At Yankelovich, we call it the mainstreaming of affluence. University of Florida advertising professor James Twitchell has dubbed it the democratization of luxury, a phenomenon that he says is paralleled by its mirror image, luxury creep. BCG consultants Michael Silverstein and Neil Fiske characterize it as the new luxury or luxury for the masses. The Wall Street Journal has described how it looks as the hourglass economy. Management consultants Joseph Pine and James Gilmore anticipated it in their analysis of the emerging experience economy.
It's called many things and described in many ways, but what it comes down to is a rising set of expectations in the consumer marketplace. Simply put, consumers want to live luxuriously. Indeed, consumers not only want this, they think they deserve it. Every car should drive like a luxury car; every hotel room should be a five-star experience. What's more, consumers expect the very best at the very best price, which is to say that material luxury has become the basic cost of entry — the table stakes just to get in the game. And with everything providing the look and feel of luxury, nothing can command a luxury price. What used to be premium is now just parity.
The vernacular of luxury is the lingo of the consumer marketplace. No more used cars; they're pre-owned vehicles. People cook on cook tops and ranges, not on stoves. Nothing's old, it's vintage. People read with eyewear, not with glasses and decorate with window treatments, not with curtains.
It's gotten to the point where it's hard to tell what does or does not qualify as luxurious. JetBlue offers leather seats and 24-channel private TVs at economy class fares. A Mercedes sports coupe can cost less than a Pontiac Bonneville or a Mitsubishi Lancer. Panera Bread serves its casual dining fare on real china with real utensils — no paper plates or plastic forks.
Consumers now take it for granted that everything should cater to their highest expectations. And not just the product itself but the service that goes with it and the marketing that promotes it. The bar has been raised across the board. Consumers are holding direct marketers accountable to a much higher standard than ever before. But while the demands are greater, so too are the business opportunities.
Consumers who buy through direct channels are disproportionately interested in living large. When compared with direct marketing non-responders in a study sponsored by Direct and Yankelovich (“Consumer Outlook,” Direct, August 2002), DM purchasers are more interested in splurging and rewarding themselves with treats and special attention. This craving for pampering carries over to the consumer marketplace, especially customer service. DM purchasers are more likely than non-responders to feel that the prices they pay entitle them to the highest level of customer service, to say that outstanding service is important in deciding where to shop, and to agree that they have no problem speaking up when they are getting bad service.
In a marketplace where material luxury is a basic requirement, only intangibles like customer service provide opportunities for differentiation and competitive advantage. While this is inherent in a highly developed marketplace, it has escalated in the last few years as competitors have rushed to outdo one another with yet more perks and extravagances in an ever-accelerating cycle of one-upmanship. At the same time, the sluggish economy has made consumers more watchful and cautious, which has intensified the need to offer additional incentives to motivate purchasing. With luxury now commonplace, only outstanding service can provide that extra push.
Relative to brand marketing, direct marketing is more intimately connected with consumers and thus is better positioned to take advantage of the service opportunity. Unlike brand marketers, DMers can deliver better service in every interaction with consumers. So direct marketing should be the vanguard for building strong brands that meet the demands posed by the mainstreaming of affluence.
However, a slight reorientation by DMers is necessary to lead the way. In particular, direct marketing is about more than outbound calls and direct mail. It's about making an impression with consumers in every contact. Every interaction with consumers must be regarded as a chance to go beyond what's expected and to provide something more than mere customer relationship management. The big opportunity for brands in a world of luxury parity lies not in more cross-sell and upsell but in breaking away from the pack with the kind of differentiation that matters most to consumers nowadays.
Of course, this is not a radical idea for direct marketers, but it is a refocusing of what to emphasize when devising the systems and the protocol used for managing consumer interactions. In particular, this means recognizing and reacting to the attitudinal dimensions of the response generated by direct marketing.
Brands won't fold if they fail to use DM channels to satisfy the heightened need for customer service, but they will fall behind those brands with the vision to utilize the full potential of direct marketing for delivering the only difference that matters in a marketplace saturated with the look and feel of luxury — service to the nth degree.
J. WALKER SMITH is president of Yankelovich Inc., Atlanta.
CRAIG WOOD is president of Yankelovich's Monitor MindBase division in Chapel Hill, NC.
