A new approach to reaching buyers and sellers of luxury items and services has been launched.
The group has a website and hopes to build a cadre of information providers from both luxury consumers and providers.
In a bid for wider recognition, the company has issued the results of a recent survey of consumer participants.
According to the Luxury Institute, (www.luxuryinstitute.com), word-of-mouth has always been a more effective marketing technique than advertising for generating sales and cultivating long-term customer loyalty, and it has become brutally efficient thanks to the rise of online forums focusing on product and service ratings and reviews.
Luxury firms cannot afford to ignore the fact that their wealthy customers are among the most avid users of these services, and now more than ever they need to ensure that their offerings and actions withstand the scrutiny of millions of consumer-critics exchanging opinions and experiences in cyberspace.
According to a Luxury Institute survey, "Leveraging the Internet Habits of the Wealthy," 84 percent of consumers earning more than $150,000 a year visit sites where customers write reviews or rate products and services, including restaurants. Women and wealthy baby boomers between the ages of 45 and 54 are especially inclined to gather the opinions of fellow consumers before they make a purchase.
Wealthy consumers say ratings and reviews are important.
-- "It's so much more important and informative reading about the experiences of product users rather than reading the advertising hype."
-- "I like to see what problems others may have encountered before I purchase. Also, customer service level is sometimes addressed and this is very important to me."
-- "Ratings and reviews are quick way to eliminate bad choices."
Where do wealthy consumers go to get their opinions today? Most of them (61 percent) use the online forums provided on the websites of retailers such as Amazon.com, Circuit City, and others. They are also willing to pay to find out about the products and services they buy. The fee-based Consumer Reports website, featuring professional ratings and reviews, is a regular source of insights for 51 percent of wealthy consumers.
Epinions.com, a site dedicated to consumer reviews, is a popular stop for 28 percent of the wealthy overall, especially those younger than 55 who have a net worth of less than $1 million; 21 percent of wealthy consumers 55 and older and 23 percent worth between $1 million and $2 million frequent Epinions.
Restaurateurs are well aware of the power of reviews in creating positive buzz and bringing in new diners. The wealthy are especially attuned to culinary customer reviews, with one fourth consulting Zagat before they sit down at a restaurant, a tendency that increases with higher levels of income and net worth.
"Across the luxury spectrum, nimble luxury firms understand that the world has just become transparent and there is nowhere to hide," says Milton Pedraza, CEO of the Luxury Institute. "In a web-connected world the flutter of a butterfly's wings in Shanghai can generate a massive hurricane in New York. If you have rigid customer processes, such as onerous return policies, confusing fees, conflicted endorsements, etc., fix them now, and favor the customer. If you are not socially responsible, bet that consumers will gang up on you online. If you make a mistake, admit it, apologize, fix it immediately, and overcompensate the aggrieved parties -- no excuses, no exceptions. Your luxury brand reputation is at stake, and it can be severely damaged in a nanosecond."
Complete results of this survey, scores of other surveys, and additional insights from the voice of the wealthy consumer, are available to professional members of the Luxury Institute's Luxury Board for an annual fee of $995.00. For more information, visit www.luxuryboard.com.
About the Luxury Institute
The Luxury Institute is the uniquely independent and impartial ratings and research institution that is the trusted and respected voice of the high net worth consumer. The Institute provides a portfolio of proprietary publications and research that guides and educates high net worth individuals and the companies that cater to them on leading edge trends, high net worth consumer rankings and ratings of luxury brands, and best practices. The Luxury Institute also operates the Luxury Board (www.luxuryboard.com), the world's first global, membership-based online community for luxury goods and services executives, professionals and entrepreneurs. To reach the Luxury Institute, please call 646-792-2669 or go to www.luxuryinstitute.com.