November 16, 2012
With a smaller pool of potential customers than their high street counterparts, luxury brands should be focusing a lot of time and attention on customer relationship management. Yes, they need to attract new sales, but they really need to keep their existing customers happy, engaged, loyal and eager to buy from them again.
However, evidence suggests that some luxury brands are less skilled at this than others – and there are some particularly common pitfalls:
1. Not knowing what CRM actually is
Some brands still ask for “a CRM campaign that will deliver sales growth in three months.” That is actually a short-term sales campaign.
CRM is about building long-term relationships that establish a level of loyalty and engagement with the brand rather than driving immediate purchases. So it is important to ask for a sales campaign if that is actually what the brand requires.
The overarching goal of CRM is to instill loyalty among customers, so the first step is to know where that loyalty lies: is it with your brand, your company or your third party dealer network? Knowing where the engagement currently exists is vital if you want to grow it or shift it towards a brand rather than a retailer.
2. Thinking all customers are the same
Despite the smaller purchaser pool for most luxury brands, not all customers are the same. Just as other brands segment their customers and provide different messaging and strategies, luxury businesses need to do the same.
For example, the individual who buys a $2 million car behaves differently to the one who buys a $400,000 car, and both are different to the one who buys a $125,000 car.
The first two vehicles will still probably sell well in tough economic times, but aspirational purchasers who might have gone for the entry-level supercar may in fact be struggling. So do not be generic: understand that different segments exist, identify them and target CRM activity accordingly.
3. Underestimating the importance of data
Some luxury brands still collect data poorly – questions such as “Do you want to go on our database?” will never get the best response.
As a rule, luxury customers are willing to give their personal details as long as they can see value to them as individuals with properly targeted offers and events, knowing that it is secure, and understand that it will cross all sections of the brand so that the sales, communications and after-sales teams will not all be bothering them for data separately.
Issues arise when brands do not understand what they are trying to do with data, collect the wrong data or fail to integrate it within the organization. No other segment has such high levels of expectation: they want to be treated not only as individuals but as VIPs.
4. Ignoring what follows the sale
Too many luxury brands still focus on sales – and not on what comes next. In fact, the post-sales relationship is one of the most critical elements of luxury CRM: if someone has just spent $1.3 million on a car, they will not be impressed by a template letter saying “thank you for buying it.”
The first element of post-sales CRM is appropriate and targeted communications, such as customer service contacts, possible accessories and accurate delivery details.
The second is about servicing and maintenance – ensure your customers know that, for example, their marvelous new watch will need servicing in 12 months, and then keep them in the loop during the maintenance process so they know you care about their experience.
Plus, any complaints need to be handled swiftly and effectively – because if left to fester, the emotional attachment between customer and product can turn to bitterness and undo all the good CRM you have done.
5. Being scared of social media
The main issue for luxury brands is the openness, accessibility and lack of control they have with social media. However, approached in the right spirit, it can work brilliantly for them. After all, many affluent individuals have at least one social networking profile, usually Facebook, and there are other networks such as aSmallWorld solely devoted to high net worth individuals.
Luxury brands derive huge value from the story behind the product, the materials, the production, the design – all of which can be communicated through social media. The conversations are going on regardless, so it is essential that brands are involved and provide a channel for this communication.
Overall, an ideal CRM model for luxury brands is the independent tailor. He knows your name, what you have bought and what shirt goes with that suit. His service is personal and he fixes frayed cuffs immediately because he needs your custom. Even brands with global sales and thousands of employees would do well to think and act like him.
Damian Bentley is managing director at Tangent Snowball, a digital and CRM agency based in London. Reach him at damian.bentley@tangentsnowball.com.
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