Business Opinions: Luxury – sold or bought?

“Luxury is a state of mind” – L’Wren Scott

Apparently selling luxury goods is easier than other products because, usually, in the sales process a good salesman has to watch both the customer needs and desires and try to satisfy both of them. When we speak about luxury goods we rarely have to identify the needs because let’s be honest, who really needs a 2 million dollars car or a 50.000 euros handbag? We want those goods or services because of the story they tell about us and also about the story behind it. Sometimes you want that product just because owning it makes you feel like part of an exclusive group of people.

But in reality the luxury market is more sensitive than any other market due to the smaller customer pool and the expectations this high end customers have. You probably have as possible customers less than 5% of the population and they are not only sophisticated but also educated and know exactly what they want from you and your products. And very important, they are unique individuals with big self-esteem so they don’t respond very well to sales techniques. The bright side is that if they like your story, they resonate with you and you keep the high standards you impressed them with initially then you will have a life time customer.

Luxury sales strategies should be different and they depend more than on any other market on the sales force you have.

Discounted luxury is an oxymoron – One of the most common strategies regards prices, special offers, discounts and so on but when we are talking about luxury goods this is one of the worst ideas ever. These products and services rank very high in the eyes of the consumer and the price-quality ratio is considered fair. When you offer a discount that ratio goes down in the eye of your client, you have to keep your standards high, quality and price as well. You need the right sales force because if they don’t believe that what they sell is worth the price they ask, sooner or later they will try a discount strategy and might just ruin your business. The alternative to discounts in the luxury industry is represented by gifts. You can offer exclusive gifts to your customer related to what they are buying and also to the value of their purchase. For example, if your customer bought an incredible evening dress for a special occasion, offer her also that special occasion by giving her some opera tickets.

Create a story, don’t speak about characteristics and benefits – If buying a car was based only on characteristics, benefits and taking us from point A to point B then no one will pay couple of hundred thousand euros for a Ferrari. And yet there are a lot of them out on the streets. When you buy a Ferrari you don’t look for a car but for the story of Italian driving passion and racing legacy. You want to be part of a world were Mario Andretti and Michael Schumacher were demi gods and have a taste of that nectar.

You sell a normal item by identifying the needs of your customer and giving him the benefits required. Less fat in his yoghurt, more miles per gallon with his economic car, affordable rates on his credit but for the special products you have to give him special feelings. You have to ignore logic sometimes and create a world of your own, a world of emotions and dreams. On Labor Day, a shopping day in the U.S., we had two different approaches from Cartier and Zales. Cartier ignores completely that it’s a major shopping holiday in their primary market. Their message was our products are true love. Zales, on the other hand, ignores emotion all together and focuses strictly on reason: bargains, discounts, getting the best “real-world” deal. Which of them do you think is a luxury brand?

Scarcity – Price is set by offer and demand, higher offer – higher prices, but a brand can also become more wanted in the same way. Scarcity is the strategy that will make your customers become part of an exclusive few. We talk here about limited editions watches that just by that double in price or special events limited number items. We have car manufacturers that only build a very limited amount of cars per year, like Pagani Zonda or Koenigsegg.  They are incredible looking, high quality and high performance cars and of course very expensive but, at the same time. you have to order one long time in advance to get a chance at owning one.  People love to feel important and special and one of a kind so they will pay a lot of money if they know they are the proud owners of one of the only 3 bottles of Dom Perignon from 1924. In the 70’s even Chanel made the famous No 5 more desirable and harder to find reducing the number of distributors from 18.000 to 12.000.

Shopping for luxury has to be relaxing, no pressure on the customer and trust me, if you build your business right the luxury customer will see that and appreciate your goods or services. Use emotions, make your customer feel so special that he makes his friends envious and they just have to experience the same sensations.  Take them on a journey into your world and build that world so unique and special that they never want to leave. Let them buy. Don’t sell!