RAPAPORT... Retaining existing customers and attracting new ones in the current economic downturn means going beyond retailing 101 and reinventing the rules in creative new ways. “It’s a slippery slope,” says Orit, president and chief executive officer (CEO) of the O Group, a strategy and design firm focused on luxury brands. “You have your certain clientele and you don’t want to lose them, but you also don’t want to admit that this is a totally down market and everything is super sale-y. It’s more about understanding what’s happening, what’s in the mind of the buyer. They’re most probably going to really think three or four times before they make that buy. And probably they’re not going to buy what they usually do. It’s about helping the consumer think it through.”
The key, says Meeling Wong, Meeling Wong & Associates, a sales and marketing consultancy in jewelry and watches, is to have “the right assortment that’s different from your neighbor and everybody else’s,” along with extraordinary service — “and anything to make your customer’s life easier. Everything to do with the experience of shopping needs to be crisp and clean and still be exciting. That’s what will differentiate you from the next person.”
Selling Savvy Shoppers will be looking for specific things, says Milton Pedraza, CEO of The Luxury Institute in NewYork City. “They will be very deliberate and stick to their budget more than they have before.” As a result, he says, retailers “have to make sure they deliver what clients are looking for at the right price points as opposed to trying to trade them up or trying to give them something that they don’t want.”
One way to entice customers, Pedraza believes, is to provide that something special — the custom-made, one-of-a-kind, limited-edition product “that is so high in quality and so well designed and so beautiful that it’s almost art rather than just a piece of jewelry.”
It is a time when retailers need to stick to what they do best, what they built their businesses on, says Carol Brodie, a New York-based luxury brand adviser. “If you’re a diamond retailer, don’t switch to pearls.”
It is also a time, says Wong, to edit the merchandise. “I’m a big proponent of less — not less is more, but less is less. You need to show less so customers can see what’s in the case; every piece should matter.”
Reach out to customers to build relationships, advises Brodie. “Whether it’s by phone calls or emails or personal letter, invite customers in for trunk shows and other creative events. Maybe this is the season where you bring in a magnificent designer who can work with your clients to re-create pieces out of jewelry they’re currently not using. You’ll be able to sell more gemstones and get a premium for the design services and manufacturing services.”
“Look back to look forward,” Brodie goes on to say. “See what customers bought last and find a way to build on their purchase.” If they bought a watch last year, suggest upgrading it with a new diamond dial, or adding detachable diamond drops to the solitaire diamond earrings you sold them last season.
Tim Gadoffre, co-founder of Marival & Co., a London-based consultancy specializing in luxury brand building, agrees that focusing on client relationships can be the greatest asset of any business. “Have a look at your customer records and recent buying behavior. Look for groups of clients with similar profiles and identify the trends in your Customer Relationship Management (CRM) data. Send an invitation to a private event, in a handwritten envelope with a real stamp, to your top 10 percent client profile, and those customers with similar profiles but who have not bought from you recently.”
The whole experience of shopping in the store needs to be ratcheted up a notch or two. “I’m sure you’ve heard it a million times but experiential marketing is so important,” says Orit, “because once you’ve gotten that loyal customer and once they feel like there’s no place else to go, they’re your best salesperson. And whether they’re going to make a big buy this season or a smaller buy, they still want to feel comfortable about it and not embarrassed about it and know that they’re still going to get some value.”
Adding ValueWhile shoppers may be price sensitive, now is not the time to delve into deep discounting if you’ve never done that before, say the experts. “There are more creative ways to add value,” says Orit.
“Don’t do deep discounting this season,” Brodie concurs. “Once you become known by even one client as a deep discounter, it’s over. You can’t go backward.”
Instead, says Wong, add value with little things “that show you’ve given it some thought; 20 percent, 30 percent off — everyone’s doing that. Whether it’s a gift-wrapping service, a shipping service, a concierge service, anything added-value will let the shopper know you’re thinking of them and what they have to do this holiday.”
Now is the time to create loyalty programs, suggests Brodie, “such as complimentary appraisals, points for spending that can be used toward future purchases, etc.” Orit agrees, pointing out that “Customer loyalty programs can get the customer thinking, ‘Well, if I’m going to buy, at least I’m going to get something for that, maybe something I can use throughout the year.’”
Reach out to your customers with personalized marketing, suggests Brodie. “Take time to handwrite notes after they’ve bought something special from you, send cards for occasions.” The idea, explains Orit, is to be top on your customers’ minds, “so that when they do spend money, they think about spending money with you. Even in this economic uncertainty, the money is not wasted on something that has long-term value.”
Make Special Events Extra Special“My experience is that private in-store events, held during the early-evening after-work hours, are a cost-effective way to boost sales,” says Gadoffre. “Just like the luxury automotive sector, stimulating trial is the key, and for diamonds, holding or wearing the jewel and seeing its sparkle is the best way to trigger the magic moment that leads to the sale. During the event, a glass of champagne and canapés make a difference.”
Use strategic partnerships to not only make an event special but to create a whole new group of potential clients. Invite the local wine shop to do a tasting in your store, suggests Brodie, “and let them invite their best clients. Let them supply the bubbly and you provide the baubles. Or invite the local car dealer to park a few of his newest and most impressive automobiles in front of your store to create some excitement — make sure they invite their best customers, too.” Orit suggests pairing up with an author whose readership fits with your clientele for a book-signing event. “You’re inviting not only your customers but working off the mailing list of dedicated followers of that author, so you’re getting a different type of traffic in.”
Getting The Message OutUse the internet to full advantage, says Gadoffre. “You can turn round an email campaign in a matter of hours, with the ability to test the effectiveness of different messages simultaneously.”
Instead of cutting back on advertising, Gadoffre goes on to say, now might be the time to invest. Pointing out similarities between October 1929 and October 2008, he says those brands “that took advantage of the drop in the price of media space, and were bold enough to increase their advertising budgets, gained significant competitive advantage by doing so. P&G’s strategy in 1929 was to advertise its way out of the depression; as a result, the company gained both market share and brand preference during the rest of the decade and enjoyed a more successful 1930s than its peers. There could be a strong business case for jewelry brands to boost their media advertising presence in the run up to the holidays.”
Whether the messages are built around “I really love you” or around the eternal values associated with diamonds, says Gadoffre, the advertising “can plug into the emotional heartland of the diamond industry. What better than diamonds to inspire and allow people a bit of space to dream? We need that even more now than when we’re not in an economic downturn.”
Pedraza advises advertising the expertise that you as a retailer have “and the substantiated quality of the product. And I think you also have to let them know that you are providing the best value — not necessarily the best price — but the best value proposition in the marketplace.”
One aspect of the selling equation that diamonds offer is their inherent value, Gadoffre points out. “Laurence Graff, whenever I’ve seen him present, has always managed to slip into his narrative, his storytelling, ‘this won’t lose its value.’ I think that is a classic. It does work and it’s credible.”
Further illustrating the point, Gadoffre says, Rolex’s only Iceland distributor Frank Michelsen is reported to have seen a significant rise in sales of his luxury watches when the country was facing bankruptcy. “It seems that because people have lost confidence in the intangible investment assets, which have shrunk or vanished in their portfolio, they want to buy tangible objects that they can hold in their hand, either to hand them down to the next generation, or to sell them outside the country at profit due to the differences in currency prices. And I think that’s the relevant point for the diamond industry.”
Nobody really knows how to predict what might happen for next week, let alone next month, London-based Gadoffre says, offering a global view of the luxury market. “Of course, there is space for passion purchases and those passion purchases won’t go away. But I think what’s interesting is people in every layer of society are just being more careful, including the superaffluent. And I think it’s going to make it tougher but there is still tremendous scope for exceptional pieces of jewelry to find buyers when they really are exceptional.”
At Your ServiceThe marketing pros weigh in on creative ways to add value this holiday season.
Tim Gadoffre: “Provide wrapping and delivery services, and the greeting cards to go with their gifts. If your clients don’t want to come to your store, offer the option to visit them at home or somewhere else that is convenient for them.”
Orit: “Surprise loyal customers with an invitation for a private champagne tour through the store to see the latest inventory. Or, after the purchase, send a little something to their home.”
Carol Brodie: “Become a concierge for your customers by offering to help secure theatre tickets or a difficult dinner reservation, or perhaps make a deal with the best restaurants in town to barter so that clients who spend over a certain amount can present their loved one with their gift over dinner, on you.”
Article from the Rapaport Magazine - November 2008. To subscribe click here.