Exceeding All Expectations

It used to be that the luxury brands could satisfy customers with obsequious flattery and a cup of tea during a shopping expedition. No more. Today's luxury consumers know their worth and want to be pampered and doted on in a very personal way.

According to Stephen Hay, loyalty development director at ICLP in Hong Kong, luxury consumers can roughly be broken down into three segments: 'Aspire', where customers aspire to own a brand but lack the resources to buy it; 'Acquire', where the focus is on the product's physical attributes and exclusivity, and 'Repertoire', where the consumer can buy the brand and cares deeply about all aspects of the relationship -- service, dialogue and environment. In fact, at this stage, the relationship may rank higher than love of the brand itself. It's the whole experience the customer is after.

"All great luxury brands have a vision that extends beyond the products," explains Nirmalo Wilkes, managing partner, TBWA Tequila Singapore. "Luxury brands live in a wonderful world. They present a view of life we all would love to share. It is always extraordinary." To ensure that consumers experience that world at all levels and touch-points, luxury brands are increasingly turning to marketing firms to manage ever-more demanding customer relationships.

As baby-boomers age and as the wealthy of the world become more affluent, the luxury brand market is growing in leaps and bounds. According to Greg Furman, founder of the New York-based Luxury Marketing Council, in the United States alone there are an estimated 2.7 million consumers with liquid assets of US$1 million or more.

These consumers and their global counterparts are changing the face of luxury brand marketing. They recognise their worth and are demanding a more personal relationship with the brand. Because of this, managing customer relationships is vital to the health of a brand.

Part of a customer relationship management (CRM) strategy may be loyalty programmes, but on a scale never before seen. These are not run-of-the-mill clubs where enough points may earn you a nice toaster.

"A luxury brand loyalty programme recognises and cements the relationship, and makes the brand more personal and relevant," says Jane Hastings, managing partner of TBWA\Tequila Singapore. "It is the tool to recognise the status of an individual; almost a signal that the person has 'arrived' at a higher level, part of a niche group of achievers or brand advocates. From that point, the member becomes part of the growth and development of the brand, from providing feedback on new designs to being the first to preview and experiment. They become representatives of the luxury brand."

Paul Hourihane, managing partner of Go Direct Singapore, describes loyalty programmes as "an effective marketing tool", adding: "They are immensely accountable and measurable".

Hourihane says that it cost five times more to acquire a new customer than to keep an old one. In the luxury game, where the 20/80 rule most definitely applies, losing merely half a per cent of the customer base can have devastating effects on the bottom line. Hence, luxury brands are working harder than ever to build long-term relationships with their best customers.

"Companies can no longer afford to be brand arrogant," explains Furman. "Until 10 years ago, most of them thought they could live by brand alone, but that's no longer the case. The baby-boomers are the most brand-aware generation in history and they are raising the bar. They want value and they demand to be known on a one-to-one basis. They are insisting on more intelligent courting."

ICLP's Hay concurs: "The high net worth customer doesn't want to be treated as a number, he wants to be treated as an individual. In the old days, the personal touch was easy, because everyone had their little black book of customers and could drive a personal transaction. But the volume of important customers is growing and the little black book approach can't keep up."

That's where technology steps in. The internet and advanced data integration systems are revolutionising CRM. And data is key. Experts say that knowing what data to get and then extracting it from customers is the single most important challenge of good luxury brand marketing.

Or as Hourihane puts it: "It's all in the details. You had better be able to spell the customer's name right, understand who he is, what he wants and when he wants it." But getting good data is only half the battle. The other half is using it correctly. Luxury brand loyalty programmes use data to tailor perks to individuals, enabling companies to target the right customers with the most appropriate gift at the most suitable time.

This is all part of the 'surprise and delight' strategy, whereby benefits may not always be published. Partly to retain the element of surprise with the customer and partly to keep the competition in the dark, the brand will devise a catalogue of benefits and will then disperse those benefits based on the customer's profile and needs at a particular time. While opulent gifts play a significant role in loyalty programmes, it's the personal touch that really drives good CRM. A telephone call to a best customer can have as big an impact as a free Vuitton bag. After all, these people can buy anything.

"Technology is not the solution to everything," says Hay. "The systems enable but don't drive relationships. It's crucial to get the customer information to key staff at the retail level and to present it in a meaningful way."

Marita Bueno moved to Singapore from the United States in June and immediately noticed a difference in the way she was treated at shops of her favourite designers. "I used to shop at Armani in the US and the staff knew my size and taste," says Beuno, a vice-president at a US-based financial institution. "Someone would phone to find out when I would be coming in to shop and, when I got there, all the clothes would be laid out for me. After I shopped, I would get a thank you card in the mail.

"(In Singapore), I went to Emporio Armani on Orchard Road and they didn't even ask my name. That's the first thing they do in the US. I also shopped at Prada here and I got good service, but they didn't know who I was or that I had shopped at Prada before," says Bueno.

"I'm used to being known as a customer, but here they don't know my name. I feel anonymous."

As the luxury brand market expands, and its customer base becomes more savvy and demanding, marketers will be forced to be increasingly innovative. Or maybe they just need to remember the lessons of the little black book.