Luxury Institute News

March 10, 2014

Luxury Institute Reveals Wealthy Gamblers’ Rankings And Specific Critiques Of Casinos in Las Vegas, Atlantic City And Connecticut

(NEW YORK) March 10, 2014 – For the past two decades, casinos at top gambling resort destinations in the United States have expanded on a grand scale and competed aggressively to attract high-end travelers. To find out how these casinos are currently perceived by wealthy consumers, the New York-based Luxury Institute surveyed men and women 21 and older with a minimum household income of $150,000 to gather detailed opinions and ratings of top casino resorts in three major U.S. gambling destinations:

Las Vegas: ARIA, Bellagio, Caesars Palace, Cosmopolitan, Encore, Mandalay Bay, MGM Grand, Mirage, Palazzo, Venetian, and Wynn Las Vegas

Atlantic City: Borgata Hotel Casino & Spa, Caesars Atlantic City, Golden Nugget, Harrah’s Resort, Revel Casino Hotel, and Trump Taj Mahal

Connecticut: Foxwoods and Mohegan Sun

Results from this 2014 Luxury Brands Status Index (LBSI) include an overall ranking of each property given eight attributes of status related specifically to casinos: luxurious guest rooms, superior service staff, unique dining options, attractive gaming floors, lavish pool areas, clubs, appealing entertainment, and desirable retail stores.

Wealthy travelers also assess each property’s worthiness of a significant price premium, and whether or not they would recommend it to family, friends and business associates.

Results show significantly higher LBSI scores for Las Vegas casinos compared to East Coast properties. One notable exception is the Borgata in Atlantic City.

“Even as more cities in the United States start to open casinos, Las Vegas is clearly still the leading destination for luxury properties, especially for affluent travelers,” says Luxury Institute CEO Milton Pedraza. “All elements of the casino, not just the gaming floors, are now crucial to create unique customer experiences.”

Respondents have average income of $370,000 and average net worth of $3.1 million.

Please visit us at www.LuxuryInstitute.com and Contact Us with any questions or for more information about specific brand rankings.

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 globally 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 Customer 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.

February 5, 2014

Wealthy Shoppers Tell Brands How They Want Technology Integrated Into The Shopping Experience

(NEW YORK) February 5, 2014 – The New York-based Luxury Institute asked consumers 21 years of age and older from U.S. households with minimum annual income of $250,000 about their views on incorporating technology in the shopping experience.

Nearly half (47%) of wealthy consumers say that a sales professional providing live chat or video assistance online would help them understand more product details, and 58% appreciate the convenience of instant answers.  Only 15% of shoppers say that they have tried chat or video and refuse to do it again.

Wealthy shoppers do not mind companies collecting personal data and using it for customized marketing, but they do show strong distaste for clandestine data gathering via mobile phones, facial recognition software and GPS tracking; 69% say information collected in this manner is a privacy violation.  Just 24% approve of retailers using facial recognition software to identify them and observe shopping habits.

Using technology in-stores to accelerate checkout is popular, but many affluent shoppers shy away from self-checkout.  Almost three-fourths (73%) say that they appreciate the time savings of checking out via mobile devices instead of standing in line at cash registers.  Although 45% say that self-checkout is more efficient, 44% prefer transactions with help from staff.

Technology has little to do with what wealthy shoppers desire most: free shipping and returns, cited by 92% of respondents.

“Habits of today’s wealthy consumer have increased the desire to browse, reserve and purchase using a mix of channels,” says Luxury Institute CEO Milton Pedraza. “Technology allows brands to leverage customer data and shopping habits, however salespeople still play a vital role into creating unique and engaging experiences.”

January 23, 2014

Three Luxury Myths Killing Your Brand Equity

(NEW YORK) January 23, 2014 –As one the world’s foremost research and consulting companies for top tier luxury brands, Luxury Institute has been privileged to work with the most dynamic brands in the U.S., Europe and Asia.  We often find ourselves engaged in rich dialogue, and healthy debate, with senior executives and top leadership at the world’s greatest luxury firms.

We help iconic brands adapt themselves to compete in the new world where technology, people and product superiority combine to drive success.  Below are three of the biggest myths that we often encounter and our recommendations for how brands can overcome the tendency of destroying their own equity, despite the best of intentions.

Myth #1: You Must Choose One Area of Focus Among Product Leadership, Operational Excellence and Customer Intimacy

Back in 1995, Michael Treacy and Fred Wiersema published “The Discipline of Market Leaders” in which the authors addressed the idea of strategic focus, and discouraged attempts to excel on multiple fronts.  The concepts and principles were adapted by top-tier consultants and spread throughout the management ranks of corporations that engaged them, propagating the myth that you have to choose only one area of differentiation.

Today, superior products, efficient operations and brand intimacy are an inseparable trio for building and maintaining a luxury brand. The reality now is that you have to be great at all three, or you are highly disadvantaged.

A clear example of achieving excellence on all three fronts is Bottega Veneta.  The iconic luxury fashion brand has seen a phenomenal sales growth trajectory over the past ten years. It was on the brink of bankruptcy in the late 1990s, and in 2001 was acquired by the company that is now Kering.  Back then, annual sales were around $50 million and the income statement was mired in losses. Today Bottega Veneta’s sales are topping $1 billion.

Bottega Veneta’s management team is best-in-class. They are blessed with a brilliant, authentic designer matched by a management team that is beyond superb. The brand delivers on all three disciplines seamlessly. At Bottega Veneta, brilliant execution delivers a reported profit margin of 32%. Phenomenal sales and profit growth flows from product leadership, operational excellence and customer intimacy that is the envy of any brand. A profoundly personal, humanistic culture translates into the Bottega Veneta brand running on all three disciplines, instead of getting a lift from only one.

Myth #2: A Luxury Brand Must Be Organized As a Hierarchy In Order to Be Effective

At the center of a luxury brand is usually a brilliant innovator and founder whose creative genius is unquestionable. There is also typically a business partner who makes all of the decisions jointly with the founder.

The origin of luxury in Europe has created an industry organizational model that has some of the strictest hierarchies known in the business world. When we visit with senior management teams in Europe, and even at many U.S. firms, the organization is defined as a military style, top-down hierarchy.

Proponents of this model say that luxury brands, unlike brands in any other industry, have lasted hundreds of years–or at least for several decades–so why fix what is not broken?

There are two major reasons why the myth of the luxury brand as a strictly regimented organization must be shattered. The first is demographic in nature. As millennials in the 21-34 age group enter the work force, our research shows that that these younger people are far more idealistic about having meaningful purpose in their work.  They tend to change jobs more frequently and often leave if they are in a structured environment where opportunities to develop and contribute are limited. Author and researcher Daniel Pink says that three things are required in an organization today to retain employees: a meaningful purpose; some degree of autonomy over how they perform their function, and continuous skills growth.

The second reason why rigid hierarchies are ineffective is the new meaning of strategy. The metaphor for a successful brand is not the machine model, but the organic model. There must be a balance of adapting processes to achieve healthy, sustainable growth while adhering to corporate DNA.

Myth #3: Sales Professionals are Anonymous and Robotic Transactors

Luxury sales teams at most brands already have enormous turnover and this is not likely to decrease in organizations that fail to empower associates. Brands must embrace the ‘freedom with boundaries’ approach or watch their associates walk out the door.

While luxury executives say they are sold on the ideas of customer experience and engagement, they are far less enthusiastic about employee experience and engagement.  Most brands will tout the new principles but will resort to giving orders instead of trusting front-line professionals, especially in tough times.

The paradox is that in order to unleash the power of customer relationship building, driven by a customer culture, brands cannot simply task front-line employees with delivering results, excluding them from the “customer” definition. Employees are really internal customers and they should be measured just as carefully. In addition to empowering employees, brands must use innovative education and daily customer and sales associate metrics to improve skills and reinforce the culture daily.

Luxury sales professionals in the future will be treated as artisanal entrepreneurs who are given their own email addresses and digital devices for professional use. They will be given the freedom to innovate in small and large ways daily in order to personalize and customize for the customer

It may be true that many sales associates in a variety of industries will be replaced by technology solutions. However, in luxury, these jobs will be upgraded to deliver the extraordinary customer experiences and build the long-term relationships that brands once took for granted when they first opened their doors.  Innovation will flow from the bottom-up as much as from the top-down.

Conclusion:

Luxury Institute has worked with more than a dozen luxury brands or conglomerates on Customer Culture projects in the past few years.  The improvements are real and deliver powerful results in customer data collection, conversion and retention. Brands have seen retention of employees increase too. Bridging the gap between management, the front line, and the customer may be hard for some executives to swallow or imagine, but that is the future of luxury.

The luxury industry is very much a darling of Wall Street today, and with good reason. As the global population of affluent consumers grows, luxury is in for a good ride indeed. Yet, these myths are preventing many luxury brands from achieving significantly better sales and profit growth and could potentially drive many established companies out of business.

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 globally 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 Customer 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.

 

January 9, 2014

Top-Shelf Toasts: Wealthy Consumers Reveal Preferences Among Champagne And Liquor Brands In Luxury Institute Survey

(NEW YORK) January 9, 2014 – After ringing in another new year, the premium spirits industry is looking forward to a robust 2014. To determine which brands carry the most prestige, the New York-based Luxury Institute conducted its 2014 Luxury Brands Status Index (LBSI) survey to gather opinions of eight high-end champagne brands and 29 liquor brands from four categories. Respondents age 21 and older have an average income of $282,000 and net worth of $3 million. Brands rated include:

Champagne: Cristal, Dom Pérignon, Domaine Chandon, G.H. Mumm, Moët & Chandon, Perrier-Jouët, Champagne Taittinger, Veuve Clicquot

Gin: Bombay Sapphire, No. 209, Hendrick’s, Plymouth, Tanqueray

Scotch: Balvenie, Chivas Regal, Dewar’s, Glenfiddich, Glenlivet, Glenmorangie, Johnnie Walker Blue, Macallan

Tequila: 1800 Reposado, Cabo Wabo, Corazón, Don Julio, Herradura, Jose Cuervo Reserva, Patrón, Sauza Tres Generaciones

Vodka: Absolut, Belvedere, Chopin, Cîroc, Grey Goose, Ketel One, SKYY, Stolichnaya Elit

The LBSI is calculated by averaging each brand’s scores on five separate components of status that relate to premium spirits: quality, taste, packaging, worthiness of a premium price, and appropriateness as a gift.  Respondents also reveal total spending on high-end spirits, as well as personal history with particular brands and the brand that they will most likely buy next.

“Brand status is the key to achieving sustainable growth, especially in saturated categories,” says Luxury Institute CEO Milton Pedraza. “Listening directly to the voice of the wealthy consumer will help champagne and liquor brands stand out on the shelves.”

Patron outranked its competitors in tequila and Balvenie took the lead in premium scotch. To find out more about the rankings within each category, contact us with any questions or for additional information.

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 globally 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 Customer 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.

October 23, 2013

Neiman Marcus Outshines the Competition For Online And In-Store Experiences Among the Wealthy

(NEW YORK) October 23, 2013 – As part of its first installment of the Luxury Multichannel Engagement Index (LMEI) survey, the New York-based Luxury Institute asked consumers from households with minimum annual income of $150,000 to share opinions and rankings of online and in-store experiences at leading luxury retailers. Neiman Marcus earns the highest overall score and stands out for garnering top honors in nine out of ten customer criteria used to evaluate both the Web and brick-and-mortar shopping experience.

Wealthy shoppers say that Neiman Marcus stores rank first for attractive displays of exclusive products, easy navigation, accessibility of customer service, personalized shopping experiences, fair prices, and for carrying ample stock and styles. Customers also laud Neiman’s salespersons for making them feel special while serving as trusted fashion advisors.

The Neiman Marcus online experience draws equally extensive praise with the top overall ranking and the highest scores on the same measures of satisfaction.

“Smart retailers realize the value of leveraging data to deliver superior experiences that build lasting customer relationships, regardless of the channel,” says Luxury Institute CEO Milton Pedraza.

Neiman plans to invest $100 million over the next three to five years on technology that will closely align inventory management, logistics and human resources across multiple retail channels.

“Every aspect of our business is being transformed by technological advancements,” said Jim Gold, president of Neiman Marcus Group, at a retailing summit in Dallas. “The lines have completely blurred between brick-and-mortar and e-commerce. The great challenge is to make the experience seamless.”

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 globally 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 Customer 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.

October 21, 2013

Luxury Institute’s Wealth and Luxury Trends 2014 and Beyond: A New Model to Increase Profitability

(NEW YORK) October 21, 2013 – The luxury industry is closing out the final quarter of 2013 and preparing for another year of uncertainty ahead in 2014. Hyper-growth in the emerging markets since 2009 is showing signs of softening, while the year-over-year increases in U.S. sales are picking up steam. Europe, too, is on the upswing.

Looking ahead, brands are concentrating on existing stores, price increases, cost reductions, and emphasizing higher-profit products. Another area of focus enabling many of these initiatives is improving customer conversion and retention efforts.

Providing luxury goods and services to wealthy customers will remain a growth industry. Market share is the name of the game and competition is getting fierce in a slower-growth environment.

We work with dozens of top-tier global luxury brands each year. Based on recent experiences in New York, Milan, Paris, and London, here are seven trends that smart luxury brands need to address in 2014:

1.   U.S. Brands Ditch CRM Vendors Who Fail To Deliver Measurable Results

The honeymoon is over. After investing heavily in CRM systems and consultants, leading brands are now beginning to divorce their initial CRM vendors. Many top-tier luxury brands, particularly those based in the U.S., are terminating their current CRM contracts or confidentially seeking alternatives. They feel shortchanged by empty CRM promises at the database and analytics levels. They are also disappointed with CRM consultants unable to execute simple reporting requirements to support marketing and front line teams on a timely, error-free basis. As CRM vendors continuously fail to deliver, look for the Europeans to stage their own revolts from underperforming analysts and systems.

2.   Mystery Shopping Is No Way To Boost The Bottom Line

Luxury executives, mostly out of habit, have opted for mystery shopping as the preferred method for measuring sales team behaviors. It’s dawning on many brand leaders today that they are often getting reports that are clearly massaged by the vendors and/or the mystery shoppers, very much like fake online ratings and reviews. These are not real shoppers, nor are they even economically qualified to be luxury shoppers. Combine this with the fact that the number of data points does not equal a statistical sample, and you get a sense of the spurious conclusions that can be drawn from mystery shopping. The concept adds up to wasted resources and falls far short of the goal. Look for the leading edge brands to abandon mystery shopping as a relic of the last century that took years to wear thin. Customer experience surveys and customer metrics can take the mystery out of mystery shopping and be a better use of resources.

3.   Attribution Model Retribution

Brands are eager to pinpoint which marketing and sales channels are most effective so they can invest accordingly. It’s not an easy task, so data scientists have come up with a concept called attribution modeling.

Attribution modeling attempts to determine which communication channels get credit when a prospect uses several of them before converting into a buyer. Data scientists analyze data and try to trace the customer purchase journey across touch points. They then weight the channel results using their own judgment to come up with an answer.

There are several challenges involved, including how to account for unknown offline influences, multiple device usage, and various digital touch points that may be a combination of social, display, video, referral, email and search. The inaccuracies are almost insurmountable. The process is biased from the start due to the fact that the most readily available data comes from online sources.

Predictably, the brand channel owner fighting hardest to get the credit also influences results. Today, data scientists build expensive attribution models that are very precise but highly flawed. Look for senior brand executives to demand full accountability from their teams and stop wasting money on inaccurate models that drive ineffective spending in 2014.

4.   Not Big Data, Relevant Data

The Big Data hype became huge in 2013. Since most senior executives are new to data and analytics, they must act duly impressed by the promise of Big Data, or they will be accused of being out of touch.

The reality is that most collected customer data is simply exhaust and not relevant in making predictions about future spending behavior. The 20% of the data that gives us 80% of the predictability models gives us what we term “lift”, or a higher probability.  This higher probability that a customer will buy an item is simply that, increased probability, not certainty. Timing is everything and even a good predictive model of what a customer might buy next may send the offer at the wrong time. Demand that your analysts prove to you which massive data they collect and analyze is relevant and why. Ensure that the data scientists verify the conversion “lift” of their models. Make sure that Big Data has a big return on investment. Sometimes just skip the propensity models and build strong customer relationships by simply contacting clients and asking how you can best serve them.

5.    Online Personal Shoppers

Finally there is innovation in delivering a customer-worthy online buying experience, and it looks a lot like the offline experience. The human being is en vogue again. Online-only and multi-channel retailers are developing personal shopper teams aimed at supporting their most valuable customers (top 20%) who may require a guided or curated experience with a trusted expert. Masses of affluent tourists are a preferred segment since many can be retained online after the initial store purchase.

Brands are incentivizing their specially selected and trained personal shoppers to use digital channels to develop deep customer relationships based on expertise, trustworthiness and generosity. It is not cheap, but the low conversion and high attrition rates among key customers and wealthy tourists require innovation that yields high returns, even if it is boring, low-tech humanity.

6.     Luxury Outlet Saturation

Recessions have a way of inspiring luxury brands to explore new opportunities for development. Luxury outlets are a growth engine right now. Many luxury retailers are reaching the point where discount outlets may soon outnumber their full-price stores. Right now, this strategy has delivered results and outlets are a source of good profits for brands, but don’t dismiss the negative impact this can all have on a luxury brand. A great deal of the merchandise in luxury outlets allegedly has never seen a full-price store. It is made of a lower level of design, quality and craftsmanship, created specifically for the outlet, and carries faux full price tags that are then reduced.

Luxury has rules that can’t be violated for long without serious consequences. True luxury consumers are highly educated and connected, and allegations have spread across fashion blogs. When you take the high quality, craftsmanship, and design out of your products, and also eliminate personalized service, you slowly erode the brand’s heritage and loyal clients will begin to doubt your legitimacy. Many executives in headquarters are quietly beginning to worry. Outlets fever will have a corrosive brand effect. The problem is that short-term growth feels so good and the negatives creep in slowly. Wall Street will cheer you on. You won’t notice your luxury brand has been damaged until full price loyalists begin to flee in droves.

7.   Customer Culture is the New Profit Mode

Like CRM, Customer Culture is a holy grail everyone discusses with passion, and can even cite the great culture-driven brands such as Zappos, Nordstrom and The Ritz-Carlton. Although most brands know their stores and websites are more like vending machines than relationship building centers, embracing Customer Culture is scary for many. Some will simply pretend they are customer-centric, while others do piecemeal work in an effort to create a client-focused environment.

Results from a 2013 Deloitte survey on culture and values show that companies with a purpose beyond selling widgets have much higher rates of profitability as well as customer and employee satisfaction. Luxury Institute’s own case studies reveal that data collection rates can triple and retention can double, especially for the top 20% of customers who drive 70% of sales. One automotive client recently won an award for CRM activities such as a 400%+ increase in lead follow-up.

Brand leaders finally understand that technology, big data, and analytics are rendered useless without empowered and inspired human beings that engage the customer daily. We predict an increased focus on Customer Culture in 2014 as brand executives are forced by fierce competition and slower growth to innovate.

Dramatic progress can be seen when brands think beyond products and channels and focus on customer relationship building. Even Apple has recognized the potential of further engaging the customer, bringing Burberry CEO, Angela Ahrendts, on board in a new role to oversee both retail and online stores. Customer Culture is the new profit driver in a commoditized and fiercely competitive luxury world. Only the enlightened will thrive.

To hear Luxury Institute CEO, Milton Pedraza, speak more about the importance of relationship building with top clients, watch excerpts from “Bold Customer Culture: The New Profit Model” presented at the 2013 Luxury Interactive conference.

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 globally 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 Customer 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.

 

October 10, 2013

Wealthy Travelers From China, Japan and Europe Rank Quality And Experience At Global Luxury Hotel Brands

(NEW YORK) October 10, 2013 – Wealthy travelers from Europe and Asia revealed their top luxury hotel picks in recent research conducted by the independent and objective New York-based Luxury Institute. Three new Luxury Brand Status Index (LBSI) reports examine the attitudes and preferences of affluent Chinese, Japanese, and European consumers as they relate to leading hotel brands.

On a 1-10 scale, wealthy respondents rated hotels on quality, exclusivity, social status, and self-enhancement. They also shared which brands are worth a luxury price tag, the hotels they would recommend, and their preferred brand for an upcoming stay.

New this year, the Luxury Institute asked consumers who recently visited a luxury hotel if their stay was for work, vacation, or both.

“Luxury hotels serve a dual purpose as destinations for both business and pleasure,” says Luxury Institute CEO Milton Pedraza. “Brands have an opportunity to deliver personalized experiences so guests will return for their next trip, regardless of the occasion.”

Affluent respondents ranked the following number of luxury hotel brands in the regions below:

Europe (U.K., Germany, France and Italy)

  • Brands rated: 31
  • Consumers surveyed: 1,516
  • Median annual HHI: £79,000 (U.K.), €69,000 (Germany), €63,000 (France), and €71,000 (Italy)
  • Median age: 47 (U.K.), 43 (Germany), 46 (France), and 42 (Italy)

China

  • Brands rated: 31
  • Consumers surveyed: 717
  • Median annual HHI: 2.5 million CNY
  • Median age: 32

Japan

  • Brands rated: 23
  • Consumers surveyed: 602
  • Median annual HHI: 20 million JPY
  • Median age: 51

To learn about the specific brands rated in each region, please contact Luxury Institute directly.

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.

September 23, 2013

Small Business Learns To Build Customer Loyalty Like Luxury Brands

Luxury Institute founder applies lessons learned in high-end retail to small and medium sized businesses.

(NEW YORK) September 23, 2013 – There are more than 27 million small businesses in the United States, according to the Small Business Administration, but 50% of them will fail within five years. While lack of capital is a major factor, also significant is the lack of a customer-centric culture.

“Many entrepreneurs launch businesses with a great product or service idea, and then proceed to focus on daily transactions rather than building long-term customer relationships,” says Milton Pedraza, CEO of the Customer Culture Institute. “Focusing on transactions over relationships does not breed customer loyalty.”

Successful smaller companies, says Pedraza, are organized at an early stage to deliver extraordinary experiences to every customer on a daily basis. The problem for most small businesses is a lack of expertise and a proven process.

To provide these companies with access to state-of-the-art methodologies and metrics to measure and boost customer satisfaction and loyalty, the Customer Culture Institute is launching a do-it-yourself, online software platform to help small businesses to create their own customer culture. Pedraza, who is also CEO of the highly-respected New York-based Luxury Institute, says the Customer Culture Navigator software enables business owners to communicate with and provide needed support and training for their employees in real-time.

Small business teams will use their creativity to custom design a cultural foundation with clear definitions of relationship values and standards. The software helps to train, measure and reinforce the culture daily, a process that has a track record of dramatically improved customer loyalty at large luxury and premium brands that Pedraza has previously coached.

“We help move companies away from a soulless transaction mentality to profitable long-term customer relationship building,” says Pedraza. “In essence, we teach them that outbehaving the competition leads to outperformance.”

One innovative approach Pedraza and his team have taken, is to use crowdfunding site Indiegogo to raise funds from investors in the project. The campaign can be viewed at http://www.indiegogo.com/projects/customer-culture-navigator/x/4837243.

“Online crowdfunding is an elegant win-win-win opportunity,” says Pedraza. “We have an opportunity to provide valuable resources to our funding contributors, while building a project that can transform small business culture and dramatically increase the success rate of small business.”

September 17, 2013

Regional Banks And Wells Fargo Deliver Winning Customer Experiences

(NEW YORK) September 17, 2013 – The Luxury Institute’s new survey asked wealthy U.S. clients with a minimum household income of $250,000 to rate multiple aspects of their primary bank from a list of national and regional banks.

Evaluations of convenience, staff, company principles, and products and services yield a composite Banking Customer Experience Index of 1-10. Wells Fargo stands out with the highest composite score and also leads in each of the four sub-indices.

Smaller banks beat out Bank of America and Chase for having knowledgeable, trustworthy and respectful staff. Bank of America earns the lowest overall score but still holds the biggest market share of high-income clients. Chase consistently ranks between Bank of America and Wells Fargo and has the second largest market share of all rated consumer banks.

Despite shortcomings of bigger banks, Bank of America, Chase, Wells Fargo and Citi Bank customers are far more likely (45% vs. 27%) to open a new account with their existing bank as compared to current customers of smaller banks.

“There is an opportunity for big banks to bridge the customer experience gap between themselves and their smaller competitors by focusing on developing a unique Customer Culture to deliver value for all segments of customers, and especially the top customers who deliver most of the profits,” says Luxury Institute CEO Milton Pedraza.

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.

August 14, 2013

Successful Rewards Programs Prove That Even Wealthy Shoppers Like Freebies And Special Gifts

(NEW YORK) August 14, 2013 – In a new survey of affluent consumers by the Luxury Institute, wealthy shoppers earning at least $150,000 a year share detailed observations and evaluations of various loyalty and rewards programs, and offer suggestions for improvements to existing frequent shopper initiatives.

Overall, 72% of wealthy consumers participate in some kind of loyalty program, with the most popular ones connected to credit cards, airlines, hotels and grocery stores. Men are significantly more likely to be members of airline and hotel rewards programs, while women are disproportionately represented in programs sponsored by grocery stores, drugstores and department stores. Previous Luxury Institute research has shown that Sephora, American Express and Amazon are the top three favorite rewards programs among affluent consumers.

Very few respondents say that they belong to a luxury brand rewards program. The main perceived benefits of luxury brands’ loyalty programs are special offers and rewards, earning and redeeming points, and free goods and services.  Free gifts carry more importance among women, shoppers under 50, and those with net worth less than $1 million.

Satisfaction with existing loyalty programs is high and most high-income shoppers say that they have had positive experiences with their memberships.  The vast majority of shoppers report that loyalty programs exert a strong influence over purchasing decisions.

“Loyalty Programs combined seamlessly with one-to-one customer relationship building can be highly effective in driving conversion and retention while making data collection easier,” says Luxury Institute CEO Milton Pedraza.

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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