Customer Relationship Management for Luxury Brands Using Prada as an Example

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Customer Relationship Management for Luxury Brands Using Prada as an Example

Intoduction

Prada is one of the most leading luxury brands in the world and is an Italian brand known as Fratelli Prada. This luxury Brand Company was started operating in 1913 by founder Mario Prada in Milan, Italy by selling luxury and sophisticated goods such as handbags, shoe, and luxury accessories. Mario believes that women should not have a role in business until his daughter took the helm of Prada as his successor and run the business for 20 years.

In 1970’s, the granddaughter of Mario Prada, Miuccia Prada took over the business and make a waterproof backpacks out of Pocone, a nylon fabric. She met her husband, Patrizio Bertelli an Italian who had a leather business and joined the company soon. They turned the label towards haute couture and internationalization. Miuccia inherited the agency in 1978 through which time income have been up to U.S. $450,000.With Bertelli alongside her as commercial enterprise manager, Miuccia was allowed time to implement her creativity in the company’s designs. She would go on to comprise her ideas into the house of Prada that would trade it and expanded their business across continental Europe.

In 1990s, Prada was become one of the most influential fashion houses. Later Miuccia launched a brand for younger consumer with her nickname as Miu Miu. In 2000s, Prada company revenue increased to US$5 billion till 2010. Prada clothing became available to purchase via online for first time through Net A Porter . They did host a seasonal runaway show on the international fashion in Milan in 1988 and 1983. In 2019, Prada runaway show was shown in New York City at Prada New York’s headquarters.

Prada have 618 over boutiques worldwide and their products increased from handbags to clothing, cosmetics, fashion accessories, watches and perfumes. Prada also have subsidiaries brands such as Church’s, Luna Rossa and Fondazione Prada. Besides that, Prada luxury brand consumer could purchase via online, www.prada.com. Prada create a collection which have high quality, new materials for each new collection with innovative design and fabrics.

Definition of Customer Relationship Management

The Customer Relationship Management (CRM) literature recognizes the long-run value of potential and current customers. Increased revenues, profits, and shareholder value are the result of marketing activities directed toward developing, maintaining, and enhancing successful company customer relationships. These activities require an in-depth understanding of the underlying sources of value that the firm both derives from customers, as well as delivers to customers. CRM principles provide a strategic and tactical focus for identifying and realizing sources of value for the customer and the firm and can guide five key organizational processes: making strategic choices, creating value for customers, customer acquisition, customer retention, service quality and loyalty or rewards programme.

The various definitions by the pundits of CRM show how the CRM paradigm is being interpreted and explained. We reproduce below some of these definitions: Customer Relationship Management (CRM) is a business strategy to select and manage customers to optimize long-term value. CRM requires a customer –centric philosophy and culture to support effective marketing, sales and service processes. CRM applications can enable effective customer relationship management, provided that an enterprise has the right leadership, strategy, and culture. CRM extends the concept of selling from a discrete act performed by a salesperson to a continual process involving every person in the company. It is the art/science of gathering and using information about your customers to build customer loyalty and increase customer value. With the current state of information technology, and high customer service expectations, it’s practically impossible to consider these process issues without addressing technology, but it’s important to remember that customer human relationship are the ultimate driving force. CRM is about developing and implementing business strategies and supporting technologies that close the gaps between an organization’s current and potential performance in customer acquisition, growth, and retention. What does it do for an organization? CRM Improves Return on Assets. The asset in this case is the customer and potential customer base.

A close look at the definitions reveals that the business strategy, business process and technology are the common factors. CRM illustrates the changing role that information technology is increasingly assuming in the world of business and the global economy at large. The use of technology is steadily shifting away from its past focus on the products and services and the efficiency gains they offer. Rather, organizations are perceiving technology as a merging of products and services that seamlessly enable new approaches to business activities and redefine how people work and interact with each other. In the future we can expect to see less clearly defined distinctions between what we today consider ‘products’ and ‘services’

The idea behind customer relationship management is to have a single, enterprise view of the customer for the purpose of cultivating high –quality relationship that lead to improved loyalty and profits. This means being able to identify all the products, services, and intermediary relationship that customers have with the organization, as well as knowing all the interactions that have taken place between the customer and the company since the start of the relationship. It means being able to maintain consistency of experience for the customer through all forms of interaction (such as inquiry, order, delivery, and service).

Luxury brands have so far been reluctant to adopt any of the classical tools of mass marketing. One of these is customer relationship management (CRM). Prestigious brands are, however, now starting to examine the benefit of the ‘lifelong customer value ’approach, beyond building the social prestige of their names. Competition has got stronger and more complex. Premium brands have worked on their products and image, and have given birth to ‘new luxury’ – which now threatens traditional luxury’s image and legitimacy, or at least blurs its boundaries. Classic luxury brands have grown a lot themselves. They are now selling evergrowing product arrays on a worldwide scale, and brands can have a tough time controlling their image, or even their distribution. Heavy licensing leading to less control over their distribution channels can damage their image in the long run. Last but not least, customers have changed. The development of ‘new money’ as well as new buying habits (for example, ‘trading-up’) makes it more difficult for brands to address new, chameleon-like customers. Even the customers who love luxury now split their expenses between a growing number of brands, which can be luxury and non-luxury brands, or even mass-market brands such as Zara, Mango and so on. Thus advantages of CRM help the business to be prior to the customer.

Discussion of Advantages of CRM

CRM helps turn your company into informational organization. The more you know about your customers, the better you’ll be able to provide them documented, and recorded. To do this, you need to move beyond the sticky notes and disorganized filing cabinets, and start using advanced organizational technology that with the kind of positive experience that really pays off. Everything that they do, and every interaction they have with your organization, needs to be identified, can not only accurately quantify and categorize data for easy future reference, but can also make that data available across departments. Thanks to CRM, this all becomes a possibility; it allows you to store a vast list of customers and any important information regarding them. Access to their file is even more convenient than before, due to the cloud. So no matter who it is that is helping the customer in question, they’ll have the same actionable data instantly available. This will result in less wasted time for clients and employees. For example, Prada consumers can access to Prada digital technology or online to view or to purchase the product.

Your time is valuable, but so is your customers’ time. And, should your customers experience a problem that needs resolution, they’re going to be unhappy unless that problem can be taken care of quickly. With CRM, as soon as a customer contacts your company, your representatives will be able to retrieve all available activity concerning past purchases, preferences, and anything else that might assist them in finding a solution. In many cases, your more experienced representatives, armed with past information and history, will be able to locate a solution within the first few minutes, thanks to an accessible database of potential issues. And, should a solution not be readily apparent, then bringing in other representatives, or even crowdsourcing for answers through customer portals, is a simple matter. With CRM, customer support becomes a walk in the park. For Example, Prada consumer can go to the boutiques or walk to any Prada fashion show to have a picture what kind of seasonal design or fashion will be released to be more up to date.

Customers who develop a relationship with you will share their opinions more often. After all, if they trust you, they will expect you to listen to them. This will motivate them to tell you about opportunities they see for improving your products or services. This customer feedback can be invaluable. And if you act on it, you prove to customers that you really do listen. That can raise their opinions of you to even greater heights. People trust the opinions of friends and family members more than any form of advertising. If you get a customer like your brand enoughto recommend it to others, you’ve just recruited a marketer more effective than anyone on your staffand you don’t even have to pay them.

Discussion on Disadvantages of CRM in Business

If it’s a small business, the issues of training aren’t so much pronounced. Nonetheless, the large companies will be required to roll out training sessions for the workers. For CRM of larger scale, this will mean appointing professional to conduct the training. In many occasions, training deprives the company the time required for enhancing productivity, so this is quite a disadvantage for new CRM applications. Additionally, the CRM training is usually different for the staff and managers because a good number of these applications have specialized features and functions for executive and managers. What’s more, these additional features also require training. It should be known that the training session can be short (take a few hours) or even longer, taking several days. For example, Prada need to give their employees training phase with the new systemwhich can took a lot of time and the employee’s must know progress of Prada Company in and out.

The essence of luxury is privileged one-toone relationships. The proper database is a prerequisite for such relationships. How then to create a really perfect database? This is a painstaking task, which must be undertaken at a worldwide level. In luxury, a client’s name should never be misspelled. The implications are that the database system should be able to read many alphabets (Cyrillic, Japanese, Chinese, Arabic and so on). There is a need to check for each fi rst name, in the home country, whether it is male or female. For instance, Andrea can be either one, depending on the country of origin. Of course, the database should also be very sensitive and reactive. It should give qualitative information about the person. Such information can be inferred from the most recent purchases, or from the attendance at a PR event. It must be updated to match the client ’ s latest changes in location or in lifestyle.

Conclusion

The luxury brands of Prada are one of the world leaders in design, production and distributing of the products internationally. Luxury products give the consumer the satisfaction not only for owning the expensive products but all create value to purchase this brand again because of the high quality and good relationship. Although Prada has some challenges to their customer relationship management, they can overcome these challenges and can improve the existing customer strategies by improving their training and avoiding zero default database. As a General Manager of luxury brand opinion,Prada could develop and maintain their existing customer relationship strategies by improving more in their business strategies and to get more profit in future.

The key to giving customers satisfaction on our products and services by using customer relationship management. The relationships that you cultivate with your customer base will determine your company’s level of success. And, as with any important relationship, its level of success will depend heavily upon how well you know one another. But unlike most personal relationships, the company-customer relationship is one that may feel a bit lopsided. After all, most clients don’t have to work very hard to learn about your business; everything that they might want to know is likely readily available. However, for a company to gather information on its customers to better facilitate a working relationship can be a difficult task. And the importance of customer data doesn’t end once it’s been collected; keeping accurate and accessible records of customer transactions, preferences, needs, and concerns can easily mean the difference between a relationship that profits both parties and one that leaves everyone feeling unfulfilled.

All in all, specific CRM can allow luxury brands to address the capital issue of customer retention. But it can also have collateral, positive effects such as new customer recruitment. Luxury brands that have succeeded in making their customers feel like they are part of a family (or at least of a selective club) are able to turn them into ambassadors or even into recruiters. Indeed, word of mouth and co-optation have always been important drivers of customer canvassing for luxury brands. Organizing special events and allowing ‘high’ and ‘elite’ customers to invite friends and relatives can be a good way to trigger co-optation. For instance, Mont Blanc created its ‘Circle of Muses’ in 2005, thanks to which its current female customers can invite their female friends to come to special evenings where they can learn more about jewelry in general, or at least experience the brand and its universe for the fi rst time. In the end, real and sincere customer centricity seems to be the perfect way to take up the initial challenge of developing one’s business while maintaining, or even reinforcing, one’s brand identity.