Not to be all too factual, but this is what happened in a nutshell. Plus three key thoughts, our insights, an outlook, and a thank you. So keep reading. 🙂
Yesterday, on March 27th, Dr. Verena Batt (University of Basel), Annabelle Scharwey (WHU Otto Beisheim School for Management), and I were excited and proud to welcome 35 fellow researchers interested in luxury management to the 5th Luxury Research BrownBag Meeting @ BaselWorld.
We were kindly hosted by René Kamm, the CEO of BaselWorld’s mastermind operator MCH Group and joined by Dr. Tiia Mäkinen, who provided us with a valuable impulse for the afternoon on our key subject „UHNWI Customer Experiences and Relationship Management“. We were proud to welcome full, associate, and assistant professors, postdocs, phd students, mba students, and exceptional master students of programs of University of Lausanne and MSC, MUG, MOK, and SIM programs at HSG as well as friendly associated general managers of two consulting firms – with this broad variety being not only beautiful, but, indeed, key to a multifacetted discussion. Our project’s scientific patrons are Prof. Dr. Günter Müller-Stewens, Prof. Dr. Sven Reinecke (both HSG), Prof. Dr. Martin Fassnacht (WHU), Prof. Dr. Dr. hc mult. Manfred Bruhn (University of Basel), Prof. Dr. Felicitas Morhart (University of Lausanne).
After a welcome by us and a key note by René Kamm, we explored the fair in individual teams in the morning, reconvened at University of Basel for the impulse talk by Tiia to continue on in high spirits with our workshop on the subject. There was coffee, cookies, and insightful conversations so we were glad to see many happy faces after an exciting day.
Beyond this very matter-of-fact report, there are three key insights, one key outlook, and a big thank you below I wanted to share with you.
I. The watchmaking industry is resilient – Two years ago we went to Basel and you got the impression that not just something was off or out of tune – there was a distinct smell of fear in the air. Don’t get me wrong: nobody really feared the Apple watch or the newly introduced TAG Heuer connected. Respected: yes – but not feared. The industry is, rightfully, too proud for that. However, those were mere examples of a larger, seismic shift that not only the watchmaking industry faces, but also automotive, fashion or any other industry. It is the fear of understanding customers less and less, of understanding markets less and less, of increasing complexity everywhere, and of an increasingly uncertain future.
In 2017, BaselWorld shows itself after having gone through the sizeable industry thunderstorm that was 2016 – but it also shows itself reorganized, and even somewhat reenergized. The fair is smaller, yes. But the innovations are as plentiful as ever and when considering the industry’s figures in 2016, the resilient presence of brands and trade alike is a sign of substance of this industry. From an external perspective, there are very few industries that can absorb external shocks like the watchmaking industry – it truly is impressive that way. Of course, this absorption was not free of pain. But then again, building muscle and competitiveness never is.
II. Still, there are more questions than answers – Yes, the watchmaking industry is resilient. But that does not really get you anywhere. This is where the greatest potential for the industry is right now stemming from – at least in my perspective: finding answers to the most pressing questions.
So you feel you know your customers less and less – find new ways of interacting with those target groups that are key to your positioning and brand. Don’t talk to everyone and learn everything, go for those to who you matter most (not the other way around!) and learn to speak their language.
So you feel you know your markets less and less – that might be, because you could benefit from a new understanding of what your market really is. Consider this: there is no Chinese market. There is no US market. There is no Domestic market. Think beyond geography to make more sense of business opportunity.
So you see increasing complexity everywhere – is that really something that is being thrust upon your brand, externally? Or is it the reality generated from the accumulation of business decisions made in the past? Reconsider and slim your portfolio of activities if your team cannot handle everything.
So you are looking toward an increasingly uncertain future – times of certain growth and easy expansion strategies most likely are a thing of the past. However, try breaking out of the more traditional „future is what happens at the end of the rails“ perspective and think as freely as to reconsider, adjust, and fast forward your business model. The future is only uncertain if you simply allow it to happen. Yoda says: there is no „try“, there is only „do“.
III. Research strives on content, community, and collaboration – Just a week back, we conducted our 2nd St. Gallen Luxury Alliance. There, we presented our partners and guests with this new credo that we would like to learn to embody: we are about content, community, and collaboration. I think the Luxury Research Brownbag @ BaselWorld is a good example for that with particular strengths in community and collaboration. There is only so much (scientific) content you can create in one day with 35 people – but sometimes, it’s not only about content creation, but sourcing of the raw material. And that’s what this event is all about.
IV. Findings – Marketing to Ultra High Net Worth Individuals follows its own rules. Here, the individual customer relationship gathers a greater relevance when compared to the broader targeting of any lower-positioned offers. Scale effects are less prevalent but individual customer experiences have the potential of reaching greater profitability – if designed successfully. Here, one key dimension becomes apparent: the degrees of freedom to design customer experiences on a scale ranging from a) highly structured and rigorously steered to the other extreme of b) merely providing a setting for a co- or altogether self-created customer experience.
If pressed to describe one distinct finding of our afternoon discussion, I’d select the following working hypothesis: The degree of freedom that might be valuably implemented in customer experience and relationship management correlates with the positioning of the offer.
For products that are in the aspirational segment, consumers look for guidance and require the brand to demonstrate the know-how and take on the responsibility for even maybe rather rigidly creating experiences as they create their products in (potentially small) series. Think Cartier wedding ring: no one goes to Cartier for a customized experience, they go there because they trust the brand to guide them.
On the other end of the scale, in the high-end segment, consumers look for customization, adjustment, fine-tuning, and sometimes even the ultimate in co-creation in one-off-manufacturing. Here, the degrees of freedom for the customer to influence and co-create the customer experiences becomes paramount. Think of a mega yacht: if you are building a billion dollar yacht, you will not adhere to guidelines. You will make the guidelines. Or buy a small country, alternatively.
V. Outlook – The Luxury Research BrownBag has received great resonance. However, it has one distinct downside: BaselWorld is only every year, and not every other month. But we are working on a solution to that. This solution will be called „St. Gallen Virtual Luxury Research Colloquium“ and it will be starting early Summer this year. We are aiming for a professionally hosted (i.e. we understand that quality is key and that we’re out of our element to do this on our own) web variant of the BrownBag meeting. This is me consciously shying away from the word „conference“ simply because I believe that the BrownBag provides and should provide a different spirit than a conference. The Virtual Luxury Research Colloquium will, however, be different from the BrownBag meeting as we will make the research projects of our participants the key focus. To curb the traditional downsides of conferences, we will implement our own process and spin on the subject to grant the Virtual Luxury Research Colloquium a good chance at becoming successful with time.
VI. Thank you – All of you have taken time out of your schedules and most of you have taken quite considerable travelling upon you to join us. Some of you have supported us with your scientific guidance or practical experience. Some of you have supported us by providing access, a wonderful venue, with sharing your insight, with hosting a wonderful fair. Some of you are paying for your own plane ticket on a slim phd salary just to come here and be with us. The least we could do was bring a smile to your faces by feeling awkward with us in front of the selfie cam, to provide a place for inspiration, exploration, and meeting your fellow researchers.
Thank you for joining us on the 5th Luxury Research BrownBag @ BaselWorld and here’s to many more.
Kind regards from St. Gallen – and looking forward to see you soon!
Head of the Competence Center for Luxury Management
University of St. Gallen