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Four Insights on How to Build Your Brand With Today's Luxury Customer

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Not so long ago, luxury goods and services were thought accessible only to the rich and famous—those with seven-figure incomes or inexhaustible trust funds. Indicators of class and status, luxury goods were outward signs that the purchaser had arrived.

By default, this customer purchased the best across the board. It was Chanel in the dressing room, Bentley in the garage, and Antigua for vacation. And, by definition, it all cost a pretty penny.

In the last two decades, however, the luxury goods landscape has changed dramatically. Various economic factors have created enormous new wealth—and a new type of luxury consumer whose motivations and needs are vastly different from those of the luxury customers of old.

Not surprisingly, there's a big push by marketers to position—or reposition—brands to better capture the attention of this demographic, whose spending is estimated by analysts to be $220 billion and growing at a clip of about 10 percent annually.

To inspire long-term, loyal relationships with this new breed of luxury consumer you must understand how they want to relate to your brand.

The following are four critical insights on what motivates this group, and how brands can best connect with them:

1. It's all about indulgence and expression

Today's luxury customers consider the materialistic aspect of luxury goods as secondary. Their luxury purchases are both an indulgence and a form of expression. And since they use shopping as a means to explore and express their identities, they adjust their shopping preferences accordingly. If "sexy and confident" are better expressed by Dolce & Gabbana than Gucci this year, that's what they will gravitate toward.

Also, these customers refuse to be forced into a brand's mold. Rather than default to one fashion label and dressing in it from head to toe, luxury fashionistas will combine pieces from multiple brands to create a unique signature statement. For example, it's not at all unusual to find this new type of luxury customer in a 3.1 Phillip Lim top, J Brand jeans and Louboutin boots, carrying a Miu Miu bag.

Brands need to do whatever it takes to find out what resonates with this empowered, creative demographic and respond with products that matter to them.

2. Prestige or "masstige," it must be worth it

Another thing that differentiates this new demographic is that they prioritize their spending—even if they can afford not to. They indulge in purchases they believe will make them feel good or that are "worth it," but happily buy "masstige" or even lower-cost items in categories where no luxury option satisfies their expectations.

This mixing of high- and low-cost purchases (especially in the United States) indicates a sophisticated and savvy shopper: the mom who spends hundreds of thousands of dollars on interior design but also shops for pots and pans at Target; the family who flies coach but stays at the Four Seasons; and the younger career woman who buys thousand-dollar handbags but everything else from H&M and Zara.

By the same token, today's luxury consumers enjoy spending money when they perceive that the value of the product and the price are in line. Before Apple, for example, purchasing a personal computer was a largely undifferentiated experience because the end product didn't seem to make a difference once in use. Apple conceived and delivered a clearly superior luxurious computing experience (both in purchase and in use) that people consider to be well worth its premium price.

3. It's all about the experience—Part 1

Today's luxury consumers expect an emotionally rewarding and affirmative experience with every luxury brand interaction—from introduction to acquisition and beyond. In exchange for their attention—and share of wallet—they expect favored luxury brands to evolve, surprise, and delight them.

For example, Kate Spade creates great, inclusive experiences by the continuous development, experimentation, and evolution of her brand—involving customers in the delightful results. Spade's ads, Web content, diverse array of products, and inspired collaborations (including the "as fourkatespade" line "As Four") keep everyone's curiosity piqued about what will come next. Spade's "Behind the Curtain" Web site, a pop-culture mixtape of sorts, catalogues her influences, interests, and whatever she thinks is cool.

Letting customers in on these "secrets" helps them feel like they know the brand in friendship, further deepening the emotional connection therein.

4. It's all about the experience—Part 2

Where luxury brands are at greatest risk of losing their luster is at the point of sale. Luxury consumers are extremely sensitive to how they are being treated, actively and passively. If customers experience any imbalance, discomfort, or disappointment during the actual purchase process, these negative emotions will be magnified and could cause significantly more damage to their perceptions of your brand than the very same occurrence in the mass marketplace.

The fine-dining experience, for example, is one of the most compressed luxury purchase experiences there is. Restaurants have a tiny window of time in which to get it right. And so, a star restaurateur like Danny Meyer, creator of the acclaimed Union Square Café and Gramercy Tavern in Manhattan, plus seven others, goes to great pains to create an experience of genuine, unfailing hospitality, which he describes as a dialogue—not a monologue.

He hires people who derive pleasure from giving pleasure, those who watch, listen, and proactively respond to what customers are saying during the entire process, ensuring a consistent, topnotch eating experience that results in the reputation that ultimately drives profitability.

He and his staff understand their job is to create a peak experience in which the customer feels on top of the world as a result of his or her visit; a flawless purchase experience combined with a genuine wink, nod and smile that makes the customer feel great about the entire interaction—and crave its repeat.

* * *

Marketers of luxury brands who understand what their customers want and work hard to provide it will be rewarded with a strong core of responsive and repeat purchasers who will help elevate their brands to the top shelf and ensure their most luxurious—and profitable—performance.

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Suzanne Hader is principal of 400twin (, a New York City-based consulting firm that provides research and strategic direction for luxury brands. She can be reached at

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