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Writer's pictureManasvi Thakare

Mastering VIP Client Segmentation: Strategies for Luxury Brands


VIP clients are the cornerstone of the luxury retail industry, driving a significant portion of revenue and brand prestige. These clients not only make frequent high-value purchases but also serve as brand ambassadors, influencing others and setting trends. Catering to VIP clientele is crucial because they demand and expect exceptional service, personalized experiences, and exclusive access, which in turn fosters loyalty and long-term relationships. In this article, we will explore quantitative and qualitative criteria that can help brands identify and segment VIP clients, highlight different groups of VIP Clientele and ways to serve them.

 

 Quantitative Criteria

1. Purchase History: Clients with highest total spend over their lifetime with you

2. Average Transaction Value (ATV): Clients who consistently make high-value transactions.

3. Frequency of Purchases: Identify clients who make frequent purchases, indicating a strong brand affinity and reliability.

4. Recency of Purchases: Clients who have made recent purchases show ongoing engagement with the brand.

 

 Qualitative Criteria

1. Engagement Level: Clients who actively engage with the brand through events, social media, and loyalty programs.

2. Product Preference: Clients who purchase limited-edition or bespoke items, demonstrating a preference for exclusivity.

3. Referral Rate: Clients who frequently refer others to the brand, showcasing their influence and satisfaction.

4. Customer Feedback: Clients who provide detailed and positive feedback, indicating a deep connection with the brand.

 

Segmentation within VIP clients

Beyond Luxury Segment

 At the pinnacle of VIP clients are the "beyond luxury" clients, as highlighted by the True-Luxury Global Consumer Insights report by Altagamma & BCG.  Beyond money consumers represent less than 1% of the total luxury customer base, but are immune to economic trends making them stable growth driver for luxury brands.

 

They can be identified by their high average transaction value, purchase of bespoke and rare products, but also by purchasing patterns that are unaffected by the external. For example, Beyond Luxury customers continued to make purchases through their dedicated relationships managers during the pandemic.


These individuals often possess a deep understanding and appreciation of the craftsmanship, heritage, and exclusivity associated with luxury brands. They expect private shopping spaces, dedicated relationship managers, one of a kind experiences and the ability to customise products along with access to rare ones. Providing direct access to designers and behind-the-scenes experiences can further deepen their connection to the brand.

 

Luxury brands need to care for this segment carefully, going the extra mile in every way. Keep in mind beyond luxury customers value privacy and exclusivity more than others, so carefully curate events for them ensuring your guest list includes other discerning guests as well.

 

Other VIP Segments

 While beyond luxury customers may be a small yet powerful part of the brand’s VIP customer base, here are other customer types that can be touted as very important.

 

Aspiring VIPs: Clients who are increasing their frequency and spend in an effort to gain VIP status. They are eager to enjoy the perks and exclusivity that come with VIP recognition, and even if they newer to the brand, they are rapidly increasing spend.

 

Encourage their journey towards VIP status with targeted loyalty programs, early access to new collections, personalized recommendations. Offer experiences that showcase the brand's heritage and craftsmanship and ensure they have a dedicated relationship manager to ensure their journey to the top is smooth.

 

Loyal Advocates: Long-term clients who have consistently supported the brand over the years. They may not be the highest spenders but their loyalty and influence are invaluable. 

Recognize and reward their loyalty with special privileges that may not cost you as much but make these advocates feel valued. Priority customer service, exclusive previews, thank-you notes, loyalty program and invitation to events in the store itself are a few ways to reward their loyalty. Create opportunities for them to share their brand stories and experiences.

 

Occasional High Spenders: Clients who make significant purchases during special occasions or events. They may not engage frequently but their individual transactions are substantial.

 

Engage them with personalized invitations to events that align with their interests and past purchase history. Share personal greetings and tailored offers during significant life events or milestones. Sales Associates can stay in touch with them to keep the relationship alive and anticipate their occasional needs, curating a selection of products for them.

 

Conclusion 

Segmenting and identifying VIP clients is essential for luxury brands to provide the exceptional service and personalized experiences that these high-value customers expect. Segmentation will vary brand to brand depending on the nature of product and average product price. By understanding the quantitative and qualitative criteria, brands can recognize the diverse segments within their VIP clientele. Developing unique personas and customer journeys for each segment ensures that brands can effectively engage and delight their most valued customers, fostering loyalty and driving long-term success.

 

If your ready to delight your VIP customers check out this workshop for your team https://www.sonaligogia.com/workshops/vip-clienteling-for-luxury-brands


About the Author


As a Luxury Customer Experience Specialist I work with brands worldwide to help them design and deliver signature experiences. I have a business degree from Tulane University (US), a Masters in Service Design (Italy) and several behavioural training certifications. As an expert in the field for over 20 years, I combine human centered tools like cross functional workshops and customer journey mapping with selling and service skill training to embed customer empathy and a service culture within organisations. Having worked with global brands like Lancôme, Zegna, Diesel and Nespresso and home grown brands D'Decor, Regal Shoes and Colorbar across India, the Middle East and Europe equips with rich and nuanced understanding about the Luxury Customer Experience.

If you want to improve your brand's service, enable your team to sell deeper and create implementable and scalable customer experiences that provide measurable returns get in touch with me.

📩 Email me: sonaligogia@gmail.com


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