Posted by Max Israel on December 31, 2009 at 6:51am
High-end brands of all kinds depend more than ever before on retaining a relatively small number of high-value customers. So why are they so uncomfortable asking those customers for feedback?Last week’s vacation in Madrid was a real balancing act between dropping in on the best and brightest luxury retailers to see what’s cooking while simultaneously not allowing Mrs. Israel to make them vastly more successful than they already are. Despite a little stress in that department, I had a great time watching pros like Loewe, Hermès, and Prada, as well as an exciting number of luxury brands which were new names to me.All this luxury brought to mind a subject we’ve looked at for some time now – the riddle of why that group of retailers which is most dependent on building long-term customer relationships stumbles so badly when it comes to soliciting feedback.Why It’s More Important in Luxury. Think about luxury brands as compared to Main Street brands. Luxury brands’ customer lists are comprised of a smaller number of customers, each of whom represents a higher lifetime customer value. Losing one of these customers due to an unfavorable experience with product or the buying experience is a very damaging proposition.In fact, many of these customers are what researchers call “aspirational” buyers. An economic up-and-comer might spend 1 or 2% of her pay for the year on a single piece, simply because of the way it makes her feel. This can start a long-term relationship with the brand, which will grow as her own economic situation prospers. If that early store experience leaves her feeling otherwise, however, that lifetime of brand loyalty can be irreparably damaged. (For more on this, see our post on The Value of One Lost Customer.)Why Can’t They Ask? So why don’t you typically see luxury retail brands asking for customer feedback? We see two main reasons.First, one of the cardinal rules of positioning your brand at the top of the luxury pile is that everything about you needs to resonate and reaffirm that you are already the best. Even a tacit acknowledgement that there could be room to improve can run counter to that message.Second, consumers everywhere first got comfortable with the notion of using the web and technology in general to give feedback on Main Street. This means that the most effective ways to gather and share feedback can have – if we’re being honest – a somewhat pedestrian feel. I think we can all understand why a company like Nordstrom might hesitate before pulling a page out of a company like Target’s playbook, regardless of how effective it is for Target.And that’s a problem, because luxury customers – like everyone else – are embracing technology to share their thoughts about these brands with everyone else in the world through social media sites of all kinds.Not doing so themselves simply makes a luxury retailer the last one to get the news when something's going very right or very wrong in the field, which is an expensive mistake.How can they make the leap? The economy has experienced more than a hiccup – it’s experienced a sea change which has altered the way consumers think about how they spend their money for a long time to come.As luxury brands reconfigure themselves to survive and – in some cases – prosper, a vital element will be learning to find ways to measure their customer experience in ways which are congruent with their larger brand experience.The good news is that this can be done very effectively using tools and skills already on hand in luxury brands everywhere. Next week we’ll distill our thoughts on how to do this into the three most important Luxury Retailers’ Rules for Feedback.Until then, have a happy and safe New Year’s!