CRM In The Luxury Market: The Challenge Of Inclusivity Vs. Exclusivity
By : | February 25, 2013

Customer Relationship Management in any market must, of course, be consistent with the general marketing strategy since any deviations from a central theme would invariably confuse the consumer. That being said, each market segment reflects the psychology of the target audience, and constitutes the cornerstone of any and all efforts at building and ensuring loyalty.

Specifically, the foundations of the luxury market reside in its real and aspirational qualities. Real in the sense that true, consistent luxury consumers are those whose lifestyles can clearly support the inherent superior cost of luxury goods. Everything must come from a high end purveyor in one form or another. The badge value is associated with the known wealth – as opposed to the pretended wealth – of the consumer. In a word, real luxury consumers are simply rich and can both afford and require superior AND more costly products.

The aspirational luxury consumer seeks identification with those who can actually live what still remains beyond their reach. And yet, certain products, like necessary accessories, enhance more ordinary products while punctuating the consumer’s lifestyle with accents of wealth, without actually being able to fully ensure it. In a word, better to have a few badge products announcing one’s intentions – if not yet one’s reality – than to have none at all.

Luxury separates the market and its consumers, requiring certain exclusivity determined more by cost than by any more arbitrary means of possession (e.g. social class, etc.). And inherent in the word exclusivity is exclusion – basically prohibiting certain elements from joining the select group.

On the other hand, inclusiveness – the root of all aspirational marketing – thrives on the promise of some future entrance into the select group. Such ambitions may be real or imagined, but the successful luxury marketer knows where to draw the line, which products to offer to the mass market (however aspirational), and which to reserve for its core consumers whose exclusivity must be protected at all costs.

From the perspective of CRM, this presents an interesting challenge on many levels.
First, to ensure loyalty among the truly wealthy, they must know that they will always be different from the others. To lose their exclusivity, and the privileges (imagined or real) which accompany it, would be to lose their identity – something no consumer would accept and certainly something no marketer would endorse. So, any CRM program for the true luxury consumer must be built on their exclusivity, yet include a certain inclusion – ironically – with others whose lifestyles support similar consumption patterns. Like seeks out like, and association both validates and protects their privileged status.

Second, not only must the loyalty strategies support such separation, they must be sustained- even reinforced – by limited product ranges designed – indeed reserved, for them. Commoditization is the antithesis of exclusivity in luxury, and can represent a serious threat to any true luxury brand. There can be no tolerance for any suggestion, let alone evidence, that reserved distribution has been, or will ever be breached.

Third, wealthy people want to associate with, be identified with, others sharing their preferences, and CRM programs need to be designed to also allow them to develop a sense of belonging, of inclusion, in the privileged class of consumers. Ensuring lifestyle consistency guarantees a brand its longevity and must be carefully nurtured over time to reflect evolutionary shifts in taste, avoiding at all costs sudden shifts which would suggest any instability since “revolution” will always be seen as the enemy of these consumers whose values will fundamentally remain conservative, regardless of how socially progressive they may view themselves.

Successful designers, jewelers, car manufacturers, to cite but a few categories where luxury plays a role, have endured over decades without following any trends or deviating from certain core principles of elegance and exclusivity. Think of Valentino who, though recently retired, has perhaps the most devoted global clientele. Compare Harry Winston’s loyal consumer base with that of say Tiffany’s. One you can just walk in and shop around with the hundreds of other tourists. The other, well have a visit and discover the difference for yourself. And what car collection is complete without a Rolls Royce – or two, or three – many of which are vintage. You probably won’t find any Mercedes Benz or BMWs in the same garage.

Aspirational luxury consumers represent another sort of challenge in that their world is in full mutation, a key element in their ambition. They seek further and have no solid sense yet of having actually “arrived.” Their values are therefore generally more open-ended as they look to their models for inspiration and guidance. Their goals are more inclusionary, the emphasis being on joining rather than to exclude.

CRM programs for them should seek to build a far broader constituency, since they derive validation from this emergent class, and are as yet unsure of their newly acquired status. This has allowed them to separate themselves (exclusion again, but in another form) from that segment from which they have risen, placing the emphasis on both their realized progress while still pointing to what remains to be achieved. One can remind them of their progress. One should remind them of their progress. But as their consumption is driven by available means, not entrenched lifestyle, its definition will be limited in ways the true luxury consumer has come to ignore. To remind the luxury consumer of anything but their reserved status would be suggestive of regress and anathema to them.

In the finely tuned interplay between inclusion and exclusion, CRM programs need to be very mindful of who their specific audience is and how best to serenade them in subtle harmonies so as to benefit each segment – the true luxury consumer and the aspirational luxury consumer. The music must be familiar, rich and carry the appropriate message. There can be no cross-over or confusion. – See more at: http://luxurynext.com/luxury-crm-market.html#sthash.wXJcfmKk.dpuf

Born and raised in New York City, Mitch graduated from Colgate University. He went to l’Universite de Geneve to study clinical psychology, as well as training as a Jungian Analyst in Kusnacht. Working in his chosen field for several years, he moved into the business world first as a business consultant for Business International – a subsidiary of The Economist. Hired by one of his clients – Digital Equipment Corporation – European Headquarters (at the time, the second largest computer manufacturer in the world) – Mitch brought his organizational and marketing skills to bear across a range of strategic initiatives, including participating in the launch of what would become one of Digital’s most important lines of business.