Professor Dr. Phil Klaus and Dr. Annalisa Tarquini-Poli recently discussed their global research on what drives the purchasing decisions of ultrahigh net worth individuals (UHNWIs) at an event I attended. (Full disclosure: I am a free guest speaker at the International University of Monaco, where Drs. Klaus and Tarquini-Poli work.) They developed a model, the MEPA framework, for how luxury managers can map their clients’ customer journey. MEPA is an abbreviation of the proposed four key ingredients of the UHNWI customer experience that drive their purchasing behavior: mismanaging expectations, extraordinary experiences, post-purchase care and achieving time savings.
In his paper (download required) “The challenges of luxury branding,” Jean-Noël Kapferer says “luxury … can be an absolute concept, referring to an idealized, inaccessible lifestyle, or it can connote some kind of excess for the sake of pleasure, beyond what reason would anticipate. ‘My luxury’ even might imply an intimate, personal decision about how a person spends money or time for the sake of pleasure (e.g., an executive taking the time to go fishing with her or his children).” How can marketers apply the MEPA model with this varied definition of luxury in mind?
The M: The Myth Of Delight And Exceeding Expectations
Expectation management (or mismanagement) is one of the most important reasons why UHNWI are dissatisfied with products, services and companies, as Dr. Phil Klaus and Dr. Annalisa Tarquini-Poli suggest. Luxury companies, especially the ones catering to UHNWIs, revolve their communication and advertising strategy around the promise that they will “exceed the client’s expectations.” Regrettably, if they don’t know what clients expect, this message can have the opposite effect. When you raise expectations, you also raise the chances that your client will not be satisfied.
From a management viewpoint, I believe it is difficult to understand what constitutes a good experience but is very simple to pinpoint and avoid a bad expectation. Every marketing manager should conduct exploratory rather than confirmatory research to understand what truly matters to their customers. For example, instead of conducting surveys, they should have conversations. To do this, they should leverage trained researchers.
Researchers, such as marketing and consumer behavior scholars, are generally trained in psychological techniques, such as soft laddering, which allow them to explore what really matters to clients. A paper published in the Journal of Targeting, Measurement and Analysis for Marketing explained that soft laddering involves “conventional, semi-structured interviews, where the natural flow of speech of the respondent is restricted as little as possible.” Academics also tend to use more rigorous, reliable and validated methods than we often find in market research practices. Equally important is that managers are ready and willing to use the insights they gain to rethink existing knowledge and strategies.
The E: Experiences
Today’s luxury marketing focus is often on the experiential part. Luxury companies emphasize retail, store, website settings, design, layout and other “sensory” elements. Dr. Phil Klaus and Dr. Annalisa Tarquini-Poli’s research suggests to me that what customers really care about is the enjoyment and experience—not the experiential settings but the private sense of luxury. For UHNWIs, what really counts is the memorable experience they are able to have with loved ones.
In research by Henrik Hagtvedt and Vanessa Patrick, a luxury brand is defined as one that “has premium products, provides pleasure as central benefit and connects with consumers at an emotional level.” Kapferer further suggests that luxury brands can be segmented into four categories: luxury as personal expression, luxury as affirmation of power, luxury as the art of living, and luxury as membership (such as the search for respect), all of which have an experience-based element to them.
Therefore, I advise marketers to focus on the experience, not the product. The product is the facilitator of the experience, not the experience itself. In the yachting industry, experiential campaigns should focus on the experience rather than the traditional focus of yachting advertising—the yacht itself. Marketers should realize that the yacht is just a facilitator of the experience, not the focus. For example, rather than showing the product, the campaign should emphasize how the client and his beloved ones enjoy their time on the yacht. Rather than showing models by the pool, the campaign should mirror “true experiences” a family has on a yacht.
The P: Post-Purchase
We all believe that luxury consumers are purchasing products because of the superior quality, craftmanship, exclusivity and uniqueness. But actually, “the best-in-class” reason why luxury consumers are purchasing a product is the experience clients have with a product or a service after they purchase it: when they start using it. In yachting, someone only becomes your client after signing a contract for a yacht. The pre-acquisition phase is important, but the post-purchase phase is even more important.
With this in mind, I recommend shifting your strategic focus toward integrating the post-purchase experience as the most crucial part of your customers’ purchasing and word-of-mouth behavior. Shift your financial efforts to delivering the best experience when clients start using your offerings, not when they are buying them.
The A: Achieving Time Savings
According to Servion Global Solutions (via IT Pro), AI could “power 95% of customer interactions by 2025.” Why would we prefer AI over human interactions? I believe the answer is because AI delivers significantly more consistent and convenient experiences.
Dr. Phil Klaus and Dr. Annalisa Tarquini-Poli’s model suggests (download required) that time is one of the most important elements of the UHNWI’s decision because time is what they really desire.
Marketers should highlight this part of the experience and how their offering delivers it by using, for example, testimonials highlighting how clients perceived it and why it is important to them.
Conclusion
Explore and validate what matters most to the UHNWI. In a 2010 paper (download required) on luxury consumption in China, “eight motives were identified: self-actualization, product quality, social comparison, others’ influence, investment for [the] future, gifting, special occasions, and emotional purchasing.” Therefore, it is important to consider a market’s needs when you’re planning a marketing strategy. Why do consumers do the things they do, why do they choose you over your competition, why do they come back and why don’t they come back, and how can you make them come to you first and make them come back again and again?
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