What does it mean for luxury companies and strategic experience management?
by Dr. Tiia Mäkinen and Tanya Greiner
Luxury experience is being redefined. It is moving from a one-off event to integrated and long-lasting. From one-directional into co-created and unique. From privileged into personally meaningful and value driving. This redefinition of the luxury experience is not driven by luxury companies themselves, but rather by their customers, and their changed behaviour and values.
The essence of success (or even survival) in the luxury business is to truly understand the customer behaviour and their changed experience landscape. How do customers define luxury experience today? What are their value drivers? What engages them and what does not? What is the context for what customers experience and why should they care what luxury companies do?
This singular focus on the customer is only one side of the game. The culture, mindset and internal process and organization of the company will be an essential part of the luxury companies’ abilities to deliver a meaningful experience for their customers. And, ultimately profits for the company.
The question therefore arises whether luxury companies are ready for the new luxury experience which is co-creational and customer-centric? Are they prepared to fundamentally change their approach and deeply ingrained beliefs about the customer, and deliver a redefined customer experience? Are they ready to internalize the new customer experience into their company culture and ways of working? Redefined luxury experience requires a new type of luxury company set-up and way of working. Because in the experience economy:
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It’s not only about how customers experience, it is also about how the company defines, designs and delivers that experience.
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The experience starts and ends with the customer
In the experience economy, a deep understanding of your customer should be the raison d’être, for the company. Getting a clear picture of who “the customer” the company focuses all their experience management efforts around an understanding of what kind of an experience their customers is after for, is mandatory.
As the experience itself is defined by not only being rational but also emotional, behavioural and subconscious, new approaches and methodologies to understand interdependencies of experience elements are needed. Investing in customer behaviour and customer needs understanding pays off in the form of meaningful insights which can, in turn, guide the company into a smarter use of scarce resources.
How customer insights are used internally defines success
Genuine customer understanding itself is not enough unless this insight is put into action and used as a basis for a developing an experience strategy. Instead, what we more often see is that, the company culture and internal processes and organizational set-up are what define the way customer insights are used and understood. In essence, this is about how the company and its employees “live and breath the customer”. Creating a new experience strategy requires relentless focus but also a profound challenge of the existing internal assumptions about who the customer is.
The company culture also defines the underlying approach towards customers and attentiveness towards customer feedback. Are front line staff, client advisors’ feedback and input really being heard and integrated? Are luxury companies, for example, able to co-create with their customers? Integrate them into the strategy development process? Would there be acceptance and willingness within the company, among employees and management, to open up for the experience development process like that?
The redefined customer experience requires a new way of thinking about the employee experience and the ways the company itself operates. Hence, the better the organization is able to adapt to the ever-changing customer behaviour and stay agile and adaptive, the better the chances to survive in the future where insight is a key.
Experience is the new marketing and requires a new mindset
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Reaching out to new (kind of) customers means speaking their language. And that means embracing new forms of culture and communication.
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Managing an experience strategy today is a lot about transforming a traditional set-up of marketing communications (e.g. paid, owned, earned media) into holistic experience strategy and experience vision, which ensures consistency in the story and engagement. The ability of the (marketing) organization to think long-term rather than short-term and strategic rather than purely tactically, challenges the way traditional marketing and the company operates and is measured.
What is needed is a strategic, big picture view, on how to develop and drive the new luxury customer experience. It is the very ability of the company itself to adapt as an organization to the ever-changing needs of the customers. What is needed is a mindset shift inside the organizations to embrace holistically the changes happening outside. Does the company culture genuinely embrace innovation and is it open to change? Does the organization set-up allow it to react and act in agile way in the new reality?
Drive the transformation with an experience-based measurement model
Being able to deliver new kinds of customer experiences does not happen overnight nor in a quarter. Experience transformation is a journey. For this reason, it is important to remember that the transformation is all about the people: the employees (and eventually the customers). It is about the management who are made responsible to make the transformation happen. It is about the employees who need to know what is expected and are being made able to operate in the new setting. It is about the culture, the way the work is done and what is emphasized and how.
In order to drive the transformation, it needs to be clear for everyone of what measures are being used i.e. when have we been successful? The measurements need to be transparent, clear and drive the change into the right direction. Measures need to showcase what works and why and how they are linked to the overall transformational journey. Therefore, questions to be asked at this point in the company require guts, transparency and honesty. Many companies use “self-centred” measures which have been historically defined to drive the success of the company from their own perspective (or shareholder or owners’ goals) not necessarily from clients’ perspective i.e. customer experience measures. Finding a balance with the company-driven measurement and customer-driven measurement enables the company to drive experience strategy forward in sustainable manner.
To sum up: Inside-out and outside-in experience architecture
Your customers define what luxury means for them, so in essence to wow the new luxury customer is to genuinely understand what they will want before they have thought of it. The better companies understand, “live and breath”, their customers and their behavior and needs, the better they are able to deliver customers something which they define relevant and meaningful, and which they are willing to integrate as part of their life.
The companies which will succeed in the experience economy will be the ones who take a holistic approach to experience design – as an outside-in to inside-out experience architecture. The companies who are fundamentally ready to challenge the way they operate today and align themselves to what customers are looking for. The experience architect is the link between strategy and execution, drives innovation and differentiation, creates a long-lasting emotional bond with customers and provides a sustainable source of competitive advantage. It also has a radical impact to the way the company itself operates, measures success and drives employee engagement and company culture. In essence, creates smart, new kind of luxury business.
Author
Dr. Tiia Mäkinen
Tanya Greiner
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Musta Experience GmbH is a global experience strategy consultancy based in Zurich, Switzerland. www.musta.cx
We co-create and collaborate with our customers to
- Understand their current customer and employee experiences through actionable insights and innovative collaboration tools
- Develop meaningful experience vision and engaging experience strategy for their journey to success in an experience-oriented world
- Design relevant experiences for customers and employees alike which lead to successful business outcome
- Transform their organizational systems and processes into a sustainable experience architecture and truly client-centric approach
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