In these days of plenty, executives of luxury goods and services companies seem so enamored with their products and channels that they may have forgotten the most important aspect of their businessthe Customer. Ask a number of luxury executives what their biggest growth opportunities are and you will hear a great deal about higher sales, cost savings, new products, expanded channels, and acquisitions. Rarely will you hear much about gaining a greater share of the customer's purchases, developing a mutually profitable long-term relationship with the customer, or seeking great referrals from happy customers. In fact, few, if any luxury firms are capable of measuring these metrics--never mind share them with Wall Street.
Today's luxury goods and services companies appear to be stuck in the machine-like Industrial Age model. They should be looking at their firms, first and foremost, as adaptive organisms, able to continuously adjust to evolving customer needs and wants. Unfortunately, when luxury firms that target the wealthy execute best practices, they simply observe what their competitors are doing. Or, they rely on the expert opinions of consultants and pundits who provide cookie cutter solutions based on the past. Best-in-class Luxury Marketers should seize the moment of a new era in Customer-Centric Luxury and listen to their customers instead.
The implications of the shift from Industrial Age marketing to the Customer-Centric Age are profound. A just-released study by The Luxury Institute reveals what the wealthy expect from the best companies in the area of customer interaction. The survey, "Enhancing the Customer Experience of the Wealthy: Best Practices in Customer Interactions", polled more than 200 households with a minimum of $200,000 in gross annual income and net worth of at least $750,000 (including home equity) on 21 customer interaction practices (note: for most companies, the wealthy are the 20 percent, or less, of the customer base that deliver 80 percent, or more, of the profits). The report, second in a series, examines how companies can best serve the affluent in the enhancing different aspects of the customer experience.
The Wealthy Demand Customer-Centric Solutions-Now!
Wealthy American consumers, the most educated and successful generation in the history of the world, stated their requirements for best practices in customer interactions. Among the findings:
eight of 10 wealthy consumers said they want to be allowed to immediately bypass automated phone systems and speak to a person directly. This effectiveness tool flies in the face of so-called "cost efficiency experts".
More than 77 percent of the wealthy share the belief that companies that use best practices have quick and easy return policies. Just try that at "snobby" Madison Avenue boutiques. Wealthy people tell horror stories of being made to feel like thieves. Wealthy women in particular, to the tune of 85 percent, require this often-ignored common sense practice.
70 percent of wealthy consumers want front-line employees empowered to make decisions on the spot. In most luxury firms, few executives can make a decision, and only after deliberations with headquarters.
60 percent of the wealthy believe that companies that are best practitioners should track the individual satisfaction levels of customers over time and take positive action. Today's technology makes this practice a no-brainer.
51 percent of wealthy consumers require that companies that use best practices customize communications to their customers. Consumers are tired of receiving frequent random, irrelevant offers and invitations from luxury firms.
51 percent of the wealthy want to be consulted on service policy changes. Individuals with net worth of $30 million plus were most adamant about this.
44 percent want to be consulted about product changes. The numbers go to 62 percent for households with annual incomes of $2 million or more.
Best Practices in Customer Interactions
Many luxury marketers say they already know many of these best practices. So, why are so many companies failing to act? Wealthy consumers are sending a clear message to luxury goods and services executives.
"When it comes to customer interactions, the wealthy demand a say in how businesses behave toward them" said Milton Pedraza, CEO of the New York-based Luxury Institute. "The objective of these best practices surveys is to give a voice to the frustrations that we hear from wealthy consumers daily, but that are largely ignored by luxury goods and services firms.
"We have provided luxury executives with the independent and objective empirical evidence to share with their Boards of Directors, procure resources, and take immediate and specific action. Our best practices surveys prove beyond the shadow of a doubt that enhancing the customer experience is the greatest opportunity luxury marketers have today." Says Pedraza.
About the Luxury Institute: The Luxury Institute is an in-depth research organization that focuses solely on the top 10% of America's wealthy. Subscribers gain access to a portfolio of publications that guide and educate high net-worth individuals and the companies that cater to them on leading edge trends, consumer perceptions (including rankings and ratings) of luxury brands, and best practices that enhance the customer experience. Publications include the monthly Wealth Report, the Luxury Brand Status Index surveys, and the Luxury Best Practices reports.
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