It’s not beauty or craftsmanship that drives the value of a brand, but how it can transform an individual. For luxury houses, this means one thing: get your story straight.
Recently, I had a meeting with an influential government official on how to enhance the positioning of his country. During the talk he had a fascinating question: if he wanted to elevate the global perception of his country to one with a luxury proposition, what would be the main risks? What I loved about this question is twofold. First, anything can be positioned as luxury once we gain clarity on what makes something luxurious, whether it is a service, a product, or a country. Second, there are significant implications, which need to be managed.
When we audit brands and try to identify gaps, we find often that luxury is simply seen as an enhanced experience, typically expressed through a focus on tangible things: the design of a hotel for example, the materials of an item, or the friendliness of a service. Counterintuitively, these don’t define luxury. They are rather the minimum expected expression.
In other words, beauty, craftsmanship, and friendliness are priced in; they never drive the value of a brand. Every year I have thousands of participants in my luxury masterclasses and the number one mistake is to confuse tangible aspects like the above with luxury value drivers. It’s so easy to make this mistake because the normal world is driven by facts and figures and tangible aspects, while in luxury other dimensions become critical.
First of all, what is luxury? A straightforward way to define the term is to think of luxury as the ability to create extreme value for an individual. Hence, no brand ever will be luxury to everyone, but it must have the ability to be of extreme value for some. To create value, which is so high that it becomes non-linear, a luxury brand needs to be fully centered around a specific need of the client. Hence, it’s never about the brand but all about the ability to have a specific role in the life of a client.
Years of extensive university research and numerous brand and category audits have shown that, fundamentally, brands that manage to achieve such a critical role gain a significant shift in how they are perceived. People who understand the signal of an extreme value-creating brand feel a significant perception shift in several key dimensions related to themselves.
In my research findings I could show that what is perceived as a luxury brand, once it’s connected to a person, enhances the attractiveness of a person significantly. It measurably increases self-perception, perceived expertise, the notion of possibility in life, and protection in social settings, to name a few. It’s much less about status and much more about the feeling of obtaining a superpower that opens doors, makes life more beautiful, and promises significant opportunity.
Looking at these results, it becomes clear that it’s not about a specific expression (i.e., the golden faucet or the thick carpet) but how special someone feels. It’s about the client, not about the brand. The brand is simply an enabler of the anticipated perception shift. And it’s almost entirely driven by the story of the brand. No story, no value. It’s that simple.
To create extreme value, a brand must be able to convince a person in a split second of what is in it for him or her. A luxury brand, in essence, needs to be a storyteller through the eyes of a client. And here is where the risks start. Most brands are providing stories that feel like a sea of sameness. If you think about countries which are tourist destinations, many of them position themselves as “paradise.” But how exactly the promise of “Paradise A” differs from the promise of “Paradise B” or “Paradise C” is typically kept vague.
Car brands typically talk about “excellence in materials and design” or they highlight what they call “innovations,” such as large screens. The problem is, when all competitors say the same thing, it’s neither an innovation nor a differentiating story. If all paradises seem the same from a distance, which one should you choose, and why?
For a recent project I analysed the perception of “Made in Italy” in the US and the results were mind-blowing. Practically no one linked it to elegance, refinement, or quality, but rather to pizza, pasta, and the movies. Nothing about fast and exceptional cars, made-to-measure tailoring, or any other quality marker. The term became an empty promise without any differentiation or substance. It became so generic that it did not evoke any emotion. Likewise, German luxury car brands are losing relevance rapidly in China because “Made in Germany” does not translate into a differentiating and relevant storytelling in a Gen Z-influenced world that lives in the now and wants to know what’s in it for them.
The sea of sameness is not an exception — it’s the rule. And therefore, up to 50% of today’s luxury brands will not survive the transition towards a Gen Z-dominated world, which will be completed by 2030. Because they don’t have a convincing, precise, and emotional story that is told through the eyes of the clients.
And where there is no story, there is no extreme value, as the story can carry 99% or more of the total perceived value in luxury. So the most fundamental risk in luxury is to be without a differentiating story which answers three questions. What do you really sell? Which emotion do you evoke? What can your customers do differently through your brand? If a client does not understand how and why a brand differs on these dimensions, I can predict with near certainty a massive value erosion.
The second risk is that a story is only as good as its execution. And this is where most brands massively fail. They not only lack clarity in terms of the story, but they are also extremely inconsistent in bringing the story to life in people-to-people interactions and on social media and other digital channels. When we recently optimized the social media messaging for a leading French luxury house, there was zero consistency in messaging, which explained why the brand was growing much more slowly than its main peers and losing relevance.
This means that to deliver extreme value for a client, the individual needs to always feel extreme value in a consistent way and within a clearly differentiated storyline — with no exception. Only then does the feeling of luxury emerge.
I recently had a fascinating experience. I took my students to one of the most significant auctions in New York. The experience was second to none except for how the students were treated when they checked in their coats. The lady responsible for that part of the experience may have had a bad day and as a result the students felt insulted and the entire experience was ruined at one touchpoint, which was not even related to the core experience.
The venue was spectacular, the tour was incredibly curated, everything was mind-blowing and exceptional, but because of that touchpoint, nothing else mattered. Next time you think that luxury is in an elegant design, great materials, or something else that is outstanding, always remember that the biggest risks are: not having a story that is told through the eyes of your clients; not having a story that differs from all the others; and not creating an exceptional experience — at all touchpoints — that brings the story to life.
And it does not matter whether you are the head of state of a country worrying about its image, or the CEO of a leading luxury brand, or someone working on a luxury startup. Do you have a true story and clarity about which emotions you evoke in your clients, and does the customer journey transport the story?
If you can look in the mirror and say yes with certainty, congratulations! But if there could be even the slightest inconsistency in the above, then you must act. Because luxury is all about delivering on a promise of an emotion; it’s about the client and not the brand. Otherwise, you will be one of the 50 percent of brands that disappear. Time for reflection. Time for action.
Daniel Langer is the CEO of the luxury, lifestyle and consumer brand strategy firm Équité.