Rewarding Customer Loyalty Without Sacrificing Retail Profits
By Bob Phibbs
Luxury shoppers like special, in-person treatment during their shopping experiences.
That’s why they prefer brick and mortar stores to online shopping - it’s hard to get a meaningful interpersonal experience from a web browser or app.
Standing on the sales floor, luxury shoppers can enjoy being the center of attention and revel in the overall shopping experience.
The goal for brick and mortar stores should be to create an in-store experience that makes these high-end shoppers want to return again and again.
Often in pursuit of this goal, retailers employ customer loyalty programs. These programs are designed to provide exclusive incentives to shoppers who meet minimum standards for spending, store visits, or other criteria.
The question that has to be asked is, are they likely to be profitable?
If a retailers’ margins aren’t high enough, they aren’t.
The Wrong Reward When loyalty programs become de-facto discount programs, instead of adding to the experience, they simply cut from the bottom line. Loyalty programs like this are essentially saying that if you visit us often enough, our products are worth less.
This isn’t the message luxury retailers should want to send.
The more price is mentioned, the more prominence it has in the customers’ mind as a deciding factor. Consistency of value is one of the most important attributes your brand can possess.
So, how can you create loyalty programs that enhance the shopping experience without eating into your profits? With a little creativity, and the right training, it’s really not that difficult.
After all as Dalia Strum, professor at the Fashion Institute of Technology, New York has said, “Typically, luxury consumers have a strong relationship with a representative from the company and, therefore, it’s important for the company to find targeted ways to display their appreciation.”
Your number one strategy to having loyal customers is to have well-trained employees who can create conversations, not just answer questions.
While the customer is loyal to the brand, they are equally loyal to the salesperson who takes care of them.
Here are three more strategies to have loyal customers:
The Secret Stash A guaranteed way to make shoppers feel special is by making them part of a very select group. Personally offering them first crack at new products before they go on display and giving them previews of new collections will help create an exceptional customer experience because it is exclusive. Rewarding loyal customers with a little insider information doesn’t cost a thing, and makes them feel great because not just anyone is allowed in.
To pull it off, you need salespeople who first engage with and listen to your customers. By building a rapport with customers, salespeople gain an understanding of the products and perks that can be used to reward their loyalty and draw them back into the store. It helps them truly personalize to the individual and invite only those who are interested for example in Stuart Weitzman to an exclusive trunk showing of the brands’ spring boot collection. Because only those who have shown the ability to purchase those boots are invited, the event can be a success.
Culture of Personalization Making a customer feel special is often as simple as remembering their name and preferences. In the old days, this information was kept on index cards but rarely updated. Nowadays, customer loyalty programs make it easy to collect and store all of a customer’s up to date information and preferences in an easy-to-use format. That data lets your salespeople instantly recall favorite brands, preferred colors - even size and style preferences. It doesn’t come from a beep on a smartphone that the customer is in the store but from the genuine relationship the salesperson has cultivated. The technology helps the relationship, it doesn’t create it.
With more data collected over time, the rewards will be highly personalized to get even greater traction than a generic offer made to the masses.
Pushing Perks High-end shoppers will take a discount if it’s offered, of course, but it’s not necessarily something they actively pursue. Why? Because the more each retailer copies another’s loyalty program, the less value it has for each customer.
The compelling reason a shopper will choose one shop over another is in the compelling perks that enhance the shopping experience or the value of the product. These perks can be vendor financed add-ons that greatly enhance the value of the luxury product in the customer’s mind, without cutting into the specific retailers’ bottom line.
Audemars Piguet, the Swiss watch manufacturer organized an invitation-only workshop at the Four Seasons Hotel in Manhattan that gave watch enthusiasts a chance to assemble the last few tiny parts that make prized possessions like theirs tick.
Salespeople who know what they know about loyal customers, and what they know about the products they’re selling, can create winning experiences like Piguet that deliver special experiences to the customer resulting in larger purchases. The special perks could also include free parking or valet service, free alterations, access to by-appointment shopping or instantaneous rewards. The more a retailer understands their luxury customers, the more they can come up with creative ways to reward their loyalty.
Rewards, not Reductions Luxury shoppers are interested in status, value, quality, and experiences. Discounts are pretty low on their list of priorities. The best retailers create loyalty programs that aren’t constantly centered on reducing prices.
A successful loyalty program should be employed to encourage even more sales by introducing shoppers to perks, new items, and custom collections. This is a win-win scenario: the customer wins a better shopping experience and the retailer wins greater loyalty and higher profits
And luxury customers tell their friends about great perks giving the retailer access to new profitable customers.
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