In the desert of New Mexico,

serial entrepreneur Sir Richard Branson

and his company Virgin Galactic are

preparing to provide affluent

travellers with the next-generation

luxury experience: commercial space

travel. For $250,000 and after

three days of preparation, one can suit

up, climb aboard the company’s

SpaceShip Two and get ready for

takeoff from the futuristic “Spaceport

America”, the world’s first

purpose-built spaceliner terminal.

The extravagant suborbital

flight also includes several minutes

of zero gravity entertainment.

A couple of hundred well-heeled space enthusiasts have already booked a ticket on Branson’s space flights. With commercial space tourism expected to take flight soon, Sir Richard Branson is a poster child for luxury’s future: the selling of experiences. According to one study, about half of all the money spent in the luxury market is for experiences. And that spending is growing more quickly than product purchases. It appears that we are finally discovering the answer to the age-old question of what to get for the man who has everything: something they have not experienced before.

The reasons for the shift in taste vary depending on the consumer. Aging baby boomers can now look back on a life of consuming and have acquired nearly everything they ever wanted. With a house full of possessions, they are now trying to get the final kick from their remaining decades. And because they have a historical perspective, they understand the importance of memories. Younger customers have grown up with the Internet and seen increasing value placed on the ability to share thoughts, concepts and experiences. And those with the necessary funds can buy experiences. Finally, maturing markets seem to act like maturing people. As consumers become accustomed to luxury and its attributes such as flamboyant designs or flashy, unmistakable labels, travel, food and other none material luxuries become important.

The future of luxury marketing may become a lot like George Mallory’s famous quote about climbing Mount Everest: “Because it’s there”. Trips to Antarctica. Classes with the undisputed expert in a specific field of art or athletics. These things were certainly possible in the past, but often required the right connections or a staff willing to do the legwork. Today, they are just another cornerstone of the luxury industry. It is hard to say which is transforming the top consumer segment more – the Internet, or the push to experience something special. It could be that they accelerate each other.

It is important to note that while we have spoken much here about service and experience as products, clearly the service industry is not the only part of the luxury sector impacted by the experience push. Every aspect of high-end retailing must now be steeped in experience as much as it is in excellence and exclusivity. Prospective customers want to be surrounded in an emotional experience that showcases a company’s branding. Experience, in terms of marketing, can still also mean sponsorship. Things like sailing regattas, extreme sports, special wine tastings. The important part is to go beyond traditional sponsoring and make a brand part of the event itself. This way, spectators feel as if they are insiders, viewing the event on behalf of the brand. The Peninsula Hotel chain does this well by allowing guests to ride on the inn’s own competition yacht. Other Peninsula services are highlighted in the infographic on page 158.

Estate agents selling multimillion-dollar houses have discovered a unique angle that showcases properties by making them the focal point of a bigger event. The estate agent teams up with a corporate sponsor for an invitation-only event that highlights the sponsor’s products and the house itself. The guest list comes from both sides, offering a win-win deal to the estate agent and sponsor. For instance, Coldwell Banker Previews International recently teamed up with Rolls-Royce to sell a US property. Experience may also carry through to the aftermarket to keep customers attached to a brand. Bugatti, for example, organises special tours through Italy for select customers. The owners pilot their expensive chariots to workshops, wineries and restaurants that only wealthy locals normally know about.

FAR AWAY, SO CLOSE

Travel is the most obvious of luxury experiences. The affluent have always been good at spending money on getting to places and ensuring they have the best place to stay once they get there. Travel on every level is on the rise as economies recover, but affluent travellers generally spend about 45 per cent more per trip than their less wealthy counterparts. That discrepancy is likely to expand to an 80 per cent difference in the near future, according to credit card company Visa. Those on a budget prefer booking online while 70 per cent of luxury travellers opt to book through travel agencies. More figures from the study are shown on the infographic on page 161.

While space may be the final frontier, there are still plenty of seldom explored corners of the earth where the well-to-do can find superlative experiences. Although companies such as Branson’s Virgin Atlantic and high-profile hotel chains do an exceptional job of catering to an exclusive clientele, we do not see the future of luxury travel in the hands of well-known travel and tourism companies. Consumers are clamouring for much more, and are increasingly savvy thanks to the pervasiveness of images on the Internet and television. Cameras have been all over the earth but most people have not. Luxury travel should now offer customers the opportunity to spend time in remote, exotic locations and in quirky, little-known hotels, lodges or even famous houses. The same is true for in-town stays. The hotel should have a bigger story. The site must have a connection to the city’s past and offer the customer a sense that he is paying for exclusive access to a unique story. An unlikely brand has cropped up to dominate this space, redeeming on decades of brand-building and a deep network of specialists: National Geographic. Who else would know how best to get into the wilds of Madagascar or the backwoods of Canada? The magazine has been going there for years and now it is happy to take you with them for a price. They will even send along one of their famous photographers or scientists to help make your trip memorable.

National Geographic also taps its experts to assemble the trips to ensure participants get the most from their visit while making as small an impact on the locals as possible. Ecological tourism is playing a key role in travel. Como Shambhala resorts play up the eco aspects of their private island locations and promote them by hinting that they care as much about the environment as about their guests’ spiritual well-being. Ignoring the carbon footprint of air travel, plenty of sustainability-minded resorts are popping up around the globe to cater to those who demand exceptional service alongside environmental protection. Even if a company does not use sustainability as part of its business plan, keeping consumers informed about efforts to lessen the impact on the earth makes good business sense in any market. “Hotels today must know where they are buying their cleaning supplies or where their food comes from,” says Design Hotels founder and CEO Claus Sendlinger. “Our goal is to actually make a difference and, naturally, let people know about it. I think consumers can actually differentiate between hotels that just do something for their image and those that truly mean it.”

Travel spending going places

Affluent travellers are increasingly paying much more for a single trip than other travellers.

The major players in luxury have never feared entering a new market or a different, unfamiliar territory. Travel is no different. LVMH has kicked off its new ultra-luxury hotel chain Cheval Blanc with two locations, a chalet in Courchevel in the French Alps featuring interior designs by Sybille de Margerie, and a second in the Maldives, equipped with beach villas, a tropical garden and a team of experts who specialise in creating customised experiences for travellers such as diving trips. Bulgari has also created jewels of tourism around the world. The Italian luxury company operates a spectacular resort in Bali, located on a plateau on the southern part of the Jimbaran peninsula, directly adjacent to the sea. Luxury travellers can rent several villas that provide unobstructed views of the Indian Ocean. At the resort’s Bulgari boutique, guests can shop for new items. Bulgari also owns an exclusive hotel in Milan and Italian-themed restaurants in Japan.

Luxury hoteliers are also considering new variations on wellness treatments, such as courses on how to deal with information overload in the digital age. Some offer the services of clairvoyants. The trend is for introspection rather than extroversion. “We’ve now got a psychic in Tulum who can measure global energy fields,” says Design Hotels’ Sendlinger. “Of course, you can only offer this kind of thing if customers are interested in it. There are plenty of specialty hotels that people book to take a closer look at themselves.”

Another trend in luxury travel is the back-to-basics holiday, often on some kind of secluded island. Companies such as Docastaway offer a desert island experience where you can choose between comfort mode and adventure mode. In the latter, guests might have to source their own food from the surrounding landscape while sharing a forest with a native tribe, or combine their holiday with survival training. With private villas and discreet mini-hotels, comfort mode caters to those who “wish to have an experience similar to that of a castaway, but desire certain levels of luxury in order to enjoy their private island vacation,” according to the company’s promotional copy.

FAMILY FRIENDLY

Families are often seen as status symbols. High-profile super moms and progressive attitudes towards parenting have changed the perception and expectations of family life. Marketing for the demanding family can now be lucrative. Many luxury hotel chains have already embraced this. They go beyond offering simple parent-friendly services such as in-room cribs, babysitting and kids’ meals. Four Seasons hotels cater to children, often with child-sized robes, welcome presents and special educational packages. Need a toothbrush for your three-year-old? Just ask. The Waldorf Astoria in Naples, Florida, offers couples amenities such as golf, tennis and a sandy beach with trained counsellors for wealthy offspring. And there are the Atlantis resorts in the Bahamas and Dubai, full of marine animals, dolphins and water slides.

Providing an experience for children is another way to exploit the changing status of families. Red Carpet Kids in Manhattan has several different packages that will keep between 12 and 15 children entertained for an afternoon and free parents from throwing a party. The philosophy behind their parties is to make children feel special with a red-carpet event, including photographers and a doorman who keeps out the uninvited. The content varies – improvisation lessons from a professional thespian, a movie viewing or even a faux Academy Award with make-up, paparazzi and an awards ceremony. All come with a customised cake, treats and kids’ food favourites, like chicken fingers and pizza.

Marketing services designed specifically for children can be tricky. Every parent is wary of insincere marketers trying to get to their purse strings through their hearts. Most parents have seen more than a few scam attempts. Sincerity is the only true way to win over parents. The experiences must be based on a true understanding of what children and young adults want as well as the expectations of their parents. Companies must also be able to communicate their deep expertise in this area.

CREATING EXPERIENCE

Experience isn’t just for service companies. Product producers also have to deliver an experience. The experience should be about sharing expertise related to the product. Companies must provide their connoisseurs with “connaissance”. Alfred Dunhill has embraced this concept in its four new locations, in Tokyo, Shanghai, Hong Kong and London. The label finds extraordinary real estate in sought-after locations and then converts it into clubs, which they call “homes”.

They are places where customers come to hang out and do more than spend money, where they completely experience the brand. There are bars with TVs, tailoring rooms to give customers exactly what they want and even movie theatres. The “homes” include memorabilia from the founder to truly ensconce customers in the Dunhill world. The company schedules themed parties and invites leaders to hold talks. At a Dunhill “home”, it might be easy for customers to forget that a new shirt was the reason they came in the first place. The Dunhill experience hints at the way to adapt existing retail space to this new need for experience: add meaning.

Stores can also try to find a spiritual, environmental or charitable edge. Hosting a debate with local thought-leaders can help position a brand among the speakers’ fans or attach a progressive, contemplative note to a well-known product. Several stores such as Merci in Paris are having success by offering luxury wares while promising the profits to charity. We are not promoting non-profits here, but it is an idea that can be adapted. The important thing is to hand customers a unique storyline about the surroundings. As with marketing to children, the motivation also has to be genuine. A company’s goal must be to tie the specific store closer to the address and show an interest in community, despite the exclusive nature of the business. “There is a marketing goal ultimately,” says Patrizio di Marco, president and CEO of Gucci. “Definitely the long-term goal, given our continuous and consistent commitment to responsibility, will enhance the brand reputation and, as such, the brand will have more meaning of craftsmanship. Consumers will buy more into the brand besides the tangible values.”

German airline Lufthansa is also making frequent travellers feel special with its HON Circle programme. The name combines the familiar three-letter signifier for airports with a shortened form of the word “honour”. HON Circle members win half-a-dozen free upgrades just by qualifying and are given access to the airline’s exclusive first-class building in Frankfurt with its extravagant buffet, five-star beds and luxurious bathrooms. Members get a special luggage tag that serves no purpose other than to signify to Lufthansa staff, and other HON members, that they belong. The programme effectively singles out those who spend the most at the airline and provides them with incentives to keep flying. To qualify, customers must accumulate 600,000 miles in two consecutive years. HON status can not be bought. The scheme surrounds members in the first-class image the company wants to project and even shuttles them to their flights in a Porsche or Mercedes. The Lufthansa HON Circle experience can start hours before members board, and can continue long after they have reached their final destination.

REWARD YOUR CUSTOMER

This is nothing new to the luxury industry, but it is one simple way to create a unique experience for a client accustomed to unique experiences. In the near future this will be all about intelligent data management. Customers will be in charge of their own online travel profiles, and will grant select hotels access to them in exchange for exceptional treatment. “I want to be recognised as a guest. And when I come back, I want to be treated specially. I do not need a red carpet. Most people do not want one. But if I arrive with my dog and in my room there’s a water bowl with his name on it, wow!” says Design Hotels’ Sendlinger.

The right salespeople can sense a customer’s taste and know which scarf is the appropriate gift for what kind of occasion. The sales associate’s knowledge and familiarity, coupled with respectful distance, should be yet another extension of brand identity and the experience a brand offers.

Car manufacturers were some of the first to offer this kind of experience based on their product. American auto enthusiasts have for years sung the praises of European delivery services from the likes of Porsche and BMW. After ordering a Porsche in the United States, buyers fly over to Stuttgart or Leipzig to take delivery. They get to know the car at top speed on the autobahn before dropping it off at a northern European port for shipping back to the States. Porsche is also now building a test track at its US headquarters in Atlanta, Georgia, where buyers who do not want to fy to Europe can try out their new purchase.

Product manufacturers need to leverage their existing strengths to offer their customers what used to be known as value-added features but now count as experience. High-paying customers want to be treated as such and be allowed in the back of the shop. Bugatti does this with its “atelier” for the Veyron model in Molsheim, France. Swiss watchmakers are also veterans in guiding tours through the plant. Creating a superlative experience should not be difficult for luxury companies because the companies themselves are a superlative experience.

Furnished for first-class lounging

Lufthansa’s HON Circle First Class Lounge at Frankfurt International Airport offers a wide range of services, including chauffeurs to whisk members directly to their flights.

The privilege of privacy

HON members have access to first-class lounges with amenities that include bedrooms and spas. The HON luggage tag (second image) discreetly broadcasts the member’s status to those who need to know.

HOW TO…
Soho House

When Nick Jones opened the first Soho House in London in 1995, he envisioned it as a private meeting place for his creative friends. Almost 20 years later, Soho House is a powerful worldwide brand. There are branches in New York, Los Angeles, Toronto, Berlin and Miami. It spans the globe with a network of successful influencers who enjoy the luxury of belonging to a closed society. How did Jones establish the Soho House experience?

1. Find the perfect place

In each city, the Soho House is located at the heart of things, easy to reach, with access to cultural offerings right on the doorstep. Often, the house is set up in a historical building, furnished to perfection, with an interior evocative of a grand British mansion. From the foyer to the rooftop, a Soho House experience is built on private luxury.

2. Create the perfect guest list

Only members and their friends are allowed. How do you become a member? It helps to be part of the creative class and successful in your field, but money does not necessarily buy access. Rumour has it that applicants who try to bribe their way in get banned for life. That’s a delicious bit of gossip that serves to increase the demand. Annual membership fees range from €1,200 for a Local House to €1,500 for the Every House, a sum luxury consumers might normally spend on a handbag or suit. The fact that money really is secondary only heightens the desirability of membership. The wait for Soho House New York can be as long as a year. Once the applicant gets in, they truly feel like the experience is custom-made for them.

3. Offer exclusivity

Members can make use of the full service of the facilities, including a restaurant and bar, often with a rooftop pool, a fitness club and spa, and a cinema. In the hotel, rooms and apartments are available to members at discounted prices. It is a hotel but more personal. A home away from home for the traveller who is used to flying between New York, London and Berlin, but who can check in to a familiar place in each city, welcomed as a valued member of the club. Part of the service is the privacy each House affords its members. Phones and cameras are not allowed, making it easier for famous guests to move around as though they were in their own home.

4. Set your own rules

Soho House might be modelled on the classic gentlemen’s club, a private haven for the well-connected, but it comes without the stiff upper lip. Jones’s favourite dress code is jeans and T-shirt. That does not look like luxury? Quite the opposite. The luxury for members here is that they can be who they are, without pretence or putting on airs.

Not for everybody

An empty rooftop pool is a rare sight at the Soho House in New York City. The house is usually packed with hundreds of members. Waiting to become a member can take a while.

“There’s simply
no app for emotions.”

An interview with Bernhard Maier,
member of the executive board and head of the sales
and marketing division at Porsche AG.

How is the brand experience changing in an age of increasing digitalisation?

This is best explained by the so-called “customer touchpoint map”. We see some modifications here, but some shifting as well. Based on our contact history, we can see how many times interested parties visit a Porsche centre before they sign a sales contract with us. In the past, a Porsche buyer would make five or six visits beforehand to learn about various models and options. In recent years, this number has been decreasing. The reasons for this are an increase in digitalisation and the around-the-clock availability of information. Today, a potential buyer finds a lot of this information on the Internet. So people come to the dealership having very specific ideas in mind. But this need not be a disadvantage. Especially when you can influence the customer’s digital touchpoints.

But they’re still coming by to have a look?

Yes, but instead of the five or six times, it will be only two or three visits. Because there are a lot of things that a computer will never be able to replace. There’s simply no app for emotions. For instance, how it feels to sit in a Porsche, the smell of its fine leather, taking in its ambience. Or during a test drive, experiencing its driving dynamics and feeling the butterflies in your stomach.

Are you seeing changes in your physical showrooms because of digitalisation?

Yes, this is happening. A customer configures and saves their desired vehicle on the Internet. Each configuration receives a Porsche code. The customer comes to us and says: “I made a change on the Internet, and now I’m not quite sure if it was registered. Can you help me?“ The salesperson at the Porsche centre can respond with: “Dear customer, do you mean our offer from 23 March? Where you configured a 911 in dark blue with a leather interior?” The salesperson calls up everything on a screen and can then say, for example: “Let’s take a quick look at this car’s configuration. To really make this your dream car, your most personal car, I recommend...”

We know from current market surveys
and Internet analysis that the buying and
ownership experience is especially
important in the luxury goods sector.

This is effective because it saves time, is emotional and it works with images. These are exactly the kind of tools that we’re already using in some of our markets today. And we’re working hard to provide this feature everywhere.

So dealerships aren’t obsolete. Customers still visit to buy?

I’m firmly convinced that with a product of this quality and price range, the final buying decision is not going to be made on a computer. We know from current market surveys and Internet analysis that the buying and ownership experience is especially important in the luxury goods sector. Customers view a product’s exclusivity as being just this point. It can’t only be accomplished digitally because personal service is the deciding factor.

If anything, the showrooms and dealerships have to be upgraded even further…

That’s exactly the point. We know that the number of visits tends to be decreasing. Therefore, you have to win over customers in a very short time using flawless personal contact. And it has to have all the emotion that they expect.

Is the experience involved when buying a luxury product becoming increasingly important?

You could say that. Besides rational reasons for making decisions such as quality, retaining value, longevity and safety, there are many critical emotional reasons for deciding to buy a product. These include associative values like company image, product design, the personal driving experience and the community, which is especially important too. Particularly in saturated markets, people are searching for new experiences, for things previously unknown and unexpected. This is why an experience like the Porsche Travel Club, which we’ve been offering for many years now, is becoming increasingly important. We also have a Porsche Sport Driving School at our factory in Leipzig and our Porsche Driving Experience Centre at the Formula One Silverstone circuit in England, and we’re building three more: one in Shanghai, which is also at the Formula One circuit there, and two more in Atlanta and Los Angeles in the United States. The experience of sports car driving tailored to each customer is one of our distinguishing features.

Many of our customers would like to be engaged
with beautiful and interesting things.
So we invite them to panel discussions, lectures,
gallery openings and other cultural events.

Could it be that luxury customers are finding the experience increasingly more important than owning something?

Fortunately, our customer base distinguishes itself from others. We cater to everyone, from 18 to the over-80s. The over-50 target group, as well the ones below it, is growing, and this is due to the fragmentation of markets and segmentation of customer groups. In addition, Porsche is no longer represented in 70, but in over 125 markets. And we not only have two, but five model series. Many of our customers still find ownership important. We call them the “Proud Patrons”. After breakfast in the morning they go down to their garage with a cup of coffee in their hand, take a look at their automotive “babies” and think, “Nice to have you here!” These customers actually don’t have much time to go driving. They simply enjoy possessing things. On the other side of the coin, there are the customers who we call the “Top Guns”. They have discovered their passion for driving and on Sundays, when they have time, they will go out to a racetrack to explore the limits of their vehicle. The Porsche experience also means being able to exchange thoughts within a community. That’s why the community idea is such a strong part of our company. The Porsche Club is one of the oldest and largest branded clubs in the world.

Though not every customer immediately wants to become a club member.

Everyone wants to choose for themselves. However, many of our customers would like to be engaged with very beautiful and interesting things. So we invite them to panel discussions, lectures, gallery openings and other cultural events. We can offer them customised programmes.

What kind of experiences match your brand?

Since we know that a lot of our customers are interested in the arts, we have expanded our activities in cultural sponsoring. There is a partnership with the Stuttgart Ballet, which is one of the world’s most renowned dance companies. The same applies to the Leipzig Gewandhaus Orchestra. We selected these two institutions because they are located in the same towns as our two main production facilities. “Made in Germany” is part of our authenticity. In addition, we are involved in sporting events, which is an obvious match for a sports car manufacturer. And then of course there are all sorts of motor racing events that lie close to the core of our brand. We initiated the Porsche Sports Cup, which has turned into one of the largest and most successful customer race series in the world. So you see, this way we are able to offer our customers and fans different experiences. These are geared to the interests of a community which, in part, money can’t buy.

Owning a Porsche is still at the core of these experiences in the end though. What do you think about the idea of the “shareconomy”? Now you can even rent seats on private jets without having to own one.

We’ve launched some pilot projects dedicated to alternative mobility. For example, we’re working with the car rental company Avis to make it possible for a particular target group to use a Porsche as a rental car. We’ve been offering this to our existing customers at selected Porsche centres for some time now. However, we believe owning our product remains the most important thing. It’s a testimony to this that over two-thirds of all Porsches ever built are still on the road. This is an extremely important USP, which goes hand-in-hand with a very high retention value. After all, who wants to share their value portfolio?

We believe owning our product remains the
most important thing. It’s a testimony
to this that over two-thirds of all Porsches ever
built are still on the road.