The luxury service market is growing, according to Bain, the global luxury industry will grow 5 per cent annually. This also means that the luxury experience market is growing as well. Many luxury brands are investing in hospitality because people are searching for experiences. Therefore hotels, spas, restaurants, clubs, lounges, bars, events, cruises, music concerts, private events and others are quite lucrative for entrepreneurs and startups.
However, it is quite effortless to create luxury products because they have to achieve different definitions. In contrast, creating a luxury service is more challenging because there are so many touchpoints, which have to reach the luxury level. Customer experience means that a company develops every single touchpoint, which is in contact with customers directly and indirectly.
For instance, it is quite typical for inexperienced entrepreneurs to offer too many services and touchpoints, which they cannot manage properly. Therefore, less is more. Entrepreneurs should evaluate, which touchpoints are vital and necessary for the business in order to create unique and unforgettable customer experiences. When a business has discovered these touchpoints, then it must develop rapidly every single touchpoint in a very radical way to achieve the required luxury level and move beyond. Hence, luxury is about small details, and most businesses are not accurate enough with small details, which are the main keys in order to amaze customers.
When it comes to new luxury services, new startups must discover ultra-niche markets, which have not been exploited by incumbents. It is harder to compete against a business, which has dedicated itself to serving a niche market. But here comes the most difficult part. Is the niche market profitable enough? Are there enough customers, who will pay for the service every single year? There is a danger that the niche market will be for one-time customers, which means that every single sale will make the market smaller, and the life-cycle of the business will become shorter.
Therefore, new business ideas must be sustainable ones. Some sort of flexibility is important because in 2017 according to Statista, 57.2 per cent of Millennials have said that they are willing to pay more for personalized high-end and luxury items, 35.2 per cent said maybe and 7.6 per cent said no. Personalization is important since it also gives room for required manoeuvres for the business itself because otherwise, the market size might be too small. At the same time, it is important to remember that personalization must not mean that it will make buying more difficult. Here comes the challenge. How to give personalized services and how to maintain customer experiences high when a company is practising selling? Therefore, every single touchpoint matters in the customer's journey - from ordering to consuming.
An article was written by Jukka Aminoff who is the author of Luxury, Buying Revolution, and Social Selling Luxury. The article was firstly published by The Mark Challenge Entrepreneurship Club, which is powered by The International University of Monaco: http://www.themarkchallenge.com/clubdet.php?id=5