The Value of a "Sparkling" Customer Experience
In the 1961 film Breakfast at Tiffany's, the characters played by Audrey Hepburn and George Peppard have a ring from a Cracker Jack box engraved at Tiffany & Co. (NYSE: TIF), unable to afford anything else from the glittering high-end jewelry store.
My favorite part of the scene is how happy the man at the counter is to engrave the ring. Rather than sneering at the two cash-strapped visitors, he treats them the same way he would treat a millionaire.
This iconic scene played a big part in reinforcing what one could call the Tiffany legend.
To this day, people around the world associate Tiffany with romance, sophistication and service. "Tiffany Blue," the color of the store's boxes and gift bags, is even a popular paint color.
This level of intense brand recognition - and devotion - among consumers is a result of Tiffany's careful attention to the quality of its products and the great pains it takes to offer customers an unforgettable experience.
In the age of e-commerce, transactions between retailer and consumer are often fairly, well, impersonal. So it's easy to dismiss customer experience as increasingly unimportant.
But a study in Harvard Business Review found that customers who have a positive experience with a retailer or service provider, whether in person or online, spend 140% more - and are 74% more likely to become repeat customers - than those who don't.
That's why it makes sense for a company like Tiffany to spend $250 million - or 2% of its projected net sales over the next three years - to renovate its flagship store on New York's Fifth Avenue, improving and modernizing the space.
Tiffany CEO Alessandro Bogliolo said he wants customers to view the redesigned flagship store as "a magic place." A café with a view of Central Park has already been added. Another one of the design team's goals is to eliminate lines so customers will no longer have to wait to view engagement rings.
As the study explains, improving customer experience benefits any company: The phenomenon certainly isn't limited to luxury retailers.
For example, in the late 2000s, telecommunications company Sprint made improving customer experience a core component of its business plan. It was able to reduce customer care costs by 33% as a result.
This bodes well for the Tiffany flagship renovation. When it's completed, its positive impact on sales could mean investors will be having lunch and dinner at Tiffany's, too.
So whether or not you'd describe yourself - like Hepburn's Holly Golightly - as "crazy about Tiffany's," the bottom line is clear: Companies that prioritize customer experience tend to succeed... as do their investors.