The News:
The Luxury Institute issued a white paper in April 2023 focused on the myths surrounding the definition of luxury and high-net worth (HNW) and ultra-high-net worth (UHNW) customers. The myths revolved around the commonly held beliefs that luxury brands can simply appeal to their customers based on their brand purpose and story as differentiators, that luxury customers are not willing to share personal data to enable personalization, and that these luxury brands’ training programs are educating teams to effectively manage client relationships. The white paper refutes these myths, while providing suggestions on developing enhanced customer experiences and services that address the specific needs of luxury customers.
See the complete white paper from the Luxury Institute here, or you can read the release here.
Developing Enhanced Customer Experiences and Services to Retain Luxury Customers
Analyst take:
Luxury brands and the HNW and UHNW customer segments they serve are awash in myths focusing on the specific customer behaviors in this segment, the key differentiators and appeal of luxury brands and products, and the level of preparedness and skill of workers servicing these customers, according to the Luxury Institute. The best practices for delivering an excellent CX still revolve around the core principles of being customer-centric, delivering efficient and personalized experiences, and training workers to deliver service with empathy and a focus on developing meaningful, long-term relationships, instead of short-term, transactional ones. However, brands and companies courting the HNW and UHNW segments must build on these basic CX elements, and go beyond to deliver extraordinary and enhanced customer experiences.
Create unique and premium experiences that reflect exclusivity
Research collected from HNW customers by the Luxury Institute noted that luxury brands are no longer able to trade solely on their brand stories to attract and retain customers. Luxury brands must focus on providing elevated experiences that reflect upon and drive the value and emotional elements that resonate with customers.
For example, luxury automobile makers once cornered the market on being able to provide the most advanced technologies and features in their vehicles. However, even today’s “affordable” cars include advanced safety features and technologies that are highly functional, and mimic those included in luxury vehicles. As such, both automakers and dealers must create premium experiences that truly elevate the marketing, purchase, and after-sales experience above more mainstream brands. One key example comes from Rolls-Royce and its “Bespoke” program, which allows customers to customize their vehicles to their exact specifications.
Exclusive experiences can include reserving the best features of a product or service, the use of advanced technology (such as virtual reality and augmented reality) to enhance shopping and services offerings, or creating specialized and personalized offerings that are unavailable to other tiers of customers. To maintain exclusivity, it should not be possible to “buy-up” from a lower tier of services to gain access to these types of services.
Provide employees with the tools and training to delivery customer-centric experiences
HNW and UHNW customers are rightly cautious about sharing personal information, according to the Luxury Institute. However, they are willing to share behavioral data to receive personalization, and even customization, but only if they trust the brand to only access the insights needed to personalize, and only when needed. Cybersecurity is table-stakes, and most HNW and UHNW customers want luxury brands to guarantee their data will never be disclosed, sold, or provided to any third parties without their consent, and expect luxury brands to reward them for access to the data with truly personalized, unique, and enhanced customer experiences.
To do this, employees of luxury brands, products, and services, as well as others who deliver service along the complete value chain, must be trained, and incentivized to deliver customer-centric experiences. This involves several aspects, including the desire to deliver an efficient, friction-free experience, the ability to offer personalized experiences at the right moments, and the ability to connect on an emotional level.
Predicting and removing potential points of friction
Delivering efficient and friction-free experiences should be the goal of all employees, regardless of the customer type. However, workers marketing, selling, and supporting luxury brands and services must develop the skills used to identify and predict barriers to efficiency before they arise, so that they can proactively eliminate points of friction before they occur, resulting in enhanced customer experiences. This requires workers to become familiar with all steps of a luxury customer’s journey, as well as developing their skills at reading a customer’s body language, emotional state, and situation, and then tailoring their service approach based on those cues.
Delivering personalized experiences at the appropriate time
Similarly, there is both art and science involved with delivering personalized experiences. Simply offering up these recommended products or services based on customer personas, triggers, or actions may be construed by customers as being transaction-based, rather than relationship-based. This mechanized approach runs counter to a luxury experience; workers must closely read the customer interaction, assess the customer’s emotional and buying state. If a customer is time-constrained, or there are other signals indicating their attention is focused elsewhere, the decision not to deliver an upsell or cross-sell can be a key part of delivering enhanced customer experiences.
Using empathy mapping to deliver enhanced customer experiences
Finally, brands need to connect with HNW and UHNW on more than a transactional level. Workers must receive training on how to connect the brand and its products and services to a customer’s emotional state, incorporating empathy mapping. Empathy mapping is a visualization that can lay out user behaviors, attitudes, and actions in a way that allows the employee to gauge customer feelings and perspective. This is particularly important in the luxury world, where decision drivers such as price are less important than services and experiences.
Author Information
Keith Kirkpatrick is VP & Research Director, Enterprise Software & Digital Workflows for The Futurum Group. Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.
