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Say Hello to Josh Freedman. He possesses all sorts of family trade secrets involving really expensive things. Upon my first visit to Freedman Jewelers, I was given a carefully guided tour of the vault and was able to hold some really large diamonds in the palm of my hand.

As Josh steps up to the role of Chief Marketing Officer at the family owned business in Boston, Massachusetts, I thought it would be a great opportunity to field some questions pertaining loyalty in the luxury goods market. From a loyalty perspective, a jewelry company would approach a loyalty program differently than a Bagel Shop, so I wanted to get an inside scoop on what motivates buyers in the jewelry market. Enter Josh Freedman, the first guest post to be featured in the ClientRocket Insider.

ClientRocket: Hi Josh. Tell me a bit about the jewelry business.

Josh: The jewelry business is a very interesting industry. I have been working in the jewelry business for 2 –1/2 years full time, but have been involved in the store ever since I was a kid. Our business, Freedman Jewelers was founded by my grandfather in 1945 and has been in the same location and in our family ever since. The first thing I noticed was the customer service aspect of the business. It’s extremely customer oriented. Our business is based on relationships & loyalty. Our staff gets to meet entire families and over time learns everything about their family. Where everyone resides, what they’re doing with their lives, when their birthdays are and so on.

ClientRocket: Do loyal customers have a noticeable impact on your bottom line?

Josh: Loyalty is huge in the jewelry industry. Our entire business has been based on loyalty, referrals, and relationship building. Here is a typical situation at our store. A gentlemen in the market for an engagement ring is referred to us by his friend. The gentlemen has a great experience and buys his engagement ring here. A year later, he and his fiancé pick out their wedding bands. A year later, he is picking out his wife’s anniversary present. Three months later, his wife drops off some jewelry items that need repair. Our goal is to form a lifetime relationship with our customers where we can assist them in any way possible whether it be selling them an engagement ring or birthday present to jewelry repairs to even assessing the value of their recently deceased grandmother’s jewelry. For our store to thrive, we rely on customer’s referrals, word of mouth marketing, and forming long-lasting relationships.

Loyal customers greatly affect our bottom line, these are the customers who come in annually for Christmas presents, anniversaries and any other life occasion where jewelry is an appropriate gift.

ClientRocket: Does technology influence buyers in the jewelry market?

Josh: Technology greatly influences buyer in the jewelry market. There are pros & cons to technology’s influence in our industry. The pros are we can use technology to our advantage. Nowadays, there are so many different styles and designs for jewelry, it’s impossible to stock them all. A customer can bring in a picture of something they like that we don’t have in stock and we can design something very similar.

One of the main cons is there are thousands of jewelry websites out there showing a variety of goods. Not all gemstones are created equally. There are varying degrees of quality which cannot be expressed through online images. A lot of these online businesses are selling inferior quality which are selling because the prices are lower.

My main objective is to have an easy, simple presence which gives a prospect the motivation to come to our store. Jewelry is something that needs to be tried on, felt, and seen in person to see how it looks on you and how it sparkles.

ClientRocket: What are some of the trends occurring in the jewelry and luxury goods markets presently?

Josh: The luxury market has been an up and down roller coaster ever since the economy troubles of 2008. Some aspects of the jewelry industry are greatly affected by the economy such as fashion jewelry, high ticket items such as expensive diamond bracelets, heavy gold items etc. Precious metals & commodities such as diamonds, gold & platinum have rocketed up in price. (Due to investors losing faith in US & European currency and opting to invest in actual commodities such as gold, This is a whole other issue As a result of the rise in precious metals we have incorporated alternative metals into our jewelry line such as an increase in silver fashion jewelry and tungsten carbide (man made steel) wedding rings.The engagement and bridal market are recession proof. People may spend less on an engagement ring then they would have several years ago, however they will still get engaged. As a result, we have improved our presence in the bridal market, running a wedding ring trunk show every spring in our store. We still want to maintain our presence in gold, platinum and diamonds to reflect our standards of quality.

ClientRocket:  How does Freedman Jewelers distinguish themselves from other jewelry stores in the crowded space?

Josh: Is this the point where I am supposed to sell my product?  I believe we have a great thing going. We sell high quality merchandise with an emphasis on customer service and relationships. We won’t compromise on our definite of quality, everything we sell is a reflection of our business. If we sold a diamond that didn’t sparkle well or had a tint of yellow, it would reflect poorly on us. The jewelry business is completely built on trust. People are willing to spend thousands of dollars for items so small (yet so valuable and sparkly) you have to trust the people you are dealing with.

Freedman Jewelers has always been a family owned business. You will always see a familiar face at our store and get a boatload of information about our products and the jewelry industry (maybe information overload) We care more about the relationship with the customer than making a sale so if we feel like we are unable to help you or lack your trust, we’ll turn away your business. Another point that really distinguishes us is that we won’t ever bad rep another jeweler. I’ve noticed many other jewelers doing this: you should always sell yourself, not down the competition. Anyways, I think that’s enough for a sales pitch. Just take a look at our reviews and see for yourself.

ClientRocket: How does e-commerce competition affect Freedman Jewelers and do you think an online store could ever replace a brick and mortar jewelry store?

Josh: E-commerce competition definitely affects our company. It still boggles my mind, but it’s a fact I’ve grown to live with. I’ve always wondered how people can spend mega money on the Internet without seeing and feeling the item in person. E-commerce competition can be a huge issue on expensive purchases such as diamonds & engagement rings. On the internet, a consumer can buy a diamond without paying sales tax. This can range from 5 – 10% depending on the state. In Massachusetts, sales tax is 6.25% so if a customer buys a $5,000 diamond (about the average for our store) they have to pay an additional $312.50 in tax to the state. Usually sales tax is not a big deal on smaller purchases but when you are spending mega money it comes into play. We counter this sales tax handicap by going above and beyond in our customer service. Customers are offered free ring resizing, cleanings, maintenance work, complimentary products for in home jewelry cleaning and so much more.

To answer the second part of your question, I 110% don’t believe an online store could ever replace a brick and mortar jewelry store. An e-commerce store only functions in selling jewelry. Can an online store help you with repairs, show you diamonds in person, and test gold for you? There are so many things that require a jeweler’s attention. There will be always be a need for brick and mortar jewelry stores as people need to trust the person they are leaving their jewelry with.

ClientRocket: Relationships are crucial to the jewelry business. How could you utilize technology to strengthen relationships with your customers?

Josh: Another solid question Dave and something we are currently working on and improving. We recently redesigned our website back in January 2011. Previously, the website was a very first generation website, filled with tons of information, but also very cluttered and not user friendly. I decided our new website needed to be simple yet elegant, user friendly, easy to navigate and engaging (figuratively and literally ) We added a diamond / engagement page briefly discussing the process, a request form and what sets us apart from other jewelry stores. We purposely made this page briefly as we are looking to interact directly with customers whether it be through email, phone or in person. Ideally, we want our customer prospects to come in the store as diamonds are something that need to be seen in person to make an educated buying decision so you can compare in person diamond flaws, differences, size etc. We have easy to browse jewelry pages with high resolution images for each item.

Nowadays, we are able to custom design anything from engagement rings to a new diamond necklace. Even up to 10 years ago, if we did not have a ring already made up it would have been difficult to accommodate that customer. Today, with the help of CAD drawings and wax molds, we can design anything you can dream up. Being able to custom design helps us retain customers even if we don’t have the jewelry piece they are looking for in stock and ultimately strengthens our relationship.

ClientRocket: How does the Freedman Jewelers of today compare with the Freedman Jewelers of generations ago? What are you doing the same and what is different?

Josh: That’s a good question David. The Freedman’s of today has evolved over time, but we have stayed true to the same ideas that the business was built on. Freedman Jewelers was founded in 1945 by my grandfather with the idea of selling beautiful, high quality jewelry at fair prices with attention to service, relationships and integrity. The business began as a completely word of mouth marketing business with no advertising. My grandfather was a larger than life figure, heck our business used to be called David C. Freedman Inc and not Freedman Jewelers. My grandfather and his staff networked through the city and suburbs, which was extremely effective at the time. The business relied on customers coming to the store without any sort of promotion. My grandfather had loyal customers through the store, but he had no way of tracking it whatsoever. There was little to none marketing data being used and little to none customer information actually being written down. (Sure it was harder those days without computers)

Today, we have become more in tune with technology and collecting data. We have a customer portfolio system, we collect all prospective customer’s emails, birthdays, anniversaries, addresses and so on. We send out monthly email newsletters, blog weekly, are involved several forms of social media (Facebook & Twitter, maybe Youtube soon). We are still sticking to our brand’s values and orgins of selling the highest quality jewelry at fair prices, educating our customers on all the aspects of jewelry (4’cs of diamonds, qualities of gold, repair work etc) and the main focus of building a relationship with our customers. The relationship aspect is mutually beneficial. Freedman Jewelers benefits from many purchases and opportunities to help customers while customers have the piece of mind of going to a place they trust and getting a fair price and a product in a timely fashion.

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Today I am rallying the loyal ClientRocket fans to see the fundamental flaws in the CheckPoints program. The CheckPoints program is completely customer facing and can potentially harm the business that probably pays big bucks to participate.

CheckPoints works like this. Customers use a nifty mobile app to scan barcodes on products in nearby stores to earn points for visiting these businesses.  Then you are supposed to put the item in your basket and check out. Right? Or you just put the item back on the shelf and continue scanning items in the store… am I the only one who thought of this, really?  The problem with this system is that it doesn’t record the points at the cash register – the point of sale. The CheckPoints system puts the burden (enjoyable task?) on the customer to scan each item to earn their points. Sounds like fun right? Even with a fancy iPhone app, customers are ultimately creatures with a short attention span. Once the next captivating shopping app comes out, customers will probably stop scanning for CheckPoints.

The solution is simple. Remove human nature from the equation and rely on the business to automatically record the customers’ points.  Say you’re at a grocery store; the clerk at the checkout register scans all the items in your basket and then asks you if you belong to the Rewards Program. You can either say no, and enroll on the spot, or say yes and scan your plastic card, iPhone app, or provide your email address.

From ClientRocket’s perspective, the business would receive far greater value if they collected their own data. This data would be usable and accessible through a Loyalty Operator’s reports for the business managers. There could still exist an iPhone app for the customer to check and redeem their points, but the store employee will do the tedious scanning since they already do scan each item.

From the Loyalty Operator’s perspective (i.e. CheckPoints), businesses would pay a premium to participate in the community program as well as the ability to offer their own Points promotions, especially one that were seamlessly integrated in their systems. The loyalty operator makes money like any other business through reward redemptions, participation fees, or sales based percentage funding.

To effectively compete with CheckPoints, the opportunity requires a PHP programmer to build on the ClientRocket API and a crafty front-end developer to design the marketing site and eventual iPhone app. Our team would be happy to combine forces with your team to create a smarter loyalty product. Just saying… we play nice with others (when we’re not picking fights).

This is just one of the endless number of ways that ClientRocket can help your business’ next (first?) loyalty project. Our technology and loyalty experts assist in the creation of amazing and powerful loyalty applications with the right people in mission control.  If anyone is interested in creating such a program, please don’t hesitate to reach out. We’d love to hear your crazy, out of this world idea—they’re the only ones that ever make a difference.

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So your business now has a rewards program.  You can now check that off the list of things “recommended” to do by the marketing gurus you pay a lot of money to keep you up-to-date with the 21st century.  You then start to wonder if all you’re doing is paying fees and giving away rewards for something you would have been doing any way.  Besides, true branding is ONLY created through top-notch service and professional know-how, NOT marketing gimmicks, right?  Wrong.  Marketing is the way you inform people of your brand. It’s sort of like the chicken or the egg, not sure which came first.  It’s time to deploy the real weapons in your marketing arsenal and they all relate to Reporting Analysis.

Just as you’ve read about Google Analytics and how important it is to monitor the traffic on your website, you’ll now hear terms such as entrenchment and retraction that describe how well you’re keeping the clients you’ve already established a relationship with.  Entrenchment is a term that defines the ability to keep a client once they have begun to do business with you.  Retraction has to do with keeping the clients that might have fallen out of touch.  How much repeat traffic and business are you really getting out of each client and is there more that can be done to maximize revenues on a per-client basis?

This blog post was written with the idea in mind that a client’s behavior can be altered through strategic marketing.  Before you can even begin to analyze how successful your incentive levels are, you’ll need to determine what statistics and reports your rewards program offers.

First, I’ll give you a short example:

Jewelry stores have a few major Holidays and events that they direct the majority of their attention to: Birthdays, Christmas, and Anniversaries.  Let’s call this the Big 3 for Jewelry Store Marketing.  It’s not complicated to explain that a single household would have at least the Big 3 keeping them coming back to the marketplace to purchase jewelry every year.  What’s to keep them coming back to one single jewelry store rather than finding the next best deal?  Loyalty.  What type of incentive encourages loyalty? Rewards.  So, knowing this simple truth can bring someone to believe that the concept of reporting could be vital to a jewelry store’s retraction campaign right?  All a jewelry store has to do is look through their reports and test to see which of their clients are only coming in 1-2 times during the year rather than maximizing the Big 3!  Then, that business can target those clients that are not showing loyalty and test promotions to see if they can turn every client into a 3-times-a-year client!  That’s big money.

Once your business is up and running with a loyalty program and customers are beginning to recognize its benefits, you’ll need to take the time to analyze how successful your program is.

Anyone can tell you that advertising is not an exact science. It can take a lot of effort to keep the momentum of a successful business or grow a new client base while building a sound foundation for years to come.  The only way you’re going to know how successful your strategy truly is will be by running an effective and accurate list of reports.  You should first determine if the loyalty program you’ve worked so hard to establish is doing it’s job by checking to see if customers are not only earning points but spending them, as well.

Every single customer that comes into contact with your business should be immediately aware of what they can earn.  They should have two ways of earning points: purchases and referrals.  Neither reward generator is more important than the other, however, it’s a good idea to spend more than just a moment during your busy months to focus on how sales reports can bring you increased profit.

Big spenders are often unaware of loyalty programs.  Big spenders usually know other big spenders.  Depending on how high your margin is on your good or service, it may be worth it to spend specific time and/or attention on just these customers alone.  You could create a separate campaign for these big spenders so you could run a specific report just for them. A referral from a loyal client is always more successful than a no-name promotion.  Let your customers increase your brand recognition and your business will grow.

Once you’ve analyzed your rewards program through reporting analysis, it’s time to start analyzing your attendance and average sales revenue.  Your attendance should be somewhat evenly distributed from month to month but you will of course witness some spikes every once in a while.  Although it is great to have one outstanding revenue generator for your business, it’s more important to keep your products, services and staff for the long run–giving your customers the warm-fuzzy feeling they want. Whether a customer has been coming to your studio for a few weeks or several years, chances are they want to feel like they are a regular so they can get attention where/when they feel necessary.  Not only is it important to analyze attendance but average sales revenue will help you determine if your prices are set according to how often most of your customers make use of your business.  If you’re not making profit, it’s not worth running your business, period.  Even a non-profit can make revenue over what was planned; it’ll just serve to benefit your cause.

Call 704.516.2496 or email David at DL@clientrocket.com for more insight on Reporting Analysis for Google and Rewards Programs.

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