Luxury Institute News

May 16, 2013

Wealthy Shoppers Focus On Quality And Price As Brands Blur Lines Between Luxury And Mainstream

Posted in CRM,Customer Experience,Fashion,Luxury Brands,Luxury Market,Press Releases,Retail,WealthSurvey
Tags: Crossover, Luxury Brands, Mass Market, Milton Pedraza, Wealthy Consumer —

(NEW YORK) May 16, 2013 – What specific factors differentiate luxury brands from mainstream brands? What would happen if one type of brand expands into the other’s market? These are among the questions answered by wealthy shoppers with minimum household incomes of $150,000 surveyed by the Luxury Institute.

For 60% of wealthy consumers, particularly those with higher levels of wealth, quality is the overriding differentiator between luxury and mainstream goods and services. Price (55%) is cited as the second biggest point of differentiation. Craftsmanship (48%), prestige (47%) and design (38%) are also critical. Older wealthy shoppers are notably more selective (51% vs. 43%) on craftsmanship than their younger peers.

Launching an extension into mainstream retail does not appear to be the kiss of death for luxury brands because there is little brand prejudice on the part of wealthy shoppers. If a luxury name branches out into mass-market, 84% of wealthy women and 78% of men would continue shopping with that company. In the case of a mainstream brand migrating up-market, 88% of wealthy women and 79% of men would remain customers.

Of the challenges facing the mainstream offshoot of a luxury brand, 24% of wealthy shoppers say the biggest risk is damage to the luxury brand’s image or reputation; 17% cited perceptions of inferior quality at the lower-priced stores.

“Luxury brands can leverage their edge in quality and craftsmanship with current offerings by communicating these attributes clearly with consumers,” says Luxury Institute CEO Milton Pedraza. “This enhances perceived value and alleviates price sensitivity.”

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

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May 9, 2013

High-Income Shoppers Embrace Online Commerce, but Stores Also Benefit From Web Browsing

Posted in Customer Experience,E-Commerce,Internet/Web,Mobile Commerce,Press Releases,WealthSurvey,Wealthy Consumer
Tags: In-Store Experience, Milton Pedraza, Multi-Channel, smartphone, tablet —

NEW YORK, NY–(Marketwired – May 9, 2013) – The Luxury Institute surveyed wealthy consumers earning at least $150,000 a year about their usage of the Internet and mobile devices, and how these technologies affect their interaction with brands across platforms.

High-earners are about as likely to have bought something at a store (78%) in the past 12 months or ordered it online via computer (77%). Despite the growing popularity of mobile and tablet shopping, research done on a traditional computer still feeds foot traffic into brick-and-mortar stores, and led to in-store purchases among 45% of the consumers surveyed. Only 25% of wealthy shoppers buy online after checking out merchandise and gaining insights at a store.

Using a tablet’s Web browser has officially entered the mainstream as another shopping channel. In the past year, 20% of wealthy consumers reported using these devices to make a purchase. Web-enabled tablet usage is more popular for transactions than catalog purchases (17%), telephone orders (15%), or buying via smart phone Web access (14%). Retailers still send out catalogs because they’re effective drivers of sales in other channels: 20% were motivated by a catalog to make an in-store purchase; 16% of respondents say they bought something online in the past 12 months after seeing it in a catalog. Downloaded apps for phones (12%) and tablets (11%) are also gaining in popularity as distinct retail channels where wealthy consumers shop.

“Successful brands turn shopping and browsing into a seamless experience across traditional websites, apps for smart phones and tablets, and within brick-and-mortar stores,” says Luxury Institute CEO Milton Pedraza. “Wealthy consumers are eager users of the latest technologies and brands need to be, too.”

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

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May 2, 2013

Pentamillionaire Investors Reveal Whether 34 Top Firms Are Worth What They’re Paid To Watch Their Portfolios

Posted in Finance,LBSI,Press Releases,Wealth Management
Tags: Brown Brothers Harriman, Milton Pedraza —

(NEW YORK) May 2, 2013 – Affluent U.S. investors with at least $5 million in assets and $200,000 minimum annual income rate 34 national financial services firms in the Luxury Institute’s 2013 Luxury Brand Status Index (LBSI) wealth management survey. Wealthy individuals share opinions on each firm’s quality, exclusivity, social status and overall client experience.

Only 30% of firms achieved an overall LBSI score of 5.0 out of a possible 10.0, suggesting significant dissatisfaction from high-net worth investors with their wealth management providers. Brown Brothers Harriman earned the highest LBSI of 5.87.

“Especially in wealthy management, client relationships and trust can take years to cultivate and a short period to deteriorate,” says Luxury Institute CEO Milton Pedraza. “Smart firms need to listen to what wealthy individuals are telling them to maintain brand reputation and client loyalty.”

Respondents ranked the following 34 wealth management firms, listed alphabetically:

Ameriprise Financial
Bank of America
Barclays Wealth Management
BB&T Wealth Management
Bernstein Global Wealth Management
Bessemer Trust
BMO Harris Private Banking
BNY Mellon Wealth Management
Boston Private Bank and Trust
Brown Brothers Harriman
Charles Schwab
Citi Private Bank
Credit Suisse Private Banking
Deutsche Asset & Wealth Management
Deutsche Bank Alex. Brown
Fidelity Investments
Fifth Third Private Bank
Goldman Sachs
HSBC Private Bank
J.P. Morgan Private Bank
J.P. Morgan Private Wealth Management
Merrill Lynch
Merrill Lynch Private Banking & Investment Group
Morgan Stanley Smith Barney Wealth Management
Neuberger Berman
Northern Trust
PNC Wealth Management
SunTrust Private Wealth Management
U.S. Bank Private Client Group
U.S. Trust
UBS Private Wealth Management
Vanguard Personal Investors
Wells Fargo Private Bank
Wilmington Trust Wealth Advisory Services

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

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April 18, 2013

Resonance Consultancy Releases Key Findings about U.S. Affluent Travel and Leisure in its 2013 Resonance Report

Posted in Hotel/Resort,Luxury Leaders,Press Releases,Travel & Leisure
Tags: Bahamas, Chris Fair, Marriott, Milton Pedraza, Resonance Consultancy, Ritz-Carlton —

(Miami, FL) April 18, 2013 – The Resonance Report, a national study by leading global tourism consulting firm Resonance Consultancy, sheds new light on the travel and leisure habits of affluent American households.

The study, conducted in conjunction with the Luxury Institute in New York, surveyed more than 1,200 individuals from households with incomes of $150,000 and higher to measure their travel and leisure preferences and aspirations. These affluent households account for almost a third of all domestic spending on lodging and air travel, according to recent estimates in the U.S. Bureau of Labor Statistics’ Consumer Expenditures Survey.

“The desirability of exotic vacations for the affluent remains virtually unchanged since 2008,” says Resonance Consultancy President, Chris Fair. “What’s changed is their growing interest in traveling with more family members and friends and their rising interest in once-in-lifetime experiences and classic journeys such as train travel, safaris and cruises that explore non-traditional destinations.”

Key Findings of the Resonance Report include:
•Affluent American households take an average of three vacations a year averaging six days in length.
•Ritz Carlton is the #1 hotel brand of choice for high net worth households ($1MM+) on vacation.
•Marriott is the most frequented hotel brand of affluent households.
•New York City is the most popular U.S. vacation destination, followed by Las Vegas and San Francisco.
•The Bahamas is the most visited island destination, followed by Puerto Rico and Jamaica while Turks & Caicos is the #1 destination affluent households aspire to visit.
•Italy is the #1 overseas vacation destination for affluent households, followed by the U.K. and France.
•Wine country tours and luxury cruises are the most desired type of vacation experiences.
•Affluent owners of vacation properties use them an average of 5 weeks per year.
•Affluent consumers are willing to spend an average of $650,000 on their next vacation property.

“This influential cohort uses its leisure time to explore what’s meaningful for them and for those closest to them,” says Milton Pedraza, CEO of the Luxury Institute. “The affluent consumer is driven by extraordinary experiences, and this study shows clearly the importance of experience for this demanding demographic.”

To download a copy of the Resonance Report 2013 visit resonancereport.com.

About Resonance Consultancy (http://www.resonanceco.com)
Resonance Consultancy provides brand development, strategic marketing and planning services to leading travel & tourism companies and organizations around the world. The principals of Resonance have completed more than 100 travel & tourism studies, reports and plans in 65 different countries.

About Luxury Institute (http://www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises.

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March 18, 2013

Women Earn The Big Money In Wealthy Families, And Decide How It’s Spent

Posted in Millennials,Press Releases,WealthSurvey,Wealthy Consumer,Women
Tags: Milton Pedraza —

(NEW YORK) March 18, 2013 – The independent and objective New York-based Luxury Institute surveyed wealthy women from U.S. households earning at least $150,000 a year about their economic situation, personal aspirations, family responsibilities and companies and industries successfully marketing to them.

Wealthy women are economic engines within their families, with 67% employed or running their own businesses; 41% report earning more than half of their family’s total income, up sharply from 27% who were bigger breadwinners in 2008. Women have been earning college degrees at higher rates than men since 1985, and educational attainment has produced economic muscle: median salary of the working women surveyed is $181,000; 66% earn more than $150,000, and 20% have annual incomes of $300,000 or more.

“Luxury executives should know that given the trends we see now, we predict that the Millennial women will achieve parity or surpass the achievements of their male counterparts in managerial, entrepreneurial, income and net worth levels in the next 2 decades,” says Luxury Institute CEO Milton Pedraza.

Despite career prowess, 90% of women 35 and older say that their most important aspect of life is family, and 34% say that their long-term career goal is to retire and enjoy more family time. Women control a majority of spending in 78% of households, with food (85%), clothing (78%), shoes (78%), and vacations (62%) also especially dominated by women.

“Shifting gender roles require brands in traditionally male dominated industries to connect with strong, successful women, but new marketing campaigns are not enough,” says Pedraza. “Companies must drive engagement through channels like social media and one-to-one communication with empowered sales professionals who serve as brand ambassadors.”

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February 12, 2013

Applying Best Practices Of High-End Retail, Luxury Institute Founder Launches Customer Culture Institute To Help Mainstream Brands Build Better Relationships, Boost Sales

Posted in CRM,Customer Culture,Press Releases
Tags: Customer Culture Institute, Luxury Institute, Milton Pedraza —

(NEW YORK) February 12, 2013- Milton Pedraza, founder and CEO of the Luxury Institute (www.luxuryinstitute.com), the leading global independent research and consulting firm in the luxury industry, has launched the Customer Culture Institute (www.customercultureinstitute.com). The objective Customer Culture Institute is focused on helping mainstream brands across all industries and geographies to rapidly design, deploy and reinforce customer-centric cultures that leverage their unique competitive positions.

“Customer acquisition, conversion, and retention rates for most brands are dismal,” says Pedraza, one of the world’s most respected and independent CRM experts since 1997. “Digital technology, social media, Big Data, and multi-channel access are getting all of the attention these days. However, the most important element in order for brands to outperform and, more importantly, outbehave their competition is a customer culture.

Pedraza has developed and licensed a proprietary Customer Culture process to the Luxury Institute and will do the same with the Customer Culture Institute. The newly formed institute will provide clients from diverse industries with Pedraza’s collaborative seven-step process that includes developing relationship-building techniques, education, incentives and measurement for customer facing employees and ultimately drives higher sales.

“A great deal of business today is purely transactional when it should be relationship-driven and more humanistic,” says Pedraza. “At the Luxury Institute, we have proven through engagements with world-class clients that customer data collection, conversion, retention, recovery and referrals go up dramatically as a customer culture takes hold.”

The Customer Culture Institute is presently adding staff and seeking more like-minded and passionate individuals specialized in particular industries to represent the institute in the U.S. and in key overseas markets. For information, please visit www.customercultureinstitute.com to fill out a contact form.

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February 5, 2013

Wealthy Customers Sing Praises of Shopping Experiences at Bergdorf, Nordstrom and Barneys

Posted in Customer Experience,LCEI,Luxury Brands,Press Releases,Retail,Wealthy Consumer
Tags: Barneys, Bergdorf Goodman, Customer Experience, Luxury Market, Milton Pedraza, Neiman Marcus, Nordstrom —

(NEW YORK) February 05, 2013 – U.S. shoppers earning at least $150,000 a year share detailed opinions and evaluations of seven leading luxury retailers in the 2013 Luxury Consumer Experience Index (LCEI) conducted by the independent and objective New York-based Luxury Institute. Based on an average of seven customer experience components rated on a 1-10 scale, Bergdorf Goodman (8.58) ranks first, but wealthy consumers are far more likely to shop at second-place Nordstrom (8.36).

Visited by 34% of wealthy shoppers in the past 12 months, Nordstrom is the most popular luxury retail chain, and it is also most likely (92%) to be recommended favorably to family and friends. The affluent shoppers who have visited Bergdorf Goodman’s two stores in the past 12 months rave about it, ranking it first on six of seven experience criteria, including having polite, trustworthy, knowledgeable and enthusiastic employees, as well as stores that are appealing and well maintained. Bergdorf’s parent, Neiman Marcus, ranks first for being the retailer that high-income shoppers say, “completely satisfies my needs.”

Despite the high praise for its people and its stores, wealthy shoppers perceive Bergdorf’s merchandise as a bit too pricey, ranking it last (63%) on the question of whether its products are worth premium prices. Barneys New York ranks first (85%) for deserving premium pricing.

“Bergdorf Goodman retains the cachet of a classic boutique that delivers outstanding experiences,” says Luxury Institute CEO Milton Pedraza. “On a larger scale, Nordstrom deserves credit for replicating great experiences with a customer centric culture across its entire network of stores.”

Wealthy shoppers also evaluated Saks Fifth Avenue, Burberry, Bloomingdale’s and Brooks Brothers.

About Luxury Institute (www.LuxuryInstitute.com)

The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

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January 10, 2013

Audi, Lexus And BMW Triumph As Leading High-End Auto Brands By Wealthy U.S. Drivers

Posted in Automobiles,LCEI,Luxury Brands,Press Releases
Tags: Audi, BMW, Lexus, Milton Pedraza —

(NEW YORK) – U.S. luxury automobile consumers rank Audi highest in the 2013 Luxury Consumer Experience (LCEI) survey conducted by the independent and objective New York-based Luxury Institute. LCEI scores (1-10) are averages of wealthy respondents’ ratings across ten areas of consideration, including evaluations of the vehicles they own or lease, their dealership experience, and their overall brand buying and ownership experience.

In addition to earning the highest LCEI score (8.36) of the ten brands surveyed, Audi ranks first for the consistently superior design and quality materials of its cars. In addition, Audi’s dealership staff is recognized for being the most trustworthy and knowledgeable. Audi also leads other carmakers in terms of future repeat purchase intent, with 96% of respondents saying they would consider buying or leasing an Audi again based on their experience with the brand.

Lexus ranks closely behind Audi with an overall score of 8.34, based largely on the dealership experience and its positive representation of the brand. The Japanese automaker earns top honors for superior sales and service experiences, respectful dealership personnel, and long term relationship building. BMW (8.27) and Mercedes-Benz (8.06) rank third and fourth, respectively.

“Wealthy consumers’ perceptions of brand experience encompass everything from the physical quality of the car to interactions with the sales and service departments at dealerships,” says Luxury Institute CEO Milton Pedraza. “Especially at the high-end, luxury automakers must be aware of how people and products combine to affect a brand’s reputation.”

Survey participants reported $2.4 million average net worth and $283,000 average income.

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January 7, 2013

Audi Rated Top Luxury Automotive Brand in 2013 Luxury Customer Experience Index

Posted in Automobiles,LCEI,Luxury Brands,Press Releases,Wealthy Consumer
Tags: Audi, Audi AG, Jeri Ward —

Brad Stertz
Audi of America Communications
January 4, 2013

HERNDON, Va. – Audi today announced that it received the top overall ranking in the 2013 Luxury Customer Experience Index (LCEI), conducted by the independent and objective Luxury Institute. The LCEI is based on data collected from affluent customers who were asked to evaluate 10 different aspects of ownership and customer experience of the luxury automotive brands they have recently used on a 0-10 scale. Among the 10 brands evaluated, Audi received the highest overall score of 8.36, recognized by customers for its consistently superior design and quality materials, and trustworthiness and knowledge of dealership staff.

“We are very pleased to have been ranked first overall in The Luxury Customer Experience Index, and we are delighted to hear that nearly all Audi customers surveyed said they would recommend Audi to others and would purchase or lease an Audi again,” said Jeri Ward, Audi of America Director of Customer Experience. “Audi and our dealer partners are continuously striving to delight our current and future Audi owners through customer experiences that exceed their expectations, and the results of the Index prove we are making significant gains.”

In 2011, Audi created the Customer Experience Team, a new division within the U.S. organization, led by Jeri Ward, which focuses on strategy and programs for improving customer experience and loyalty across the company.

The LCEI is based on a nationwide in-depth survey of 1,234 luxury automobile owners, conducted in November 2012. Respondents – ages 21 and older and with a minimum gross annual income of $150,000 – evaluated levels of respect, knowledge and trust of dealership staff, dealership sales experience and service experience after purchase, among other factors.

ABOUT AUDI
Audi of America, Inc. and its U.S. dealers offer a full line of German-engineered luxury vehicles. AUDI AG is among the most successful luxury automotive brands globally. Audi was a top-performing luxury brand in Europe during 2011, and broke all-time company sales records in the U.S. Through 2016, AUDI AG will invest about $17 billion on new products and technologies. Visit www.audiusa.com or www.audiusanews.com for more information regarding Audi vehicle and business issues.

ABOUT LUXURY INSTITUTE (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises

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December 10, 2012

Superior Craftsmanship, Materials and Customer Service Define Luxury Market and Drive Premium Pricing According To New Survey

Posted in Automobiles,Customer Experience,Customer Service/CRM,Luxury Brands,Luxury Leaders,Press Releases,Wealthy Consumer
Tags: Jim Farley, Lincoln, Milton Pedraza —

(NEW YORK) December 10, 2012 – In a new survey by independent New York-based Luxury Institute, superior craftsmanship, materials and customer service scored highest in terms of helping to define the luxury market while driving premium pricing. Additionally, survey respondents overwhelmingly favored a long-lasting, high quality product over one that merely enhanced status.

The survey, in cooperation with the newly relaunched Lincoln Motor Company, asked wealthy luxury automobile consumers to share their opinions that may have altered since the recession about buying considerations and luxury spending across a variety of product categories.

“High standards for the tangible quality of goods are to be expected from such refined buyers,” said Luxury Institute CEO Milton Pedraza. “Of particular interest is the growing leadership of U.S. firms as global luxury brand icons. Jewelry from Tiffany & Co., consumer electronics from Apple and handbags from Coach are among the world’s most prominent brands, giving consumers worldwide more reasons to pursue luxury in the States.”

Defining and Driving the Luxury Market

When it comes to what drives luxury and justifies premium pricing, 86% of affluent Americans surveyed say that superior craftsmanship is the deciding quality. Nearly as many (84%) say they also expect the use of superior materials in luxury products. The third most important consideration, cited by 76% of wealthy respondents, is a “superior customer experience both during and after the sale.”

A majority of wealthy consumers report enjoying their luxury purchases discreetly versus proudly showing their purchases to others. In addition, more than 90% indicate that acquiring a long-lasting, high quality product is more important than enhancing their status.

“What we see in this insightful Luxury Institute research is that during the recession, the U.S. luxury market changed and people changed,” said Jim Farley, Executive Vice President of Ford Motor Company Global Marketing, Sales and Service and Lincoln. “They want what appeals most to their desires and not what they believe will impress others and this is a trend we believe will continue to grow ever stronger. We also took good note that in the automotive sector the expectation of great service is still being underserved, something we intend to address with the new Lincoln.”

Other survey results highlighted the fact that half of high-income shoppers rely on user reviews and the recommendations of family and close friends, enabling quick sharing of opinions and influence. These top-two influencers of luxury consumers’ purchase decisions demonstrate how relative newcomers can quickly establish brands that compete with established stalwarts, and how traditional brands can reinvigorate themselves via digital media.

Added Milton, “What we hear consistently and loudly from wealthy consumers is that the manner in which the goods are sold, as well as the service provided after the sale, are nearly as important as the products themselves. With American brands growing in luxury influence, there is a clear eagerness on the part of the global consumer to embrace American luxury brands, making service a critical success factor for the future.”

Survey Methodology
The Luxury Institute conducted an in-depth online survey with 1,216 affluent U.S. consumers in cooperation with the Lincoln Motor Company. Half male and half female respondents were recruited and screened to only include those age 21 or older with a minimum gross annual income of $150,000 and ownership/lease of at least one luxury automobile.

About the Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth Consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

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