Banking on Thanks
More and more, retailers are showing their appreciation for customers in an effort to keep them spending.
When a large flower arrangement arrived at Joanna King's home in Ellicott City, Maryland, in mid-February, she thought she might have an admirer.
"I had no idea who was sending me a Valentine," she says. The gift turned out to be from a saleswoman at the Ethan Allen store where she had just purchased a chair for her living room.
"I went back to the same saleswoman because I liked her, but the flowers didn't hurt," says King, who soon ordered a new sofa and received another bouquet. "The arrangement was nicer the first time, but I would definitely go back."
Sending personal notes and gifts are a long-standing practice at high-end retailers, though generally for sales representatives who have relationships with individual customers. But in the face of an economic downturn-last week, both Neiman Marcus and Nordstrom reported that same-store sales for February had dropped from last year-luxury retailers are stepping up the practice of thanking clients.
Spenders big and small recently received thank-you notes from designer boutiques Luca Luca, Jimmy Choo, Stuart Weitzman, and Louis Vuitton. Department stores Saks Fifth Avenue and Bergdorf Goodman (which is owned by Neiman Marcus) also sent notes, particularly to customers who bought beauty products-not surprising, as such purchases tend to be more regular.
"Personal shoppers send thank-you notes as a general practice to people who spend $10,000, $15,000, or $20,000 a year," says Milton Pedraza, C.E.O. of the Luxury Institute, a rating and research company in New York. "In a business downturn, [retailers] focus on this type of practice a bit more. Top managers at Saks Fifth Avenue in Dallas have told me, 'We'll pack their suitcases if they want us to,' to try to embed themselves in the lives of their customers, particularly in slow economic times."
A spokeswoman for Ethan Allen says gifts are sometimes sent to customers when its salespeople-designers in company parlance-"have relationships that have lasted for years." She adds, "It's a personal thing for our designers, not part of the corporate dictate." Instead, the company believes competitive pricing and perks like free design service and delivery drive sales.
Nordstrom is known for maintaining a correspondence with its best regular customers, particularly those who shop in the beauty and menswear departments. However, this reporter received a card after purchasing two moderately priced knit shirts and a jacket that was on sale.
"There is no corporate direction on this," says Michael Boyd, a Nordstrom company spokesman. "Our salespeople build relationships with their customers by calling them and sending out thank-you notes."
As the economy tightens, "hopefully our salespeople-and we have a commission-based sales force-send out more thank you cards," Boyd says.
The new direction in retail is relationship management, says Tom Julian, director of trends for McCann Erickson. "From small boutiques to major department stores, retailers have had to show their shoppers how much they appreciate them in many ways. It's more than service today."
In economically challenging times, retailers who can connect with their customers in multiple ways will have a competitive edge, Julian says. Examples he's seen include direct marketing through email and stepping up benefits to members of frequent-shopper programs.
Sending gifts, however, is less common. "I know Holt Renfrew in Canada sends birthday gifts to top customers and Tourneau sends gift certificates for local restaurants when they know their top customers' birthdays," Pedraza says. But, he adds, those are exceptions.
He warns that retailers can go overboard with sending thank-you notes. "It should be done only at important junctures or it just becomes trivial. When a thank-you note is received, the receiver should be pleasantly surprised. Anything done too much loses its cachet."Visit Portfolio.com for the latest business news and opinion, executive profiles and careers. Portfolio.com© 2007 Condé Nast Inc. All rights reserved.