Avoid Losing 90 Percent of Your Referrals

Here’s a few amazing statistics from the Luxury Institute: 

• Most luxury brands lose 80 to 90 percent of their customers in a given year.  
• Luxury brands are hard pressed to retain 50 percent of their most loyal customers. 
• Less than 15 percent of luxury customers claim to have a relationship with a sales professional.

Let’s translate the loss of up to 90 percent of luxury customers in a given year to decorative plumbing and hardware.  It’s not a hard stretch to state that most showrooms have the potential to lose up to 80 to 90 percent of the referrals from existing customers in a given year if they fail to deliver an experience that luxury consumers expect from a high-end showroom.  The Luxury Institute points out that there is tremendous upside opportunity for high-end retail.  Customers who have a true relationship with a sales professional typically will buy double from that brand and will remain loyal to that brand for a longer period of time.  

As 2018 DPHA Conference Workshop Leader Bob Phibbs (The Retail Doctor) points out, you can’t sell luxury products without first selling yourself.  There’s a reason why someone makes an effort to visit a showroom and it’s not to determine how big a discount is being offered them.  The reason why 90 percent of the customers don’t return or provide a referral is because the sales professional failed to develop a meaningful relationship with them. Phibbs offers a four-step strategy to avoid that outcome.

1. One-size-fits all approaches do not work. Showroom customers are similar to showroom products.  They stand out from the crowd.  They have stronger personalities and are more self-assured.  A customized approach is required for each customer.
2. Determine the personality type and craft stories that resonate with your customer's world views.  Don’t dawdle on "Driver" types.  Get to the point quickly because they can recognize best-in-class products easily.  Provide data and information to "Analytics" (explain why PVD will last a lifetime, ceramic disk cartridges won’t leak, etc.).  "Expressive" customers will be more attracted to original designs as opposed to knock-offs.  "Amiables" want to know what are the best-selling products and which high-end customers and celebrities have purchased them.
3. Learn to deal with smart phones.  During the sales process, there’s a better than 50 percent chance your customers will use their smart phone.  How have you trained your team to deal with that?
4. Look for tells. Notice the cars that customers drive when they pull up to the showroom. What does wearing a Rolex watch signify? Check out clothing and accessories as well.  Regardless of the budget someone might state, what they are wearing and drive may be a more important indicator of budget potential. Luxury consumers want to interact with sale professionals that understand and can speak to the luxury mindset.  That’s why selling through the sales professional’s wallet will never establish relationships that result in referral or repeat business.