21 Oct 2014
High-end retailers are famous for being intimidating and supercilious. Whether it's a cultural artifact or an actual reality, the perception exists that high-end stores tend to treat customers poorly, especially if they are not immediately wealthy. Conventional marketing wisdom would say that this is a terribly negative strategy, and that the better customer service a retailer provides, the happier the customer will be, and the more likely they are to purchase from you again. Surprisingly, a new study that will be published in an upcoming edition of the Journal of Consumer Research by Darren Dahl has found that when it comes to the highest of the high-end retailers, the opposite is true.
Yes, you read that correctly - as long as a brand is perceived to be a luxury high-end brand, customers actually respond more positively to being treated poorly by the sales staff. At least, it's 'positive' when it comes to the bottom line of the retailer's books. According to the paper, "Rejection by a brand increases consumers' desire to affiliate with it, and they do so by increasing their willingness to purchase, pay for and wear or display items from the rejecting brand." This is incredibly counterintuitive, but it seems to only apply to high-end brands. If the brand or retailer is considered to be cheap or budget, then the effect of poor service is completely different.
Additionally, the effect doesn't seem to apply equally to everyone. Dahl was quoted as saying, “Our study shows you’ve got to be the right kind of snob in the right kind of store for the effect to work." In other words, the more you idealise a certain brand, the more likely you are to respond favourably to being rejected by it, which is completely counterintuitive to traditional marketing wisdom.
In the no-holds-barred world of retail, where a tiny competitive advantage can be the difference between success and failure, it will be interesting to see how various retailers attempt to capitalise on the results of this study. Even more interesting will be possible applications in the world of e-commerce. When it's impossible to assess a customer's potential net worth and spending habits simply by looking at them as they walk through the front door of a shop, we may find that the 'big data' on our shopping habits being compiled by various retailers is sold and consolidated to form a sort of digital buying power scale. But will customers allow it? Only time will tell.