The hidden dangers of luxury customer experiences

With 80 percent of customers believing the experience a company provides is just as important as its products or services, many brands recognize that customer service levels strongly influence customer loyalty. In an attempt to inspire more loyalty from customers with high lifetime values, some brands decide to offer luxury experiences. Examples include premier dining experiences, or paid for excursions to spas or wellness centers. 

Why brands offer luxury experiences

Yorick Astier, VP of sales for customer experience at Oracle, says that by offering luxury customer experiences to exclusive consumers, companies can better emotionally engage with them: “If a customer feels a brand truly cares about them, it triggers an emotional connection that encourages future engagement and leaves customers with a sense of respect and fidelity,” he remarks. 

This emotional connection created by offering exclusive experiences can have a lasting impact on business. Research has shown that increasing customer retention rates by just 5 percent can increase profits by between 25 to 95 percent, and that 68 percent of customers will spend more money with a brand that they believe understands them and treats them like an individual. If customers feel appreciated, respected and valued during the customer journey and buying process, they are more likely to return. 

Get the latest CX resources straight to your inbox

Sign-up to the CX Network newsletter today to stay informed about new CX resources and industry updates. 

Learn More

Can luxury CX lead to neglecting customers?

However, not all brands necessarily have the capacity to, or see strategic merit in offering premium experiences only to select individuals. In the March meeting of CX Network’s Advisory Board, one member in the B2C space likened selecting which customers were of VIP status to picking a favorite child. If customers discovered that select individuals were being favored over others, that could alienate and offend the customers who are loyal but do not fit into the ‘VIP’ parameters. 

When discussing the issue, one member gave an example of a story they had encountered in the hospitality industry, where a child had lost their teddy bear. A member of staff found and returned it to the family personally. The Advisory Board meeting proposed that because resources were being absorbed on obsessing over one customer, the company risked frustrating the neglected customers.

Comparing higher price point customers to lower

Higher price point customers are a high-value, low-volume landscape as compared to lower price-point customers, which represent the vast majority of customer bases. By obsessing over customers of higher spend, brands risk neglecting a high portion of their customer base. Research has revealed that 86 percent of consumers will leave a brand they trusted after only two poor customer experiences. If customer experience for the average customer is neglected over premium CX for the few, this could lead to customer churn. In fact, US$35.3B is lost every year by US businesses in customer churn caused by issues such as fair treatment. 

Overall, the Advisory Board discussion determined it was more worthwhile to focus on building premium support options for all customers. By focusing on customer centricity and providing for all customers rather than luxury experiences for the few, brands are able to better provide for all customers.