Why Consumer Breakups Are Luxury’s Costliest Mistake

Key Takeaways: After analyzing customer experiences at a Swiss luxury hotel in Zurich, brand breakups were found at two seemingly minor touchpoints: the breakfast area and the dining area. Typically, a luxury brand breakup does not happen because of the core service delivery, such as the hotel room or the purchase experience. But in many instances, it happens because of seemingly tiny details. Paying precise and rigorous attention to their customer journeys would prevent luxury brands from losing millions of dollars in revenue. Picture one of the top US customers of one of the most successful luxury fashion brands. She regularly shops for amounts that exceed several hundreds of thousands of dollars during one visit. She gets invited to the brand’s private space for shopping (reserved for brand VIPs), and the flagship store she frequents often closes so she can shop in total privacy. One would expect this critical customer relationship to go smoothly every time. Yet, this is what happened: After purchasing hundreds of bags, one of the customer’s bags had a significant defect on the inside, which the client only recognized upon returning home. The next day, she went to the store unannounced and was attended to by a different sales associate, who did not know her. She politely asked if she could exchange the bag for a new one since she didn’t use it. Yet, her request got bluntly denied. Instead, the sales associate offered to repair the bag, which wasn't acceptable to the customer, as the brand created an unpleasant "take it or leave it" feeling. After this interaction, the customer left the bag in the store, turned around, and departed for good. She never bought another item from the brand. The revenue loss counted into the millions. But even worse, the client got so furious that she repeated this story to her wealthy and influential friends — and many of them were also the brand's top customers, causing an avalanche of lost clientele, revenue, and reputation. One single interaction, after years of loyalty, was enough to cause a crucial brand breakup. And if you think this is the exception, think again. Our research indicates that most luxury brand breakups happen similarly. They are rarely caused by what many would call a "major" issue. Instead, they often get triggered by a seemingly minor interaction between the customer and staff. But they matter because those interactions signal to the customer that the brand does not care or take their issues seriously. That leads to a quick escalation of emotions, followed by a breakup. As such, years of trust get destroyed in a single minute. When I recently analyzed the customer experience for a Swiss luxury hotel in Zurich, two breakups happened at two different touchpoints. The first was at the breakfast area. A guest had to wait two consecutive days for a table to get cleared, and the service took slightly longer than expected. During the same breakfast, coffee was available from a single machine only, and a permanent queue of guests trying to get their coffee rendered the waiting time between five and ten minutes. That was enough to cause anger and a subsequent breakup reaction, despite an otherwise excellent stay where the guest was extremely content with everything from the spacious and luxurious room to the friendliness of the staff. However, two consecutive breakfast annoyances were enough for the guest to decide never to come back. In the same service audit, another group of guests broke up with the hotel in the dinner restaurant because they tried to order dinner at 10.01 pm — one minute after its kitchen service officially ended. They told the front desk staff at checkout that they would never come back, based on what they perceived as inflexible and inconsiderate staff behavior. They loved everything else about the hotel but were furious it didn't make an effort to help them in an important situation. Typically, a luxury brand breakup does not happen because of the core service delivery, such as the hotel room or the purchase experience. But in many instances, it happens because of seemingly tiny details causing a customer to feel undervalued. But, in the end, only the customer perception matters — not what the brand thinks is right. I always say that luxury is very similar to a romantic relationship. When brands are doing their job right, the customer cannot help but fall in love with a brand because it creates extreme value. Consequently, luxury customers expect permanent attention and affection from the brand. One negative interaction is enough to break trust, leading to an immediate and often permanent brand breakup. And these breakups come at a significant price. As with a romantic breakup, customers who end their relationships with a brand hardly ever just "walk away." When they leave, they leave angry, emotional, and ready to share their feelings with others. Sadly, brands are often unaware of the situation and, therefore, cannot intervene. Luxury brands regularly lose many of their best customers because of insufficient processes, a lack of personnel training, or simply slow, inflexible, and time-consuming service delivery. Most breakups would be avoidable if brands paid more attention to the customer journey. When I audit and optimize brand experiences, I sometimes ask myself if managers of some luxury brands ever try to experience their service from a customer standpoint. Often, paying precise and rigorous attention to their customer journeys would prevent losing millions of dollars in revenue. After a breakup, it is rare for a brand to win the customer back. In most cases, those customers are lost forever and cost significant reputational damage. Therefore, my advice is to take potential breakups very seriously. Avoiding them requires rigorous brand audits and customer journey optimization. To avoid breakups, brands must have strategies and procedures that minimize risks in critical service delivery touchpoints. Not doing this is almost certainly costing you your best clients — if not now, then over time. It is the costliest mistake many luxury brands make, so do not let it happen to you. Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the professor of luxury strategy and extreme value creation at Pepperdine University in Malibu, California. He consults some of the leading luxury brands in the world, is the author of several luxury management books, a global keynote speaker, and holds luxury masterclasses in Europe, the USA, and Asia. Follow @drlanger

Why Consumer Breakups Are Luxury’s Costliest Mistake

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Published November 02, 2021

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Why Consumer Breakups Are Luxury’s Costliest Mistake