Take a look at the websites of most companies operating at the premium end of the spectrum, and you will usually find something about customer service, generally explicit but sometimes implicit. That’s not too surprising, since it can be an important factor in both a company’s brand image and also in persuading savvy consumers that paying extra for a premium product really is justifiable. How important? Here’s a true story.
 
A couple visited the boutique store of a watch company – a premium brand, though not one of the ‘top tier’. He was looking to buy a particular watch, one of the company’s top-end models. Now, this guy is a pretty serious horologist, with a small but decent collection, and an admirable knowledge of the companies and watches at the high end of the market. He visited this boutique for a specific watch, and wouldn’t otherwise have considered one of this company’s products.
 
The service they received was truly exceptional. First, the salesperson knew everything that could be expected about the brand, and about the range of watches, and then some. There was no hard sell; in fact, the process was so ‘soft’that the selling was almost imperceptible. And once the sale was made, glasses of champagne were produced for the couple, to help pass the time while the watch was adjusted, sized, and prepared for use by the on-site watchmaker.
 
The enthusiast's wife was equally impressed; she has a watch from one of the top French luxury firms, whose name is instantly recognizable by all. She’s a devotee of the watches of this brand, and never considered anything else. The salesperson was happy to show her anything she wanted to see, which included one particular watch that took her fancy, providing all the requested information, and offering some accessories with which to compare and contrast the watch. Again, no pressure, just helpful, informative, low-key, and above all relaxed.
 
What topped it all off came a few days later: a handwritten note from the salesperson, thanking them for their visit and their custom. You might think that’s over the top, fawning, cheesy, especially since it was for the sale of just one watch. Well, I can tell you that the couple were mightily impressed; unless you’re dealing with ultra-luxury megabucks products, who offers that kind of service and attention to detail these days? And the result of making the showroom experience so pleasant and unpressured, and taking a few minutes to write that note, is that the company is firmly on the radar for both of them; it has converted the wife from being a devotee of a single brand to appreciating that this other brand has something to offer, beyond just what is on her wrist. And it's worth noting that the watch she fancied, is one of the most expensive the company offers, equal in price to three or four of the watches her husband purchased, and being a branded boutique, all prices are MSRP.  The exemplary service rendered this acceptable for a product that the cognoscenti always purchase at a discount.
 
This level of service, this attention to detail, can help define and distinguish a brand.  It is a primary determinant of sales margin.  Branding goes far deeper than a logo or a corporate color scheme, it is the form and ethos of interaction with the consumer and with partners.  Brand equity is often the key differentiator between a company and the competition, and the strategy through which a brand is built and managed simply cannot be about the corporate logo, or what font to use; customer service needs to be an integral part of what you do, since it is central to how you are perceived by your customers, how often they buy from you, the emotional investment they make, and how much of their temporal and pecuniary currency they spend.

The economic downturn has not been kind to many firms in the premium sector - but not all luxury brands have struggled. Here at Intelliga, we were interested to read an article in Newsweek which looked at companies which have bucked the trend, and actually experienced growth. The article, Classic to the Core, explains that they have achieved this by strategies we stress to all our clients: having a strong brand, sticking faithfully to the brand image and majoring on quality and exclusivity.

The article looks at luxury brands – mostly fashion brands – that have seen varying degrees of success in navigating the global financial crisis and discusses the reasons why some have prospered while others have seen sales decline or, like fashion house Christian Lacroix, have gone under.  The article cites a study by Bain and Company that found the luxury market fell 10% in the US and 8% globally in 2009 – the first time the overall market for luxuries ever declined.

However, Hermès sales grew 8.5% worldwide in 2009, and turned in an 11% increase in Q4, while LVMH’s flagship brand, Louis Vuitton, also had a good 2009, enjoying double-digit growth.  What did these brands do?  They focused on “what they do best – classic bags and scarves for Hermès, old-fashioned luggage for Louis Vuitton”. There were no discounts, trendy product introductions or attempts to go downmarket.  Hermès even opened a new store in Manhattan in February – the brand’s first men’s store.

Apparently, for some brands, luxury isn’t dead, or even in hibernation, it has just gone back to an emphasis on quality, classic and more conservative items.  Consumers who may have bought more trendy and conspicuous items are moving back to “tried-and-true stalwarts”.

Famous luxury brands with more extrovert products that experienced sales declines shouldn’t worry, though.  NYU Professor Scott Galloway, who studies luxury marketing, believes the market for 'conspicuous consumption' items such as Porsches and Manolo Blahniks, which are classics, will rebound as soon as people have money in their pockets again.  There are people who could buy these items – they have been not been doing so because they don’t want to be seen as crass.  And the Bain study indicates that even if the market for some products never recovers to previous levels in the US, markets such as China, India and Brazil will more than make up for it – and there will probably be lots of room for less conservative items.