If you’re starting a new business and intend to become a luxury brand, a basic cookie-cutter business model template downloaded from the internet won’t get you where you want to go. Luxury brands follow different rules than standard businesses, from marketing to product design and manufacturing. When developing your luxury business model, take the following ten tips into consideration:
1 – Develop your niche
To be a luxury brand, you need to establish at least some degree of exclusivity (the more the better). To do this, you’ll need to identify a niche. Unlike a department store, you won’t want to sell a wide range of products. Rather than specializing in clothing, jewelry, home decor, and technology, just pick a single category. You may want to narrow down your niche even further than this. For example, instead of selling home decor, only sell textiles such as throws and pillows.
While having a narrow niche is important, don’t go too far and make it so small that your business has no room for growth. Balance here is key, but when in doubt, start out narrow and expand slightly down the line if you find a need to.
2 – Prioritize quality over quantity
A luxury brand doesn’t sell mass-produced items that can be cheaply manufactured. Your products must showcase craftsmanship. This involves using only the best materials and highly skilled laborers.
For example, furniture may be made of unique types of wood and have delicate carvings done by talented carpenters. While this means you won’t be manufacturing as many products, the craftsmanship involved will allow you to price products accordingly and make similar – and oftentimes greater – profits than you would otherwise.
3 – Be innovative
To set yourself apart from all the other retailers, you’ll need to be highly innovative. Not only do your products need to meet a need that other products cannot, but the way you market, sell and produce your products needs to be innovative as well.
A great example of this is Apple. Not only are their products completely unique, but their storefronts are as well. Customers are greeted with rows of tables of products that can be touched and tested. Rather than lining up at the counter to make a purchase, Apple employees walk the store making recommendations and sales wherever the customer is standing. This makes the purchase memorable for customers and increases the chance that they will come back time and time again.
4 – Target affluent customers
Luxury brands are not accessible to everyone, and by partnering with and attracting the business of affluent customers such as celebrities, influencers, and political figures, your brand will become more desirable.
Send PR packages to affluent customers you believe will appreciate your product and ask them to post about your products if they like them.
5 – Focus on the customer experience
Luxury brands don’t just sell incredible products – they also offer a unique experience to the customer. This may involve offering your customers complimentary drinks or being attentive to their every need without trying to force a sale. With online shopping becoming more and more popular, a fantastic experience that can’t be obtained through a computer screen is necessary to attract customers.
By focusing on providing an incredible customer experience, you’ll also increase customer loyalty and keep them coming back time and time again.
6 – Move beyond online sales
To offer a unique customer experience, you’ll have to move your store beyond an e-commerce platform to a physical storefront. While it may be more feasible to begin your business online, you’ll want to write in plans to expand to retail locations.
While there are concerns about the viability of traditional brick-and-mortar stores these days, affluent customers are still seeking experiences over possessions, indicating that there is still value in storefronts. By keeping physical retail spaces to a minimum, you create exclusivity and demand while also ensuring you are not reliant on them.
7 – Offer bespoke services
A successful luxury brand offers products and services that can’t be obtained elsewhere. To make your products and services unique, make them bespoke. This involves facilitating personalization. For example, a high-end whiskey business may allow a limited number of customers to pick from a selection of different wooden stakes to flavor each cask.
Function of Beauty allows customers to fill out a hair quiz to create a bottle of shampoo tailored to their hair, as well as pick out scents and colors.
8 – Build a sleek website
If your in-store experience screams luxury, but your website looks like any other run-of-the-mill store, it’s time to redesign it. While there are several website builders that offer free templates, these won’t set your brand image apart from the crowd. It’s a good idea to invest in a website designer to make sure your homepage is just as bespoke as your products and services.
If displaying images of your products and services, avoid simply placing them over a white background and get creative. The clothing brand Zara includes videos of their products in addition to images and poses models in front of a variety of different backgrounds.
9 – Develop an iconic brand identity
People who buy products from luxury brands aren’t just interested in the product, but rather what the product symbolizes. Customers want a product and purchasing experience to feel like a lifestyle. Most luxury brands portray success, but the similarities tend to stop there. Some may promote class, while others may target customers who see themselves edgy.
By clearly defining your brand identity, you’ll be able to better target customers that seek to align themselves with this identity.
10 – Never meet demand
A common thread throughout this article has been exclusivity. The final way to achieve exclusivity is by making sure your supply never meets demand. This can be done by producing a very small number of products that sell out quickly (and are on trend!), and then creating a waiting list for restocks. Capsule collections, or limited edition products, can also be a great way to increase demand.
Customers who miss out on a purchase once will be more likely to try to snap up the next product that comes out.