Luxury Is Love: 3 Implications for Luxury Brands to Be Successful in China

At a recent luxury leadership workshop that we organized in Asia with the top management team of an iconic European luxury brand, I asked all participants to share with me in one sentence, what luxury is for them. One executive smiled when she pointed to her Hermès bag. She looked at me and said, “Daniel, I usually do not buy expensive things, but this bag was love at first sight: I saw it, I fell in love, I wanted it, I would have done anything to get it.” To me, this is one of the best definitions of luxury: A brand that makes you fall in love. It expresses the intensity of the relationship between consumers and the brand. It is not a standard purchase, done casually without paying attention. In contrary, it is a conscious choice, driven by an emotional connection. It leads to a relationship that consumers describe as love. Let’s pause here for a moment: if a luxury brand creates a love relationship — then all rules of love relationships apply. Most importantly, at all times consumers need to feel that the brand is in love with them, too. If they have the impression, that the relationship is not essential to the brand, they will break up. And when they break up — like in real life — love can turn into hate, and those consumers, who were the most vocal advocates, will now turn sour and be lost. There is no exception to the rule, and in my experience, this is where many luxury brands fail. We find in our work with luxury brands across industries that although all managers know about the importance of customer experience management, they often underestimate the intense love relationship that customers have with their brands. Hence, while they may be good at some consumer touch points, they usually do not manage the customer journey appropriately or don’t pay enough attention to specific details. Two examples come to my mind: first, a leading luxury hotel chain that invested a high double-digit dollar amount (north of 50 million) in renovating their flagship hotel. After the renovation, customer satisfaction was at an all-time low. Reason: they still had the same staff and did not train them to upgrade their service with the upgraded facility. Result: a mismatch between higher consumer expectations and unchanged service. The result — a broken love relationship, unhappy customers, more than 50 million wasted until the staff was trained to perform in an elevated way across every touch point. A second example, an iconic Swiss watch company that is seen by many as the pinnacle of luxury in mechanical wristwatches. A friend of mine in Hong Kong bought one of their flagship models, and a screw in the automatic movement loosened and severely damaged it. My friend, an influential, avid watch collector with an impressive collection of some of the rarest and most beautiful mechanical timepieces tried unsuccessfully to get help from the brand. Messages and emails were unanswered. Finally, they suggested that he was responsible for the loose screw inside of the movement until he came to a point where his love for the brand turned into deep disappointment. Their lack of compassion, customer service, and solution resulted in him always complaining about the brand and not buying anymore from them. I estimate that the brand lost more than 100,000 of future revenue with him, and even worse, since he is telling his story to everyone in his influential circle, a lot of potential buyers in China and Hong Kong may not buy the brand given his experience. In both cases, consumers did not feel loved — in both instances underestimating the power of the love relationship and not having the right tools in place caused damage to the brand. So, what should brands do? 1. Define an authentic positioning When we identify gaps for our clients in customer journeys and brand experiences, we usually see that issues start with an insufficient definition of the brand. When we apply our luxury brand model, most of the time, while brand equity seems healthy at first glance, we find gaps especially in the emotional core of the brands. In other words, the ability to inspire consumers. And inspiration is the basis for a love relationship. This goes beyond the “why” question. Only when brands are sharply defined and when this definition can be condensed and explained with a few simple words, then consumers will relate to it. In China, where the majority of luxury consumers are under 40 years old and digitally native, any brand positioning that needs more than 5 seconds to understand will fail. And a brand that is not recognized will never be perceived as relevant and authentic. In my experience, an appropriate brand equity aspiration and definition is an area that is strongly underestimated for China, especially by global brands that often rely on their worldwide playbook and then wonder why the results in China are disappointing. 2. Understand how your brand is perceived Most brands rely on traditional market research or basic digitally-generated consumer insights. In China, this is not sufficient and will lead to failure. It is crucial to have a real-time grasp on which conversations are going on around the brand, how consumer consent is shifting and how the communication of the brand is shaping perceptions. Basic heatmaps and social listening tools are not sufficient, especially since most standard tools are breaking down with the firewalled Chinese Internet. Implementing an appropriate digital infrastructure, which should include advanced data querying and AI, and that works with Chinese consumers is indispensable. I am surprised how often I hear managers asking, do we need that? Launching in China without a clear, automatically updating data set on how consumers talk about the brand means launching in a black box and hoping for good results. Good luck with that. 3. Create communities and spread the love Once the brand is defined in an authentic and relevant way for Chinese consumers and the infrastructure is in place to have a real-time view on consumers, it is all about building communities and providing excellent service. In my point of view, traditional advertising in China is a waste of money and should be replaced by targeted digital advertising, because it is the only way to create communities of brand lovers. With the help of KOLs (key opinion leaders), those communities can be nurtured and developed. In the best case, brands create a platform for ongoing consumer interactions in both dimensions, and this also requires advanced CRM systems. Of course, managing communities also means on a broader scale, optimizing every touch point, training staff according to the brand positioning developed before and ensuring that the love relationship is strengthened touch point by touch point. When consumers fall in love, this has more profound implications than what is apparent at first glance. And managing hundreds, thousands and millions of love relationships at the same time is not easy and requires utmost precision. To succeed in China, advanced technology and the right combination of luxury strategies and tools is a precondition, it is not an option. And it prepares companies for the future. Because what happens now in China is anticipating how increasingly young and digital consumers will make their brand choices worldwide. Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité. He consults some of the leading luxury brands in the world, is the author of several luxury management books, a regular keynote speaker, and holds management seminars in Europe, the USA, and Asia. Follow @drlanger

Luxury Is Love: 3 Implications for Luxury Brands to Be Successful in China

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Published April 22, 2019

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Luxury Is Love: 3 Implications for Luxury Brands to Be Successful in China