In any business, creating a regular relationship with the final customer is the best way to achieve repeated sales and reduce the customer acquisition cost. When the main distribution channel is represented by non-controlled retailers though, achieving the desired proximity is a detached process from the sales, and might easily result in a complex and expensive program.
Jewellery and watches manufacturers suffer more than anyone else from the lack of data upon their final consumers, as the spending capacity of each one of them can be very high, and keeping them close to the brand is a vital factor of success.
In this article, we explore how jewellers and watchmakers can successfully use their Warranty programs to obtain customers data, feed their CRM tactics and increase the number of repeated sales while keeping a good relationship with their retail distribution channel.
A traditional warranty is usually made of a nicely refined card, where the retailer stamps its sign, notes a code and marks the date of the sale. From that date for the entire “warranty time”, the customer will be able to bring that item back to the shop, have it cleaned, maintained or repaired, while the manufacturing company will pay for these services.
This form of warranty is in line with the objectives of the retailers: it allows them to engage an exclusive relationship with the customer, while no transfer of information to the manufacturing brand is required, making it impossible for the latter to create any type of proximity with the final consumer.
But how to break the rule? It is not easy to disregard strong retail brands such as Christ in Germany and Switzerland or Chow Tai Fook in China. In order to get around the problem, large groups such as Richemont and LVMH have allocated massive investments in the creation of their own retail distribution channel. Unfortunately, not every brand has the financial and commercial power to bypass the retailers, so for everybody else the first challenge is represented by piercing the “retailer exclusive relationship” thinking.
One asset in the manufacturer’s hands is the drastic evolution the typical luxury consumer went through during the past 15 years. It is difficult to imagine how a world-travelling, social-addict, ecommerce-comparator current buyer of a high-end jewel can confer the decision to buy to a “proximity” shop.
A 2017 research from McKinsey was highlighting how the purchase of a luxury item is conditioned by at least 5 “touch points”. In a few words, wealthy people won’t buy a brand they didn’t “meet” at least in:
1) A shop in the centre;
2) At airports;
3) At their friend’s wrist, or neck, years, etc…;
4) On the Internet (website, reviews, e-malls);
5) On social networks (Instagram first)
It is impossible to predict where the purchase will actually take place. The choice of available channels drastically diminishes the traditional idea of one shop building an exclusive and lasting relationship with the customer. If a consumer buys a watch on Chrono 24 from a dealer sitting thousands of kilometres away, who will hold the relationship? Who will take care of the maintenance and the repairs?
This type of consumers expects an international warranty, valid in Geneva as well as in Dubai, New York or Singapore, in any point of sales where the brand is represented. In the majority of cases, they will have no warranty card with themselves, they will barely have knowledge of where and when they bought their jewel, admitted it wasn’t a gift. Nevertheless, they expect to be recognized as customers of the brand and to be treated as such.
During the last 10 years a handful of pioneering brands tested various Warranty programs leveraging on web technologies; some of them could trace a sustainable path, other just failed.
Out of the successful experiences, we could identify the 5 “best practices” listed below:
A digitalized Warranty program is a not-to-miss opportunity to create brand proximity and increase repeated sales. In order to bypass the well-known retailers’ skepticism, the program shall be built so that the distribution channels have a clear perception of the value that such a program will return for them. Such a program creates value for the manufacturer, for the retailer, for the final customer and for second-hand collectors, enhancing overall the perception of a brand.