10 Retail Strategies for Luxury Brands to Improve CRM


Milton Pedraza | October 17, 2012

Milton Pedraza, CEO of The Luxury Institute, outlines 10 relationship building strategies for sales professionals to boost sales, profits and retention

Milton Pedraza, CEO of The Luxury Institute, outlines 10 relationship building strategies for sales professionals to boost sales, profits and retention.

Top sales associates across industries have told us that the sales model is broken in most retail companies. Instead of building profitable long-term customer relationships, most sales associates focus just on transactions.

Customer retention rates are between 10-30 percent in the top-tier brands, even with multiple stores and channels available for customers to make a purchase. When stores are empty, the majority of associates stand idle, wasting time, the company’s money and even their own earning opportunities.

Sales professionals are the single greatest expense for retailers, yet their productivity is low compared to their true human potential. Marketing and advertising get more attention and investment even though the moments of truth happen not on Facebook, or with a banner ad, but between human beings.

“ Customer retention rates are between 10-30% in the top-tier brands, even with multiple stores ”

In our 7-Step Customer Culture engagements with luxury and retail brands, we have empowered sales associates to design Relationship Building Values and Relationship Building Standards. These Values and Standards created by sales associates are empirically proven to dramatically drive long-term customer interaction.

Here are ten simple, effective and measurable action steps, created with the wisdom of the best sales associates across luxury and retail globally. If you deploy them faithfully, you will dramatically increase your customer acquisition, retention and referral rates as you survive—and even thrive—as other stumble in this uncertain global economy:

Mobile for Relationships

Provide sales associates with powerful mobile devices to build relationships, not just execute transactions. In order to dramatically increase customer retention, educate and equip the sales team to use mobile devices to collect relevant customer data and to communicate with clients respectfully and intelligently.

A large percentage of the investment in retail store technology today focuses on streamlining the sales process to serve the customer faster and better. Apple is a great pioneer in this worthy goal at its stores. Most of these platforms, however, are designed solely to expedite in-store transactions, even at Apple.

Our research indicates that the best sales professionals utilise available in-store computers when the store is quiet to contact customers. They even use personal mobile devices during low traffic periods or after hours to cultivate strong long-term customer relationships. Make relationship building the top priority when mobilising your sales associates.

Stop Spam

Stop spamming customers and send simple, relevant emails from sales associates instead. Sales associates complain that one reason clients, especially top-tier clients, refuse to share their email is the fear of daily or weekly bombardment by marketing emails.

For these 20% of customers who give you 70-80% of revenue, sales associates must cultivate a human connection. Sending personal, individualised emails and having a one-on-one phone dialogue creates value for the customer and the brand. Inspire sales associates to generate their own simple, brand-appropriate emails to top clients and watch email open rates soar beyond 50%. Conversions will go up dramatically, too.

“ Stop spamming customers and send simple, relevant emails from sales associates instead ”

Share & Update

Share the customer profile transparently with the client and ask for updates. Unless you are keeping data you would not be comfortable sharing with the customer, you can build trust and loyalty transparently. You must not only encourage sales associates to do this, but you must also encourage your customers.

Simply ask the customer if they would like to review their details and purchase history to update it so that you can serve them better. While the idea may seem risky to some, it should seem a natural progression in the age of social media and open communication. Test it, learn your way through it, and engage customers by being honest.

Use it as an opportunity to see how you can learn more relevant information about how your customers want and need to be served. This is a pre-cursor to what Doc Searls, author of “The Intention Economy-When Customers Take Charge,” sees as the future.

He predicts a time in the near future when customers will really be in charge of each vendor or brand relationship, including full ownership of their personal data. Until then, this small and simple step will earn the trust of clients and give you valuable insights, but it is only for those who operate with complete integrity and courage.

Have Enough Staff

Hire more sales associates in existing stores. Sales associates admit that many stores are understaffed, even while brands build more stores in low-traffic locations. Managers try to optimize staffing simplistically for traffic rather than relationship building.

The result is understaffed stores in peak traffic times and overstaffed stores during low traffic periods while customer attrition climbs to alarming rates. Instead of this haphazard staffing approach, first try hiring enough sales associates so that they can handle traffic when stores are full and also create extraordinary experiences for their customers.

Use staff intelligently in slow times by empowering sales associates to contact current customers proactively, recover lapsed customers and cultivate referral prospects. Don’t compromise, optimize store staffing and watch customer satisfaction and relationship building rise.

“ Sales associates admit that many stores are understaffed, while brands build more stores in low-traffic locations ”

Offer Direct Contact

Ensure that customers have sales associate contact data even if they do not provide their own. One may think that it is standard practice at most luxury and specialty retailers for sales associates to provide their contact details to each customer they interact with directly. It is not. Many stores supply sales associates with nothing or with generic store cards.

Provide each member of your sales team with proper personalised business cards. Then, make sure that every sales professional is fully educated and rehearsed in how to present their credentials in a manner that inspires trust, even if the customer declines to share their information immediately.

You can also prominently display the sales associate’s full name, email and phone number on the sales receipt to guarantee that every customer has a human they can contact at the store. Ensure that your sales associate has earned the customer’s respect with expertise, trustworthiness and caring and can be easily contacted as needed.

Reassign Relationships

When sales professionals leave, immediately reassign the relationship. Retail customers reveal that one frustration they often have is that when their favourite sales associate leaves the company, the brand acts as if its relationship has been severed with the customer, too. The customer is never transitioned or contacted to maintain a connection with the brand.

This is an egregious assumption since the customer very likely expressed an interest in the brand in the first place and, despite the sudden lack of communication, they will likely want to buy the brand again. Create an outreach process such that whenever a sales associate leaves, the brand generates a dignified and genuine effort directly from store managers to seamlessly connect the customer with another compatible sales associate.

As awkward as the situation may be, brands cannot ignore or punish customers simply because a sales associate is no longer with the company. Transition relationships in a humanistic, honest way and watch retention metrics rise.

“ When sales professionals leave, transition the customer and immediately reassign the relationship ”

Cultivate Tourists

Cultivate tourist customer relationships as deeply as local relationships. In many stores today, especially in major international cities like New York or Paris where most of the revenue is concentrated, the percentage of buyers who are tourists is extremely high, often above 50%. Tourists are seen as transient purchasers despite the fact that many have interest in purchasing from the brand again.

Brands need to leverage global online capabilities and stores in the customer’s home city to build lasting relationships. We have worked with sales associates to develop measurable standards for collecting critical tourist customer data, transitioning customers to their home store, directing customers to buy online and sometimes even developing lasting and virtual long-distance relationships.

In today’s global digital marketplace, there are no excuses for treating tourists as one-time purchasers and losing great customers. Building long-term relationships with tourists pays off in increased revenue across the brand’s multi-channel global network.

Referral Programs

Create a proactive referral program where top clients can invite friends to a personalized shopping experience and store events. Most brands are not yet using effective customer retention programs, but fortunately the practice of establishing customer referral programs is already in place in many stores across luxury and retail brands globally.

Referrals can only be achieved once a sales associate has earned trust and cultivated a long-term relationship with a customer. Even then, the associate must be careful how to approach a customer for referrals. It is an art and a science.

Create a measurable education program to ensure that every single sales associate builds customer relationships that also generate referrals and watch sales increase with low marketing costs. Inspire the consistency in practice across all sales associates in all stores in a systematic, measurable and humanistic way.

“ Cultivate tourist customer relationships as deeply as local relationships ”

Empower Employees

Empower store managers to coach their teams daily with objective metrics. Top-performing sales professionals tell us that they see their career as a relationship-building endeavour. Some affectionately call it their Olympic sport. It requires humanity, first and foremost, combined with high-performance based on education, deliberate practice and coaching.

We find that the best store managers are not managers at all. They are coaches who are fully equipped with customer and sales associate metrics. They use those metrics to objectively assess, inspire and lead their teams to relationship building success on a daily basis. Automate the back office work and empower your store managers to drive relationship building with both associates and customers.

Go even further and institute weekly sales calls where sales associates, not sales managers, present data collection and customer retention progress updates. Sales will go up along with sales associate retention.

Consider Alternatives

If a customer refuses to provide email data, give them an alternative email address. This is a new idea that is now gaining traction. As we reported previously, sales associates tell us that customers, especially top-tier ones, are unwilling to share their email addresses due to fear of marketing emails that they consider to be spam rather than personalised communication from the brand.

Think about cooperating with a new kind of vendor relationship management pioneer such as Azigo. They will help your customers create an email address and mailbox that they can use for receiving emails from brands that they choose to hear from, without compromising their private address. While Azigo and other VRM providers are in the early stages of innovation, it may prove valuable to begin testing ways to partner with these intermediaries.

The great hockey player, Wayne Gretzky, when asked why he dominated the sport, said “I don’t go where the puck is, I go where the puck is going.” Customer relationship management is where the puck is. Vendor relationship management is where the puck is going.

Technology is extremely important in today’s retail environment, but it is a commodity that is evolving into a utility. Implementing CRM and VRM systems will do very little without the human beings who utilise these tools to build lasting customer relationships.

We are fortunate to work with the world’s leading luxury and retail brands in developing their relationship building power through Customer Culture, and we have seen how implementation of the ten steps outlined above can drive sales.

These action steps, when implemented separately or together, will dramatic increase your sales and profits in an uncertain global economy and shifting retail landscape.

To further investigate CRM on Luxury Society, we invite your to explore the related materials as follows:

- Raising Customer Loyalty in the Midst of an Uncertain World
- Do Affluent Customers Value Rewards?
- 10 Critical Steps for Creating A Powerful Luxury CRM Culture