Updated: Jan 3
Written by: Evan Goodfellow
Luxury brands have three key factors that set them apart which is a strong value to price ratio and have created a strong affinity towards the brand. In this article we look at what they are doing right.
Frequent for a Reason
In an article recently posted on the Canadian Marketing Association’s website entitled How to Retain Customers like a Luxury Brand the author John Bardawill writes about the key elements luxury brands use to build loyalty. Bardawill starts out by recounting a time when he was working on an 18 month project which had him flying back and forth between Canada and Australia. When he first started commuting between countries he began wondering what kept frequent fliers coming back to the same airline for repeat business. This was later translated to customer experience research conducted by his company which found that people’s decision to fly with an airline was based on a brand’s perceived value which was influenced by three main factors. The first factor being a need to have a strong value to price ratio, second, the traveller has to have an affinity towards the brand, and third the brand has to be able to retain the customer long term, all of which could be greatly facilitated through Market Research Online Communities.
In order for luxury brands to thrive, according to Bardawill, is their ability to retain customers which has a great impact on profitability. The article cites research conducted in 1990 by Bain & Co.’s Frederick F. Reichheld which found that companies can boost profits by 100% simply by being able to retain just 5% of their customers. Bardawill writes, “It’s tempting to think of this simply as engagement, but for high-value brands it is a matter of re-engagement: offering the customer an experience that is so special that it prompts him or her to actively re-engage repeatedly with the high-value offering. To do this, high-value brands provide their customers with valuable and unique services and benefits.” The services that these brands provide are focused on strengthening the relationship between the customer and the brand, which requires the brand to understand the needs and desires of the customer.
Creating a Great Customer Experience
Building a great customer experience for luxury brands depends on four components according to Bardawill. The first is exclusivity, which is done by creating a special level of service. This special level of service is done through “product design, availability, and channel access.” The example he gives is Holt Renfrew’s personal shopping apartment which offers flowers, food and access to personal shopping, styling, and small parties. This service is offered only to high-value customers.
Another component in building great customer experience is personalization. Personalization according to Bardawill is done through meeting customer’s expectations and also in accommodating their personal preferences. Market research online communities are a great way to survey customer’s expectations. Harley-Davidson offers a customization service which offers loyal customers the ability to connect with design specialists to customize their motorcycle to their personal preference.
The third component according to Bardawill is the convenience factor. Companies that are able to improve experiences and make inconvenient situations more convenient are able to create strong brand experiences. The example he uses is the Rocky Mountaineer train service in B.C. and Alberta. The train services are five star and offer great meals and benefits once you arrive on the train but they go a step further in making things more convenient. The convenience they offer is managing every detail of your trip, from having your luggage picked up and dropped off and making sure the transition is as seamless as possible.
The final component is fulfillment. This involves reaching out and trying to fulfill the needs of your customer in order to create an amazing customer experience. Bardawill writes, “Think of the hotel concierge tending to a guest’s needs.” The example he gives is of the service American Express offers to its Centurion card members. One customer service representative helped a cardmember find a painter for their Paris home and even helped them select colors.
While this may sound like a lot of extra work on behalf of a company going beyond the services already provided, Bardawill writes that these services are not without reward or payment. He writes, “When executed well, serving a high value customer’s needs translates into providing them with something that they will pay extra for.” For a company to really strive for excellence in customer service a company has to understand that the return on investment is guaranteed and that profits will increase otherwise it seems like a lot of extra work for nothing.
Understanding your Customers Needs
We believe that excellence in customer service and understanding clients needs before they ask for them are crucial elements for a successful company. Many times a company is often guessing what their customers want, and spending a lot of time and resources to meet these needs, rather than basing their decisions on facts. That is why market research online communities are so great because they allow senior level management the opportunity to hear directly from the customers in regards to what services they want, and what they expect.
If you would like to find out more how our online market research community software can help your business feel free to contact us.