Fallon Brainfood: How Customer Service Will Save Luxury

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Why customer service will save luxury.

March 8, 2011

Meet Savanah and Jeanine.

Savanah Brihn Jeanine Lilke

And, you’ll also see two other faces via Skype.

Peter Rose Senior Vice

President

Mark Guarino Senior Auto and Entertainment Analyst

Agenda

Three Stages of Luxury

Shifts in Consumer and Brand Behavior

Examples of Modern Luxury Customer Service

What if I don’t work on one of those fancy-schmancy luxury brands?

Customer service is becoming increasingly important for all brands.

And historically, mass brands adopt the behaviors of luxury brands forcing luxury to continue to raise the bar.

So this is your time to learn from the masters and plunder.

Luxury customer service is no longer confined to one-on-one interactions with sales people

Social Media Mobile

In-Store Online Experiential

Act I: The Boom

Few were invited to partake.

It was truly a lifestyle with its own social cachet.

The best money could buy.

Made by artisans, not assembly lines.

Sold by experts.

With personalized and attentive service.

Not for Everyone

Personalized Service

Part of a Larger Story

Made and Sold by Experts

Exquisitely Crafted

A Social Experience

At its core, luxury was…

Act II: The Fall

Consider your status when traveling.

“The saddest thing I can imagine is to get used to luxury.”

— Charlie Chaplin

And that is exactly what we did.

When luxury went corporate, the primary objective changed.

Creating the finest things money could buy.

Making money, lots of money.

From: To:

Consumers overextended their credit.

Offered entry-level products to reach aspirational customers.

Reduced the quality to turn average profit margins into luxury margins.

No longer hired experts.

Traded individualism for homogenization.

Began to expect luxury-style service in non-luxury environments.

Holiday Inn

Began to expect luxury-style service in non-luxury environments.

This triple threat brought luxury to its knees.

1.   Big conglomerates homogenized brands to increase profits.

2.   Consumers expected a piece of the luxury life.

3.   Mass brands incorporated luxury services.

And the recent economic recession certainly didn’t help luxury retain its appeal.

38% of consumers reported they reduced the amount of their luxury purchases in the past year

Source: Mintel, Consumer Attitudes Toward Luxury Goods, U.S., March 2010.

In the first half of 2009, worldwide sales of luxury goods fell

20%

Source: Bain & Co. Consulting, May 2009.

And the recent economic recession certainly didn’t help luxury retain its appeal.

Act III: The Comeback

Not for Everyone

Personalized

Part of a Larger Story

Made and Sold by Experts

Exquisitely Crafted

A Social Experience

In other words, they needed to return to this…

In a way that isn’t this…

The only way to modernize luxury is through customer service

and customer service is bigger than you think it is.

Affluent consumers view customer service as an essential part of luxury.

57% of high-income shoppers

identify superior customer service as a defining quality of luxury goods.

Source: Luxury Institute, September 2010.

Yet, that’s where luxury falls apart.

50% of high-income shoppers

have noticed a marked decline in the customer experience.

Source: Luxury Institute, September 2010.

Here are some impactful ways to draw on the classic codes of luxury in a modern style.

Burberry: Teamed up with Facebook to create a social networking fashion blog that revolves around the famed Burberry trench.

FROM: Brand validates customers TO: Customers validate brand

Burberry: Teamed up with Facebook to create a social networking fashion blog that revolves around the famed Burberry trench.

FROM: Brand validates customers TO: Customers validate brand

Ritz-Carlton: Through collaborations with like-minded partners, Ritz-Carlton awards the best customers with exclusive experiences.

FROM: Inaccessible to most TO: Accessible to many, but truly rewarding the best

Bloomingdale’s—Engaged shoppers with an interactive and individualized experience.

FROM: Personalized one-on-one services TO: Use technology to personalize all service touchpoints

Bloomingdale’s: Engaged shoppers with an interactive and individualized experience.

BMW—Transformed the traditional dealership experience to create a more welcoming environment.

FROM: Guided discovery TO: Self-directed discovery

BMW: Transformed the traditional dealership experience to create a more welcoming environment.

FROM: Guided discovery TO: Self-directed discovery

MINI Cooper: Extended the campaign into new markets by offering distinct experiences in the public space.

FROM: Product experts TO: Lifestyle experts

Lululemon athletica: Community Ambassadors lead classes and experiences unique to the lululemon lifestyle.

Tiffany & Co.—Engagement ring app effortlessly connects mobile to in-store.

FROM: Singular customer interactions TO: Seamless customer interactions

Tiffany & Co.: Engagement ring app effortlessly connects mobile to in-store.

Inaccessible to most

Brand validates customers

Personalized one-on-one service

Guided discovery

Product experts

Singular customer interactions

Customer validates brand

Accessible to many, but truly rewarding the best

Use technology to personalize all service touch points

Self-directed discovery

Lifestyle experts

Seamless customer interactions

FROM: TO:

Three things we want you to remember about luxury customer service.

1. The old ways of luxury laid the foundation for the modern luxury market.

2. To stand out today, luxury brands must use customer service to reinvent their identity.

3. In order for continued success, luxury needs to out-behave, not just outperform, the competition.

Thank you.