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Setting long-term customer relationships via in-store service

By
October 9, 2014

Fred Thompson is retail practice leader at LoyaltyOne

Fred Thompson is retail practice leader at LoyaltyOne

By Fred Thompson

According to the old proverb, you catch more flies with honey than with vinegar. Does the same principle apply in a luxury retail setting? No, says a recent study that implies that the ruder the sales staff, the better the sales.

Research announced earlier this year from the University of British Columbia’s Sauder School of Business measured the impact of salesperson attitude in retail settings.

It’s not you …
Through online surveys, participants imagined interactions with different types of salespeople under varying conditions. Variables included the imagined store’s level of luxury, the extent of the salesperson’s arrogance, how well the salesperson represented the store’s brand, and how closely participants themselves related with the brand.

The study’s findings:

• Rejection makes people want to buy luxury goods. However, a salesperson’s condescending attitude has little effect on mainstream retail brands such as Gap and American Eagle

• Rejection strengthens purchasing when salespeople embody the luxury brands in the way they act and dress, serving as authentic representatives and reflecting brand attributes

• Consumers have strong brand desires: those who really want to own a particular brand are even more influenced by rejection. Instead of switching their loyalties, these customers only became more attached

A number of psychological triggers may be behind this behavior.

First, the desire to belong to a social group is deep-seated in the human psyche.

With a luxury brand, that desire is enhanced by exclusivity – a chance to be part of a chosen few with the inherent benefits and prestige.

Rejection may also inspire the drive to re-establish control.

Customers expect to receive courteous, deferential treatment. The rude approach flips the table and puts the salesperson in control, seemingly dictating the terms of the purchase. Some customers therefore feel obligated to make a purchase as a way to regain control of the transaction and the interaction.

Rude embrace?
While rude service may work in the short-term, it does not support beneficial long-term customer relationships.

The pressure created by the tactic works in-store, and in the moment, but alienates customers in the long run – a perspective acknowledged by the study which noted that customers who expressed increased desire to purchase the luxury products reported significantly diminished desire only two weeks later.

A better alternative is to create engaged, personalized customer service that is linked to a strategic loyalty program. This sets the table for long-term customer relationships, particularly in the luxury segment.

Loyalty programs generate customer profile information and transaction data that offer salespeople valuable insights. These insights can translate to tailored customer experiences using clienteling practices.

Better engagement contributes to an improved overall shopping experience, encouraging additional purchases and repeat business.

In the meantime, constructive insights from this study can inform luxury retailers’ broader loyalty strategies:

Embrace the aspirational value of status. Although the salesperson temporarily captures the dominant status through rude behavior, this is not sustainable over time.

Customers will return to retail settings where they feel comfortable and their status is appropriately recognized.

Be sure status indicators, either in a formal program or through unpublished CRM actions, are aligned to customer value.

Conveying higher status to customers on a short-term basis is highly effective. As numerous successful campaigns have demonstrated, members will work harder to keep status than earn it the first time.

Cede some control to the customers. Program elements, especially rewards and redemption, provide another vehicle for customers to exercise their control.

Allowing members to choose special days to earn accelerated rewards, determining which forms of recognition are meaningful to them, and providing greater selection of benefits without major sacrifices to the simplicity of your loyalty strategy are all well tested approaches that drive greater customer spend over time.

Membership should surround customers with the sense of belonging and perceived benefit, as well as generating a vested interest in the brand.

Leverage the power of the sales associate. In-store personnel have the most direct and critical connection to customers and nothing can replace the face-to-face, personal interaction that they provide. Period. They are more effective than points and can create or destroy more value than any published loyalty program.

Successful loyalty strategies leverage associates and their skills, giving them the tools to enhance long-term customer relationships. Unfortunately, this is one of the most commonly overlooked aspects of loyalty strategy across the retail sector.

LONG-TERM CUSTOMER relationships in the luxury retail segment should be built with engaged associates providing personalized service, linked to a strategic loyalty rewards program. The experience for both customers and retailers will be far sweeter and the long term results much better.

Fred Thompson is retail practice leader at LoyaltyOne, Toronto, Ontario, Canada. Reach him at fthompson@loyalty.com.

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