Ahead of the upcoming Seamless Asia 2017 conference, we spoke to Wong Mei Wai, Business Director of Aspial (Aspial-Lee Hwa Jewellery) about a little-discussed but incredibly important topic: How loyalty programmes work in the fine jewellery industry.
Wong says that in fine jewellery, traditional earn-and-burn, chop-and-stomp loyalty programmes don’t work, and that a less mainstream approach is required.
Are customers today really less loyal? How do your jewellery purchase habits differ from your mother’s?
I would say it depends on the product category (high or lower involvement), the segment that we are playing in and the target audience. Naturally the circumstances which most businesses operate in have changed as consumers today have many different options available. However, the super-premium and luxury brand users in our portfolio have the greatest loyalty. This is due to a multitude of reasons, including cutting-edge design differentiation, trust and superior service and experience.
Our mothers’ generation (baby boomers and the yuppies) still see jewellery as keepsakes, a symbolic part of a life journey that commemorates key milestones. Jewellery was the embellishment of simple colours like the Greeks wore on their robes. This manifested itself in careful selection of gifts of diamond, Pure Gold, Jade and Pearl representing specific significance in our lives.
In contrast Gen X and Y sees jewellery as accessories. Driven by practicality and convenience, their purchase journey is faster and well-researched on digital before hitting the stores. Unlike our mothers we keep a very open mind to the precious materials, gems and stones. We are open to considering precious and semi-precious stones, gold, silver and platinum and other gems as long as the designs are eye-catching.
On the other hand (and interestingly) there is a developing trend amongst millennials to embrace more traditional forms of jewellery – for example, in China there is the emergence of buying pure gold and diamonds as an investment despite the decline in marriages.
Explain to us the difficulty a business leader in charge of selling a high value/luxury item like fine jewellery.
While there are many opportunities for the luxury (high value) industry today, it is in a state of flux and change. Such industries include handbags/leather goods, jewellery and watches, fragrances and designer make-up and skincare. The main challenges faced are:
(a) The Luxury Purchase Equation
The Luxury industry growth has a close connection to exclusivity and prices that relates closely to income and wealth dynamics. Economic and social insecurities can threaten the growth of the industry.
(b) Buying into the Luxury dream
Whilst it is quite true that greater income leads to greater spend on luxury there are some who do not feel the need to upgrade to luxury. This can be seen in the growth of the ready-to-wear being born out of French design houses and soft accessories that challenge the thinking that good design always costs money.
(c) Balancing discounting and communication
With the above changes in the luxury industry many luxury brands have to turn to discounting, giving gifts and loyalty programs. However this vicious cycle is not to be desired especially if the brand is exclusively super premium versus accessible luxury.
(d) Lower Barriers to Communication
In addition, social media – Instagram particularly – has increased exposure to new and smaller luxury brands due to the low cost/high impact of creating brand awareness through the medium.
Hence, in recent years, luxury brands as businesses need to look at consumer needs and balance the cost of production with exclusivity, using great design brought to consumers in accessible materials.
How do you design a loyalty programme that keeps customers coming back for more if they’re not going to be coming to you every other week?
Frankly the approach is similar to that for hotels, serviced residences, airports, and bank programs where we always start with considering consumer needs and opportunities through occasions. We need to know the consumer through careful analysis – for instance, are the purchases driven by deeper reasons including weddings, anniversaries, childbirth or other festivities which give you a reason to buy a gift again? Are there opportunities to up-trade or cross-sell to consumers?
Do you think it’s worth having a formal loyalty programme in the fine jewellery market? I can’t imagine Tiffany’s having an earn-and-burn points system for its customers…
It depends on the segment of the jewellery market and the objectives of that business. In the accessible luxury segment you will find membership cards, coalitions, earn-and-burn points, and discounts through up-trading to name a few.
Are there loyalty programmes in the fine jewellery industry that you particularly admire?
For top-tier luxury, I am more inclined to be impressed by skillful relationship building to make a customer feel special than any point system or membership program. This is because the more premium and exclusive the service, the less a mainstream membership approach appeals as we are today already inundated with cards, EDMs, direct mailers, points and birthday rewards by all retailers.
We have seen many renditions of loyalty programs in luxury ranging from unique gifts on birthday months to different offers one might receive if they were to return or introduce friends. These programs have become a category basic in many industries and consumers are becoming bored with them. It just makes them feel it is “normal” to have that but it does not mean they highly value these benefits and utilize them.