Luxury Service: Why is it so hard to get it right?

 

IdontknowWith over 90 properties and over 40,000 employees Ritz-Carlton consistently earns top honors in most rankings of luxury hotels. And so it’s no surprise that Ritz Carlton earned top honors a study conducted by Luxury Branding, a London-based consultancy that specializes in the global luxury market. Yet other well-recognized luxury hotel brands, such as Four Seasons and Peninsula, did not fare so well (13th and 20th, respectively), with the Waldorf Astoria rating an embarrassing 50th. By using TripAdvisor rankings as its data source, the study examines whether luxury hotels are truly delivering 5-star service or are just resting on their laurels. The study’s results are sampled from over 2.25 million public reviews on TripAdvisor. (The study is available as a free download from the website). Continue reading “Luxury Service: Why is it so hard to get it right?”

Coach the Coach: A collaborative coaching technique for sales managers

coachA few years ago I headed up a training team for a high-end jewelry brand. We were asked to create a learning initiative to help promote diamond sales. The blended program integrated different learning methodologies including e-learning, videos, webinars, games, support tools and in-store activities. The program required sales management teams to coach their local sales teams through a multi-week agenda. While the initiative did improve diamond sales, it unfortunately brought to light a mistaken belief that our sales managers were good coaches.

We looked for a way to help our sales managers improve their coaching skills. We needed a design that was both low-cost (we had exhausted our budget) and time efficient (sales managers were bogged down with daily operational tasks). In addition, we had other programs running simultaneously and could not afford to invest a lot of resources into designing a formal coaching program. Our solution was to create a program where the sales managers became coaches for each other. Here’s how it worked:

  1. We scheduled 30-minute phone calls with groups of no more than 10 sales managers at a time.
  2. We wrote a few scenarios of sales interactions “gone wrong.” I played the role of sales associate while another team member played the customer (you could also role-pay with one of the callers if you send out the script in advance. Each scenario lasted 2-3 minutes and focused on an issue such as being rude, giving wrong information, or not asking open-ended questions.
  3. Prior to the call, we asked one of the sales managers to role-play as the sales manager in the scenario. Once the scenario concluded, we asked the sales manager to provide feedback to the “sales associate” (me).
  4. After the sales manager finished coaching the sales associate, we asked the other sales managers if they’d experienced a similar situation and how they’d handled it. We questioned whether they believed the sales associate’s behavior would change as a result of the coaching. If not, why not? If so, then why had the coaching been effective?
  5. We encouraged the sales managers to coach each other (hence “Coach-the-Coach”). We allowed this process to happen naturally; our role was simply to guide the conversation back if it went off track.
  6. We spent the last 5 minutes of each call reviewing key learning points and emailed a summary to all participants afterwards. Several sales managers offered suggestions for future scenarios.

One unanticipated benefit of the program was that the groups learned over time to trust and depend on each other for advice. The Coach-the-Coach program proved to be a quick, interactive, fun, and convenient way for our sales managers to hone their coaching skills.

Luxury Talent Goes Big

Big3This Harvard Business Review post, “Luxury’s Talent Factories,” discusses how large luxury conglomerates such as LVMH, Kering and Richemont actually drive talent performance. Most management research would argue the opposite. It’s generally accepted that companies can increase their financial returns by focusing on core lines of business. Contrary to this evidence, the article states: “Diversification generally does not add value unless there are significant cost savings and operational synergies across units—which isn’t necessarily the case with all luxury groups.”

Diversification generally does not add value unless there are significant cost savings and operational synergies across units—which isn’t necessarily the case with all luxury groups.

According to the article, here are some of the reasons the “Big 3” are able to use their size to their business advantage in developing luxury talent:

Mobility – Diversification of internal brands means that employees who move from subsidiary to subsidiary bring a core set of brand values and skills. They are also better able to build their personal networks across multiple internal brands. The advantage to the enterprise is that they’re able to leverage talent when and where they need it.

Best practices – The organization can identify and transfer best practices across products, and gain the benefit of new perspectives at the same time. In one case, CRM talent from a fashion group was brought in to help build a CRM function for a watch brand.

International Experience – Cross-cultural exposure inspires creativity and provides exposure to a larger pool of manufacturers and suppliers.

Understanding the Global Customer – As technology and social media create a growing international marketplace, it’s imperative that brands understand how luxury customer expectations vary from country to country.

Although Europeans can explain to customers what luxury means, they also must have experience in foreign markets to understand which aspects of luxury the customers there actually care about. For example, in America consumers will buy watches for their functionality or performance, whereas in Asia it’s more about the prestige of the brand.

The three large luxury groups are able to leverage these advantages for the individual as well as for the enterprise. It only works, however, when the group is able to keep its brands relevant and continuously invests in developing premium talent.

Please don’t be rude!

rudeMilton Pedraza, CEO of Luxury Institute recently confirmed, “Luxury brands lose half of their top customers every year. The biggest reason why a consumer won’t come back is not the product—it’s a rude or inattentive salesperson” (The new face of luxury: breaking down the myths and stereotypes of the luxury shopper). On the surface this statement seems to contradict the finding of a recent study titled, Should the Devil Sell Prada? Retail Rejection Increases Aspiring Consumers’ Desire for the Brand (October 2014 Journal of Consumer Research). The study (co-authored by Dr. Darren Dahl, a marketing professor at the Sauder School of Business and Prof. Morgan Ward of the Cox School of Business) found customers who receive poor treatment from sales associates in a luxury retail environment are more likely to make a purchase.

Luxury brands lose half of their top customers every year. The biggest reason why a consumer won’t come back is not the product—it’s a rude or inattentive salesperson

Continue reading “Please don’t be rude!”

Handling Customer Complaints with Grace

complaint
The British Museum in London holds one of the earliest recorded customer complaints inscribed nearly 4,000 years ago on a Babylonian clay tablet dated circa 1750 BC.

When customers have a higher expectation of service, as in the luxury sector, the potential for customer dissatisfaction increases. I may not expect a hand-written thank-you note after purchasing a fashion ring at Macy’s, but I’d be surprised not to receive one if I bought a yellow-diamond pendant at Tiffany & Co. Because the service expectations of the luxury customer are so high, complaints need to be handled with extra care.

The goal, of course, is to prevent customer complaints altogether by listening attentively to the customer and ensuring seamless service. But things can and do go wrong, even in a luxury environment. When they do, it’s important to remember to act with grace. The dictionary defines ‘grace’ as a polite or pleasant way of behaving. It’s important to note as well, that the word ‘grace’ comes from the Latin gratia—to give thanks. Many people say grace before a meal in order to express gratitude. In the same way, a complaint can be seen as a gift. It presents an opportunity to exceed customer expectations and create loyalty. When we handle the complaint with grace, we are thankful for this gift.

When a customer is dissatisfied with your product or service, here are six steps you can follow: Continue reading “Handling Customer Complaints with Grace”

Once Upon a Time: Telling Luxury’s Story

story“Only 19 percent of consumers believe sales associates have relevant information,” says Adam Silverman, principal analyst at Forrester Research, San Francisco. “That’s very shocking and that’s clearly an indicator that the sales associate role needs to change.”

One way in which you can change that role is to perfect the art of telling luxury’s story. A good story engages and excites the listener. Stories create emotions and those emotions, in turn, drive desire. We buy luxury items not because we need them, but because we desire them.

Continue reading “Once Upon a Time: Telling Luxury’s Story”

The Rarity of Platinum Service

platinumPlatinum is more expensive than gold because it is rarer. Similarly, a platinum level of service is more precious than the “gold standard” of service offered by most sales professionals. The Golden Rule states: “Treat other people as we would wish to be treated ourselves.” It is the rare sales professional, however, who knows and lives by the Platinum Rule: “Treat other people as they would wish to be treated.” The difference comes down to a small, but meaningful, change in perspective.

Continue reading “The Rarity of Platinum Service”

Three Principles of Luxury

3GoldBarsLet me start by apologizing to anyone who is expecting a definitive list of principles that define luxury. This post may leave you with more questions than answers. I ended the year 2014 with a few posts devoted to the very question of what luxury is. It seems I’m still on the same track now that the new year has arrived.

I just finished reading a recent LinkedIn post by Alan Crean, a self-described Subject Matter Expert in Professional Services Automation. The post is titled “Luxury Brands as a Professional Services Market.” It begins with a succinct summation of the luxury question I’ve been pondering. According to Crean:

There is no official definition of what constitutes a ‘luxury good.’

Continue reading “Three Principles of Luxury”

It’s All About That Service!

GiftThe month of December is traditionally one for giving and receiving gifts. It seems fitting then, as I try to select the perfect present, that I’ve spent most of the month addressing the question “What is Luxury?” (see “Is the term “luxury brand” overhyped?” and “More on What is Luxury?“).

We may have to leave the year with the question unanswered, or at the very least, we may have to settle for a paradox, according to a recent article in The Economist: “The Modern Luxury Industry Rests on a Paradox.”

I thought it fitting to wrap up the year with this article. It covers all aspects of the luxury question from many perspectives: age, geography, politics, world events, and social climate. Continue reading “It’s All About That Service!”