What Company Culture can learn from Luxury Brands - Markus Kramer
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What Company Culture can learn from Luxury Brands

Based on concepts as old as humanity itself, luxury represents the discipline of branding in its finest essence and stands true at the pinnacle of differentiation. It is the antidote of commoditization. The intangibles within luxury are powerful drivers of growth, generating consistently high profit margins and customer loyalty beyond ‘points and rewards schemes’.

Even in times of slower than anticipated growth in Europe, a dropping GDP in China and Russia struggling for peace… growth rates in the luxury sector are still higher than in most other industries. A world hidden to most, associated with high price tags and a guaranteed aura of mystique, luxury operates differently.

What can we learn from a culture hidden behind a curtain of glitz and glamour?

Scarcity Drives Demand. For luxury, less is quite literally more: long waiting lists, products reserved for only the best clients, limited production runs, selective distribution. You name it, real luxury is (deliberately) not easily accessible. In order to create this position of power, Luxury draws on stories steeped in history, genuine and ethical craftsmanship and the unquestioned integrity of material and provenance.

In terms of distribution, many luxury brands will not only control sourcing, but also have vertically integrated retail channels – making sure nothing is left to chance. Apart from high (and often beyond all rationality) price positions, there is one more critical yet often-undervalued factor that distinctively differentiates luxury from the mass and premium business models.

The Total Obsession With Product

Passing on the skills of mechanical engineering over generations in fine watchmaking, for example, is no easy feat. In times of contemporary living, not many youngsters will opt for a career filled with hours spent over magnifying glasses moving minute pieces of precision parts into place with tweezers. Yet it is exactly in these deeply rooted doings that we find some of the most interesting and differentiating insight: Luxury celebrates product over the customer. Hard to believe, but true. Luxury companies are made up of perfectionists, where only the best is tolerated. This goes for the quality of output, as well as for the dedication and capability of the people they employ.

And who benefits?

Of course the customer represents the very reason these companies exist and do well – but deep down, there is a mutual understanding by both the company and the customer centered on a shared passion and appreciation for the finest product, the best craftsmanship and an ensuing, mutual respect for one another.

Often the customers are experts and so closely involved within these companies that joint collaboration on a master timepiece or on an individually configured car would put many new world marketers out of their debt. Whilst the modern discipline of marketing is re-discovering the idea of ‘putting the customer at the centre’, the luxury industry has practiced it all along: customer inclusion. However, luxury is not a democratic process and hence this applies generally only to the making of a product that has already been designed – innovation within Luxury is a separate topic all in its own right.

The Law Of Perfect Attraction

If you hire for money, you’ll get people doing a job. For luxury brands, employing the right people is absolutely vital. Finding and retaining not only people with skill but with a true sense of believing makes all the difference.

I have not come across any luxury company with a corporate culture that would not reflect this. This is generally not something that is trivial to cope with. Luxury goods companies are often headed up by incredibly opinionated leaders in organisations that are well structured – and underpinned by a common purpose so strong that it will eject ‘non-believers’ rather swiftly. If a non-believer ‘enters’ it is often by mistake. For the ones who do find a home however, it habitually results in a lifelong, fulfilling career.

It is not uncommon to find third – or fourth – generation watchmakers within the same watchmaking company in the Swiss Jura Mountains, for instance. Over time, this strong idea of a common purpose, expressed in shared passion transcends staff and customers alike and becomes a self-propelling mechanism that drives innovation, great product, fulfilled employees and loyal customers.

How Does It Translate?

The lines in front of an Apple store when Apple launches a new product are no coincidence, but a clever way of using some of the codes inherent in the luxury business model for a technology product. The same goes for distribution (vertical control of value chain, think Apple Store) and culture, too.

Consider Steve Job’s perfectionistic personality that resulted in a culture so focused on product that it would not allow for anyone not sharing the same passion and belief system. Polarizing? Sure. Successful? Very. Differentiation and offering value propositions with real integrity (not just in the product, but in the culture too) are no longer an option, but a key to survival and success.

Building strong cultures that truly capture, enthuse and drive staff and customers alike also means building a value system (i.e. Brand) with purpose, focus and consistency. Luxury brands offer not only strong cases in branding lessons, they also offer deep insights into the mechanics of how to activate on passion and build a network of like minded people around it for the benefit of greater and better products, healthier margins and both happier staff and customers.

Article originally written for and published on November 5th 2014 for enviableworkplace.com