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PRODUCTS AND IDEAS THAT INSPIRE PERFORMANCE

Premium Incentive Products Magazine - Products and Ideas That Inspire Performance

The Power of Luxury

The Inspiration Inherent in Good Quality & Design

When you hear the word "luxury," what products or brands come to mind? A Rolex watch? A Louis Vuitton handbag? A Cartier bracelet?

Maybe all of the above.

Luxury, in the world of incentives, is closely associated with the types of products that companies turn to time and time again to reward their employees for a job well done and thank customers for their business. In the end, those chosen luxury items are what will create lasting memories of why the reward or gift was given.

From the perspective of how powerful luxury can be, industry experts shared their thoughts on what luxury means, why it matters in incentives today and who is motivated by luxury goods.


The Meaning of Luxury

As a noun, luxury is defined as "the state of great comfort and extravagant living"; as an adjective, it means "luxurious or of the nature of a luxury."

"To me, it is definitely a noun and an adjective," said Joe Zanone, authorized sales agent, Movado Group Inc., a premier watchmaker. "The words alone such as opulence, richness give weight to the value of the item. The best wording comes as an adjective such as smart, fancy, up-market, which is what we all would choose where we can afford it. There are lawn mowers. Then there are John Deere Power Cut mowers with every possible high-tech gadget available today. Every category of items available in our industry comes with basic, upscale and luxury versions. We all strive to obtain luxury in everything we work for."

While by definition luxury means opulence, lavishness or grandeur, "these words often carry a negative connotation," said Jessica Brown, senior director of luxury goods, Rymax Marketing Services, Inc., a full-service loyalty marketing provider.

"To us, luxury is any product that people aspire to own from a popular brand that people know and trust," she said, "particularly as it relates to fashion and accessories brands. To us, brands like MCM, Gucci and Ferragamo epitomize luxury."

Becky Sawicki, director of special markets, JURA Inc., a company that specializes in automatic coffee machines, said that "Luxury means something special, with connotations of elegance, quality and enjoyment. Luxury is often associated with wealth and money, but it goes beyond this.

"For example, allowing yourself to sleep in and relax all morning, sipping delicious cappuccinos is a true luxury for busy people," she said.

What's more, "Luxury can be a lifestyle when speaking about an individual, but when referencing luxury products it refers to quality, longevity, design and, at times, exclusives," noted Jeffrey Brenner, director of special markets, Seiko, and vice president of the Incentive Manufacturers Representatives Alliance (IMRA).

Why Does It (Still) Matter In Incentives?

"Luxury matters because our channel is all about motivation and merchandise brands that fall into the aspirational category are highly motivational," said Mike Landry, vice president, special markets, TUMI. "Individuals aspire to own certain brands for a variety of reasons.

"In the bag, watch and eyeglass category, wearing an aspirational brand is an outward sign that one has achieved a certain degree of success," he said. "They have 'made it,' if you will. People modify behavior to own and, perhaps, show off a brand that they might not otherwise purchase and that's the core of any effective incentive program."

Premium incentive products are about making recipients feel special, and luxury products do just that.

It matters because "Luxury is the blue ribbon at the state fair!" Zanone said. "We all strive to give and obtain the best in our work lives and the best deserves the blue ribbon. Luxurious goods are the pinnacle of performance recognition."

Brown noted that "People love trophy value items that are long-lasting. Cash rewards are not as appealing anymore because it is fleeting. No one remembers what they spent their last cash reward on. Most likely it was to pay a bill or put toward another large expense.

"On the contrary, every time they use their handbag, wear their watch or listen to music on their headphones, they'll remember where the items came from and how they earned them. Luxury items resonate and keep people motivated," he added.

Making consumers feel special is important.

"Premium incentive products are about making recipients feel special, and luxury products do just that," Sawicki said. "If a product is a cut above, it's more memorable and more likely to motivate."

Brenner added, "A consumer is a consumer. Where they get their product is simply the portal of delivery. The consumer wants something aspirational, a special item that says, 'I worked hard, I earned this'; or 'due [to] my many long days and hours of travel and hotel stays, I should be rewarded.'

"The act of recognizing and incenting is still critical to ensure longevity with your workforce and loyalty from consumers, and luxury goods enhance the process," he added.

Who Is Motivated By Luxury Goods?

"Everyone!" Zanone said.

"Be it a Mercedes-Benz, Frette Linens or a Jura Espresso Machine, we all want the best and the most luxurious of items dangled in front of us to make us push ourselves to obtain our goals," he said. "Everyone has an idea of what is luxurious to their daily lives and will strive to obtain those luxuries if presented as part of the incentive program. Luxury is target in the program. Luxury drives the levels of participation."

Brown agreed, saying that "everyone is motivated by luxury goods," and that "People love aspirational items of which they can be proud.

"Baby boomers love today's popular brands not just for themselves, but also to gift to their children and grandchildren," she said. "Similarly, most millennials and gen Zs lack the disposable income necessary to purchase luxury goods, so being rewarded with them really matters. They feel empowered and appreciated, which drives their motivation to earn the next great reward."

Research from Deloitte, a multinational professional services network based in London, revealed the latest trends shaping the global luxury market today. Released earlier this year, the report, "Global Powers of Luxury Goods 2018," examined the 100 largest luxury goods companies globally, based on the consolidated sales of luxury goods in FY2016 (which the company defines as financial years ending within the 12 months to June 30, 2017).

For example, the report stated that "Collectively, millennials and generation Z will represent more than 40 percent of the overall luxury goods market by 2025, compared with around 30 percent in 2016. Unlike baby boomers, many millennial luxury consumers expect to interact with brands across a range of digital platforms, rather than only through traditional channels. Millennial consumers are also important for in-store shopping and expect a high-value, customized experience."

Furthermore, "for millennials the emotional and personal context within which luxury brands appeal to consumers has widened considerably. Luxury brands are supplementing traditional attributes such as quality and scarcity with lifestyle values, including sustainability to attract millennial consumers."

On some level, most people are motivated by luxury goods, with different product categories appealing to different people.

"Everyone has their own concept of luxury," Sawicki said, "whether it's a status brand, the newest technology, classic design, or something exotic and rare, or simply something special that feels like a personal indulgence."

What's more, "Impulse shoppers can be a strong influencer for motivating the selection of luxury goods," Brenner said. "The ease of electronic redemption and quick shipping pushes the brain to think 'big,' it is a sense of accomplishment. A brand's digital presence is critical, to include its social media platform/platforms and websites look and feel to entice and lure the purchaser."

And, luxury goods are not only effective in white-collar motivational scenarios, but "even safety and well-being programs can benefit from upscale brands," Landry said.

"We've seen the recent rise in brands like Yeti, which is effectively a camping/outdoors brand, a category that you would associate with blue-collar motivation programs," he said. "Even though Yeti is priced at a premium position, that product category appeals to a certain working demographic as a luxury, i.e., aspirational brand."

In looking at the psychology of luxury's attractiveness, Peter Noel Murray, Ph.D., wrote in an October 2016 column, "The Emotions of Luxury," for psychologytoday.com, about why consumers buy luxury products. He said that "Studies show that the appeal of luxury is primarily psychological."

The psychological factors, especially emotion, are the focus of his research. However, consumers also are rational beings, and are "aware that they can buy products at mass market retailers which have aesthetics and features similar to luxury brands, but are a lot cheaper."

Murray stated that "Neuroscience tells us that the emotions associated with our judgments guide us in making decisions. Emotions and feelings are components of rationality in that they reveal what is important to us."

For example, people can be "emotionally drawn to good design, and then rationally decide whether the exceptional qualities of luxury design are worth the additional price versus the 'good enough' qualities of a mass market alternative."

However, neuroscience only reveals the process that people's minds use to make a decision, not why people make one choice versus the alternatives. And, he stated, "Evidence suggests that the decisions to purchase a luxury product are overwhelmingly emotional. Purchase behavior is a direct result of how a consumer perceives that a brand delivers the emotional end-benefits of buying and owning."

What's more, Murray explained that the emotional end-benefits have an effect on the "consumer's concept of the self and play an important role in motivation. Consumer purchase of luxury brands frequently is driven by perceptions about self identity, ideal self, social comparison, and other 'self' motivations."

"… Luxury products have the power to change the consumer's perception of who they are by altering the self, they deliver desired emotional end-benefits, including self esteem and hedonic feelings such as satisfaction and power."

How Do You Motivate With Luxury?

In attempting to motivate with luxury goods, you should be strategic about your product focus.

"Products that will be used and enjoyed every day, such as JURA Automatic Coffee Machines, have more motivating power," Sawicki said. "With their exclusive technologies and unsurpassed quality, these machines are perennial favorites for high-end premium incentives."

Brown said her company always recommends motivating audiences with multiple touchpoints throughout the year.

"This can include a points-based system that allows audiences to redeem for merchandise year-round on an online platform, or in person, at an exclusive, invitation-only event," she said. "These events allow people to interact with a variety of products, hand-picked especially for their preferences.

"Both within our rewards platform and our interactive events, we offer a wide range of products across multiple categories, from brands such as, John Hardy, Michael Kors, Tory Burch, Ray-Ban, Miele, Dyson, LG … just to name a few," Brown added.

Meanwhile, Brenner suggested making the process "experiential" when motivating.

"The luxury consumer wants and needs to feel pampered or special—that they are being given an opportunity that few others get to experience," he said.

"This is accomplished when brands participate either during an event or pre/post-event, a gift room where the recipient is able to choice from a pre-selected assortment or a 'fitting' such as watches, luggage, fashion accessories and more," Brenner added. "In some cases there may be a pre-trip gift such as luggage to use when traveling or post-trip such as a watch to remember the 'time' you spent with colleagues."

Zanone said that "It is the carrot of the program."

"If I could go to my workplace, do my job and leave with only a paycheck, I would be just an employee," he added. "Put the opportunity for me to drive a Mercedes-Benz on a two-year lease and I will become your best employee ever and push so hard to win that prize! It could be a little [simpler] and be a set of All-Clad Copper Cookware, which is way out of most family budgets.

"But," he added, "If it is the 'prize' I want, I guarantee I will do whatever I have to in order to obtain the prize!"



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