What Really Drives Customers to Buy From Louis Vuitton Again?

0
23,870 views

Share on LinkedIn

In a recession, a “spend less” philosophy is nearly equal to smart living. Especially for “unnecessary items” like luxury goods, your rational brain will tell you to keep such temptations out.

This poses a severe challenge for all luxury brands. What should they do to survive the economy downturn?

A price cut is the most commonly used tactic, because in many cases, it is relatively easy, fast and direct. Others will advocate for better service to drive customer satisfaction, or a combination of both. Insights generated from our global Louis Vuitton Shopping Experience Survey renders a different and uncommon perspective.

Voice of the Customer from Louis Vuitton Shoppers

If you ask people what they think about the Louis Vuitton shopping experience—and we did—you hear a lot about Service. Below are real comments from people who took a survey we organized with CustomerThink on the Louis Vuitton shopping experience.


“No one bothered to greet me other than the security guard at door!”
“I guess I did not fit the image – I was not wearing all labels.”
“Messy store, impolite sales assistants and poor attention to customers.”
“Long queue, slightly condescending assistant – not the VIP experience it should be.”
“I don’t look like a typical LV customer, so the salespeople were in a hurry to have me out of ‘their’ store as fast as possible.”

Figure 1 breaks down the attributes customers like the least about their shopping experience at Louis Vuitton stores. We collected 2,318 valid responses across the globe. And, as you can see, Servicing Attitude was the No. 1 attribute (39 percent) respondents like least about the Louis Vuitton shopping experience; the No. 2 attribute had to do with the Price/Value issue (21 percent).


Figure 1: What do you like the least about the Louis Vuitton shopping experience?

Respondents were asked to rate their satisfaction level for each sub-process. The average satisfaction scores of each sub-process are linked and mapped to form the Emotion Curve*. To illustrate the results with proper segmentation, we chose the segment of Mainland China customers who had purchased something during their last visit to Louis Vuitton stores. The corresponding Emotion Curve is shown in Figure 2.


Figure 2: Emotion Curve—Louis Vuitton Shopping Experience: Mainland China Customers with Purchases in Last Visit

As you can see, respondents considered Location and Store Exterior (S1 and S2), Shopping Environment (S6), Product (S11), Payment and Gift-wrap (S21 and S22), and Exclusive Feeling (S27) to be the most significant pleasure peaks. On the other hand, Greeting (S4), Price (S13), Value-added Service (S20) and Collection of Customer Info (S25) are the most significant pain peaks for the respondents. Service and related attributes (S15~S19) are also perceived relatively poor in performance.

Figure 3 illustrates the importance rankings of all attributes, derived by regression analysis with 1 being most important and 27 being least important. For simplicity, we only show the levels of importance to Customer Satisfaction (Customer Importance Weightings), to Brand Differentiation (Branded Importance Weightings), and to Repeat Purchases (Purchase Importance Weightings) for the sub-processes and attributes related to Product (S11), Price (S13), Services (S15~S19), and Exclusive Feeling (S27).


Figure 3: Importance Rankings of Key Attributes—LV Shopping Experience: Mainland China Customers with Purchases at Last Visit

Should Louis Vuitton Enhance In-Store Service?

If Louis Vuitton executives were to listen to the voice of their customers (VOC), they might respond by enhancing service levels. However, as we always stress, you should be very cautious when you listen to the VOC. You must put the survey’s message in context. To do that, you must examine the impact of those pain points not only to customer, but also to the brand and to repeat purchases.

Though survey respondents considered service the “least-liked” factor in their Louis Vuitton shopping experience, it does not necessarily mean that service should be your most priority concern, especially in a recession. Why? Referring to Figure 3, though the service-related attributes (S15~S19) are very important in driving customer satisfaction, they are unimportant in reflecting the brand values of Louis Vuitton and in driving repeat purchases. On the contrary, a good in-store service to all customers may work against the Louis Vuitton branded experience.

Although Louis Vuitton is a successful brand, they don’t provide a retail experience that satisfies customers—unless you’re a celebrity or dress like the rich and famous, the sales staff usually ignores you. This pain is strong enough to trigger our Psychological Immune System to rationalize our suffering for something of great value—exclusivity—the most critical need of Louis Vuitton target customers and the core brand value. Therefore, Louis Vuitton is delivering an effective and a branded in-store experience, though it may induce some pain.

Are Louis Vuitton’s Prices Too High?

Price is the pain peak of the Louis Vuitton shopping experience (see Figure 2) and the attribute respondents rate No.2 as what they like least about the in-store experience (see Figure 1). However, price is among the least important attributes in affecting the satisfaction level of their customers (ranked 24th out of 27 sub-processes / attributes, see Figure 3), but the most important attribute in differentiating the brand.

Interesting, isn’t it? Price as an attribute, while relatively unimportant in affecting overall customer satisfaction, is certainly important in generating a differentiated customer experience. That does not mean that customers are satisfied with the prices at Louis Vuitton. It only means premium pricing is one of the key attributes differentiating Louis Vuitton from competing brands. Theoretically speaking, if Louis Vuitton cut prices, assuming all other elements remained constant, they would be less differentiated from their competitors. They could try a drastic price cut in order to maximize sales in this recession, but the outcome, an un-branded experience, will destroy the brand in the medium- to long-run. Most important of all, price is definitely not the key driver for customers to buy again at Louis Vuitton stores. (Ranked 24th out of 27 sub-processes / attributes, see Figure 3)

Experience Design by Objective

Improving customer satisfaction should be a means but not the end. You are working with one eye closed if you don’t derive the importance of attributes to purchases. If you only focus your resources on attributes important to satisfaction but unimportant to repeat purchases, you may achieve great satisfaction scores but have no impact at all on improving sales performance.

Based on the X-VOC data from the Louis Vuitton survey, the primary reason customers buy again at Louis Vuitton is not the service. Customers buy again so they can experience the exclusive feeling they get from wearing and owning Louis Vuitton products. (‘Exclusive feel’ is the most important attribute in driving repeat purchases, see Figure 3) They should focus on innovating or redesigning the in-store experience by target feelings: Prestige and Exclusivity; rather than trying to enhance all service attributes to all customers. After all, what’s the point of improving satisfaction if it doesn’t help—or may even jeopardize—future sales?

Similar to most of the companies in all kind of industries, the service, product and price in your competitive business can easily be replicated. The beauty of the “Experience Design by Objective” model is: if you weren’t Louis Vuitton, the same importance levels to satisfaction, differentiation and sales mean nothing to you. In other words, competitors would find it more difficult to copy your unique branded experience as comparing with the product, price, service and related attributes, as different companies have different brand values and target objectives, which will lead to a different mix of ideal performance of sub-processes and attributes.

To stay alive and ahead, you have to differentiate—and a branded experience is definitely one of the key differentiators, especially in a recession. Through building your own Experience Design by Objective model, you can find out three critical moments-of-truths affecting customer satisfaction, brand differentiation and purchase. Only with these in mind, you know where you stand and what tactics you should use to combat with the recession.

*Emotion Curve is invented and first put into applications by Mr. Sampson Lee, president of Global CEM, in 2006. It is one of the experience assessment and management tools of the U.S. patent-pending Branded Customer Experience Management Method registered by Global CEM. Emotion Curve maps the customer emotions generated at each touch-point or sub-process, and links them to form a curve in reflecting the perceived experience across the entire customer lifecycle (covers all touch-points at stages of pre-purchase, at-purchase, and post-purchase), or at a specific touch-point (e.g. retail, call center, website, etc.). Unlike the conventional approaches focus on enhancing efficiency and are process-centric; emotion curve represents the genuine customer feeling by addressing emotions and five senses, in a natural time sequence from an experience perspective. It is a truly [customer-centric] experience assessment and management method. The statistic data of emotion curve is derived through substantial X-VOC surveys, from the experience ratings on each touch-point or sub-process, evaluated by different target customer segments. The definition and selection criteria of touch-points and sub-processes are based on vigorous and scientific research, method, and sequential steps. An Emotion Curve shows how customers perceive experience. It is an innovative and powerful tool for creating a branded customer experience strategy. Furthermore, through a simple curve, from CEO to receptionist, no matter in boardroom or post room, all people in a company could easily understand and communicate the customer experience levels, by using a common graphical language.

LEAVE A REPLY

Please enter your comment!
Please enter your name here