ritz-Carlton and vice chairman of the association. “It will provide an opportunity to meet other marketing practitioners while building stronger relationships.”

As part of its member research benefits, LCRMA recently ran a survey with over 100 luxury executives globally using the Luxury Institute database and the database of top luxury and retail recruiting firm Martens & Heads. Following are some key takeaways:

Luxury brands recognize the true importance of CRM as it relates to short and long-term brand success: Nine out of ten Luxury CRM executives believe that having a customer-centric culture and values is linked to long-term growth and financial success.
Luxury brands are still implementing the basics of CRM: Only about two-thirds of Luxury CRM executives know their current customer retention rate. For these companies, the average rate is approximately 57%. Traditional RFM (recency, frequency, monetary value) is the type of data most commonly found in Luxury CRM systems and used in marketing campaigns for luxury brands.
Luxury brands are behind on the use of formal customer experience research: Reported data from front-line executives and staff are the most commonly used source of knowledge about the customer experience.
Most luxury brands have not yet recognized the role of the employee selection process in creating a truly customer-centric culture: Just 36% of CRM executives say that their luxury brand selects employees that are service-oriented based on formal testing.
Luxury brand employee key performance indicators (KPIs) are not aligned with achieving basic CRM goals: Only one quarter (27%) of Luxury CRM executives say that their organization has financial incentives that encourage front-line staff to collect customer data.
Online represents a significant growth opportunity in 2010 as it is the channel with the highest reported average customer growth rate
The multi-channel luxury consumer is on the rise, but not a strong focus for all CRM initiatives: Most Luxury CRM executives surveyed report that they have multi-channel customers but only 33% of these executives report that they have specific retention and reactivation strategies in place to grow multi-channel customers.

“Today it is essential for luxury brands to be customer-centric at every organizational level,” says Felicity Lewis, senior global manager of interactive and direct marketing and LCRMA vice-chairwoman. “Jurlique strongly believes in the social approach of the Luxury CRM Association. Delivering extraordinary customer experiences to drive sales is a must for every brand in 2010.”

About the Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the uniquely independent and impartial ratings, research, and Luxury CRM consulting institution that is the trusted and respected voice of the high net-worth consumer. The Institute provides a portfolio of proprietary publications, research and consulting services that guide and educate high net-worth individuals and the companies that cater to them on leading edge trends, high net-worth consumer rankings and ratings of luxury brands, and best practices. The Luxury Institute also operates LuxuryBoard.com, the world’s first global, membership-based online community for luxury goods and services executives, professionals and entrepreneurs.

For Further Information, Please Contact:
The Luxury Institute, LLC
Martin Swanson
Business Development
(914) 909-6350
mswanson@luxuryinstitute.com

Share and Enjoy:

1 Comment

March 17, 2010

Watch Brands Signing on, Uneasily, for E-Tailing

Posted in Customer Service/CRM, Luxury Market, Watches

By VICTORIA GOMELSKY
Published: March 17, 2010
www.NYTimes.com

TheWatchAvenue.com is a virtual arcade of posh boutiques representing some of Switzerland’s finest timepiece brands. Using ambient street sounds, digital clips of walking, talking salespeople and cyberkiosks brimming with product information, the site attempts to recreate the chic ambience of the real-world salons where luxury watches are typically sold.

Unlike those salons, however, WatchAvenue’s boutiques are not equipped to sell anything. Among its 12 tenants, just one, TAG Heuer, sells its timepieces online - and even then only through links to the sites of its brick-and-mortar partners.

The luxury watch business is committed to offering a deluxe, tactile shopping experience. But as latecomers to Web 2.0, most brands have struggled with translating that to the Internet. Compounding their reluctance to sell online is the Web’s tainted reputation as a breeding ground for counterfeits.

The arguments deflect attention from a more pressing concern about e-commerce: the threat it poses to a brand’s traditional distribution network.

Recent developments, however, suggest that the industry’s entrenched views on distribution, and the Internet’s place in it, are changing.

Hermès was the first to introduce an e-commerce-enabled site, in 2008. While it is restricted to the U.S. market and has a limited selection, the site points to a future in which luxury watches may be accessible 24/7.

“It responds primarily to the need of convenience for buyers who are located far from a shop, so it’s particularly appropriate for countries with large geography like the U.S.A. or China,” said Luc Perramond, chief executive of La Montre Hermès.

TAG Heuer followed about six months ago with the roll-out of its e-tailing program, a portal that directs online shoppers to retail partner sites that are constructed and maintained by the brand for a fee. A sign that TAG Heuer is considering additional online models is the December introduction of Tagheuereboutique.com, where the brand sells eyewear, leather goods and accessories directly to consumers.

“Accessories is the ideal category for us to start in because we have no other channel to retail them,” said Jean-Christophe Babin, TAG Heuer’s chief executive. “If we see they are successful, we might be tempted to sell watches online for a simple reason: to grow the market.”

In the meantime, only one major player in the watch space has been bold enough to go direct with its timepieces. In December, Bell & Ross introduced its European e-boutique, which offers the French-Swiss brand’s entire watch collection, of about 300 models, to online customers in Europe. They can buy through the site directly or have watches shipped to authorized points of sale. In the latter instance, credit would go to the retailer.

“We felt it was more important to take a stand in the e-commerce world than to build the ideal conceptual store online,” Roberto Passariello, Bell & Ross’s director of marketing and communication, said. “Retailers are doing it, and have for a while. This is a way to control our brand image.”

The move has put pressure on other Swiss brands to address the issue. Although scores of them have flirted with Internet customers through expensive Web site redesigns, Facebook fan pages and iPhone applications - and a few, including Cartier, have introduced pilot e-commerce projects in discrete markets like Japan - most high-end watchmakers are missing a tremendous opportunity by not selling online, luxury goods strategists say.

“The future belongs to companies who have relationships with customers directly,” said Milton Pedraza, chief executive of the Luxury Institute, a marketing firm. “Not only does the Internet not cannibalize the retailer very much, it will probably drive business to the retailer.”

Mr. Pedraza’s conviction rests on the notion that luxury shoppers fall into one of two broad categories, the status-driven and the pragmatists, and that brick-and-mortar retailers will always appeal to the former. David Sadigh, managing partner of the IC-Agency, a digital marketing firm based in Geneva, said, “Most haute horlogerie consumers would prefer to buy offline - that is the current pattern. But there is a segment more open to buy online. They would like to put their American Express card down and get their product as soon as possible.”

As Internet retailing continues to outperform other retail channels, both Mr. Pedraza and Mr. Sadigh are confident that more Swiss brands will embrace e-commerce, though, by the latter’s reckoning, they will primarily come from the mid-range segment.

Read the full article http://www.nytimes.com/2010/03/18/fashion/18iht-acawecom.html

Share and Enjoy:

0 Comments

March 11, 2010

News Release: Burberry, Louis Vuitton Lead Luxury Firms For In-Store Customer Experience

Posted in Customer Service/CRM, Press Releases, Retail, WealthSurvey
Tags: Brooklyn College, Burberry, Louis Vuitton, mystery shopper —

Luxury Institute Mystery Shoppers Rate Retailers on Merchandise, Ambiance, and Store Personnel

NEW YORK (March 11, 2010) - “In-Store Customer Experiences,” the latest WealthSurvey from the objective and independent Luxury Institute (www.LuxuryInstitute.com), analyzes 240 visits to luxury retail stores in Manhattan by 78 students in Prof. Veronica Manlow’s Fashion Marketing and Research Methods class at Brooklyn College.

The top three factors that shoppers consider before recommending a brand are merchandise, service and store atmosphere. Two standouts across several criteria are British fashion house Burberry and French luxury outfit Louis Vuitton, with 77% of shoppers saying they would recommend Burberry to family and close friends, and 74% saying the same about Louis Vuitton.

Polite, informed, articulate and appropriately dressed personnel lead to better experiences, as does the ability to put customers at ease while browsing the store. Mystery shoppers report that on 94% of Burberry visits the staff made them feel comfortable; Vuitton did the same 76% of the time.

Making customers feel special can also boost sales. “My salesperson made me feel important to the point that I ended up purchasing a pocketbook,” says one Louis Vuitton customer. Burberry and Vuitton top the rankings for making customers feel special, doing it on 52% and 42% of visits, respectively.

“Stores are the front lines of luxury retail and this is where luxury brands can do some of the greatest good or ill for their reputations,” says Milton Pedraza, CEO of the Luxury Institute. “Putting polite, informed and well-groomed sales personnel on the floor is just the start, but done well it can be a true differentiator.”

For Further Information, Please Contact:

The Luxury Institute, LLC
Martin Swanson
Vice President Business Development
(914) 909-6350
mswanson@luxuryinstitute.com

Share and Enjoy:

0 Comments

January 25, 2010

Luxury retailers find new ways to woo the well-heeled

Posted in Customer Service/CRM, Jewelry, Luxury Market

By Marina Strauss
Globe and Mail Update

Carriage trade putting renewed emphasis on customer service as business model changes in aftermath of recession

The Hermès store on Toronto’s famed mink mile did something in December it had never done before: It brought in an engraver to personalize fragrance bottles with a customer’s initials, flowers or hearts.

It was a free service for customers at the upscale retailer, one that the well-heeled appreciated. Not bad for business either, as overall sales at the store almost doubled from a year earlier.

“Now was not the time to shrink on customer service,” says Jennifer Carter, chief executive officer of Hermès Canada, which runs four luxury stores. “Every sale counts.”

The move by Hermes is emblematic of how the carriage trade is more aggressively courting consumers after the downturn as the business model changes. Retailers are finding they need to be more attentive - provide random acts of kindness, as it’s known at Holt Renfrew - or risk losing customers spooked by the recession.

Holt Renfrew, Canada’s premier upscale retailer, has formalized its “random acts of kindness” program, sending flowers or theatre tickets to its top customers. Hermès has extended to as much as a week the 24-hour period that the stores will normally hold an item for a customer. And jewellery chain Tiffany & Co. TIF-N sends snail-mail notes, personalized e-mails and Facebook messages to its customers.

Early results show that luxury retailers are starting to see better times.

Yesterday, Tiffany said that its sales at stores open a year or more rose 8 per cent in November and December, compared to a dramatic plunge a year ago. Saks Inc. and Nordstrom also reported better same-store sales in December: 10 per cent and 7.4 per cent, respectively.

Montreal-based Birks & Mayors Inc. BMJ-A saw a 6 per cent increase in same-store sales in November and December at its Canadian stores, although overall same-store sales were flat because U.S. sales fell 6 per cent, an improvement over the 2008 decline of 7 per cent.

Discerning customers are seeking service more than ever as a big differentiator in choosing their stores, says Milton Pedraza, CEO of the Luxury Institute consultancy in New York.

For Holt Renfrew’s new president, Mark Derbyshire, improving customer service is a top priority. Sales at the privately held chain exceeded targets, he adds, helped by its “random acts of kindness” initiative. “Clearly we’re on the right track,” he says. “But I encourage our employees to take more risks with that … go deeper and find ways of truly anticipating the needs of customers.”

He is empowering sales employees to find out so much about their customers that they can “go out on a limb and have what the customers wants,” he says. “It’s not easily done.”

But ensuring better customer service also requires new ways to reward employees. Mr. Pedraza says staff compensation has to be based on more than sales generation. And customer feedback has to be constantly monitored through surveys.

Mr. Derbyshire says he will review employee rewards to try to make them reflect better how customers are served.

Other retailers, including Tiffany, are reinforcing a tradition of catering to customers. Tiffany, started in 1837 as a stationery store, has kept true to its heritage and continues to send written notes to its new customers. The message also includes suggestions for future purchases.

“There’s nothing as personal as a handwritten note,” says Edward Gerard, a group vice-president at Tiffany.

Share and Enjoy:

0 Comments

April 5, 2009

Exclusive sites offer fashion deals of those “in the know”

Posted in Customer Service/CRM, Internet/Web, Luxury Market, Retail

From March 2009
By Fiona Soltes

Even in hard economic times, Theo Gray likes a little luxury. She likes it even more when the items feel as though they’ve been chosen just for her, laid out on black velvet, offered at a discount - and she can buy them online.

Current financial woes have made many a fashion-forward shopper alter her definition of “luxury,” but the Boston attorney adheres to its truest sense: Names like Elie Tahari, Alexander McQueen and Manolo Blahnik fill her closet and roll off her tongue. How does she afford them? You’ll have to be personally invited to find out.

In late January, Unity Marketing released the results of its most recent affluent consumer spending study. The survey of nearly 1,200 respondents with an average income of $199,200 showed that “even the richest Americans” are holding off on discretionary purchases. In fourth quarter of 2008, those customers spent 6.4 percent less on luxuries than they did in the preceding three months.

But in an otherwise dismal retail environment, there’s at least one spot as bright as a Cartier diamond. Invitation-only websites like Gilt.com, ideeli.com and RueLaLa.com claim continuous counter-cyclical sales increases by offering small lots of luxury - and in some cases, premium - brands at deep discounts.

Typical shoppers are women in their late 20s to early 50s who enjoy the thrill of a good deal, the excitement of being part of an “in” group - and the ability to buy fine items in a time-efficient, private manner when others around them may not be able to justify doing the same.

“I’m willing to shop if the prices are right,” says Gray, a regular visitor to Gilt Groupe’s Gilt.com. “That’s how I’ve always been. But the other day I was wearing a pair of Tory Burch boots. … You don’t want to say, ‘Yeah, they’re a $500 pair of boots.’”

Launched less than a year ago, Rue La La already has a membership in the hundreds of thousands accessing its daily sales.

“The advent of the Internet and the fact that wealthy consumers are so time-starved has made them incredibly desirous of a luxury channel that is convenient,” says Milton Pedraza, founder and CEO of the Luxury Institute, a Manhattan-based research and ratings organization. “A lot of wealthy consumers, already used to buying things on Amazon, are now asking, ‘Why do I need to go to the store? If I know the product, and it’s easy to find, and it’s easy to make the transaction, then I want it now. Ship it.’”

As e-commerce has evolved, Pedraza says, the need for the in-store customer experience has declined, “and in that sense, I think luxury is a little behind other retailers of the world.”

Read the full article at: http://www.stores.org/Current_Issue/2009/03/cover/index.asp

Share and Enjoy:

0 Comments

February 19, 2009

Snooty Service Falls Out of Style

Posted in Customer Service/CRM, Luxury Market, Retail

A new solicitousness at high-end boutiques

WSJ.com
RAY A. SMITH

Angel Yimsiriwattana still remembers feeling intimidated when she walked into a Chanel boutique in New York two years ago.

When she approached a salesman, he “was snooty and reserved,” she says, and barely spoke to her. Clad in a casual sweater and jeans, she figured the sales staff sized her up as someone unlikely to buy. Even though she spent $7,000 that day, she still felt unwelcome.

The atmosphere is a lot different at the Chanel boutique in Soho these days. On a recent visit to the same store, the 27-year-old says she was treated like a princess. “As soon as I walked in, [the sales associates] were smiling and said ‘how are you?,”‘ she says. “Everyone circled around me like little fish. They were extra nice and helpful.” Even though she didn’t buy anything, the sales staff cheerfully wished her “a nice day” as she walked out of the store.

As the luxury goods industry suffers a massive slump in sales - many sales clerks at designer stores who were famously haughty and patronizing suddenly have changed their styles. In the boom times, the aloof service was part of the exclusive aura cultivated by some brands, sending a message that only the coolest or richest customers were worthy of a purchase. Now, “that arrogant and snobby attitude of feeling people should be grateful to buy at their temple is a dinosaur mentality that is going extinct,” says Milton Pedraza, chief executive of the Luxury Institute, a consumer-research firm. “Now those brands have to be grateful for a customer.”

In some cases, the new solicitousness is such a dramatic change from the past that it is catching consumers off guard.

When Tony Brown shopped at the Paul Stuart shop in New York in the past, he was used to being generally ignored. But recently, when he walked into the store he was approached by “four or five” associates who each said hello, welcomed him to the store and asked if they could be of assistance. “It was like a popularity contest,” he says of their lavishing attention on him. With the store nearly empty, “it’s more of an event if a customer comes in. It’s like ‘we’ve got one!”‘ he says.

While shopping at a Bottega Veneta boutique in New York recently, Britton Warren said he noticed an almost strained attentiveness, with sales associates “giving me all kinds of oohs and ahhs when I tried things on.”

When Mr. Warren bought a pair of brown loafers discounted to about $430 from about $720 at a Fendi boutique, three employees complimented him on his choice, offering effusive praise. “They would go back and forth telling me how wonderful the shoes are and say things like ‘oh that’s a great pair of shoes,’” Mr. Warren says.

Read the rest of the article at http://online.wsj.com/article/SB123507494487525743.html

Share and Enjoy:

0 Comments