Google Rethinking Luxury: Connecting with Today's Affluent Consumer


Uploaded by GoogleBusiness on 19.09.2011

Transcript:
MALE SPEAKER: So I'm here to talk to you about this new
post-recession affluent consumer.
How they've changed, how they've really gone inward and
reprioritized.
And I'm here to give you some permission to use
your license of luxury.
And the license of luxury is the permission to pursue big
ideas, and do things very differently.
I thought I would start with a story.
August 2008, my fiancee at the time and I were driving back
from East Hampton.
We were in an Audi A8L, and we were on Route 27, which is the
road that leads to the LIE.
Terrible traffic on a Sunday afternoon and
it was pouring rain.
And we didn't want to wait.
So we looked at our nav screen and we saw that there was a
road paralleling Route 27.
So we figured let's outsmart everyone and take that.
So we hopped over, and we're flying along very smugly.
And we came to the crest of a little hill, and at the bottom
there was a really big puddle.
So we said, hey we're in Quattro, right?
This is serious four-wheel drive.
We pushed the button that raised the car up a little
bit, and we decided to go through.
And we shouldn't have. It was just way too big of a puddle
to even attempt it.
And we got stuck.
We got towed, and a week later, I got a call from
Chubb, who's our insurance company.
And they said, we're declaring the car a total loss.
So clearly we were way out of our depth in this puddle.
And it was the first time in 15 years that we had been
without a luxury car.
But it was August 2008.
And if you think back to what was about to happen a month
later, Monday, September 15, 2008, was the start of the
financial crisis.
Lehman went down that day, AIG almost did, and everything
really want to hell.
So as being owners of a small business, we didn't feel like
it was really the right time to go and buy
another luxury car.
So we were going to try on austerity for size and just
drive our Land Rover for the next two, three years.
And I'm a little ashamed to admit what I realized about a
year into this.
I really missed having a luxury car.
And I really ashamedly will tell you so much of myself was
kind of tied up in this.
So we started getting excited again about buying one as 2010
progressed, and as the economy seemed to be getting better.
And we made a decision at the end of last year that we were
going to go back in and buy another luxury car, which we
did in January.
If we only knew today or knew then what we know today about
the economy, we might not have. But we did.
And so we picked it up in January.
And I won't say that it was a cathartic experience, but it
was really close.
Again, I won't admit any of this outside of this room.
But it made me feel kind of whole again.
And I felt like I was who I used to be before.
So shallow, I know.
I am proud to say, though, that every time I get in that
car, I do really appreciate it.
I have a lot of gratitude for it.
I kind of get in, I pet the steering wheel.
I really appreciate the sounds.
Anyway, I just wanted to share it, because the product you
make really does impact customers a lot
in really deep ways.
But I'm only one guy, right?
So today, what I want to do is tell you about 7,000 affluent
consumers who we've spoken to over the last 18 months.
Tell you how they're feeling, what they want from brands,
what they want from their family, and
really how they've changed.
And I want to give you permission.
And the permission comes in the form of
the license of luxury.
The license of luxury is kind of a muscle.
It's something that you guys all have in
spades as luxury brands.
And the more you use this license, the more luxurious
and better thought of you'll become.
The best brands are always on the outside pushing their
license of luxury.
And you guys have it and you just have to use it.
The license of luxury is when you're sitting in a meeting
and you have that idea and you say, oh, I got
a really big idea.
And then you start by saying, I have a really bad idea, but
let me present it to you guys.
And you know it's a good idea, but you're afraid it's so out
there that it's over the top.
So that's the license of luxury.
When you have that big idea, it's the freedom to pursue it.
And I'm going to tell you that the affluent want
you to pursue it.
They want you to do things differently, creatively,
highly personalized.
And I'll give you proof today for it.
Numbers, stories, history, et cetera.
So let's start with a quote.

As part of our methodology, we speak with industry experts.
This happens to be a high-end shrink in Beverly Hills.
And he said "The affluent fashion
themselves to be creative.
They want things that help them stand out in a creative
way, to show off some element that distinguishes them.
Part of their identity comes from 'out-creative-ing'." So
there's now resonance, cultural resonance and
creativity.
"They want to seem more creative than the next guy.
They want to do what's not been done before.
Dress in a way that's distinct.
They want to stand out and they want to inspire a kind of
envy in others."
They can only do that if you guys are really pushing in
every aspect of the business.
So take a look at some brands who do it well.
Chanel.
Amazing global brand, right?
The highest end couture brand.
When Portfolio Magazine was in existence a few years ago,
they had a monthly column where they valued
privately-held companies.
And they valued Chanel at about $16 billion.
So this is a business made up of selling $10,000, $20,000
outfits and selling perfume and makeup.
But they did something really creative.
They came out with rub-on tattoos, right?
The stuff that we had as kids that our kids have. These were
$90 for the rub-on tattoos.
And imagine the courage that it took for this brand, this
exalted luxury brand, to come out with
rub-on tattoos, right?
Crazy thing you would think.
So here are some of the rub-on tattoos at the runway show.
I mean, quite exquisite in the bracelets and the garters.
The amount of press that this garnered them was unreal.
And it did two things.
It made their existing core customer feel--
I'm with a really cool, young brand.
And it also brought in a whole bunch of youngsters who really
weren't familiar with the brand and made them desire
that brand.
And license of luxury happens everywhere.
For me, when Bentley came out with the Continental however
8, 10 years ago, whenever that was, this was like a big
difference for Bentley.
This was a completely different car, a departure
from what they had ever done.
And it's really changed the brand.
Richard Branson obviously is a master of license of luxury.
Virgin Galactic.
This is scheduled to take off next year at $200,000 a ride.
So you can only imagine, if he can get you to space, he can
probably get you to London in nice style.
And then of course American Express.
American Express in 1999 created the black card.
And they created a product that they don't talk about at
the highest level of the brand.
So interesting strategy there.
$2,500 a year.
$5,000 to join.
No one knows how you join.
No one knows what the benefits are.
If you go on flyertalk.com, the boards are filled with
people guessing at it all.
So there's a great story of five Hollywood producers who
all have the black card.
And these guys have dinner once a month.
And at the end of dinner each month, they all throw out
their cards on the table.
Or I should say, sorry, in the vernacular, they whip them
out, right?
They whip out their cards and throw them out in the middle.
So this one night, one of the guys waited a moment.
And then he nonchalantly reached into his pocket and he
pulled out a red American Express card.
And he just kind of tossed it blithely.
And his friends were like, what's that?
He said, oh, well you guys didn't hear about this?
Yeah, it came in the mail two weeks ago.
It's the new thing.
And of course he was just messing with
his buddies, right.
He had gone and probably paid thousands of dollars to a
credit card manufacturer just to make this red card, just to
play with his friends.
But that's what the license of luxury allows you to do.
It really allows you to grow and do things that really
create fascination.
It gives you a place for people always to reach for in
your brands.
So I'm going to get into some data that supports all this
stuff that I'm talking about.
And I want to just give you some insight into our
methodology, because it's a really different methodology.
We were supporters--
sponsors of a company called Harrison Group, a terrific
research company who came out with a seminal study on
affluence in 2005.
And we learned a lot from them.
But we wanted more.
They're more of a tracking study.
We really wanted to understand what's in the hearts and minds
of these customers.
So we looked for a research company, and we didn't really
find anyone who met what we were looking for.
And one of the reasons is most research on the affluent tops
out at a $250,000, $100,000.
It's just not really the real affluent.
So we said, let's start our own thing.
And not being researchers, we thought that a good way to do
it would be to bring in as many great minds into the room
as possible.
And that was the collaborative aspect of what we would do.
So our methodology is our internal team, top left,
speaks with our researchers.
And we work with different outside research companies,
because we want to bring in companies who are best suited
for the particular topic at hand, whether it's next gen,
whether it's responsibility, et cetera.
So we consult with them.
We then have one-hour phone calls with each of our
category exclusive members.
Can see American Express black card, Sotheby's, Four Seasons,
[UNINTELLIGIBLE]
Chartis, Saks Fifth Avenue.
Chartis, you guys all know.
They're the high-end insurance group of AIG.
And Robin Hood is a foundation in New York that's a pro bono
member of ours.
So we have deep conversations with them.
And the reason we do it on a category exclusive basis is we
really want them to share with us what's keeping you up at
night around this topic or that topic.
What do you really fear?
So we get all that information.
From there, we go to a consumer salon.
So they're like focus groups, but they're a little more
casual and they are like salons where we're trying to
just encourage a good conversation about the topic.
We take all of that qualitative and we write a
20-minute online survey that we field among 1,200 affluent
in three different categories.
Aspirational, $75,000 to $200,00 household income, is
about the top 25% of the country.
Affluent, $200,000 to $500,000 is about the top 10%.
And the wealthy at $500,000 plus are a little less than
the top 1%.
And then we present all this stuff to our members.
So anyway, when I show you numbers, that's where
they all come from.
And incidentally, in about a month, we're launching our
blog affluently.com which, if you're interested in receiving
it, because I know you won't remember by
then, send me an email.
Basically what we're doing, several times a week, is we're
talking about the affluent consumer.
We're speaking with gatekeepers, shrinks,
housekeepers, executive assistants, all sorts of
content just about this consumer.
OK.
So what do you have to know to start any
discussion about the affluent?
You have to know that they have entered this new age of
enlightenment.
They've gone through this very difficult period where they
really had to reexamine everything.
And they've become softer.
So we like to say that if you want to connect with this
consumer, you as brands need to find your softer side.
You need to go inward.

I'm just going to highlight some data.
We asked what people are most passionate about.
And what they're most passionate about is what you
would expect them to be most passionate about.
At the top level, family and friends.
But then travel.
Travel has been consistently the top scoring thing outside
of family, because people want experiences.
They want to collect experiences, have experiences
that help them grow as individuals.
What they're not really interested in is stuff.
Fashion, cars, jewelry.
Of course, they are interested in it.
They buy it, they need it, right?
So the trick though is for brands who make stuff to
really present that stuff as experience.
And here's some of the experiences and things that
they need more of.
They all need more exercise.
We all need more exercise.
They need more travel.
They love to learn.
The affluent didn't grow up with money.
90% are self-made.
So they didn't grow up understanding BMW or Audi or
Maserati, or any of these brands.
There's some intimidation factor, so they
really like to dig in.
So give them the opportunity to learn.
Really put all your information out there.
Let them decide when enough is enough.
55% need more sex.
54% need more spontaneity.
They're so overwhelmed, right?
All the devices, all the everything,
they can't take it.
And 10% need more shopping.
So one of the things that comes out of this methodology
we have is we get into some pretty far out conversations.
And one of them was about self help and the affluent, and
this search that they were all undergoing to really
understand themselves better.
So we asked the question about their
self-help reading habits.
And we found that one out of every three books the wealthy
read is a self-help book.
So they're really going in, trying to understand
themselves on a much deeper level.
And they want everything to be deeper.
They're looking for deeper connections.
If you add in business books to this, it becomes one
out of every two.
So there's this deep desire to learn from
this wealthy audience.
And the thing we really advise all of our clients, we have to
stop thinking of our brands consumers as consumers.
And we have to remember that they're people, particularly
these people who have really gone inward.
They have spiritual sides, they have intellectual sides,
emotional, creative.
And importantly, they have connecting sides where they
really do want to connect.
And I think this is one of the most interesting things we
found from our research is the desire that the affluent have
to really engage with brands with whom they do business on
a much deeper level than you might have ever thought.

And they're not getting it.
So we asked them about needs that brands with whom they do
business with met.
And we gave them a list of about 30 needs and we said,
all right, what needs are they meeting and what needs do you
wish brands you love met.
And this is about their favorite brand, by the way.
So we asked them identify your favorite brand, and then tell
us what they're meeting and what you wish they would meet.
So what you see that's interesting is that the
wealthiest, the 500,000 plus, have the most needs being met.
But they also have the most needs that they
wish were being met.
They're asking you to really connect with
them in a deeper way.

And it's not happening.
82%--
and this is one of the highest numbers we've seen in any of
the research we've done in six quarters--
say they really don't think that brands are doing enough
to earn their loyalty.
And this is pretty staggering, right, because we all spend so
much time and so much money on acquisition strategies.
Can't imagine what cost for acquisition in your world is.
And then you think of the lifetime
value of these customers.
At a minimum, it's tens of thousands.
For most, it's probably hundreds, and for many, it's
probably millions.
So the question I would ask you is this.
Are you guys as brands spending 1/100 of what I spend
with you on keeping me happy?
Are you spending even 1/1,000 of what I spend with you on
returning the favor?
So if we take an $80,000 car, and 1/100, we're
talking about $800.
At 1/1,000, we're talking about $80.
I don't feel like for any of the car purchases that I've
ever made that I've gotten $80 in value in any way back from
the car company.
1/1,000.
So we boiled the equation down to this.
The wealthy and the affluent are giving you their time.
They're giving you their interest. They're spending
hours Googling, looking at sites, watching video.
They're giving you their affection.
Very importantly, they're giving you their reputation.
The car they drive, the clothing they wear is a
reflection of them.
They're giving you their trust, they're giving you
their money.
And what they're getting back is a car.
It's a nice car, right?
But it's still a car, or a handbag or something.
Very few brands are really going deep enough to make that
connection on a very real level.
So the best thing I ever got came from BMW, and it was a
package beautifully presented of four CDs from TED
Conferences.
So it was kind of perfect.
It was TED.
It was thought leadership, it was modern, it was technology,
it was interesting, it was learning.
It hit on a lot of the things.
And I loved it, and I used it.
And I still do.
So this, to me, is kind of the pinnacle that I've seen.
But is it enough to make me not want to go and test drive
Audi or Mercedes next time I go to buy a car?
I don't think it is.
And for me, there might not be anything, because I love test
driving and doing all that.
But what would connect with me better?
And I have this fantasy.
And I'll spare you the German accent
because I do it terribly.
But I'm sitting at my desk and the phone rings.
And I pick up and somebody says, hello Mr. Sacks.
I say, yes, suspiciously.
Who's cold calling me?
This is Dieter from Munich BMW.
We're calling to say thank you.
What?
Yeah, we just say you've purchased your third BMW and
we are so grateful.
We're really appreciative that you've given us so much
business over the years.
And it makes us all so happy that you love
our product so much.
It makes everyone here very proud.
And we just want to encourage you for the next time you buy
a car or before then, come and visit us at the factory.
Give me a call before you come.
I'll arrange everything.
And if there's ever anything you need, just let me know.
We appreciate it and thank you again.
That's it.
Phone call.
Easy.
Do it on Skype.
It's free.
And really makes a connection.
Really makes a deep, meaningful, lasting connection
that I will talk about.
I'm going to tell people about that experience.
So one thought is, if you guys use the lexicon of CRM,
customer relationship management, we would recommend
rethinking it totally, right, because CRM leads to well, we
sent out 27,000 pieces and we got a 1.7 response rate.
But what kind of connection rate did you get?
Who did you really touch with that mailing?
So we'd recommend thinking of it is dating.
When you think of things as dating, it's a totally
different experience.
There's a progression to dating.
Your first date is not the same as your second date, or
your third or your fourth.
With most CRM, it feels like relationships are being
restarted every time.
And you know what, I've been a customer for 17 years.
It's kind of a little annoying at some point.
The other thing that it allows is very different
personalities when you date.
There's a time to be sexy.
A time to be sweet, a time to be shy, a time to be
aggressive.
Just it adds a lot more color.
It allows you to figure out how to bring this idea of
license of luxury into every touch point with your
customers along the way.

And I'm not just the only guy who likes it very personal.
So here's some proof for when you're debating these things
back at the office.
We asked how personally do you want to be communicated with
by brands who you do business with.
And the options were I want it to be very personalized,
somewhat personalized, or not personalized at all.
And here again, you see the wealthy almost twice as much
as the affluent wanted really personalized.
They want that phone call, they want the personal letter.
They want something that lets them know you really care
about them and you really hear them.
So here's the equation for you in simple ad guy math.
The 7 refers to the number of hours in a day, not that we
all work, but that a salaried person is working.
5 is the number of days in a week.
48 is the number of weeks in a year that you work.
And 6 is the number of personal letters that a
bright, articulate, well-educated college graduate
with good handwriting can write.
Six letters an hour.
So that works out to 10,080 letters a year.
So for the cost of one person who's maybe $40,000, you can
touch 10,000 customers.
So according to my research--
I don't know if this is right, but I saw BMW was the market
leader and I think 135,000 cars.
So for the cost of four or five fully loaded sevens, they
can reach out and personally touch every single customer
with whom they've done business in the past
year in a real way.
And that's going to make an impression.
So this is a quote from one of our salon respondents.
She said, "The same woman calls me every year when they
have their annual trip.
She knows who I am, she knows what I like.
I don't need a lot of other things.
One call a year from a person I've been dealing with for
many years who knows exactly what I'm looking for, that's
really important to me." Very simple, very
inexpensive, very human.
So you're tempted to ask, well, how can we do mass
personalization, because that would be the answer.
It's a lot of customers, 135,000.
And the answer is, as far as we know at the
moment, is you can't.
At the heart, at the root of personalization is person.
And that makes for a very different type of encounter.
So we said that the affluent want spontaneity.
And they can't get it.
This customer having grown up without money, having been
told by their parents to work really hard is struggling to
figure out the right way to incorporate technology into
their lives.
And because they're successful business people, they need to
go and try out every media channel, every new platform
that comes out.
It's important to their business to be up to speed.
So I want to take a look at how the wealthy are using
media today.
And what's most interesting about this chart, I think, is
not the individual bars but the general trend you see.
The white bars represent the total affluent.
So the top 25% of the country.
And you see a pretty traditional long tail.
They start high on TV, then web, then
email, and they go down.
Whereas the wealthy start a little lower, but they really
even out quickly.
They are everywhere, and they're
everywhere all the time.
So what it means for brands--
and this is really an issue for kind of some of the
fancier luxury brands or those that perceive themselves to be
fancier, the jewelry companies of the world--
is you do need to be everywhere.
And I think in the automotive world, that is the case.
But a lot of the other brands, is it appropriate
for us to be here?
Is it really right for our brand to be on Foursquare?
And it is, and you have to be.
So some specific numbers.
We've heard about the death of magazines.
Not true.
79% of the wealthy plan on spending the same or more time
with magazines.
And within that, the number who plan on spending
more is about 30%.
Same goes for newspapers at 76%.
As for digital media, 57% of the wealthy say they like to
have the latest gadgets versus only 29% of the affluent.
So the 500 plus were twice as more likely to buy whatever
comes out as soon as it comes out, which means that when
they buy their new toy, they need to have places to go.
You guys as brands need to be there so they can have that
full experience.
They obviously access the internet on their phone.
This was done a few months ago, so I'm
sure that's much higher.
They're all on social networking sites.
And this was interesting.
65% said they have a lower impression of brands if
they're not heavily engaged in social media.
So you really must be there.
They want you to be there.
And then among the wealthy, there's a 350% increase in
Twitter usage over the last 18 months.
So the question becomes all right, how do you use your
license of luxury when it comes to media, when it comes
to all these channels and platforms?
And the trick is not just to be there, but it's to
personalize as much as you can while you're there.
So one thought that comes to mind-- something we've
discussed with some of our hotel clients--
is don't just have a brand Twitter
address or two or three.
Have 20.
In the car world, let your design guy have his own feed.
Let the speed guy, let the engine noise guy
have his own speed.
Let the guy who runs the history--
let them all have their own feed, so that I as a customer
can speak to the person and hear from the person who
interests me and who suits my interests.
So that's a way to use your license of luxury in this part
of the game.

So last quarter, we just did a great study on Gen Y. And I
just want to touch on it very briefly.
Gen Y is, as you all know, 11 to 34 years of age today.
And I want to speak particularly about the 11- to
22-year-olds because they're the part who we're probably
paying less attention to.
But in some ways, they're the most important part.
This generation, one of the things that really marks them
is that they've grown up in a family where they're friends
with their parents.
They're buddies, they're pals.
It's like their equals.
And there's an exchange of information that
goes back and forth.
So we wanted to understand how they influence their parents.
54% of the parents of wealthy and affluent Gen Y-ers said
their child makes them aware of new luxury products and
services they should purchase.
Their child helps them with research, particularly when it
comes to any product that has technology as part of it.
55% admit that their children know more about luxury brands
than they do.
And the most important one is 46% ask for
their child's opinion.
They actively seek out their child's opinion.
So the question I have for you is what are you doing as
brands to speak to 11-year-olds today?
What are you doing to speak to 14-year-olds?
And you guys are car companies, so it's OK.
You're not tobacco companies who can't go there, right?
So how do you do this?
And one thought I'll give you just as an example of license
of luxury is at the dealership.
I see when we buy our cars a lot of families come in with
kids in tow.
So what do the kids do?
What if there was a room that had a simulator of the car
their parents were going to drive, and they can really get
in that front seat and then a road appeared in the
windshield, and they could drive the car that their
parents were about to drive.
And they could really take the audio system, the video system
out for a spin.
That would be a very different experience.
And their parents are going to be influenced by what these
kids want for sure.
So there's a great benefit in it.
And then the additional benefit of course is you're
getting to this next generation well before they're
in your wheelhouse.
So you're really beginning to build and form brand
impressions with them at a young age.
All right.
So where does it all break down?
And this is from our research.
The worst part, the biggest threat to your business isn't
the economy.
It's not gas prices.
It's not design.
It's not J.D. Power awards.
It's none of that stuff.
It's what happens at the dealership.
And I say in the kindest possible way, it's really, in
the greater world of luxury, it's kind of a joke.
And it really is a joke in the sense that it
is the butt of jokes.
It's the stereotype in so many movies and TV commercials.
The car salesman and the car experience.
And if you think about what happens in the rest of the
world, it's a completely different story.
The experience of buying a $200 scarf at Hermes is 1,000
times better than buying a $100,000 car at a dealership.
It's totally unbalanced.
It makes no sense.
And it's that point where you can really make a connection,
or you can just ask somebody to give them a five and not
really treat them terribly well.
So some proof about the affluent and their feelings
about shopping.
They feel judged.
They feel judged.
Now, this is not just automotive, by the way.
This is all high-end shopping experiences.
I would guess that if it were automotive, the numbers might
even be a little higher.
So people feel judged.
They feel that sales associates can take the fun
out of the experience.
And what a shame, because this should be one of the most fun
purchases there is to make.
It's cars, it's great.
"Sales associates make me feel like I've wasted their time if
I don't purchase anything."
Well, they're not supposed to purchase in this business in
their first visit.
They're there to test out, to take a test drive, to play
with something, to see what they like.
They'll probably come back two or three times.
It's a big thing.
Customers like to make an experience
out of buying a car.
And of course, when they can, they usually try and shop
online rather than deal with sales staff.
So the fantasy has to be some kind of post-Armageddon world
where there are dealerships with no people.
And all the cars are there and they all have keys in them.
And I can go sit in a car for an hour if I want and not have
to listen to anybody.
I can test drive whatever I want.
And I can go home and I can build the same car that I
built online a dozen times before that day and order it.
Boy, wouldn't that be lovely.

Particularly bad when it comes to women-- since we're in
fashion week, this is a quote from one of our advisory panel
members who you guys may know, Simon Doonan, who's a creative
consultant at Barney's and a really insightful guy.
Says, "Women essentially feel anxious when they go shopping.
They feel scrutinized, they feel like their ability to
make the right choice is going to be judged.
So there's a fairly high level of anxiety around their brand
acquisition.
The retailer who's smart does everything to bring down the
anxiety bit by bit.
A glass of champagne, remembering who they are,
reinforcing their sense of self...
If they're treated in a way that makes them feel anxious,
they'll rocket out of the store," along with their
hundreds of thousands or millions of dollars in
prospective lifetime value.
So what's the answer for this?
And I don't know the car business that well.
I don't know what goes on with dealers.
I remember a few years ago when some of the guys in
Detroit took back dealerships.
I remember the lawsuits that ensued.
But the luxury brands in every other arena
have taken back control.
And it's not been pretty always.
Tiffany used to be sold at jewelers throughout the
country, all sorts of independent jewelers.
They're not any longer.
There were lawsuits about that.
There were problems. There were pissed off people.
But they've protected their brand.
And the brand is the most fragile thing, right?
It's a construct in our minds.
That's all it is.
And if it goes to hell at the point of retail, well, all the
investment goes to hell with it.
So I'll give you some examples.
You've all been to a Ralph Lauren store before.
This is one of the nicer ones.
There's a sense of ceremony.
There is an entrance when you go to Ralph Lauren.
The brand and the lifestyle is carried out inside.
He's got into the restaurant business.
At some of his larger stores, he's opened up restaurants.
So you really have this full Ralph Lauren experience when
you're with him.
Clearly, the sales staff look better than most dealer sales
staff, and they really embody the brand at every level.
So the question is, or one question is, but does this
result in more money?
That's the question at the end of the day.
So we worked with a company for many years called Baccarat
who I'm sure you all know, a 250-year-old plus crystal
company from France.
Baccarat had just opened a store on
59th Street and Madison.
And it was a prototype store.
They were testing out a new format.
Did very well.
They wanted to open a second to see if the magic worked
outside of New York.
So they chose Greenwich.
And the reason they did, it was close by.
They could keep an eye on it.
And they went to a store called Hoaglands, which is a
fine retailer in Greenwich who was the Baccarat dealer for
many years.
And the guys from Hoaglands said, go ahead, open a store
if you want.
But we can tell you because we've been selling Baccarat
for 60 years that the market opportunity, the appetite for
Baccarat in Greenwich is $60,000.
That's what it is every year, that's what it has been.
It grows a little bit.
So they said, thanks guys, we're going to do it.
And of course, $1 million the first year because people were
in the brand.
They had created a temple to the brand.
And I haven't seen any dealers, any car brands that
have created temples to the brand.
I've seen subtle improvements, consistency from the outside.
I've seen Keurig espresso machines as kind of the big--
we're classing it up.
But imagine for a moment that one of the brands really did
take back control.
One of your competitors said we're getting out of this.
We're going to build temples to our brand.
And so in my vision of this temple, I walk into a door and
there's a big room.
And the room is just leather.
Floor, ceiling, walls.
They're full hides.
Beautiful dyed hides hanging from the wall.
The smell is just overpowering new car smell.
And I'm in this brand in a very sensual, sensory way.
The look, the feel, the smell, everything about this brand
tells me I've come to this.
I get educated about the history.
The history provides value.
It provides rationale for the price
that that car is charging.
The better you get at this, arguably, the more you can
increase your pricing.
So I think there's tremendous opportunity there.
And using your license of luxury will
allow you to do that.
I want to end on what was a really big thought for us.
We have an advisory panel member named Lee Brower.
Lee is a fascinating guy.
He is a 6' 6", bald Mormon guy.
He looks like Mr. Clean.
And he's in the business of helping families pass down
wealth from generation to generation, estate planning.
And he get very disenchanted that he was seeing the money
vanish after two generations or three generations.
So he says, there's got to be something more to this.
He said, what if I help pass down family history and values
and morals and ethics, and really the important things
that hold a family together.
Might that help the money go with it?
So he started the business doing that.
And Lee is also--
for those of you guys who have read or seen The Secret--
if you put it out there, it will come back to you.
Lee is the rock guy.
So he's the guy who carries a gratitude rock in his pocket
and whatever he touches it he remembers to be grateful.
And he really does live it.
Anyway, so Lee brought up this concept of capture.
And he said the concept of capture is something that's
missing to a great degree in our society.
We have all these wonderful experiences.
It's such a fast pace.
But if you're not capturing them, you're not banking them,
and you're not creating that value for the future.
So when you talk about happiness, you have to be able
to capture these experiences and recognize them.
And we all run through life without capturing things.
We have so many more experiences than our parents
did, and we don't have the gratitude often.
So we asked the question in the quad part of the survey,
would you like it if a luxury company created experiences
that stayed with you for the long term and you can mentally
bank and treasure.
80%--
again, a really high number for our survey--
agreed with that statement.
Would you like it if a luxury company could create products
that enable me to savor the day to day moments of life?
Almost 9 out of 10.
So what should be a pretty easy, human thing to do, to
appreciate, to capture a moment, to value something, is
something that this affluent consumer is saying, no, I
really can't.
I'm totally overwhelmed.
I don't have the time to appreciate that.
I'll do it, but I can't spend the time.
So help me.
So how can you guys do it?
How can you use your license of luxury to do that?
And when I thought about it, what came to mind for me just
because it's somewhat fresh is the car delivery.
Picking up the car at the dealer.
You've all heard of primacy and recency.
The importance of what happens first and what happens last.
This is a great opportunity for dealers at the end,
because they can kind of correct all the transgressions
that have happened up to the point of delivery.
So we were very excited and we drove-- it
was a Saturday morning--
and we drove to our dealer to pick up the car.
And we drove in and there it was, sandwiched right in
between two other cars.
And it was such a let down.
It was our special thing that we were so excited about was
just there.
There was no sense of ceremony.
There was no ritual.
There was no anything to it.
We then walked into the dealership and we went to our
guy's desk, which was the same as it always is which is
littered with papers.
And we signed everything we had to sign.
He was picking up the phone, and it was frustrating.
I mean, again, back to the $200 Hermes example, this was
a different world.
So here's what I see it as.
What if brands could create delivery rooms, right?
And I use that expression purposely, like the room where
babies are delivered, where very special things happen.
So let me ask you guys to go with me for a moment
and close your eyes.
And I have really good light, so I can see you all.
And I want to take you through what this experience might be
like for me.
So before you get to the dealership, perhaps the day
before, something comes in the mail.
It's an invitation.
They know what time you're coming.
You arrive, you're greeted.
You don't have to pester somebody.
They're there waiting for you.
They lead you back to a part of the dealership that you've
never seen before.
They take you into this room.
There's a new hallway that you haven't been in.
It's kind of dark.
It's moodily lit.
Lovely carpeting.
The walls beautiful darker color.
So it calms you down.
It tells you there's something exciting happening.
There are photographs on the walls from the heritage of the
brand for years and years and years, right up through the
concept cars.
You then get taken into another room.
Beautifully furnished.
In the back of the room, you think you see your car.
But a silhouette of the car.
Barely lit, edge lighting.
Maybe a glint or two off a painted surface.
Great music playing.
You're offered a seat in furniture that feels and looks
like the brand.
They bring out a dossier for you.
You sign the papers.
They present you with a box.
You open the box.
There's a key in it.
The dealer invites you to press the button, and you do.
And the car chirps, the lights go on, really
brightens up the room.
Sound is intense in that small space.
The house lights come on and reveal the car.
There's ceremony to this.
You're invited over to get in the car.
They take you through a proper briefing of it.
And then what you thought was a wall opens and it opens to
the street.
And you're ready to drive out and be on your way, having had
this great experience.
But before that happens, 6 or 8 or 10 people from the
dealership come in, mechanics, the GM, the receptionists, and
they say, congratulations.
Thank you so much.
We really hope you enjoy this car.
It's wonderful, and we really appreciate your business.
To me, that would be a very different type of experience.
That doesn't cost a lot.
It can happen in dealerships today.
Just needs a little remodeling.
And I'm sure there are hundreds of others.
Lots of ways to use your license of luxury to really
make a connection with this customer.
So I want to leave you with one thought.
And that is when you're in meetings, when you're
brainstorming alone, when you're thinking of media
strategy, creative strategy, dealer--
whatever--
whatever you're thinking about that has to do with your
brand, before you start that meeting, ask the question, how
can we use our license of luxury?
You all have license of luxury.
And the more you use it, the better you're going to get at
it and the better it will be for your business.
Thank you very much.
[APPLAUSE]