In our last post we looked at the preparation aspects of luxury service provider differentiation, customer connection with the provider’s identity and customer experience management. This week we consider how the ideas generated can feed into a formalised plan.
Looking at the market for your brand and splitting it into distinct segments allows you to see viable groups of potential customers. Each group must have its own characteristics and be different enough from the other groups to warrant separation, for example you would envisage that their buying or consumption behaviour would differ and/or that their criteria for purchase would contrast. You may segment based upon any of these aspects or perhaps through demographics like age, the 50 plus age group in particular often represents an opportunity in traditionally quieter periods. Other segmentation options include geographic (international and domestic for example) and psychographic (personality and lifestyle).
From your segmentation, decide which groups to target; to combat the inherent perishability within the service industry it is highly likely that you would select at least two segments that would complement each other in their usage. When making your selections consider firstly whether you have the capabilities to engage with the group; you may decide to target families, couples or the 18-35 age group, and it is worthwhile to begin to formulate ideas for reaching them. Within your analyses, look at market potential; how big is this group, what are the market or socio-economic trends that may impact upon it, is it a viable segment long-term?
Positioning is the art and science of making your service appealing to your chosen segments, in a way that differentiates it from the competition. You may recall from our previous post that customer experience can be a means of differentiation and competitors are less able to imitate this strategy than a price or quality positioning. Indeed, in the luxury service industry, quality is a pre-requisite rather than a differentiator. This is the stage that your ideas for the brand narrative come to the fore, and you attempt to blend these thoughts into a story that will engage your chosen segments. Look at societal and demographic trends to inform; increased working hours means that family time is at a premium and thus themes that promote togetherness and relationship bonds will appeal to families. Similarly, don’t rely on past assumptions to inform, use current research that can indicate what your chosen segments are looking for now.
An in-depth understanding of segment needs and requirements will inform your customer experience strategy. A key service characteristic hinges upon its delivery by the front-line staff, so once you have this information make sure your staff receive bespoke training that takes account your chosen segments; after all, how can they be expected to surprise and delight guests if they do not have an in-depth understanding of their needs? It is a little like asking your employees to buy the perfect present for someone they know nothing about; if they knew what motivated them, their lifestyle, hobbies and interests, the chances of them selecting just the right gift increases considerably. With your plan in place, and training undertaken, all that remains is the execution… come back next week for the third and final part of the series.
By Paul Russell, co-founder and director of Luxury Academy London