yachting industry
Incognito
threeCX-stages.pdf
See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/349637782
What matters most to ultra-high-net-worth individuals? Exploring the UHNWI
luxury customer experience (ULCX)
Article in Journal of Product & Brand Management · February 2021
DOI: 10.1108/JPBM-10-2020-3164
CITATIONS
5 READS
915
1 author:
Some of the authors of this publication are also working on these related projects:
The role of AI as CX enabler. View project
Managing the Luxury Customer Experience UHNW View project
Phil Klaus
International University of Monaco
73 PUBLICATIONS 2,561 CITATIONS
SEE PROFILE
All content following this page was uploaded by Phil Klaus on 03 March 2021.
The user has requested enhancement of the downloaded file.
1
What Matters Most to Ultra-High-Net-Worth Individuals?
Exploring the UHNWI Luxury Customer Experience (ULCX)
Philipp ‘Phil’ Klaus Ph.D, MBA, MRes
Professor of Customer Experience Strategy and Management
International University of Monaco
INSEEC U Research Center
Email: [email protected]
Please cite as :
Klaus. Ph. (2021), “What Matters Most to UHNWI? Exploring the UHNWI Luxury
Customer Experience (ULCX),” Journal of Product & Brand Management.
https://doi.org/10.1108/JPBM-10-2020-3164
2
What Matters Most to Ultra-High-Net-Worth Individuals?
Exploring the UHNWI Luxury Customer Experience (ULCX)
Abstract
Purpose – The study explores the customer experiences of a under researched luxury client
segment, the ultra-high net-worth individuals (UHNWI) in three settings, yacht-made clothing
services, chartering a yacht, and art collection.
Method – We conducted 13 interviews with UHNWI, enquiring about their experiences with
different services. We collected and analyzed the data using a recommended three-step approach:
in-depth interviews using soft-laddering; coding and purifying data through a systematic
approach and hierarchical coding; and using the emerging consensus technique (ECT) to
scrutinize and validate the emerging themes.
Findings – Our study revealed UHNWI drivers or purchasing and repurchasing behavior as
(mis) managing expectations, personal relationships with personnel, and achieving convenience-
driven time savings. The corresponding conceptual framework is the UHNWI Luxury Customer
Experience (ULCX).
Practical implications – Our study reveals how Über luxury brand manager need to carefully
manage the UHNWI clientele expectations, focusing their investment on their brand personnel
and the way they can save their clients valuable time.
Originality/Value – Our study is the first to explore UHNWI perceptions of their experience
with Über luxury provider across multiple contexts. We highlight that the luxury experience, not
3
the acquisition and owning of luxury goods drive the UHNWI decision making and purchase
behavior.
Keywords Luxury Brands, Über Luxury, UHNWI, Customer Experience, Luxury Customer
Experience, Customer Experience Strategy, HNWI, Luxury Marketing, ULCX
4
What Matters Most to Ultra-High-Net-Worth Individuals?
Exploring the UHNWI Luxury Customer Experience (ULCX)
Introduction
Customer experience (hereafter CX) is the top business priority in 2020 and draws heavy interest
from scholars and managers alike (e.g. De Keyser et al., 2020). CX’s ever-increasing importance
originates from multiple sources: customer channels, interactions, choices, and customer
journeys’ increasing complexity are just some of the many challenges managers are facing
(McColl-Kennedy et al., 2015).
Managers and researchers view CX as an evaluation of all customer’s direct and indirect
interactions over time, leading to reactions and behaviors (Manthiou, Hickmann & Klaus, 2020).
CX is complex, holistic, and multifaceted. Thus, is should come as no surprise that CX research
is seen as in its early development stages (Lemon & Verhoef, 2016). This is especially evident in
the luxury environment, where CX is the key strategic focus and source to gain a competitive
advantage (Klaus and Mathiou, 2020).
However, there is no consensus on either how to define luxury (e.g., Ko, Phau & Aiello,
2016), or on the role of CX in luxury (Holmqvist, Ruiz & Penaloza 2019). Luxury is
conceptualized as complex, heterogenous, context-specific, and individual in nature
(Rosenbaum, Ramirez, Campbell & Klaus, 2019). Despite this rather broad, holistic
conceptualization, researchers agree on some of luxury’s common features. One, researchers
suggest that the rules of traditional consumer behavior drivers do not apply in the luxury setting
5
(Hennigs et al., 2012). Another agreement is the overwhelming presence of hedonic motivations
(Hagvedt & Patrick, 2009). These factors heavily influence how luxury brands and the luxury
customer experience need to be managed (Klaus, 2018).
Traditionally, luxury research refers to price, hedonics, superior product quality, and
exclusivity as its foundational pieces (Aliyev, Urkmez & Wagner, 2019). Luxury researchers and
brand managers alike understand that the customer experience construct is becoming more and
more important (Klaus and Manthiou, 2020). The development of the much-needed research is
not quiet meeting the demand yet. Most studies are either conceptual in nature, exploring only
CX outcomes, or revolve around the experiential aspects rather than providing a more
comprehensive view of the luxury customer experience.
Three of the nine global luxury segments, private aviation, yachting, and fine art rely
exclusively on ultra-high net-worth individuals (UHNWI) (Bain, 2019). UHNWI, of which they
are currently 513,244, are persons with a minimum net-worth of $30 million (Knight Frank,
2020). Despite the UHNWI crucial importance for the luxury sector worldwide, research
explores how the UHNWI experience their interactions with luxury brands is almost completely
overlooked. Our study aims to fill this important gap by empirically exploring UHNWI’s luxury
customer experience (ULCX). By doing so our research delivers two valuable contributions to
luxury, customer experience, and luxury brand management research.
First, this study is one of the first empirical studies to conceptualize the ULCX,
advancing our understanding of not only luxury experience, but also the UHNWI segment.
Second, we advance our luxury experience understanding by examining what drives behavior in
three different über-luxury settings.
6
We organize the paper as follows. After our introduction we extend on the study’s
theoretical foundation. This extension leads into the methodology section, followed by
presenting our findings. We then discuss our findings and their implications for theory and
practice, before elaborating on future research directions.
Theoretical Foundation
Customer Experience (CX), plays a dominant role in serving customers across all segments.
Gartner (2018) found that by 2020, 81% of all companies expect to be competing mostly or
completely on CX (Pemberton, 2018). CX management (CXM) has become the top strategic
priority for organizations (Klaus, 2018). CX’s holistic nature challenges CXM, because managers
often omit the crucial customer viewpoint (Klaus, 2020a). This is true for the luxury experience
market, which continues to outpace the luxury goods market, now representing over 60% of the
total global luxury market (Boston Consulting Group, 2017).
While material goods are still highly valued among consumers, one-of-a-kind experiences
represent the apex of human desire, especially among luxury consumers. Indeed, luxury consumers
use services and experiences to discern themselves (Yeoman & McMahon-Beattie, 2017). This
follows the popular notion that consumers move away from possessing towards experiencing
luxury offerings. Furthermore, consumers seek to enhance their lives through the experiential
consumption of luxury (Yeoman, 2011).
Traditionally, though, luxury researchers highlight the importance of the physical and
psychological ownership of luxury offerings (Jussila et al., 2015). The underlying reasoning lies
in the benefits luxury goods possession signals regarding the owners’ esteem, influence, and social
status (Nia & Zaichkowsky, 2000). Experiencing luxury is therefore less likely to satisfy the
7
symbolic outward-bound necessity gained by possessing luxury goods and services (Hoffmann &
Coste-Manière, 2012). This indicates that the motivations for seeking luxury from possessing
goods versus seeking luxury experiences are different (Fadnavis, 2014).
Following these propositions, UHNWI are traditionally seen as a segment that is motivated
by possessing luxury offerings first, rather than experiencing them (Roberts, 2018) . We
empirically examine this proposition in our study by conceptualizing the UHNWI customer
experience, highlighting hat drives their luxury experience perceptions and corresponding
decision-making processes. In the following section we introduce the methods to conceptualize
the ULCX, advancing our understanding of not only luxury experience, but also the UHNWI
segment.
Methodology
We apply a three-step method to explore the UHNWI customer experience meaning and domain,
following similar studies’ well-established guidelines (e.g., Klaus & Maklan, 2012). The
conceptual ULCX model seeks to improve existing customer experience models proposed in
conceptual studies (e.g., Verhoef et al., 2009) and in studies centering on suppliers rather than
customers (e.g., Atwal & Bryson, 2017).
First, to clarify the meaning of UHNWI customer experience, we examined the
perception and corresponding attributes of customers’ experience through in-depth interviews,
applying the soft laddering technique (Botschen, Thielen & Peters, 1999). Second, we coded and
purified the data through a systematic comparison approach and hierarchical coding. This
method guaranteed that we scrutinized all the data comprehensively and investigated all the
8
construct’s dimensions (Strauss & Corbin, 1990). Third, we applied the emerging consensus
technique (ECT), the judges dissected and validated the evolving dimensions (Klaus, 2013).
The laddering technique is the recommended approach to evaluate mental structures
within a means-end paradigm (Reynolds & Olson, 2001). During the laddering procedure,
investigators ask probing questions to reveal underlying relationships between the attributes
(means), consequences, and personal goals (ends). Our respondents shared their experiences
chronologically, starting with the initial interest for the service/product in question, their
information search and evaluation, followed by their selection, the transaction, and their outcome
assessment.
The links between these elements and consequences are means-end chains (Reynolds &
Gutman, 1988). Several studies demonstrated that this method enhances a wide range of
marketing applications, including customers' services, products, and experiences assessments
(Klaus, 2020a). We achieved data saturation (Glaser, Strauss & Strutzel, 1968) after conducting
individual in-depth interviews with 13 interviewees. The interviews lasted between 28 and 64
minutes. Our sample exceeds the evidence-based recommendation of 12 interviews (Nguyen &
Klaus, 2013).
We interviewed via Zoom, Skype for Business, and Microsoft Teams, contingent on the
interviewees’ preferences. Two marketing researchers independently coded the interview
transcripts. We started with open coding within the interviews, followed by axial coding to
compare the interviews (Ryan & Bernard, 2003). We used a systematic line-by-line comparison
9
approach and hierarchical coding to ensure a thorough examination of all the data (Klaus &
Maklan, 2012). Applying this coding approach allowed us to generate emerging categories of
more discrete concepts (Strauss & Corbin, 1990).
We embarked on the exploratory research to explore the UHNWI viewpoint of their
customer experiences. Supported by the recommendations of other CX studies, we investigate
UHNWI perceptions during the three CX stages, before, during, and after their purchase (e.g.,
Klaus et al., 2013). We recruited the 13 interviewees through the service providers’ client base.
The interviewees’ financial status qualifies them as “a judgment sample of persons who can offer
ideas and insights into the phenomenon (Churchill, 1979, p. 97).” The respondents shared their
experiences with three services: using a sartorial service for their garments, chartering a
superyacht, and purchasing art for their private collections. Cultural differences might not apply
to our sample because the interviewees’ residences, and nationalities vary. Table 1 provides
descriptive profiles of the samples.
Table 1 Sample Profile
Interviewee# Tailoring
Services
Yacht
Charter
Fine Art
Collector
Nationality Residence
1 X X --- American USA
2 X --- X Greek EU
3 X X --- Italian CH
4 --- X --- Arab UAE
5 X X --- Belgian B
6 X X --- Italian EU
10
7 --- X --- British EU
8 --- X X British EU
9 X X --- American USA
10 X X --- Russian Caribbean
11 X X --- Swiss CH
12 X --- --- German EU
13 --- --- X Greek EU
Note: X equals a positive response (yes).
We labelled and defined each ULCX attribute based on the results of the individual
coding. Next, the researchers reviewed the variations in their classifications to achieve
agreement. For attributes appearing in multiple transcripts we inspected the codes and decided on
the attribute names.
This analysis generated a pool of 23 attributes. Then we applied the emerging consensus
technique (ECT) to maximize content and face validity (Klaus, 2013). ECT is a robust method
for exploring the luxury and experience concept (e.g., Havir, 2017; Izogo and Jayawardhena
2018). The ECT “allows the researcher to develop a validated, clear, and concise labeling of
attributes, dimensions, and their individual allocation in the conceptual framework of the
phenomenon of interest, employing multiple experts and a combination of behavioral (emerging
consensus) and mathematical methods, as recommended in the literature” (Klaus, 2013, p. 446).
11
An expert panel of three judges reviewed the held item pool to maximize content and
face validity (Dagger et al., 2007). The expert panel comprised two luxury marketing academics
and a luxury CX manager. We applied ECT following the suggested five steps (Klaus, 2013):
attribute labeling and describing; attribute label and description selection; advanced attribute
label and description selection; attribute validity testing; and model readability and applicability
testing. This process led to 18 attributes in four dimensions being retained and is explained in
more detail as follows.
First, each judge received each attribute’s quotes. Each judge received the quotes in
sequential order and were invited to label and describe each attribute, using the original
interview quotes. Then, each judge was shown the labels and descriptions of all judges and the
researchers. We then asked each of the judges which of the proposed labels and description fit
the data best. Next, each judge received all resulting labels and descriptions and we asked them
to choose the most applicable one. We then selected the chosen labels and descriptions. Labels
and descriptions were only included if two out of three judges selected it.
Next, we applied the Q-sort technique (Funder et al., 2000). We printed each attribute on
an index card and asked the judges to create dimensions and subdimensions according to their
understanding of the ULCX. Judges were free to create any number of dimensions and labelling.
The agreement between the judges, creating three main dimensions, was high, indicating high
reliability.
12
Next, two academics familiar with the research were given the dimensions and
descriptions and we asked them to rate them as either “very applicable,” “somewhat applicable,”
or “not applicable.” We only kept attributes with a very applicable rating, retaining all attributes
and dimensions in the process.
In a final step, two luxury brand managers reexamined and confirmed the model’s
readability and applicability. Brief descriptions of dimensions and the attributes corresponding to
the dimension are provided in Appendix A. Our ensuing framework follows the well-established
guidance of exploring the CX in different contexts (e.g., Klaus, 2020a), allowing us to discover
the ULCX (e.g., Parasuraman et al., 2005). Figure 1 visualizes the resulting ULCX conceptual
model.
Figure 1 UCLX Conceptual Framework
13
Findings
Our analysis suggests four ULCX dimensions: (mis)managing expectations, importance of
personal relationships, achieving (convenience-driven) time savings, and extraordinary
(personal) experiences. We will now present each of the four ULCX dimensions.
(Mis)managing expectations
Respondents were precise in what they describe as ‘mismanaging my (their) expectations
(Respondent 4).’ This feeling of ‘expecting that they have all the resources in the world to
deliver what you are looking for (Respondent 12),’ is, regrettably often reevaluated after being
faced with ‘the reality that they are far from it (Respondent 12).’
Most of these unreasonable expectations of what providers are capable of are raised by
their communications, in which ‘they promise the moon and the stars, but don’t live up to it
(Respondent 7).’ This, in turn, drives dissatisfaction, but is seen an unusual occurrence, even for
UHNWI. As Respondent 10 states ‘it happens more often that you think. So, once you find the
one that does it right, you will stay with them.’ UHNWI often feel that the sheer number of
different contact persons, and their various level of services and skills, involved in delivering the
experience let them down. ‘Too many chefs in the kitchen’, as Respondent 13 explains. These
inconsistencies and variances lead to a perception of being ‘let down,’ especially if, for example,
the focus of the experience is being relaxed and enjoying quality time with friends and family on
a yacht.
Respondents also voice their frustration of how challenges and their requests are being
handled with. For example, Respondent 1 mentions ‘I asked for a particular textile, but I haven’t
14
heard back from my contact if this is still available. All I want is somebody responding to me,
even if the answer is we don’t know.’ The same is true for the moment challenges occur.
Respondent 11 mentioned that ‘he understands that there are challenges if suits are tailored in
Napoli, but I still need to know when my suit will be delivered. All I want is somebody to tell
me, so I can deal with it.’
UHNWI often benchmark personal interactions with their service as benchmark for their
post-purchase experiences and are disappointed if the post-purchase care does not live up to the
expectations raised during the face-to-face encounter. Respondent 5 mentions that ‘I had such
great interactions with (name of provider), but when he didn’t reply to my messages of more
private nature after the garments were delivered, I was a little disappointed.’ This statement leads
us into the next ULCX dimension, the importance of personal relationships.
The importance of personal relationships
Respondents referring to the fact that having a trusted relationship with their service provides is
important to them for multiple reasons. First, the offerings we investigated are rather private in
nature, such as sartorial services and collecting and acquiring art. This means that the pleasures
deriving from these offerings are often private in nature, too, and should be kept private, too. As
respondent 13 explains ‘I buy art for my own pleasure. They are not publicly displayed. I want
(to deal with) someone that respects my privacy and knows what I am looking for.’ The
respondents value their providers’ tacit knowledge. They describe it in terms of ‘(Name personal
contact) knows exactly what I like, and what I am looking for (Respondent 1).’ This intimate
knowledge of the client’s needs does not come over night, though, and many highlight this fact
by statements such as ‘he now knows me so well, I can trust him to pick the right style for me
(Respondent 6).’
15
Respondents often describe it as a personal relationship, going beyond the pure client-
provider interactions. This is evident by statements such as ‘he is more than my tailor. We talk
about our hobbies and our families. I consider him now a friend (Respondent 3).’ This long-term
personal of the relationship with the provider often permits clients to be less strict in terms of
services being not delivered. Respondent 6 mentions ‘because he is also my friend, I am more
willing to be not as demanding as a regular client might be.’ Time, time-savings and convenience
play a crucial role in the ULCX, as we elaborate further in the next section, discussing the
‘achieving time savings’ section.
Achieving (convenience-driven) time savings
UHNWI understandably demand a lot from their service providers. Our findings highlight that
UHNWI clearly perceive the difference between their demands in terms of convenience, such as
being taken care of, tailor-made solutions to match their needs, cost savings, advice, and services
on-demand, and the benefits they aim to gain from their demands being met. The experiences
clients are looking are clearly voiced in terms of tailormade on-demand services.
UHNWI explain the convenience and time savings of, for example, having delivered the
services where and when they need them, according to their schedule, is a main driver of their
provider selection. Respondent 11 mentions ‘It is just so simple. (Name of service provider)
comes to my office, visits me at home, or even meets me wherever I am around the globe to
deliver my suits and, if necessary, make last minute changes. The freedom of having the service
when and where I need it, is a key benefit for me.’ This highlights the need of UHNWI to keep
their opportunity costs as low as possible. Opportunity costs refer to the time and other resources
required to access and take advantage of the services. Respondent 9 mentions that his tailor
16
‘comes and visits him in the US according to my schedule,’ even though he is in Italy, ‘many
times a year, even if he doesn’t sell me something.’
UHNWI expect that they have everything at your fingertips. Given that most of our
respondents manage one or more companies their time is valuable, especially if they allocate
leisure time. For example, chartering a superyacht, where the combination of all previously
mentioned UCLX dimensions (yachting), where time with the beloved ones is so important. As
Respondent 4 states, ‘this is my time with my family, and I cannot waste valuable time with
trying to manage our vacation. I manage mu businesses 24/7, and I simply cannot be bothered.’
This important focus on saving time to gain more of UHNWI describe as most valuable time,
time with their beloved ones, leads into the next ULCX dimension, the extraordinary experiences
with their family and close friends. Because, as Respondent 12 highlights ‘I am so busy, so every
moment I can save to spend quality time with my family is priceless.’
Extraordinary (personal) experiences
Throughout all services we found the common thread of experiencing the service is often
equal of even higher valued than the possession of the good connected to the service. For
example, respondents using the sartorial services often mention that the interactions with the
service provider were at least as important as the final product. Respondent 9 describes the
‘experience of selecting the textiles for my suits, getting measured, talking about the different
style and options, creating my wardrobe were almost more important than receiving the suits.’
He added ‘do not get me wrong, it is nice to have them, but the process of creating them was the
more enjoyable experience.’ This is also true for the interactions with the art galleries for the
collectors. Respondent 8 mentions that ‘it is the hunt (for the piece of art) that is more thrilling
and enjoyable than the catch.’
17
This concept is even more prevalent when respondents talked about chartering a
superyacht. Despite having the financial means, they rather charter a yacht than owning it. There
is a consensus that owning a superyacht is ‘simply too much of a headache. I already manage too
many people; I don’t need to manage any additional ones (Respondent 4).’ Respondent 7
elaborate on this by stating that he charters a yacht because ‘we want to reach extraordinary
places and experiences without headaches. To experience these places, I do not need to own
something I won’t use for the rest of the year, with all the troubles that comes with owning one. I
just need to use it.’
This notion extends to UHNWI seeking more breadth than depth of experiences, as
Respondent 10 explains. ‘I want to be independent from possessions that limit me in what I want
to enjoy. I have family, and our needs and interests change all the time. So, I need to have
flexibility.’ This goes together with the notion that UHNWI are looking for experiences that save
them time and opportunity costs, so they can use their ‘most precious time. My time with my
family and close friends to have experiences we will never forget (Respondent 11).’ And these
unique, extraordinary experiences, are the clear perceived aim of all other activities. Respondent
8 perfectly summarizes the ULCX ‘at the end of the day, I choose the (providers and offerings)
ones that save me valuable time, so I can have more quality time with my family. You cannot put
a price tag on this one.’
Discussion
Our study improves our understanding of the luxury experience by discovering the ULCX in
three different experience settings. We define ultra-high net-worth individuals’ perceptions and
experiences (ULCX), proposing a conceptual foundation for what has been labelled the über-
18
luxury segment. We expand and extend not only customer experience knowledge but deliver
crucially (previously missing) evidence of what kind of experiences UHNWI value, and what,
ultimately, drives their purchasing and word-of-mouth behavior. The drivers are: managing the
UHNWI expectations correctly, the importance of their personal relationships with the luxury
company’s representatives, the need to save time, which then can be converted into quality time
and experiences with the ones most important to the UHNWI, their close friends and family. In
layman’s terms, we discover what matters most to UHNWIs. These findings are of critical
importance, given the exclusive, but powerful nature of the segment for one-third of all luxury
industry business segments. Therefore, our study adds much desired variation and support to the
conceptualization of the luxury CX and luxury in general (Rosenbaum & Russell-Bennett, 2019).
Contrary to common belief, our study delivers little support to the notion of the suggested
importance of owning luxury goods and services. On the contrary, our findings highlight that
experiencing rather than owning luxury is the key driver of UHNWI decision-making processes.
Our results question the importance of psychological ownership to explain luxury customers
behavior. Instead, we propose the experience as the main driver of how UHNWI perceive luxury.
We also find convincing proof endorsing Klaus (2015; 2020a) and Holmqvist, Ruiz, and
Penaloza’s (2020) claim that experiencing a luxury good or service is at least as relevant, if not
more, than purchasing it. Our research explores and finds evidence of extraordinary moments
and experiences aboard a yacht. Holmqvist et al. (2020) urge researchers to conceptualize how
remarkable moments become luxury experiences, and we discovered plentiful evidence of this.
We encourage researchers to explore the contexts and the circumstances under which a luxury
good or service could stimulate luxury experiences even further.
19
The evidence shared in our study contradicts the notion that experiencing luxury is less
likely to satisfy the symbolic outward-bound necessity gained by possessing luxury goods and
services. Our findings indicate that there are alternative ways to experience luxury, besides
acquiring and owning luxury goods, which lead to at least equivalent perceived benefits.
Independently of which one delivers the perceived benefits to the UHNWI, the motivations and
benefits perceived differ between an experience-seeking versus a more possession-oriented
individual. Our findings indicate that the experience construct deserves more attention in the
luxury context and needs to be considered as at least an alternative decision-making and
purchase behavior driver. We encourage researchers to determine when and under which
circumstances the experience construct, as put forward in our study, is equal or superior to
traditional luxury constructs, such as the brand, in explaining luxury clients’ behavior.
By dissecting the ULCX into four dimensions we deliver more insights on what
constitutes the UHNWI experience perceptions and drives their behavior. While time and time
savings play a crucial role in the ULCX, it all starts with how the UHNWI expectations
management. Our findings indicate that UHNWI expectations are set to a level that leads in most
cases to dissatisfaction. Our respondents were clear in voicing that disappointing experiences
could be avoided by better managing their expectations, other factors played an important rule,
too. One example is UHNWI search for experiences demonstrating a long-term relationship
approach from the provider towards them. The findings indicate that UHNWI not only looking
for a trusted long-term relationship with the provider but expect the provider to understand the
experiences they are looking for. The respondents clearly indicate that post-purchase care and
understanding the importance of time, and corresponding desire to time-savings are clearly
mirrored in how their experience is being managed. Every experience that will not consider their
20
experience, such as multiple contact, inconsistent touchpoints, will be perceived as detrimental to
the experience, and ultimately lead to clients looking for alternative offerings. This highlights the
overall challenging holistic nature of both, the customer experience, and customer experience
management (Lemon and Verhoef, 2016).
The four ULCX dimensions and their dynamic nature cannot be seen in isolation, and
need to be addressed, and ideally manages in a way that reflects a focus on the UHNWI ULCX.
Our study underlines the vital role of delivering the time savings that UHNWI are looking for.
UHNWI aim to save as much time as possible to convert these precious time savings into quality
time and the opportunity to enjoy unique experiences with their nucleus. Given that most of our
respondents manage one or multiple businesses around the globe, the focus on saving time and
experience the time with their beloved ones, free of other distractions, should come as no
surprise. We go as far as to say that delivering quality time and experiences are the future of
UHNWI luxury management.
All these findings not only have widespread theoretical implications, but also significant
managerial ones.
Managerial Implications
Our LUCX study delivers multiple vital insights to luxury and luxury brand managers
around the globe targeting the UHNWI segment. The most important finding is that how UHNWI
experience luxury, not the possession of luxury goods, drive their decision-making and purchasing
behavior. Luxury managers worldwide need to change their strategies accordingly (Klaus, 2020b),
starting by gaining insights on what constitutes the luxury experience and how to measure it
correctly (see, e.g., Klaus, 2015).
21
Managers need to adapt a more holistic view on how to successfully manage their client’s
experiences. One of the key findings is clearly the notion of expectation (mis)management. This
finding clearly highlights that the widespread notion of exceeding expectations in the luxury
industry, sometimes referred to as delight, is leading to dissatisfaction, customer churn and
negative word-of-mouth. Combining this with the relatively small segment size in terms of
numbers of persons, expectation management needs to be rethought and based upon what drives
the UHNWI behavior. To be more precise, luxury brands management need to focus on avoiding
dissatisfaction rather than trying to delight. This is a management practice that is successfully
applied in other industry, such as financial services (Posignon, Klaus & Maull, 2015).
Keeping the UCLX’s emphasis on time savings in mind managers need to rethink which,
when, and how they will deliver their services and offerings. We stress the need for offering
options reflecting the ever-changing UHNWI demands and circumstances. For example, as the
findings indicate it is important to offer clients multiple options on how services and experiences
can be delivered. According to our study even one client will choose from multiple options on how
a service can be delivered based upon her/his changing personal circumstances and needs.
Given the UHNWI clear emphasis on the pre-possession/consumption experience and the
aim to save quality time with their loved ones. We encourage managers targeting the UHNWI
segment to highlight the experiential part and the desired outcomes in their communication and
acquisitions strategy. Rather than focusing on their offerings and specifications, this new strategy,
aligning the managerial strategy to the ULCX the UHNWI is desiring, will ensure a better
prospect-client ratio, and ultimately an increase in firm performance.
Table 2 summarizes our study’s key theoretical and managerial implications.
22
Table 2 Key Theoretical and Managerial Implications
Key Theoretical and Managerial Implications
1. The ULCX construct includes 4 dimensions: (mis)managing expectations; importance of personal relationships; achieving time savings;
extraordinary experiences.
2. The ULCX drives the UHNWI decision-making and purchasing behavior.
3. Experiencing luxury is more important than acquiring and possessing luxury goods and services, even for UHNWI.
4. Motivations to experience luxury are different from motivations to own luxury goods and experiences.
5. To succeed in the UHNWI segment, managers need to shift towards a ULCX approach.
6. To successfully manage the ULCX, luxury managers need to manage expectations more realistically.
7. Delivering time savings for the UHNWI will be the strategic differentiator for luxury management.
Limitations and Future Research Directions
Our study submits that experiencing luxury rather than owning luxury goods and services is what
drives the UHNWI behavior. We encourage researchers to further investigate this notion. Our
study covers three UHNWI settings. It will be interesting to see if our findings are applicable in
other settings relevant to the UHNWI. We believe it will be interesting to follow-up our
investigation using a larger sample size to explore possible differences between our study’s and
other relevant settings, such as private aviation, high-end real estate, luxury sports cars, and
superyachts. Moreover, we encourage future research focusing on further investigating the
dynamic nature of the ULCX by, for example, investigating the differences between first time,
versus repeat, versus regular clients/buyers/users. Similar studies could also focus on one of the
settings we explored and test our ULCX framework. We urge scholars to investigate the important
managerial viewpoint of how the ULCX is practiced. The addition of this data will allow an even
23
more comprehensive view of the ULCX. We encourage researchers to focus and further validate
ULCX’s notion of managing expectations by, for example, investigating in controlled settings if
communicating the ‘right’ expectations will drive client behavior in the luxury industry.
24
References
Aliyev, F., Urkmez, T., & Wagner, R. (2019). A comprehensive look at luxury brand marketing
research from 2000 to 2016: a bibliometric study and content analysis. Management Review
Quarterly, 69(3), 233-264.
Atwal, G., & Bryson, D. (2017). The super-rich. In Luxury Brands in China and India (pp. 75-
99). London: Palgrave Macmillan.
Bain & Co. (2019). Bain-Altagamma 2019 market monitor worldwide luxury.
Boston Consulting Group. (2017). The true-luxury global consumer insight.
Botschen, G., Thelen, E. M., & Pieters, R. (1999). Using means-end structures for benefit
segmentation: An application to services. European Journal of Marketing, 33(1/2), 38-58.
Dagger, T. S., Sweeney, J. C., & Johnson, L. W. (2007). A hierarchical model of health service
quality: scale development and investigation of an integrated model. Journal of Service
Research, 10(2), 123-142.
De Keyser, A., Verleye, K., Lemon, K., Keiningham, T., and Klaus, Ph. (2020), "Moving the
Customer Experience Field Forward: Introducing the Touchpoints, Context, Qualities (TCQ)
Nomenclature," Journal of Service Research.
Fadnavis, M. (2014). Marketing Concept of ‘Luxury’To Ulterior High Net worth Individuals
(Uhni). Age, 60, 40.
Funder, D. C., Furr, R. M., & Colvin, C. R. (2000). The Riverside Behavioral Q‐sort: A tool for
the description of social behavior. Journal of Personality, 68(3), 451-489.
Glaser, B. G., Strauss, A. L., & Strutzel, E. (1968). The Discovery of Grounded Theory;
Strategies for Qualitative Research. Nursing Research, 17(4), 364.
Hagtvedt, H., & Patrick, V. M. (2009). The broad embrace of luxury: Hedonic potential as a
driver of brand extendibility. Journal of Consumer Psychology, 19(4), 608-618.
Havíř, D. (2017). A comparison of the approaches to Customer Experience Analysis. Economics
and Business, 31(1), 82-93.
Hennigs, N., Wiedmann, K. P., Klarmann, C., Strehlau, S., Godey, B., Pederzoli, D., ... & Taro,
K. (2012). What is the value of luxury? A cross‐cultural consumer perspective. Psychology &
Marketing, 29(12), 1018-1034.
Hoffmann, J., & Coste-Manière, I. (2012). Global luxury trends: Innovative strategies for
emerging markets. Springer.
25
Holmqvist, J., Ruiz, C. D., & Peñaloza, L. (2020). Moments of luxury: Hedonic escapism as a
luxury experience. Journal of Business Research, 67(8).
Izogo, E. E., & Jayawardhena, C. (2018). Online shopping experience in an emerging e-retailing
market. Journal of Research in Interactive Marketing.
Jussila, I., Tarkiainen, A., Sarstedt, M., & Hair, J. F. (2015). Individual psychological ownership:
Concepts, evidence, and implications for research in marketing. Journal of Marketing Theory
and Practice, 23(2), 121-139.
Klaus, P. (2020a). The End of The World as We Know It? The Influence of Online Channels on
the Luxury Customer Experience. Journal of Retailing and Consumer Services.
Klaus, P. P. (2020b). Customer experience, not brands will be on the iron throne. International
Journal of Market Research, 62(1), 6-8.
Klaus, Ph. (2018). Luxury patient experience (LPX): review, conceptualization, and future
research directions. The Service Industries Journal, 38(1-2), 87-98.
Klaus, P. (2015). Measuring Customer Experience How to Develop and Execute the Most
Profitable Customer Experience Strategies. Springer.
Klaus, Ph. (2013). The case of Amazon.com: towards a conceptual framework of online
customer service experience (OCSE) using the emerging consensus technique (ECT). Journal of
Services Marketing, 27(6), 443-457.
Klaus, Ph., Gorgoglione, M., Buonamassa, D., Panniello, U., & Nguyen, B. (2013). Are you
providing the “right” customer experience? The case of Banca Popolare di Bari. International
Journal of Bank Marketing, 31(7), 506-528.
Klaus, P., & Maklan, S. (2012). EXQ: a multiple-item scale for assessing service experience.
Journal of Service Management, 23(1), 5-33.
Klaus, Ph., & Manthiou, A. (2020). Introducing the EEE customer mindset: Reevaluating
Customer Experience Research and Practice During (And Post) Corona. Journal of Service
Management.
Knight Frank (2020). The 2020 Wealth Report.
Ko, E., Phau, I., & Aiello, G. (2016). Luxury brand strategies and customer experiences:
Contributions to theory and practice. Journal of Business Research, 69(12), 5749-5752.
Manthiou, A. Hickmann, E., & Klaus, Ph. (2020). Beyond good and bad: challenging the
suggested role of emotions in customer experience (CX) research. Journal of Retailing and
Consumer Services.
26
McColl-Kennedy, J. R., Gustafsson, A., Jaakkola, E., Klaus, P., Radnor, Z. J., Perks, H., &
Friman, M. (2015). Fresh perspectives on customer experience. Journal of Services Marketing,
29(6/7), 430-435.
McColl-Kennedy, J. R., Zaki, M., Lemon, K. N., Urmetzer, F., & Neely, A. (2019). Gaining
customer experience insights that matter. Journal of Service Research, 22(1), 8-26.
Nguyen, B., & Klaus, P. P. (2013). Retail fairness: Exploring consumer perceptions of fairness
towards retailers' marketing tactics. Journal of Retailing and Consumer Services, 20(3), 311-324.
Nia, A., & Zaichkowsky, J. L. (2000). Do counterfeits devalue the ownership of luxury brands?
Journal of Product and Brand Management, 9(7), 485-497.
Parasuraman, A., Zeithaml, V. A., & Malhotra, A. (2005). ES-QUAL: a multiple-item scale for
assessing electronic service quality. Journal of Service Research, 7(3), 213-233.
Pemberton, C. (2018). Key Findings From the Gartner Customer Experience Survey.
Ponsignon, F., Klaus, P., & Maull, R. S. (2015). Experience co-creation in financial services: an
empirical exploration. Journal of Service Management, 26(2), 295-320.
Reynolds, T. J., & Gutman, J. (1988). Laddering theory, method, analysis, and interpretation.
Journal of Advertising Research, 28(1), 11-31.
Reynolds, T. J., & Olson, J. C. (Eds.). (2001). Understanding consumer decision making: The
means-end approach to marketing and advertising strategy. New York: Psychology Press.
Roberts, J. (2018). Luxury and Ignorance: From “Savoir-Faire” to the Unknown. Luxury, 5(1),
21-41.
Rosenbaum, M. S., Ramirez, G. C., Campbell, J., & Klaus, P. (2019). The product is me: Hyper-
personalized consumer goods as unconventional luxury. Journal of Business Research.
Rosenbaum, M. S., & Russell-Bennett, R. (2019). Developing substantive theories into formal
theories via disruption. Journal of Services Marketing, 33(5), 572-575.
Ryan, G. W., & Bernard, H. R. (2003). Techniques to identify themes. Field Methods, 15(1), 85-
109.
Strauss, A., & Corbin, J. (1990). Basics of qualitative research. Sage Publications.
Verhoef, P. C., Lemon, K. N., Parasuraman, A., Roggeveen, A., Tsiros, M., & Schlesinger, L. A.
(2009). Customer experience creation: Determinants, dynamics and management strategies.
Journal of Retailing, 85(1), 31-41.
Yeoman, I. S. (2011). The changing behaviours of luxury consumption. Journal of Revenue and
Pricing Management, 10(1), 47–50.
27
Yeoman, I. S., & McMahon-Beattie, U. (2017). The turning points of revenue management: a
brief history of future evolution. Journal of Tourism Futures, 3(1), 66–72.
28
Appendix A – ULCX Dimensions and Attributes
Dimension Dimension description Dimension Attributes
(Mis)managing expectations Perceptions of the provider raising expectations
unreasonably high in comparison to what is
being delivered
• Raising expectations through communications
• Overpromising and underdelivering
• Too many chefs in the kitchen
• Lack of clear communication if challenges arises
• Importance of post-purchase care
Importance of personal
relationships
Highlighting the importance of personal
relationships with the providers’ representatives
• (Need for and respect of) Privacy
• Long-term view of relationship
• Tacit knowledge
• Availability
• Trust
Achieving time savings Crucial importance of time savings for clients • Convenience addicts
• Opportunity costs
• On demand
• Gaining quality time
Extraordinary experiences Focus on the experience rather than the
possession of a luxury offering
• Experience vs possession
• Less headaches
• Seeking more breath than depth
• Unique experiences with family nucleus
View publication statsView publication stats
