NEW YORK, NY--(Marketwired - July 05, 2016) - At the most recent quarterly meeting of the Luxury Client Experience Board (LCEB) in New York, a membership association founded between Luxury Institute and The Ritz-Carlton, executives from top retailers, agencies, and major luxury brands met to assess the benefits, challenges and opportunities presented by segmentation and clienteling to improve sales performance. Attendees agreed strongly that brands can benefit from segmentation, which they defined as the grouping together of current and potential customers who share similar attributes, with the aim of matching products and offers to that particular segment. The majority of executives in attendance confirmed that they struggle with the successful implementation of segmentation as they navigate through irrelevant and clustered data, 25% of which is dirty. Segmentation programs fail to realize their potential because companies struggle with successful adoption and implementation, often drowning in irrelevant and clustered data that fails to provide actionable information to drive sales.
"Segmentation has tremendous potential but it can only be effective if it is fully integrated into the brand's systems and key executives believe in the system wholeheartedly," says LCEB co-founder and Luxury Institute CEO Milton Pedraza. He noted that the top 5% of clients account for 40% of sales for many brands, the next 15% make up 30% of sales while the remaining 80% of clients generate 30% of sales; each segment presents its unique challenges. The top segment of 5% must be provided with an additional level of service to deepen and maintain relationships and continue to drive the disproportionate share of sales. Luxury executives in attendance agreed that this top segment should be treated with special care from a manager, president, or other brand representative to ensure that their relationship is maintained if sales associates leave the brand. The middle 15% of clients must be nurtured into the upward segment. The high potential client within that 80%, who will increase their purchases over time, must be identified and a long-term relationship must be created to harbor loyalty as they increase their spending.
In his keynote address to the group, Milton Pedraza focused on the fact that CRM executives, IT engineers and sales associates must all collaborate to create a fully integrated system that serves all departments' needs seamlessly. He recommended that companies utilize segmentation based on their unique business objectives, data availabilities, customer lifecycles, and the customer relationship value. Representatives from many of the brands in attendance (40%) confirmed that gaps in communication between CRM executives and their front-line teams cause preventable problems in segmentation, including the common problem of maintaining a relationship with the client that only engages with the brand every few years. Executives agreed that it is key to establish a very strong communication flow between all parties to not only establish what should be implemented, but how it should be leveraged.
Following lively discussion and executive insights, Milton Pedraza presented ten final recommendations for all brands to implement for successful segmentation and clienteling.
For more information on best practices in segmentation and clienteling, and to become a Luxury Client Experience Board member, visit www.LuxuryInstitute.com, or contact us directly with any questions. Upcoming LCEB events include meetings on Thursday, September 15, and Thursday, November 10. On Thursday, October 13, an exclusive LCEB event will be held for C-level executives only including guest speaker Doug Kirkpatrick, author of Beyond Empowerment: The Age of the Self-Management Organization.
About the LCEB: Luxury Institute announces the Luxury Client Experience Board (LCEB), a membership association of luxury industry practitioners co-founded with The Ritz-Carlton to enhance the education and development of leading luxury brands. The LCEB provides members with ongoing education and training opportunities on industry best practices through primary research, educational events, and education across industries to deliver exceptional, seamless, and measurable Omni-channel client experiences on a daily basis. The LCEB unites luxury executives from all fields and internal departments dedicated to creating these exceptional experiences and building long-term, high-performance relationships with clients.