The road to retail jewelry profitability for generations has been based on creating high levels of store traffic and presenting well merchandised displays complemented with professional service. However, today the leading approaches are leveraging data rich customer bases to manage more profitable customer relationships focused on merchandising, marketing and more customer oriented service offerings. Even the “be back” shoppers are finding it more difficult to switch retail jewelers due to more interactive relationships.
Retail jewelers have long been challenged with “me too” responses by their competitors which can greatly limit truly differentiated offerings. When offerings are not effectively differentiated the result can lead to a commoditization trap causing downward spiraling prices and profit margins. Today, retail jewelers need to know how, when and what to offer individual customers and the results can be the difference between a profitable and unprofitable business. Sourcing items that owners and managers personally prefer and then waiting for the right customers to enter the store who also find those items to be desirable is no longer the best way to manage and merchandise a retail jewelry store.
Today’s retail jewelry store needs to be wherever the customer wants it to be. Sure location, location, location still matters; as do carefully selected merchandise inventories. But this approach has too often led to non-differentiated product offerings. Too many customers feel that jewelry merchandise and store environments all look the same. The result too often has led to greater price reductions. The way out of this selling and merchandising conundrum is relationship marketing. Retail jewelers have to reach out to customers beyond the four walls of their store with more strategic approaches to identifying, securing and growing customized customer relationships built one at a time. Relationship marketing can help jewelry companies win customers away from competitors before the customer even begins to shop for a specific purchase occasion.
It’s more than the old 80-20 rule. In general, 80% of a company’s business comes from 20% of the customers. Each jewelry store needs to identify their most valued customers and understand what amount of business their most valued customers represent. What do the purchasing habits of the store’s most valued customers look like? What products do they desire and what motivates them to make these purchases? How can the company look beyond the transactions to understand how to make the relationship with the customer more relevant and more profitable? How can the company create more relevant value propositions targeting the most valuable customers? Offerings must be more customized for individual customers. Database marketing and relationship marketing are replacing the old approach of offering undifferentiated product offerings that too often have led to commoditization and lower prices and margins. Datebase marketing and relationship marketing are two ways around selling commodity jewerly.