Clienteling has become an important technique in customer relationship management over the last few years, particularly at luxury retailers and high-end brands.
It is used to improve the customer experience through personalization, enhance customer loyalty and drive repeated purchases and longevity of the customer’s lifetime with the brand.
Read Also: Customer Lifetime Value
What is Clienteling?
Clienteling is a sales technique used in retail to build a long term relationship with the most valuable customers and treating them as clients.
In this technique, the customer data is collected, together with other information such as purchase history, product preferences and frequency of shopping. A personalized relationship then starts between the retailer and the client, where the customer is served based on this gathered information.
It is particularly used at luxury retail, where there is a sizable share of HNWI (High Net Worth Individuals) who would prefer a more personalized shopping experience that could sometimes extend to being served at the comfort of their homes.
Read Also: What is Luxury Retail?
Why is Clienteling Used in Luxury Retail?
According to the Pareto principle, 80% of consequences come from 20% of causes (The 80/20 rule).
This holds true to many areas of life.. and in retail it translates to:
80% of sales come from 20% of customers
Retailers have realized this by analyzing their sales data, and so they started developing loyalty programs and techniques that cater for the special 20% and improve their satisfaction, and hence their retention.
At luxury retail, those 20% require a very special treatment; more than just being a “Gold Member” and getting some special deals.
In fact, we’ve noticed that this segment of customers are not interested in deals or offers. They are interested in new collections, limited launches, personalized products,..etc.
It makes sense! They are the most profitable segment for the business after all.
Not only do they contribute the highest sales, but we have also found them to contribute the highest margins, due to them shopping at full price and rarely waiting for the discount.
This has called for a new method or technique to serve those clients, and so clienteling has developed and became a main component of the selling process at luxury retailers.
Benefits of Clienteling for Retailers
Identifying and serving the best performing customer category has a lot of benefits for the business.
1. Cost Effective, Targeted Marketing
Not only is customer retention cheaper than acquisition, but knowing exactly who your most profitable segment is and serving them with targeted ads and messages that are designed to convert to another sale is the best use of your marketing dollars.
2. Personalized Experience
Having access to useful data through the clienteling platforms helps create a personalized customer experience, which is exactly what this type of customer is looking for.
Instead of receiving a mass SMS about the latest offer, which might be irrelevant to them, they receive a 1 to 1 communication form a salesperson that they know and have met in person at the store, with exactly the type of product or service they are usually interested in.
This is what drives loyalty and retention.
3. Product Development & Sourcing
Another benefit that can arise from this approach is that the retailer can use this relationship to better serve their customer in the future through better product sourcing and development.
Customers will share what they are looking for, and sometimes even will give ideas about products that they can’t find in the market, and this is when you will start to see if there is enough demand for such a product and can start sourcing or developing it.
The best products we have launched were the ones based on customer feedback and request, and clienteling makes it easier to capture such feedback.
4. Better Product Launches
With those types of customers being always on the lookout for new products and special collections, having a database of interested customers will allow for exceptional product launches.
It will help build excitement about the launch in advance, and deliver high sales for the product from the beginning.
It will also help gauge the demand for the product in advance and better forecast the right level of inventory to buy.
Skills Needed for Better Clienteling
In order to deliver the right clienteling experience, the sales team needs to be equipped with the right set of skills.
These skills include:
- Good communication in the local language of the client
- Being able to start a conversation that uncovers customers needs, by asking the right questions
- Product knowledge, and being up to date with the latest trends in the market and future product launches
- Customer knowledge: Purchase history, preferences in styles and colors, preferred time of communication
- Adapting to the customer’s preferences and style (It’s all about personalization after all)
- Not to shy from following up at adequate intervals
- Knowing how to spot limits and boundaries while holding the conversation
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Retailer & Founder of Retail Dogma, Inc.
Rasha has 14 years of retail & ecommerce experience. She has started an ecommerce business in 2008, and later worked at H&M, Bath & Body Works, Victoria’s Secret and Landmark Group. She’s lived in 4 different countries, speaks 3 different languages and holds a BSc in Pharmaceutical Sciences and an MBA in Strategic Management & Marketing.