Demystifying the Luxury Customer (Guest Article)
I was recently speaking with a good friend and former client at two well known Italian luxury brands. We got onto the topic of the roles and responsbilities of a luxury CIO and how it differed from the traditional high-street retailer. Having worked the luxury segment in IT and CRM for many years, she had some very interesting stories to share. Luxury is simply different, perhaps more so than many of my readers realize. So, at the end of our conversastion I asked her if she would like to share her perspective as an IT executive on the inside, supporting two of the worlds most demanding retail brands, catering to the difficult to reach, “rich and famous” customer.
The article that follows highlights some of the considerations that luxury retailers must incorporate into their Clienteling and CRM strategy.
Demystifying the Luxury Customer
In my years working as a VP of Information Systems within luxury fashion retail I have often been at the center of CRM vendor intrigue. The luxury client is a customer few understand and fewer still know how to reach. They can’t be induced by traditional retailing techniques. Loyalty cards, promotional savings, free gifts are simply ignored, or worse, damage the brand. This leaves most marketers wondering, “How do you reach this client?” My answer is emphatically — by building a Customer Centric organization. By effectively and creatively utilizing BI and CRM analytical tools in conjunction with consistent clienteling activities, with an enterprise-wide customer centric philosophy, a luxury retailer can begin to connect and build loyalty with their client.
The key to reaching the luxury client is to really know them, their lifestyle and shopping behavior. However, success is based on how you use that information and how relevant the channel and messaging. Every customer has a unique value equation that must come into balance before they buy. The mass market customer generally buys based on “need” and is motivated by savings and incremental offers. The luxury client buys because of “want” and is willing to pay a premium for an experience.
Let’s take a minute to examine the lifestyle of the luxury client. We already know their income bracket is high, but what else do we know? They are social, aware of their status, often busy (perhaps too busy to even shop during regular hours), uncompromising and specific with style, they value quality and service over quantity, are event or experience driven, and value trust at the hands of experts. Knowing these “soft” characteristics and combining them with “hard” purchase behavior provides the retailer with the data to personalize, influence and delight their customers. Armed with this customer knowledge and the analytical detail provided by CRM and BI tools, the purveyor of luxury products can sustain a relevant profitable relationship with their exclusive clientele.
Let’s look further. As I mentioned, they are social and event driven. So, why not create social shopping events like an invite a friend (new shopper) luncheon or a charity fashion show (forgive me, I am in luxury fashion). These are fabulous ways to bring in existing clients and add their closest friends to your roster of customers. While a sale will not necessarily cause the luxury client to shop, selecting pieces that their trusted associate believes is “just right for them” is often irresistible. In home shopping and approval shipments to top customers has been proven to build exceptional loyalty. Since a luxury client is looking for a shopping experience built on convenience and trust, the relationship you build with them must be one that welcomes them in to your company’s “family”. Their associate becomes their friend, their confidant who knows them and knows what is best for them. This level of customer intimacy requires capturing and leveraging information at every customer touch point and making that knowledge accessible to all constituents across the organization.
A great place to start is to ask questions and LISTEN to their story. Know your local social event calendar and know their personal interests and events. Knowledge is power particularly in luxury. Think out of the box when analyzing their shopping behavior and look for the patterns that will guide your next move. Every decision your luxury client makes tells you something about who they are. Every piece of information, from how often they shop, with whom they choose to shop, what pieces they buy, to when they buy helps you create a picture of “your client”. Build and continually revise your client “profile” to remain current with an ever changing world and how our world affects your client. The foundation for approaching luxury clientele is the same as it is for all customers. It is your response to the data you uncover that is different. The key success factor is to gain a deep understanding of whom your client is and what they value. Analyze your successes and failures and always be willing to adjust your strategy to connect with an ever changing clientele culture.
The author, Genine Fargnoli is the former VP of IS and Director of CRM at Georgio Armani. She previously worked in Program Managment for Gucci Group NYC. She can be reached at [email protected]